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Trading statement
Lewis Group Limited
Incorporated in the Republic of South Africa
Registration number 2004/009817/06
JSE share code: LEW
ISIN: ZAE00058236
(“Lewis” or “the group”)
TRADING STATEMENT
Shareholders are advised that the group is currently finalising its results for the year ended
31 March 2016 (“the period”), which will be released on SENS on Wednesday 25 May
2016.
Trading conditions became increasingly challenging in the second half of the period owing
to the further slowdown in the economy, higher levels of unemployment in the group’s
target market and the introduction of the National Credit Regulator’s affordability
assessment guidelines which negatively impacted credit sales. Trading in the fourth
quarter was further impacted by aggressive discounting by a major competitor ahead of
store closures.
After increasing by 8.8% in the first half, merchandise sales declined by 2% for the second
half and were 2.9% higher for the period. Revenue for the period increased by 2.2%.
The group’s gross profit margin has strengthened over the period while operating costs,
excluding the Beares acquisition, continue to be tightly managed. Debtor cost growth at
17.1% was similar to the level reported at the interim results.
The group anticipates headline earnings per share for the period to be between 24% and
29% lower than the 845 cents reported for the prior year. Headline earning per share for
the period is expected to be between 642 cents and 600 cents.
As previously advised to shareholders, the group’s decision to move from term to monthly
insurance policies in all three trading brands will significantly reduce the level of capital
required by the group’s wholly-owned subsidiary, Monarch Insurance. As part of this
process a large portion of the equity and bond portfolio has been liquidated to further de-
risk the business in light of a potential sovereign rating downgrade. This has resulted in
investment income for the period increasing by R452.6 million over the prior year. This has
benefited earnings per share which are expected to increase by between 17% and 22%
over the 908 cents reported for the prior year, but does not impact headline earnings.
Earnings per share is expected to be between 1062 cents and 1107 cents.
The information in this trading statement has not been reviewed and reported on by the
group’s independent external auditors.
Cape Town
16 May 2016
Sponsor: UBS South Africa Proprietary Limited
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