Lewis : Audited Final Results for the year ended 31 March 2024

AUDITED SUMMARY CONSOLIDATED

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024

Review of the 2024 financial year

Merchandise sales	Revenue	Gross profit margin
increased by	increased by	up
4.7%	9.8%	250 bps
to R4.7 billion	to R8.2 billion	to 43.1%
Satisfactory paid	Debtors book	Operating profit
accounts at	growth of	up
81.3%	15.6%	13.1%
Earnings per share	Headline earnings per	Total dividend
increased by	share up	increased by
15.9%	7.1%	21.1%

to 806 cents

to 925 cents

to 500 cents per share

Lewis Group Limited: Summary consolidated financial statements

COMMENTARY

INTRODUCTION

Lewis Group delivered a resilient performance in a weak retail trading environment, reporting continued strong credit sales, robust growth in the debtors book, record high customer payment metrics and improved returns to shareholders.

Pressure on consumers' disposable income from high energy, food, fuel and borrowing costs continued to constrain the Group's cash sales and adversely impacted on the performance of UFO, the Group's cash retail brand.

The board has shown its confidence in the Group's prospects and cash generating ability by increasing the total dividend by 21.1% to 500 cents per share. This is the third consecutive year that the Group has returned more than 100% of earnings to shareholders through dividend payments and share buybacks.

The Group adopted IFRS 17 Insurance Contracts in the reporting period with full retrospective application. There was no material impact on the earnings for the current or prior periods. The implementation of IFRS 17 required the restatement of comparatives from 1 April 2022, fully disclosed in note 1.2 of the audited financial statements.

TRADING AND FINANCIAL PERFORMANCE

After increasing by 4.2% for the first nine months of the 2024 financial year, merchandise sales, supported by new product ranges and good stock levels, grew by 6.7% during the challenging trading conditions in the fourth quarter, resulting in an overall sales growth of 4.7% to R4.7 billion for the year.

Merchandise sales in the traditional retail segment increased by 6.9%, with all the traditional brands performing well. Sales in UFO, however declined by 12.6%. Comparable store sales across all brands grew by 1.9%.

The strong credit sales growth trend continued, with credit sales increasing by 15.8% and cash sales declining by 11.8%. Credit sales have grown at a compound annual rate of 16.9% over the past three years and now account for 66.2% of total merchandise sales (2023: 59.9%). The Group has maintained its prudent credit granting criteria in the constrained spending environment and the credit application decline rate increased to 35.1% (2023: 34.7%).

The Group capitalised on opportunities to acquire well located trading space to accelerate the expansion of its store base. The Group opened a net 29 new stores, including 10 new Bedzone stores and a net

4 new traditional stores outside of South Africa. The total store base of 869 includes 138 stores outside of South Africa.

Other revenue, consisting of effective interest income and ancillary services income as well as insurance revenue (measured in terms of IFRS 17), benefited from the strong credit sales growth in recent years, increasing by 17.2%.

Total revenue, comprising merchandise sales and other revenue, increased by 9.8% to R8.2 billion (2023: R7.5 billion).

The gross profit margin benefited from effective margin management on new merchandise ranges introduced in the second half of the year and strengthened by 250 basis points to 43.1%.

Following the adoption of IFRS 17, insurance service expenses relating to the Group's insurance business are reported separately. Operating costs, including insurance service expenses, were well managed and grew by 5.0% in the high inflationary environment. The Group received insurance proceeds of R27.3 million, mainly relating to claims arising from the 2021 civil unrest, which has been included in operating profit.

LEWIS GROUP LIMITED AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS	1
FOR THE YEAR ENDED 31 MARCH 2024

Lewis Group Limited: Summary consolidated financial statements

COMMENTARY CONTINUED

The quality of the Group's debtors portfolio continued to improve with the level of satisfactory paying customers increasing to an all-time high of 81.3% (2023: 80.4%) and collection rates ending the year at 79.7% (2023: 80.8%). Net bad debts as a percentage of debtors at gross carrying value reduced to 11.2% from 13.1% in the prior year.

