Lewis Group Limited · JSE:LEW
Lewis — FY2021 Earnings Presentation
24 slides from Lewis's earnings presentation, May 2021
Slide 1: Annual Financial Results 2021
2021 ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 1 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 1
Slide 2: Agenda
AGENDA 01 02 Debtor analysis Highlights ▪ Debtor performance ▪ Review of 2021 ▪ Gross debtor analysis ▪ Operational review ▪ Share repurchases 2 03 04 Targets and Outlook Financial results • Financial and ▪ Income statement operating targets ▪ Segmental analysis • Outlook ▪ Analysis of costs ▪ Balan
Slide 3: Highlights
3 HIGHLIGHTS ▪ Review of 2021 ▪ Operational review 04 06 01 ▪ Share repurchases 08 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 3
Slide 4: Review of 2021
REVIEW OF 2021 Revenue + 4.2% Merchandise sales + 6.7% Gross profit margin at 41.8% 4 Operating profit + 174.2% Cash generated from operations + 46.8% at R914.6m HEPS + 136.9% to 616 cents per share Total dividend + 77.3% at 328 cents per share LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 4
Slide 5: Review of 2021
REVIEW OF 2021 ▪ Prioritised the health and wellness of our staff and the safety of our customers ▪ Severe trading restrictions in the first 2 months imposed by the lockdown ▪ Lost sales approximate R360 million ▪ Lost collections approximate R250 million 5 ▪ Focus on cash preservation and cost cont
Slide 6: Operational Review
OPERATIONAL REVIEW ▪ Strong operational performance despite first quarter being adversely impacted by Covid-19 trading restrictions Sales patterns ▪ Merchandise sales increased by 6.7% 62.1% 61.6% - Half 1 down by 4.9% - Half 2 up by 17% 6 ▪ Trading out of 807 store outlets (LY: 794 stores) 26.2% -
Slide 7: Operational Review
OPERATIONAL REVIEW ▪ Credit application decline rate: 38.1% (LY: 37.5%) ▪ Credit sales mix: 49.1% (LY: 56.9%) - Cash sales increased by 25.9% - Credit sales declined by 7.9% 7 ▪ Expenses tightly managed LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 7
Slide 8: Number of Shares Repurchased (millions)
NUMBER OF SHARES REPURCHASED (millions) 17.31 11.94 8 8.63 5.41 5.36 3.22 3.31 2018 2019 2020 2021 Number of shares purchased Cumulative Since listing we have repurchased 29% of all shares in issue LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 8
Slide 9: Debtor Analysis
9 DEBTOR ANALYSIS ▪ Debtor performance ▪ Gross debtor analysis 10 14 02 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 9
Slide 10: Debtor Performance
DEBTOR PERFORMANCE 2021 Group collections (%) 79.4% 75.6% 73.2% 10 59.9% Quarter 1 Quarter 2 Quarter 3 Quarter 4 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 10
Slide 11: Debtor Performance
DEBTOR PERFORMANCE Satisfactory paid accounts (%) 74.4% 71.4% 70.5% 11 68.5% 68.4% 2017 2018 2019 2020 2021 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 11
Slide 12: Debtor Performance
DEBTOR PERFORMANCE 2021 2020 Collections (Rm) Collections from instalment sales 3 911 4 052 Actual collections achieved As a % of one contract instalment per customer per month-12 months 71.8% 74.5% 12 As a % of one contract instalment per customer per month-10 months 74.9% 73.8% Contractual arrears
Slide 13: Debtor Performance (Rm)
DEBTOR PERFORMANCE (Rm) 5 747 5 691 5 569 5 609 5 528 42.0% 44.1% 42.6% 28.9% 13 28.0% 2 534 2 424 802 2 323 19.1% 17.1% 802 17.6% 14.3% 1 561 1 620 13.3% 1 066 1 010 957 733 813 2017 2018 2019 2020 2021 Gross debtor Debtor costs Impairment provision Implementation of IFRS9 Debtor cost % Impairment
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 2021 430 459 3 537 586 733 902 20.7 592 247 169 226 118 916 88
Slide 15: Financial Results
15 FINANCIAL RESULTS ▪ Income statement ▪ Segmental analysis 16 17 03 ▪ Analysis of costs 18 ▪ Balance sheet overview 19 ▪ Key ratios 20 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 15
Slide 16: Income Statement
INCOME STATEMENT 2021 2020 % Revenue (Rm) 6 726 6 453 4.2 Merchandise sales (Rm) 3 931 3 686 6.7 Gross profit margin (%) 41.8 41.0 16 Operating profit (Rm) 696 253 174.2 Operating profit margin (%) 17.7 6.9 Attributable earnings (Rm) 433 182 137 EPS (cents) 576 232 148 LEWIS GROUP LIMITED AUDITED FI
Slide 17: Segmental Analysis
SEGMENTAL ANALYSIS Group Traditional Cash Revenue (Rm) 6 726 6 149 577 Merchandise sales (Rm) 3 931 3 365 566 Operating profit (Rm) 696 603 93 17 Operating margin: 2021 (%) 17.7 17.9 16.4 2020 (%) 6.9 6.7 8.3 Number of stores: 2021 807 764 43 2020 794 753 41 LEWIS GROUP LIMITED AUDITED FINANCIAL RES
Slide 18: Analysis of Costs (Excluding Debtor Costs)
ANALYSIS OF COSTS (EXCLUDING DEBTOR COSTS) 2021 2020 Rm Rm % Employment costs 1 259 1 214 3.7 Admin and IT 325 360 (9.7) Marketing 184 299 (38.5) 18 Transport and travel 242 273 (11.4) Depreciation, amortisation and impairment 343 376 (8.8) Other operating costs 575 494 16.4 Total 2 928 3 016 (2.9)*
Slide 19: Balance Sheet Overview
BALANCE SHEET OVERVIEW 2021 2020 Rm Rm Property, plant, equipment and intangible assets 683 632 Right-of-use assets 635 694 Inventory 948 741 Trade and other receivables 3 367 3 326 19 Cash on hand 447 1 193 Other assets 743 802 Total assets 6 823 7 388 Shareholders’ equity and reserves 4 873 4 709
Slide 20: Key Ratios
KEY RATIOS 2021 2020 % HEPS (cents) 616.5 260.2 136.9 ROE – after tax (%) 9.0 3.8 20 ROCE – after tax (%) 8.7 3.7 ROA – before tax (%) 10.5 4.8 Gearing ratio – including IFRS 16 (%) 7.4 12.0 Total dividend declared (cents) 328 185 77.3 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 20
Slide 21: Targets and Outlook
21 TARGETS AND OUTLOOK ▪ Financial and operating targets ▪ Outlook 22 23 04 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 21
Slide 22: Financial and Operating Targets
FINANCIAL AND OPERATING TARGETS Targets Actual Target Medium- % 2021 2021 2022 term Gross profit margin 41.8 38-42 40-42 41-43 Operating profit margin - based on sales 17.7 8-12 12-18 16-20 (Decrease)/ Increase in operating costs (2.9) 3-5 8-12 3-5 22 Credit sales as a % of total sales 49.1 56-60 52
Slide 23: Outlook
OUTLOOK ▪ Trading conditions expected to become more challenging ▪ Despite macroeconomic challenges, resilient business model provides stability in the long term ▪ Robust cashflows and strong balance sheet ▪ Adequate stock levels to counter the challenges in the supply chain 23 ▪ Continued focus on
Slide 24: Questions
24 QUESTIONS 05 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2021 24