General SENS Submitter Company - Lewis Group Limited - Settlement re National Credit Regulator and Lewis Stores (Pty) Ltd - LEWI

Lewis Group Limited - Settlement re National Credit Regulator and Lewis Stores (Pty) Ltd - LEWI

Lewis Group Limited
Registration number 2004/009817/06
JSE Bond Code : LEWI
(“Lewis”)


SETTLEMENT ORDER IN THE MATTER BETWEEN THE NATIONAL CREDIT
REGULATOR AND LEWIS STORES (PTY) LTD IN RELATION TO LOSS OF
EMPLOYMENT AND DISABILITY INSURANCE

Shareholders are referred to the announcement released on SENS of 15 September
2016 regarding the judgment by the National Consumer Tribunal (NCT) in the matter
between the National Credit Regulator (“NCR”) and Lewis Stores (Pty) Ltd (“Lewis”),
which the NCR initiated in 2015 in relation to the issues of offering loss of
employment insurance by Lewis to pensioners or self-employed consumers and the
offering of disability insurance by Lewis to pensioners amongst other matters as
contained in the SENS announcement referred to above.

Shareholders are advised that today, 2 May 2018, following discussions between
Lewis and the NCR the parties reached agreement that they would seek an order by
consent from the High Court setting aside and replacing the judgement of the NCT
with an order from the High Court. At the request of the parties the High Court
granted the following order:

1.   The determination of the NCT is hereby set aside and replaced by the orders
     set out below:

          a. It is declared that by offering loss of employment insurance to
             consumers who are retired or self-employed, the Appellant (“Lewis”)
             has contravened the provisions of section106(2)(b), as read with
             section 106(1) of the National Credit Act 34 of 2005 (“NCA”);

          b. Save insofar as is permitted by law, Lewis shall not offer or demand
             that any pensioner or self-employed consumer pay for loss of
             employment insurance;

          c. Lewis shall, within 30 calendar days of this order, pay an amount of
             R5 000 000. 00 (five million Rand) as a fine (in terms of section 151 of
             the NCA);

          d. Lewis shall engage an independent firm of auditors to review the
             methodology applied in the conduct of the audit carried out by
             PriceWaterhouseCoopers Inc (“PWC”) dated 19 August 2015 (“the
             PWC audit”) and will procure a second audit only if and to the extent
             that the independent review concludes that there were material
             irregularities in the methodology adopted by PWC;

          e. Lewis will complete the repayment of the premiums paid by the retired,
             and self-employed consumers in respect of Loss of Employment
             Insurance policies, in accordance with the recommendations and
             findings of the PWC audit or any subsequent audit as referred to in
             paragraph (d) above and will provide the Regulator with the detail of
             such repayments, including the names of consumers.

2.   Lewis will, in respect of all future credit agreements concluded with pensioners
     take reasonable steps to establish that such pensioner has an insurable
     interest in respect of the cover provided under any policy offered by Lewis.

3.   There shall be no order as to costs.

With reference to paragraph 1(e) above, shareholders are advised that Lewis is in
the final stages of completing the process of refunding the amount of R67.7 million to
its pensioners and self-employed customers in respect of the cost of loss of
employment insurance mistakenly sold to them together with interest accrued.
There is approximately R4 million still to be refunded. As reported previously, the
R67.7 million above has been fully provided for in prior years. The court order
provides certainty in this long outstanding matter and will result in an additional
R5 million charge.

A copy of the court order can be requested from Ms Diane Rafferty by email on
diane.rafferty@lewisgroup.co.za.


Cape Town

03 May 2018
Debt sponsor
Absa Bank Limited (acting through its Corporate and Investment Bank division)

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