Despite the improvement in the quality of the debtors book, the forward-looking component of the debtors impairment provision, based on the macroeconomic outlook, resulted in an increase in the debtors impairment provision as a percentage of debtors at gross carrying value from 36.0% to 37.5%. Management believes this increased provision appropriately reflects the high levels of uncertainty and potential volatility in the South African economy for the forecast period. Debtor costs as a percentage of debtors at gross carrying value increased from 12.0% to 17.6%.

Impairments and capital items totalled R65.4 million compared to R102.2 million in the prior year. The remaining goodwill of UFO of R59.9 million was impaired.

Operating profit increased by 13.1% to R689.5 million.

Net finance costs increased by R60.5 million to R136.7 million mainly due to higher borrowing costs and a reduction of R21.1 million in foreign exchange gains relative to the prior year.

The Group's earnings were 6.2% higher at R436.4 million and earnings per share increased by 15.9% to 806 cents, supported by the positive leverage effect from the Group's share repurchase programme. Headline earnings were 1.9% lower while headline earnings per share increased by 7.1% to 925 cents.

The Group's balance sheet remains strong with a net asset value of R4.7 billion. The borrowings ratio (gearing ratio, excluding lease liabilities), increased to 11.7% from 4.0% mainly due to the ongoing investment in the growth of the debtors book.

SHARE REPURCHASE PROGRAMME

The Group repurchased 4.2 million shares at a cost of R170.0 million in the financial year, at an average price of R40.82 per share. Since the commencement of the current share repurchase programme in 2017, the Group has bought back 35.7 million shares at a cost of R1.3 billion and an average price of R35.67 per share.

At the annual general meeting in October 2023, shareholders granted management the authority to repurchase a further 10% of the issued share capital and the Group has acquired 3.3% to date.

OUTLOOK

Trading conditions are not expected to improve in the short to medium-term as consumer spending and confidence remain depressed. The risk of political uncertainty and social instability in the aftermath of the general elections poses a major threat to the trading environment. Interest rates are likely to remain higher for longer than originally forecast, while fuel and food inflation as well as unemployment remain at elevated levels.

Turbulent sea-freight markets, with ongoing operational constraints across South African ports and steep freight rate increases, are expected to remain challenging over the coming months and are likely to negatively impact economic growth.

Despite the mounting macroeconomic headwinds, the Group continues to invest in longer-term growth strategies to support revenue and margin. Twenty new stores are planned across the traditional retail brands in the 2025 financial year to further expand the Group's extensive footprint. As consumer demand for credit is expected to be maintained, the Group will continue to invest in the expansion of its debtors book, which is motivated by the proven history of effective credit practices and the quality of the debtors book.

2 LEWIS GROUP LIMITED AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024

Lewis Group Limited: Summary consolidated financial statements

COMMENTARY CONTINUED

DIVIDEND DECLARATION

Notice is hereby given that a final gross cash dividend of 300 cents per share in respect of the year ended 31 March 2024 has been declared payable to holders of ordinary shares. The number of shares in issue as of the date of declaration is 52 393 699. The dividend has been declared out of income reserves and is subject to a dividend withholding tax of 20%. The gross dividend for determining the dividend withholding tax is 300 cents and the dividend withholding tax payable is 60 cents for shareholders who are not exempt. The net dividend for shareholders who are not exempt will therefore be 240 cents. The dividend withholding tax rate may be reduced where the shareholder is tax resident in a foreign jurisdiction which has a Double Tax Convention with South Africa and meets the requirements for a reduced tax rate. The Company's tax reference number is 9551/419/15/4.

The following dates are applicable to this declaration:
Last date to trade "cum" dividend	Tuesday, 23	July 2024
Date trading commences "ex" dividend	Wednesday, 24	July 2024
Record date	Friday, 26	July 2024
Date of payment	Monday, 29	July 2024

Share certificates may not be dematerialised or rematerialised between Wednesday, 24 July 2024 and Friday, 26 July 2024, both days inclusive.

