Lewis Group Limited · JSE:LEW
Lewis — H1 2018 Earnings Presentation
21 slides from Lewis's earnings presentation, Nov 13, 2017
Slide 1: Results Presentation for the six months ended 30 September 2017
RESULTS PRESENTATION for the six months ended 30 September 2017
Slide 2: Agenda
Agenda 3 Key features 9 Debtor analysis 12 Financial results 18 Targets and outlook 21 Questions
Slide 3: Key features
Key features Merchandise sales up 5% Debtor Costs reduced by 11.5% Expense growth contained at 1.8% Balance sheet ungeared Dividend maintained 3
Slide 4: Key features
Key features Headline Revenue Gross Profit Operating profit earnings per share (3.2%) 40.9% (30%) (15.8%) R2 659m R 529m R 192m 164c LY R2 746m LY 40.5% LY 275m LY 195c 4
Slide 5: Key features
Key features Sales patterns since year end • Furniture & appliances (83% of business – up 5.4%) • Electronics (17% of business – up 2.5%) Gross profit margin - 40.9% (LY 40.5%) • new product ranges supported margin • competitive pricing sourced locally 5
Slide 6: Key features
Key features Rest of Africa - solid performance - 110 stores Small format Lewis stores - 207 (41% of Lewis store base) Store outlets - 744 stores ( LY: 780) consolidation in smaller towns Credit application decline rate 37.4% (LY: 41%) Credit sales at 68.8% (LY: 63.4%) Debtor costs as a
Slide 7: Key features
Key features Gearing • Ungeared balance sheet • Repaid borrowings of R1.4 billion in last 18 months Expense control • High focus area • Well below inflation 7
Slide 8: Net asset value per share
Net asset value per share 7 000 9.4% compound annual growth in NAV since 2005 6 000 6 315 6 128 6 157 6 133 6 012 5 481 5 000 4 828 4 000 4 225 3 719 3 000 3 303 3 020 2 774 2 425 2 000 2 060 1 000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017-09 restated restated 8
Slide 9: Debtor analysis
DEBTOR ANALYSIS • Debtor performance • Gross debtor analysis 9
Slide 10: Debtor performance
Debtor performance H1/2018 H1/2017 Collections Collections from instalment sales Rm 1 990 2 027 Actual collections achieved As a % of one contract instalment per customer per month 76.2% 74.6% Contractual arrears Rm 2 352 2 452 % of gross debtors 38.6% 38.5% Debtor Costs Total debtor costs (-11.5%)
Slide 11: Gross debtor analysis
Gross debtor analysis Impairment No Customers Gross Receivables Instalments in arrears Provision Total Customer Grouping Period Arrears R 000 1 2 3 4 >4 No % R 000 % R 000 % R000 R 000 R 000 R000 R 000 Sep 2017 409 445 67.7 3 457 430 56.8 20 437 1.3 561 863 153 413 107 496 80 648 61 171 159 135 Cust
Slide 12: Financial results
Financial results • Income statement • Segmental analysis • Analysis of costs • Balance sheet overview • Capital ratios 12
Slide 13: Income statement
Income statement H1/2018 H1/2017 Rm Rm % Revenue (Rm) 2 659 2 746 (3.2%) Merchandise sales (Rm) 1 295 1 233 5.0% Gross profit margin (%) 40.9% 40.5% Operating profit (Rm) 192 275 (30.1%) Operating profit margin (%) 7.2% 10.0% Attributable earnings (Rm) 143 174 (17.7%) EPS (cents) 164 197 (16.7%) Hea
Slide 14: Segmental analysis
Segmental analysis Group Lewis Best Beares Revenue (Rm) 2 659 1 931 349 379 Revenue growth (%) (3.2%) (5.7%) (1.4%) 9.8% Operating profit (Rm) 192 114 56 22 Operating margin H1:18 7.2% 5.9% 16.2% 5.7% H1:17 10.0% 10.6% 15.6% 0.6% Number of stores H1:18 744 500 126 118 14
Slide 15: Analysis of costs
Analysis of costs H1/2018 H1/2017 Change Rm Rm % Employment costs 514 498 3.0% Admin and IT 164 156 5.0% Marketing 123 113 9.0% Occupancy costs 183 183 0.2% Transport/Travel 99 102 (2.6%) Depreciation 44 49 (10.2%) Other operating costs 130 134 (3.4%) Total Operating costs 1 257 1 235 1.8% 15
Slide 16: Balance sheet overview
Balance sheet overview H1/2018 H1/2017 Rm Rm Property, equipment, goodwill and trademarks 390 440 Inventory 530 450 Insurance investments 701 1 268 Trade and other receivables 4 204 4 472 Insurance and reinsurance assets 298 1 009 Tax and deferred assets 111 199 Cash on hand 684 836 Total assets 6 9
Slide 17: Capital ratios
Capital ratios H1/2018 H1/2017 ROE – after tax (%) 5.2% 6.4% ROCE – after tax (%) 5.0% 6.4% ROA – before tax (%) 6.4% 7.6% Gearing ratio (%) ungeared 18.8% Interim dividend declared (cents) 100c 100c 17
Slide 18: Targets and Outlook
Targets and Outlook 18
Slide 19: Financial and operating targets
Financial and operating targets Actual Target H1/2018 2018 Performance indicators Gross profit margin (%) 40.9 38 – 42 Operating profit margin (%) 7.2 5 - 10 Increase in operating costs (%) 1.8 2-4 Credit sales as a % of total sales 68.8 63 - 66 Satisfactory paid customers (%) 67.7 66 - 70 Debtor co
Slide 20: Outlook
Outlook Trading conditions remain challenging Continued focus on collections Share repurchase programme Acquisition of UFO Festive trading period 20
Slide 21: Questions
Questions 21