Lewis Group Limited · JSE:LEW
Lewis — 8th Annual Merrill Lynch Emerging Market Equity Conference – South Africa 2007
22 slides from Lewis's conference presentation, March 2007
Slide 1: Group Overview
GROUP OVERVIEW 8TH ANNUAL MERRILL LYNCH EMERGING MARKET EQUITY CONFERENCE – SOUTH AFRICA : MARCH 2007 ONE-ON-ONE PRESENTATIONS always delivering 1
Slide 2: Agenda
Agenda 1. Group Overview 2. Lewis Core Competencies 3. Highlights of the Current Year – 31st March 2007 4. Debtors Book 5. National Credit Act 6. Growth Strategy always delivering 2
Slide 3: 1. Group Overview
1. Group Overview always delivering 3
Slide 4: Lewis Group Structure
Lewis Group Structure Largest single furniture retail brand in SA Strong brand awareness 500 25 450 402 400 20 1 8 .7 350 309 300 15 13.2 250 1 1 .6 11.1 201 1 0 .7 200 162 9.2 158 150 148 147 145 10 7 .3 150 6.0 5 .6 5.1 100 5 50 0 0 Town Talk Town Talk Savells Joshua Joshua Ellerines Lewis Russell
Slide 5: Extensive Store Network
Extensive Store Network Western Cape 86 Free State 64 Mpumalanga 55 Gauteng 55 Eastern Cape 54 North West 35 Kwa-Zulu Natal 34 Limpopo 32 Northern Cape 29 Namibia 17 Botswana 13 Swaziland 10 Lesotho 6 TOTAL March ’06 490 always delivering 5
Slide 6: Strong Market Position
LSM 2 LSM 7 LSM 1 LSM 3 LSM 4 LSM 5 LSM 6 LSM 8 LSM 9 LSM 10 always Barnetts 113 Ellerines 309 Price ‘n Price 122 delivering Lewis Stores 402 92 Lubners Russells 201 OK Furnishers 158 Strong Market Position Furn City 162 Morkels 117 Joshua Doore 148 147 Beares 24 Furniture City 58 Geen & Richards 27
Slide 7: Growing Middle Market
Growing Middle Market Amps Lifestyle Measurement : 2006 2001 % 2003 % 2006 % 2006 / 2001 In c re a s e 0 0 0 's 0 0 0 's 0 0 0 'S 0 0 0 'S LSM1 3 ,0 7 7 1 0 .6 2 ,6 9 2 9 .0 1 ,6 5 0 5 .3 -1 ,4 2 7 LSM2 4 ,1 0 1 1 4 .1 4 ,0 3 7 1 3 .6 3 ,7 6 0 1 2 .2 -3 4 1 LSM3 4 ,2 4 2 1 4 .6 4 ,2 0 3 1 4 .1 3 ,9
Slide 8: 2. Lewis Core Competencies
2. Lewis Core Competencies always delivering 8
Slide 9: Lewis Core Competencies
Lewis Core Competencies • Consistently high operating margins • High cash conversion ratio • Integrated credit and marketing strategies – Re-Serve • Advanced credit granting processes – Application and behavioural scorecards • Proven collection processes • Merchandise innovation • Experienced manage
Slide 10: Sustainable Operating Profit
Sustainable Operating Profit A solid & long track record …. always delivering 800 R729 R594 600 R506 R Millions R442 R429 R417 R388 400 R351 R361 R327 R298 R274 R200 200 R166 R139 R110 R86 R49 R64 R33 R39 - 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 200
Slide 11: Re-Serve Scheme
Re-Serve Scheme • Identifies suitability of customer for further credit extension • Fully integrated with debtors system and store operations • Driven by historic payment behaviour & current indebtedness • Customer base is segmented and targeted monthly • Targeted direct mailing with promotional off
Slide 12: Other Core Strengths
Other Core Strengths Convenience Extensive store network Selection Merchandise offers to meet local needs Small store based 90% of deliveries executed Warehouses within 24 hours. Quick Credit decision 9 to 12 seconds anywhere in the country – immediate customer response Store based collection Direct
Slide 13: Experienced Management Team
Experienced Management Team Employees Average Average Service Age (Lewis) • Executive Team 12 14 48 • Divisional Managers: – Operations 12 15 43 – Credit 12 11 44 • Regional Controllers: – Operations 64 10 42 • Assistant Regional Controllers 19 6 42 always delivering 13
Slide 14: 3. Highlights of the Current Year – 31st March 2007
3. Highlights of the Current Year – 31st March 2007 always delivering 14
Slide 15: Highlights of the Current Year – 31st March 2007
3. Highlights of the Current Year – 31st March 2007 • Merchandise sales for nine months to 31st December 2006 up 15% (Like-for-Like 11%) • Successful merchandise initiatives • Increased furniture sales mix • Overall condition of debtors book improved • Expansion of all three chains – 25 new stores o
Slide 16: 4. Debtors Book
4. Debtors Book always delivering 16
Slide 17: Health of Debtors Book
Health of Debtors Book % FY06 FY05 Change Gross Debtors: Rand R2921m R2677m 9.1% Revenue R2875m R2511m 14.5% Bad Debt levels 4.0% 3.8% Yield on Book 26.1% 25.2% Average age of book – months 14.3 14.8 Impairment Provision as % of 12.6% 14.4% gross debtors always delivering 17
Slide 18: Debtors Provisions: prudently provided
Debtors Provisions : - prudently provided Debtors Book Provisioning (Balance Sheet) Bad Debts (Income Statement) 40 36.3 34.2 35.0 35.6 35 9 28.3 7.9 8 30 7 6.4 25 6 20 16.2 % 15.6 14.4 5 4.4 12.6 % 3.8 4.0 15 4 10.4 10 3 2 5 1 0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Total Debtor provi
Slide 19: 5. National Credit Act
5. National Credit Act always delivering 19
Slide 20: Impact of National Credit Act
Impact of National Credit Act • Lewis supportive of policy objectives of Act • Overall impact manageable and fully compliant by 1 June 2007 • Revenue projections – anticipated to be neutral • Credit granting process already in place • Debt counselling – internal process well established. Certain ext
Slide 21: 6. Growth Strategy
6. Growth Strategy always delivering 21
Slide 22: Growth Strategy
Growth Strategy • Increase sales of existing stores through merchandise innovation • Expand all three chains (25 stores per annum) • Consider acquisitions – provided there is a fit to Lewis’ core strengths • Further improve operating efficiencies • To train and develop all levels of staff and furthe
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