Lewis Group Limited · JSE:LEW
Lewis — FY2008 Earnings Presentation
22 slides from Lewis's earnings presentation, Mar 31, 2008
Slide 1: Results Presentation
RESULTS PRESENTATION For the twelve months ended 31 March 2008 1
Slide 2: Agenda
AGENDA 1. Financial Highlights 2. The Year in Review 3. Debtor Analysis 4. Financial Overview 5. Outlook 6. Questions 2
Slide 3: Financial Highlights
1. Financial Highlights R3596m R930m 25.9% 717.0c 689.8c 323c Maintained at Up Up 25.9% Up Up Up 8.2% 8.2% 10.3% 6.9% 21.4% Revenue Operating Operating Earnings Headline Dividends Profit Margin per Share Earnings per share per share 3
Slide 4: The Year in Review
2. The Year in Review Best Lifestyle Group Lewis Electric Living Revenue up 8.2% 7.8% 11.9% 9.1% Merchandise sales % contribution 100% 82% 11% 7% Merchandise sales up 4.5% 4.1% 7.4% 5.0% No. of stores – total 525 417 87 21 No. of stores – opened this year 22 11 8 3 4
Slide 5: The Year in Review (Cont'd)
The Year in Review (Cont’d) NCA Implementation Merchandise strategies Sales analysis – Furniture & Appliances Credit Sales - This year : 67% Last year : 69% Enhanced Re-serve programme Electronic Catalogue 5
Slide 6: The Year in Review (Cont'd)
The Year in Review (Cont’d) Quality of Debtors Book - Doubtful Debts Provision % - Debtor Costs Extended terms to selected customers Consumer Credit Insurance Financial Services – JV Sanlam – Funeral benefits 6
Slide 7: Debtor Analysis
3. Debtor Analysis 7
Slide 8: Debtor Costs
Debtor Costs FY08 FY07 Rm Rm Total Debtor costs 190 148 Bad debts written off 172 138 Provision for Doubtful Debts 18 10 Debtor costs as a % of net debtors 6.5% 5.8% Credit Application decline rate 22.5% 20.1% 8
Slide 9: Doubtful Debt Provision
Doubtful Debt Provision FY08 FY07 Rm Rm Net Debtors before DD Prov. 2939 2530 Doubtful Debt Provision 396 378 Doubtful Debt Provision % 13.5% 14.9% 9
Slide 10: Debtors Payment Analysis
Debtors Payment Analysis NUMBER OF CUSTOMERS DOUBTFUL DEBT PROVISION 2008 2007 2008 2007 Customers fully up to date No. 534,286 542,142 including those who have paid Satisfactory paid 0% 0% 70% or more of amounts due % 75.1% 76.4% over the contract period Customers who have paid No. 51,759 47,959 be
Slide 11: Analysis of NCA Business
Analysis of NCA Business * With the introduction of the National Credit Act ("NCA"), Lewis offered selected customers extended terms. NUMBER OF CUSTOMERS NCA NCA 24 Months Over 24 Months Customers fully up to date No. 196,840 69,139 including those who have paid Satisfactory paid 70% or more of amou
Slide 12: 4. Financial Overview - Income Statement
4. Financial Overview - Income Statement 12
Slide 13: 4. Financial Overview - Income Statement
4. Financial Overview - Income Statement FY08 FY07 % Rm Rm Revenue 3 596 3 324 8.2% Merchandise sales 1 890 1 809 4.5% Gross profit % 32.7% 34.0% Operating profit 930 860 8.2% Operating margin % 25.9% 25.9% Attributable earnings 642 598 7.4% EPS (cents) 717 650 10.3% Headline EPS (cents) 690 645 6.9
Slide 14: Segmental Analysis
Segmental Analysis Risk Financial Retail Services Services Total Rm Rm Rm Rm 2008 Revenue 2 141 564 891 3 596 Operating profit 307 175 448 930 Operating margin 14.4% 31.1% 50.2% 25.9% 2007 Revenue 2 045 465 814 3 324 Operating profit 322 183 355 860 Operating margin 15.7% 39.5% 43.6% 25.9% 14
Slide 15: Analysis of Revenue Mix & Product Range
Analysis of Revenue Mix & Product Range Revenue Mix Ancillary Services 9.7% (8.2%) Finance charges earned Merchandise sales 52.5% (54.4% ) 22.1% (23.4%) Insurance premiums earned 15.7% (14.0%) Product Range Appliances 26% (25%) Furniture 52% (50%) Audiovisual 22% (25%) 15
Slide 16: Reinsurance Revenue Recognition
Reinsurance Revenue Recognition The Group defers insurance revenue over the period of the contract. Monarch reinsures 40% of premiums with an independent 3rd party reinsurer with real risk transfer. A premium reserve deposit of 40% of ceded premiums is retained by Monarch effectively deferring
Slide 17: Analysis of Costs
Analysis of Costs (Excluding Debtor costs) FY08 FY07 Change Rm Rm % Employment costs 505 486 3.8% Admin and IT 167 162 2.9% Marketing 107 107 Occupancy costs 135 117 15.8% Transport/Travel 127 109 16.6% Depreciation 41 39 5.1% Other operating costs 122 102 19.4% Total 1204 1122 7.3% % of revenue 33.
Slide 18: Balance Sheet Overview
Balance Sheet Overview FY08 FY07 Rm Rm Property, plant and equipment 201 183 Investments 665 660 Tax and Deferred tax 30 103 Inventory 230 230 Net Debtors after Doubtful Debts 2615 2188 Cash 67 36 Total Assets 3808 3400 Shareholders’ equity and reserves 2730 2527 Retirement benefits 58 68 Tax and De
Slide 19: Capital Structure and Ratios
Capital Structure and Ratios FY08 FY07 Rm Rm Gearing ratio 23.3% 15.6% Share buy back this year 162 214 Final dividend (cents) 179 150 Dividends declared this year (cents) 323 266 (+21.4%) Dividend cover (x) 2.0 2.25 ROE 24.4% 24.8% ROCE 21.4% 22.5% 19
Slide 20: 5. Outlook
5. Outlook 20
Slide 21: Outlook
Outlook Trading conditions are expected to remain tough while external factors such as oil prices and food inflation affects the group’s target market. Positive indicators: - There are no signs of increased unemployment - Infrastructural spend and job creation in evidence in certain sectors Ex
Slide 22: Questions Thank you
6. Questions Thank you Visit our website on: www.lewisgroup.co.za 22