Lewis Group Limited · JSE:LEW

Lewis — H1 2022 Earnings Presentation

26 slides from Lewis's earnings presentation, November 2021

  1. Slide 1: Unaudited Interim Results H1 2022

    UNAUDITED INTERIM RESULTS H1 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021 2022 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 1

  2. Slide 2: Agenda

    AGENDA 01 02 Debtor analysis Highlights  Debtor performance  Review of H1 2022  Gross debtor analysis  Operational review  Share repurchases 03 04 Targets and Outlook Financial results • Financial and  Income statement operating targets  Segmental analysis • Outlook  Analysis of costs  Bala

  3. Slide 3: Highlights

    HIGHLIGHTS  Review of H1 2022  Operational review 04 06 01  Share repurchases 09 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 3

  4. Slide 4: Review of H1 2022

    REVIEW OF H1 2022 Revenue + 12.2% Merchandise sales + 20.7% Gross profit margin at 40.2% Operating profit + 23.3% Cash generated from operations at R595.1m HEPS + 39.7% to 330 cents per share Interim dividend + 46.6% to 195 cents per share LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 4

  5. Slide 5: Review of H1 2022

    REVIEW OF H1 2022 Solid well-balanced performance during a challenging 1st half Impact of the civil unrest in South Africa  Disruptions to store operations - 57 looted and damaged (53 Traditional and 4 UFO) - 260 stores closed as a precautionary measure - 51 reopened (48 Traditional and 3 UFO)  Ad

  6. Slide 6: Operational Review

    OPERATIONAL REVIEW  Trading out of 817 store outlets (LY: 805 stores) Sales patterns - Net 10 new stores opened in FY22 62.6% 62.2% - 129 stores outside SA (LY:125 stores) - 233 small format Lewis stores (48% of Lewis stores) - 104 stores refurbished  Merchandise sales increased by 20.7% - Compara

  7. Slide 7: Operational Review

    OPERATIONAL REVIEW Credit application decline rate (%) Sales mix Cash Credit 39.1% H1 2022 49.4% 50.6% FY 2021 50.9% 49.1% 38.4% 38.1% H1 2021 50.9% 49.1% 37.5% FY 2020 43.1% 56.9% 37.4% 37.1% FY 2019 42.1% 57.9% FY 2018 34.2% 65.8% FY 2017 34.8% 65.2% FY 2018 FY 2019 FY 2020 H1 2021 FY 2021 H1 2022

  8. Slide 8: Operational Review

    OPERATIONAL REVIEW  Expenses tightly managed - Increased by 16.9%(excl. debtor costs), as a result of cost savings in H1 2021 due to six-week hard lockdown - Increased by 6.3% when compared to H1 2020  Robust balance sheet  Share repurchase programme - 9.1 million shares repurchased in the 12 mon

  9. Slide 9: Number of Shares Repurchased Since 2018 (Millions)

    NUMBER OF SHARES REPURCHASED SINCE 2018 (MILLIONS) 23.34 17.31 11.94 8.63 6.03 5.41 5.37 3.22 3.31 2018 2019 2020 2021 2022* Number of shares purchased Cumulative • Includes repurchases made to the beginning of November 2021 Since listing we have repurchased 34.5% of all shares in issue LEWIS GROUP

  10. Slide 10: Delivering Shareholder Returns / Active Capital Management

    DELIVERING SHAREHOLDER RETURNS / ACTIVE CAPITAL MANAGEMENT 2022 2021 2020 Return of capital- share buy back (Rm) 194.5 112.6 101.7 Return of income- dividends (Rm) 260.4 149.9 198.6 Total spent on increasing shareholder returns (Rm) 454.9 262.5 300.3 Market capitalisation (Rm) 2 743.2 2 195.8 1 370.

  11. Slide 11: Debtor Analysis

    DEBTOR ANALYSIS  Debtor performance  Gross debtor analysis 12 14 02 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 11

  12. Slide 12: Debtor Performance

    DEBTOR PERFORMANCE Group collections (%) 78.7% 76.3% 74.9% 74.5% 73.8% 71.8% 66.5% FY 2017 FY 2018 FY 2019 FY 2020 H1 2021 FY 2021 H1 2022 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 12

  13. Slide 13: Debtor Performance

    DEBTOR PERFORMANCE H1 2022 H1 2021 Collections (Rm) Collections from instalment sales 2 172 1 866 Actual collections achieved As a % of one contract instalment per customer per month 78.7% 66.5% Contractual arrears (Rm) 2 160 2 250 % of debtors at gross carrying value 37.3% 39.1% Debtor costs (Rm) D

