Lewis Group Limited · JSE:LEW
Lewis — FY2016 Earnings Presentation
24 slides from Lewis's earnings presentation, May 2016
Slide 1: Annual results presentation for the year ended 31 March 2016
Annual results presentation for the year ended 31 March 2016
Slide 2: Agenda
Agenda Overview of results 3 Debtor analysis 7 Financial results 11 Regulatory update 19 Outlook 21 Questions 2
Slide 3: Overview of results
Overview of results Headline Total Operating Revenue Gross Profit earnings per dividend per margin share share + 2.2% 38.0% 14.1% (26.5%) maintained R5 785m R1 015 R 815m 622c 517c LY R5 661m LY 36.6% LY 19.4% LY 845c LY 517c 3
Slide 4: Overview of results
Overview of results • Sales pattern for the year › Furniture & appliances (82.3% of business) - up 4% › Electronic sales (17.7% of business) - down 3.1% • Credit application decline rate 39.3% (LY: 40.2%) • Credit sales mix – 64.3% (LY 69.1%) • Debtor costs 17.1% of net debtors (LY: 15.3%) • Expense
Slide 5: Overview of results
Overview of results • Recently acquired 56 stores in four Southern African countries • Footprint increased by 44 stores in FY16, with 26 further stores added in April / May 2016 • Merchandise a key focus • Solid gross profit margin at 38.0% despite aggressive discounting by competitor closing stores
Slide 6: Net asset value per share
Net asset value per share 10.5% compound annual growth in NAV since 2005 7 000 6 000 6 158 6 012 6 128 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 restated restated Net asset value per share (cents)
Slide 7: Debtor analysis
Debtor analysis cag 7
Slide 8: Debtor performance
Debtor performance FY16 FY15 Collections Collections from instalment sales (+4%) Rm 4 067 3 912 Actual collections achieved As a % of one contract instalment per customer per month 73.3% 73.7% Contractual arrears 36.7% 32.9% Debtor Costs Total debtor costs (+17.1%) Rm 1 005 858 ■ Bad debts written o
Slide 9: Debtor payment analysis
Debtor payment analysis Number of Customers Distribution of Impairment provision Debtor’s Payment Analysis 2016 2015 2016 2015 Satisfactory paid: Customers fully up to date, including those who have paid No 459 390 473 901 Rm 38.3 21.1 70% or more of amounts due over the contract period. The provisi
Slide 10: Debtor costs vs. Impairment provision (Rm)
Debtor costs vs. Impairment provision (Rm) R 1 800 R 1 600 1 533.6 R 1 400 R 1 200 1 294.3 1 129.5 R 1 000 997.2 R 800 875.2 758.3 R 600 1 005.0 R 400 858.1 702.4 522.3 539.6 R 200 458.9 R 0 2011 2012 2013 2014 2015 2016 Impairment Provision (Rm) Debtor Costs (Rm) 10
Slide 11: Financial results
Financial results 11
Slide 12: Income statement
Income statement FY16 FY15 % Revenue Rm 5 785 5 661 2.2% Merchandise sales Rm 2 668 2 591 2.9% Gross profit margin % 38.0 36.6 Operating profit Rm 815 1 098 (25.7%) Operating margin % 14.1 19.4 Attributable earnings Rm 961 806 19.3% EPS (Investment Income up R453m) cents 1 083 908 19.3% Headline EPS
Slide 13: Segmental analysis
Segmental analysis Best Home and 2016 Group Lewis Electric Beares Revenue Rm 5 785 4 565 793 427 Revenue growth % 2.2 (1.7) (1.1) 100 Operating profit Rm 815 700 143 (28) Operating margin % 14.1 15.3 18 (6.6) Number of stores 760 526 127 107 13
Slide 14: Analysis of costs (excluding debtor costs)
Analysis of costs (excluding debtor costs) FY16 FY15 % Rm Rm Employment costs 946 881 7.4% Admin and IT 275 241 13.9% Marketing 192 177 8.7% Occupancy costs 329 274 20.3% Transport / Travel 224 216 3.9% Depreciation 86 64 34.2% Other operating costs 260 208 24.7% Total 2 312 2 061 12.2% % of revenue
Slide 15: Balance sheet
Balance sheet FY16 FY15 Assets Rm Rm Property, plant and equipment and trademarks 431 413 Investments 1 669 1 844 Inventory 445 420 Trade and other receivables 4 514 4 413 Prepaid insurance premiums (Note 1) 1 185 1 485 Cash 587 222 Total Assets 8 831 8 797 Equity and liabilities Shareholders equity
Slide 16: Restatements – Balance sheet
Restatements – Balance sheet FY16 FY15 Rm Rm Refund of premiums and interest (56.7) (54.6) Insurance accounting (130.0) (162.9) Maintenance contracts (166.0) (169.1) Effect on total assets (352.7) (386.6) Reinsurance accounting 153.7 134.7 Taxation (141.7) (145.9) Effect on total liabilities 12.0 (1
Slide 17: Restatements – Income statement
Restatements – Income statement FY16 FY15 Rm Rm Refund of premiums and interest (2.0) (5.4) Insurance and reinsurance accounting 13.9 0.4 Maintenance contracts 3.0 (41.1) Profit before taxation 14.9 (46.1) Taxation (4.2) 12.9 Effect on attributable profit 10.7 (33.2) Increase (decrease) in diluted e
Slide 18: Capital ratios
Capital ratios FY16 FY15 ROE – after tax (%) 17.6% 15.4% ROCE – after tax (%) 14.7% 13.0% ROA – before tax (%) 15.8% 15.9% Gearing ratio (%) 25.5% 24.8% Total dividend (cents) 517c 517c 18
Slide 19: Regulatory update
Regulatory update Sees <a. 19
Slide 20: Regulatory update
Regulatory update • Affordability assessment regulations adopted in July 2015 • National Credit Regulator referrals to the National Credit Tribunal › Loss of employment and disability cover › Club and maintenance contracts • 28 Customer lawsuits › delivery charges and maintenance contracts • Cap on
Slide 21: Outlook
Outlook 21
Slide 22: Financial and operating targets
Financial and operating targets Performance indicators Achieved Target Target Medium-term 2016 2016 2017 targets Gross profit margin (%) 38.0 37 - 38.5 39 - 41 41 - 43 Debtor costs as a percentage of net debtors 17.1 12 - 14 16 - 18 14 - 16 Satisfactory paid customers (%) 68.8 66 - 70 66 - 70 70 - 7
Slide 23: Outlook
Outlook • Strong Balance Sheet – low levels of gearing • Challenging trading environment • Shifting competitive landscape • Rest of Africa acquisition • Monarch Insurance – change in the business model › Monthly business › Capital base • Merchandise • Management of the debtors book 23
Slide 24: Questions
Questions lags