DIRECTORS' REPORT
NATURE OF BUSINESS
Lewis Group Limited is a holding company listed on the JSE Limited, operating through two main trading subsidiaries, Lewis Stores (Proprietary) Limited and Monarch Insurance Company Limited. Lewis Stores (Proprietary) Limited offers a selected range of furniture and appliances through 436 Lewis, 92 Best Home and Electric and 20 Lifestyle Living stores. Sales are mainly on credit. Monarch Insurance Company Limited, a registered short-term insurer, underwrites customer protection insurance benefits to South African customers. In addition, there are also trading subsidiaries in Botswana, Lesotho, Namibia and Swaziland operating under the Lewis brand.
The nature of the business of the subsidiaries is set out here.
REVIEW OF FINANCIAL RESULTS AND ACTIVITIES
The financial results and affairs of the group are reflected in the annual financial statements set out here.
SEGMENTAL ANALYSIS
Segmental information is set out in the segmental report of the annual financial statements.
POST-BALANCE SHEET EVENTS
There were no significant post-balance sheet events that occurred between the year-end and the date of approval of the financial statements by the directors.
SHARE CAPITAL
The company’s authorised and issued share capital remained unchanged during the year.
TREASURY SHARES
The group has purchased 9 216 928 (9.2%) of its own shares on the open market through its subsidiary, Lewis Stores (Proprietary) Limited. Refer note 8.1 and 8.2 for more detail.
The Lewis Employee Incentive Scheme Trust effectively holds 810 706 shares, all of which will be utilised to cover share awards granted to executives. Details have been set out in notes 8 and 18.3 to the financial statements.
DIVIDENDS
The following dividends have been declared or proposed for the financial year ended 31 March 2010:
| Dividend | Date | ||
| per share | declared | Payable | |
| Interim – declared | 144 cents | 9 Nov 2009 | 25 Jan 2010 |
| Final – proposed | 179 cents | 19 May 2010 | 26 July 2010 |
| For the year | 323 cents |
Notice is hereby given that a final cash dividend of 179 cents per share in respect of the year ended 31 March 2010 has been declared payable to the holders of ordinary shares recorded in the books of the company on Friday, 23 July 2010. The last day to trade cum dividend will therefore be Friday, 16 July 2010 and Lewis shares will trade ex-dividend from Monday, 19 July 2010. Payment of the dividend will be made on Monday, 26 July 2010. Share certificates may not be dematerialised or rematerialised between Monday, 19 July 2010 and Friday, 23 July 2010, both days inclusive.
DIRECTORS
David Nurek, Alan Smart, Hilton Saven, Ben van der Ross, Professor Fatima Abrahams and Les Davies remained directors during the year. Zarina Bassa and Sizakele Marutlulle were appointed as non-executive directors on 1 October 2009.
Alan Smart retired as the chief executive officer on 30 September 2009 and Johan Enslin was appointed as chief executive officer and as a director on 1 October 2009. Alan Smart has agreed to continue to serve as a director in a non-executive capacity.
In terms of the articles of association of the company the following will retire and have offered themselves for re-election:
Z Bassa
L A Davies
J Enslin
S Marutlulle
B J van der Ross
COMPANY SECRETARY
M G McConnell remained as company secretary throughout the year. The address of the company secretary is that of the registered offices as stated here.
DIRECTORS’ INTERESTS
At 31 March 2010, the directors’ beneficial direct and indirect interest in the company’s issued shares were as follows:
| 2010 | 2009 | |||
| Direct | Indirect | Direct | Indirect | |
| D M Nurek | – | 10 000 | – | 10 000 |
| H Saven | – | 2 940 | – | 2 940 |
| A J Smart | 319 070 | – | 260 555 | 40 259 |
| J Enslin | – | 27 388 | n/a | n/a |
| L A Davies | 50 000 | 25 908 | 50 000 | 25 337 |
| 369 070 | 66 236 | 310 555 | 78 536 | |
n/a = not applicable since appointed as a director on 1 October 2009
The following share awards have been made to directors:
| J Enslin | 252 423 |
| A J Smart | 34 718 |
| L A Davies | 210 068 |
Full details of the terms and conditions in relation to these share awards are set out in note 18.4 to the financial statements.
During the course of the year, no director had a material interest in any contract of significance with the company or any of its subsidiaries that could have given rise to a conflict of interest.
No related party transaction in terms of the JSE Limited Listings Requirements took place between the company and its subsidiaries and the directors or their associates, other than remuneration for services rendered to the company as set out in note 18.4 to the financial statements.
SUBSIDIARY COMPANIES
Details of the company’s subsidiaries are set out here.
The company’s interest in the aggregate profits and losses after taxation of the subsidiary companies is as follows:
| 2010 | 2009 | |
| Rm | Rm | |
| Profit | 597.6 | 571.0 |
| Losses | – | – |
BORROWING POWERS
Borrowings were R961.4 million at 31 March 2010 (2009: R737.0 million). Borrowings are subject to the treasury policy adopted by the board of directors. In terms of the articles of association, the group has unlimited borrowing powers.