  14. Slide 14: Gross Debtor Analysis

    GROSS DEBTOR ANALYSIS Instalments in arrears Number of Gross Impairment Impairment Total customers carrying value provision provision arrears 1 2 3 >3 Customer grouping Total R’000 R’000 % R’000 R’000 R’000 R’000 R’000 Satisfactory paid 2022 437 383 3 649 167 719 478 19.7 587 355 162 322 114 743 85

  15. Slide 15: Debtor Performance

    DEBTOR PERFORMANCE Satisfactory paid accounts (%) 75.2% 74.2% 69.9% 69.5% 68.1% 67.9% 67.7% Highest in 14 years H1 2016 H1 2017 H1 2018 H1 2019 H1 2020 H1 2021 H1 2022 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 15

  16. Slide 16: Financial Results

    FINANCIAL RESULTS  Income statement  Segmental analysis 17 18 03  Analysis of costs 19  Balance sheet overview 20  Key ratios 21 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 16

  17. Slide 17: Income Statement

    INCOME STATEMENT H1 2022 H1 2021 % H1 2020 % Revenue (Rm) 3 406 3 034 12.2 3 083 10.5 Merchandise sales (Rm) 1 991 1 650 20.7 1 735 14.8 Gross profit margin (%) 40.2 40.5 40.3 Operating profit (Rm) 341 277 23.3 244 39.8 Operating profit margin (%) 17.1 16.8 14.0 Attributable earnings (Rm) 234 183 27

  18. Slide 18: Segmental Analysis

    SEGMENTAL ANALYSIS Group Traditional Cash Revenue (Rm) 3 406 3 130 276 Merchandise sales (Rm) 1 991 1 719 272 Operating profit (Rm) 341 320 21 Operating margin: H1 2022 (%) 17.1 18.6 7.6 H1 2021 (%) 16.8 18.2 8.3 Number of stores: H1 2022 817 773 44 H1 2021 805 764 41 LEWIS GROUP LIMITED UNAUDITED I

  19. Slide 19: Analysis of Costs (Excluding Debtor Costs)

    ANALYSIS OF COSTS (EXCLUDING DEBTOR COSTS) H1 2022 H1 2021 Rm Rm % Employment costs 690 622 11.0 Admin and IT 182 157 15.8 Marketing 146 90 62.3 Transport and travel 139 93 49.4 Depreciation, amortisation and impairment 186 174 7.0 Other operating costs 257 233 10.1 Total 1 600 1 369 16.9 Total oper

  20. Slide 20: Balance Sheet Overview

    BALANCE SHEET OVERVIEW H1 2022 H1 2021 Rm Rm Property, plant, equipment and intangible assets 701 624 Right-of-use assets 661 653 Inventory 1 057 858 Trade and other receivables 3 439 3 321 Cash on hand 390 564 Other assets 779 780 Total assets 7 027 6 800 Shareholders’ equity and reserves 4 737 4 8

  21. Slide 21: Key Ratios

    KEY RATIOS H1 2022 H1 2021 % H1 2020 % HEPS (cents) 330 236 39.7 215 53.5 ROE – after tax (%) 9.7 7.7 7.1 ROCE – after tax (%) 8.8 6.9 7.0 ROA – before tax (%) 10.5 8.6 8.9 Gearing ratio – including IFRS 16 (%) 9.3 5.3 11.9 Total dividend declared (cents) 195 133 46.6 120 62.5 LEWIS GROUP LIMITED UN

  22. Slide 22: Return on Equity

    RETURN ON EQUITY 9.7% 9.0% 7.7% 6.4% 5.1% 3.8% FY 2018 FY 2019 FY 2020 H1 2021 FY 2021 H1 2022 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 22

  23. Slide 23: Targets and Outlook

    TARGETS AND OUTLOOK  Financial and operating targets  Outlook 24 25 04 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 23

  24. Slide 24: Financial and Operating Targets

    FINANCIAL AND OPERATING TARGETS Targets % Actual H1 2022 2022 Medium-term Gross profit margin 40.2 40-42 41-43 Operating profit margin 17.1 12-18 16-20 Increase in operating costs 16.9 8-12 3-5 Credit sales as a % of total sales 50.6 52-56 52-56 Satisfactory paid customers 75.2 72-75 73-76 Debtor co

  25. Slide 25: Outlook

    OUTLOOK  Tougher trading conditions expected in the 2nd half of the year - High unemployment levels - Rising interest rates - Rising food and fuel prices - Uncertainty around Covid-19 and potential 4th wave - Ongoing Eskom loadshedding  Business model continues to demonstrate resilience  Well sto

  26. Slide 26: Questions

    QUESTIONS 05 LEWIS GROUP LIMITED UNAUDITED INTERIM RESULTS H1 2022 26

Lewis Group — H1 2022 Earnings Presentation on 6ix