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Notice of AGM

Proxy

Lewis Group Limited is a listed investment holding company with two major wholly-owned subsidiaries, Lewis Stores and Monarch Insurance Company, and a number of smaller trading wholly-owned entities.

Nature of business

Lewis Group Limited is a holding company listed on the JSE Securities Exchange, 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 400 Lewis and 58 Best Electric 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. Lifestyle Living with 17 stores, which focuses on the more upmarket segment of the furniture retailing market, was acquired on 7 October 2003.

The nature of the business of the subsidiaries is set under Interest in Subsidiary Companies.

Review of financial results and activities

The financial results and affairs of the Group are reflected in the annual financial statements set out under the Financial section.

Post-balance sheet events

There were no significant post-balance sheet events that occurred between the year-end and the date of the approval of the financial statements by the directors.

Share capital

In anticipation of the listing, the GUS PLC Group acquired the entire share capital of Lewis Group Limited (then Rowmoor Investments 505 (Proprietary) Limited), a "shelf company". The Company was incorporated on 19 April 2004 with an authorised share capital of R1 000, divided into 1 000 ordinary shares with a par value of R1.00 each, and an issued share capital of R10.00 divided into ten ordinary shares with a par value of R1.00 each and with no share premium.

Alterations to share capital and share premium

On 3 June 2004, the Company subdivided its authorised share capital into 100 000 ordinary shares with a par value of one cent each.

On 15 July 2004, the Company increased its authorised share capital to R1 500 000 divided into 150 000 000 ordinary shares with a par value of one cent each and placed such authorised share capital under the control of the directors.

Shares issued

The Company issued 99 999 000 shares to the GUS PLC Group in consideration for the transfer to the Company of the entire share capital of Lewis Stores (Pty) Ltd. The issue price was R28.00 being the par value of one cent and share premium of R27.99 per share.

Repurchase of shares

No shares have been repurchased by the Company or its subsidiaries.

Dividends

The following dividends have been declared or proposed for the financial year ended March 2005:

Directors

The director of Lewis Group Limited on incorporation (Rowmoor Investments 505 (Proprietary) Limited) was SK Gottschalk who resigned on 22 June 2004. The following directors were appointed to the Board:

DM Nurek (Chairman)	15 July 2004
H Saven	22 June 2004
AJ Smart	22 June 2004
DA Tyler	22 June 2004
BJ van der Ross	22 June 2004

CVs of the above directors are set out under the Board of Directors.

In terms of the Articles of Association of the Company, one-third of the Board is required to retire by rotation at each annual general meeting. Retiring directors are those who have been longest in office and, if more than one of them were elected directors on the same day, those to retire shall be determined by lot or by agreement between the directors. It has been agreed between the directors that AJ Smart and DA Tyler will retire. AJ Smart has offered himself for re-election.

Company Secretary

AJ Meerburg appointed as company secretary on 22 June 2004, resigned on 19 November 2004 and PB Croucher was appointed in his stead on that day. The address of the company secretary is that of the registered offices.

Directors' Interests

At 31 March 2005, the directors' beneficial direct and indirect interest in the Company's issued shares was as follows:

In terms of the Lewis Executive IPO Restricted Share Scheme and the Lewis Executive Share Option Scheme, AJ Smart is entitled to 219 428 shares and 219 428 options on the vesting dates set out below.

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 Securities Exchange listing regulations took place between the Company or its subsidiaries and the directors or their associates, other than remuneration for services rendered to the Company as set out in the Corporate Governance report.

Lewis Group Share Trust

The employee incentive schemes are in operation for employees, including executives and directors holding salaried employment office. The aggregate number of shares which may be utilised for these schemes shall not exceed 10% of the issued share capital of the Company. The three schemes in operation are:

• Lewis Executive IPO Restricted Share Scheme:
  • The participants under this scheme are limited to members of the senior management of the Group.
• Lewis All Employee Share Scheme:
  • The scheme is open to all employees.
• Lewis Executive Share Option Scheme:
  • The scheme is for executive directors and senior management.

The GUS PLC Group made 4% of the issued share capital of the Company at the date of the listing available to the Share Trust for the awards and options as they vest.

Details of the award shares and options are set out below:

The award shares and options were granted on 4 October 2004, the date of listing. The vesting dates are as follows:

Subsidiary companies

Details of the Company's subsidiaries are set out under Interest in Subsidiary Companies.

The Company's interest in the aggregate profits and losses after taxation of the subsidiary companies is as follows:

Borrowing powers

Borrowings were R180.9 million at 31 March 2005. 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.

Unissued shares

It has been requested of the members to place 10 million unissued shares of the Company under the control of the directors subject to the regulations of the JSE Securities Exchange and a resolution for this purpose appears with the notice of the forthcoming annual general meeting.

Holding company and shareholders

For the year under review, the Company was controlled by GUS Holdings BV, a company incorporated in the Netherlands, which owned 54% of the shares. The remaining 46% of the shares are widely held. The ultimate parent is GUS PLC, a company incorporated in the United Kingdom and whose shares are listed on the London Stock Exchange.

For details of shareholders' spreads and major shareholders, refer to Shareholders' Information.

Special resolution

• At a general meeting of shareholders on 3 June 2004 it was resolved that:

  "The authorised share capital of R1 000.00 (one thousand Rand) divided into 1 000 ordinary shares of R1.00 (one Rand) each be and is hereby subdivided into 100 000 (one hundred thousand) ordinary shares of R0.01 (one cent) each. All shares rank pari passu."

• A Resolution was adopted on 15 July 2004 that:

  "(1)	The authorised share capital of the Company be and is hereby increased from R1 000.00 (one thousand Rand) divided into 100 000 (one hundred thousand) ordinary shares of R0.01 (one cent) each, to R1 500 000.00 (one million five hundred thousand Rand) divided into 150 000 000 (one hundred and fifty million) ordinary shares of R0.01 (one cent) each, by the creation of an additional R1 499 000.00 (one million four hundred and ninety nine thousand Rand) divided into 149 900 000 ordinary shares of R0.01 (one cent) each. All ordinary shares rank pari passu.
  (2)	The Company be and is hereby converted from a (Proprietary) Limited Company to a Limited Company.
  (3)	Subject to the passing and registration of special resolution no. 2, the name of the Company be and is hereby changed to Lewis Group Limited.
  (4)	Subject to the passing and registration of special resolutions no. 1 and no. 2, the Memorandum of Association be and is hereby deleted and replaced by the new Memorandum of Articles.
  (5)	Subject to the passing and registration of special resolution no. 2, the Articles of Association be and is hereby deleted in its entirety and replaced by the new Articles of Association."

The purpose of the above resolutions were to prepare the Company for listing on the JSE Securities Exchange.

• It was further resolved on 8 September 2004 that:

  "The Company hereby approves, as a general approval contemplated in sections 85 and 89 of the Companies Act, No. 61 of 1973, as amended ("the Companies Act") the acquisition by the Company or any of its subsidiaries from time to time of the issued shares of the Company, upon such terms and conditions and in such amounts as the directors of the Company may from time to time determine, but subject to the Articles of Association of the Company and the provisions of the Companies Act and if and for so long as, the shares in the Company are listed on the JSE Securities Exchange South Africa ("JSE"), subject also to the Listings Requirements of the JSE."