For and on behalf of the board

Hilton Saven	Johan Enslin	Jacques Bestbier
Independent non-executive	Chief executive officer	Chief financial officer
chairman
Cape Town
31 May 2024

LEWIS GROUP LIMITED AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS	3
FOR THE YEAR ENDED 31 MARCH 2024

INDEPENDENT AUDITOR'S REPORT

ON THE SUMMARY GROUP FINANCIAL STATEMENTS

To the shareholders of Lewis Group Limited

INTRODUCTION

The summary consolidated financial statements of Lewis Group Limited, which comprise the summary consolidated balance sheet as at 31 March 2024, summary consolidated income statement, summary consolidated statements of comprehensive income, the summary consolidated statement of changes in equity and summary consolidated cash flow statement for the year then ended, and related notes set out on pages 5 to 26, are derived from the audited consolidated financial statements of Lewis Group Limited for the year ended 31 March 2024.

OPINION

In our opinion, the accompanying summary consolidated financial statements are consistent, in all material respects, with the audited consolidated financial statements, in accordance with the requirements of the JSE Limited Listings Requirements, as set out in Note 1 to the summary consolidated financial statements, and the requirements of the Companies Act of South Africa as applicable to summary financial statements.

SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

The summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards and the requirements of the Companies Act of South Africa as applicable to annual financial statements. Reading the summary consolidated financial statements and the auditor's report thereon, therefore, is not a substitute for reading the audited consolidated financial statements and the auditor's report thereon.

THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND OUR REPORT THEREON

We expressed an unmodified audit opinion on the audited consolidated financial statements in our report dated 31 May 2024. That report also includes the communication of key audit matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period.

DIRECTOR'S RESPONSIBILITY FOR THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

The directors are responsible for the preparation of the summary consolidated financial statements in accordance with the requirements of the JSE Limited Listings Requirements, set out in Note 1 to the summary consolidated financial statements, and the requirements of the Companies Act of South Africa as applicable to summary financial statements.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on whether the summary consolidated financial statements are consistent, in all material respects, with the audited consolidated financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810 (Revised), Engagements to Report on Summary Financial Statements.

Ernst & Young Inc.

Director: Tina Lesley Rookledge

Registered Auditor

Chartered Accountant (SA)

31 May 2024

4 LEWIS GROUP LIMITED AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024

Lewis Group Limited: Summary consolidated financial statements

INCOME STATEMENT

for the year ended 31 March 2024

			2024		2023
				Audited	Audited
					Restated
		Notes		Rm		Rm
Revenue		3.1	8 183.8	7	456.4
Retail revenue		3.2	5 543.3	5	268.1
Merchandise sales
			4 652.7	4	443.1
Ancillary services				890.6		825.0
Effective interest income			1 654.6	1	333.9
Insurance revenue			985.9		854.4
Cost of merchandise sales		4	(2 646.5)	(2	637.0)
Operating costs			(2 834.8)	(2	712.8)
Debtor costs		2.2	(1 225.1)		(719.5)
Bad debts net of recoveries				(781.5)		(790.3)
Movement in debtors impairment provision				(443.6)		70.8
Insurance service expenses			(722.5)		(675.5)
Operating profit before impairments and capital items		754.9		711.6
Impairments and capital items		8	(65.4)		(102.2)
Operating profit			689.5		609.4
Investment income			37.3		33.5
Interest expense		5.3	(161.2)		(114.5)
Interest received		5.3	23.7		16.4
Foreign exchange gains		5.3	0.8		21.9
Profit before taxation			590.1		566.7
Taxation		11	(153.7)		(155.7)
Net profit attributable to ordinary shareholders			436.4		411.0
Earnings per share	(cents)	9	806.3		695.6
Diluted earnings per share	(cents)	9	781.2		672.5

LEWIS GROUP LIMITED AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS	5
FOR THE YEAR ENDED 31 MARCH 2024

Lewis Group Limited: Summary consolidated financial statements

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2024

	2024	2023
	Audited	Audited
		Restated
	Rm	Rm
Net profit for the year	436.4	411.0
Items that may be subsequently reclassified to income statement:

Movement in other reserves

Fair value adjustments

Changes in the fair value of debt instruments at fair value through other comprehensive income - FVOCI debt investments

Tax effect

Foreign currency translation reserve

Items that may not be subsequently reclassified to income statement:

(5.6)11.8

(10.8)(6.5)

(14.8)(8.9)

1. 2.4

1. 18.3

Retirement benefit remeasurements

Remeasurements of the retirement asset and liabilities Tax effect

Other comprehensive income

Total comprehensive income for the year attributable to equity shareholders

(5.7)(0.7)

(7.8)(1.0)

2.10.3

(11.3)11.1

425.1422.1

6 LEWIS GROUP LIMITED AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024

Lewis Group Limited: Summary consolidated financial statements

BALANCE SHEET

as at 31 March 2024

				01 April
		2024	2023	2022
		Audited	Audited	Audited
			Restated	Restated
	Notes	Rm	Rm	Rm
Assets
Non-current assets
Property, plant and equipment		442.3	426.3	396.4
Right-of-use assets		793.7	760.0	747.1
Intangible assets		110.4	114.9	107.3
Goodwill		-	59.9	151.0
Deferred taxation		64.4	50.1	80.0
Retirement benefit asset		109.0	106.7	109.8
Financial assets - insurance investments	6	242.5	257.3	266.1
		1 762.3	1 775. 2	1 857.7
Current assets
Inventories		723.6	869.3	1 018.8
Trade and other receivables	2.1	4 483.2	3 946.7	3 443.2
Insurance contract asset	7	196.5	125.5	97.9
Taxation		8.6	6.5	28.1
Financial assets - insurance investments	6	134.9	138.9	156.7
Cash-on-hand and deposits	5.1	224.3	183.0	308.1
		5 771.1	5 269.9	5 052.8
Total assets		7 533.4	7 045. 1	6 910.5
Equity and liabilities
Capital and reserves
Share capital and premium		0.9	0.9	0.9
Treasury shares		(8.2)	(8.3)	(3.7)
Other reserves		42.6	35.5	11.4
Retained earnings		4 667.5	4 664.5	4 787.2
		4 702.8	4 692.6	4 795.8
Non-current liabilities
Lease liabilities		699.4	680.3	700.1
Long-terminterest-bearing borrowings	5.1	350.0	-	-
Deferred taxation		59.9	67. 6	54.2
Retirement benefit liability		78.6	73.3	77.3
		1 187.9	821. 2	831.6
Current liabilities
Trade and other payables		698.5	684.2	685.0
Payments in advance		184.4	189.6	181.1
Short-terminterest-bearing borrowings	5.1	425.6	367.5	80.8
Lease liabilities		240.9	264.7	250.2
Taxation		93.3	25.3	86.0
		1 642.7	1 531.3	1 283.1
Total equity and liabilities		7 533.4	7 045. 1	6 910.5

LEWIS GROUP LIMITED AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS	7
FOR THE YEAR ENDED 31 MARCH 2024

Lewis Group Limited: Summary consolidated financial statements

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2024

	2024	2023
	Audited	Audited
		Restated
	Rm	Rm
Share capital and premium
Opening balance	0.9	0.9
Cost of own shares acquired	(170.0)	(275.7)
Transfer of cost of cancelled shares	170.0	275.7
	0.9	0.9
Treasury shares
Opening balance	(8.3)	(3.7)
Share awards to employees	51.6	29.4
Cost of own shares acquired	(51.5)	(34.0)
	(8.2)	(8.3)
Other reserves
Opening balance	35.5	11.4
Other comprehensive income:
Changes in fair value of FVOCI debt investments	(10.8)	(6.5)
Foreign currency translation reserve	5.2	18.3
Equity-settledshare-based payments	30.8	25.8
Transfer of share-based payments reserve to retained earnings	(18.1)
on vesting	(13.5)
	42.6	35.5
Retained earnings
Opening balance previously reported	4 581.8	4 708.4
Restatement	82.7	78.8
Opening balance - revised	4 664.5	4 787.2
Net profit attributable to ordinary shareholders	436.4	411.0
Distribution to shareholders	(224.2)	(241.4)
Transfer of cost of cancelled shares	(170.0)	(275.7)
Transfer of share-based payments reserve to retained earnings	18.1
on vesting	13.5
Retirement benefit remeasurements	(5.7)	(0.7)
Share awards to employees	(51.6)	(29.4)
	4 667.5	4 664.5
Balance as at 31 March	4 702.8	4 692.6

8 LEWIS GROUP LIMITED AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024