Notes to the Group Financial Statements
1. Basis of accounting
These consolidated financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice ("SA GAAP") and are consistent with those applied for the year ended 31 March 2004, except for the treatment of negative goodwill. In order to comply with AC 140 negative goodwill is no longer amortised, but recognised immediately to income. Previously recognised negative goodwill has been treated in accordance with the transitional provisions of AC 140 and derecognised to retained income on 1 April 2004.
2. Holding company
In anticipation of the listing Lewis Group Limited acquired the entire issued share capital of Lewis Stores (Pty) Ltd from the GUS PLC Group and, in return, issued its entire share capital to the GUS PLC Group. The shares were issued at the IPO price of R28 per share and the effect of the transaction was to interpose Lewis Group Limited as the holding company of Lewis Stores (Pty) Ltd. The restructuring affected the share capital of Lewis Group Limited but it had no impact on the equity of the consolidated Lewis Group as in substance, no transaction occurred. The shareholders' equity and reserves, and the results disclosed for the Lewis Group are therefore those of Lewis Stores (Pty) Ltd and its subsidiaries.
| | 31 March 2005 | 31 March 2004 |
| | Rm | Rm |
| | Audited | Audited |
| 3. | Revenue | | |
| Merchandise sales | 1 351.9 | 1 190.4 |
| Finance charges earned | 605.0 | 602.1 |
| Insurance premiums earned | 357.9 | 332.6 |
| Fees for services rendered | 196.7 | 149.6 |
| | 2 511.5 | 2 274.7 |
| 4. | Bad debts and impairment provision | | |
| Bad debts, bad debt recoveries and repossession losses | 125.3 | 131.2 |
| Movement in impairment provision | (23.7) | (16.1) |
| | 101.6 | 115.1 |
| 5. | Net finance costs | | |
| Interest paid: | | |
| – Fellow subsidiary | 32.8 | 136.2 |
| – Bank and other loans | 16.9 | 14.6 |
| – Other | 5.1 | 4.3 |
| Interest received: | | |
| – Bank | (12.0) | (13.2) |
| – Other | (0.1) | (0.2) |
| | 42.7 | 141.7 |
| 6. | Trade and other receivables | | |
| Instalment sale and loan receivables | 2 677.1 | 2 630.4 |
| Provision for unearned finance charges, unearned | | |
| insurance premiums and unearned maintenance income | (568.8) | (511.9) |
| Impairment provision | (385.4) | (409.1) |
| Net instalment sale and loan receivables | 1 722.9 | 1 709.4 |
| Other receivables | 27.7 | 42.3 |
| | 1 750.6 | 1 751.7 |
| The credit terms of instalment sale and loan receivables | | |
| range from 6 to 24 months. Amounts due from instalment | | |
| sale and loan receivables after one year are reflected as | | |
| current, as they form part of the normal operating cycle. | | |
| 7. | Material capital commitments | | |
| There were no material capital commitments contracted | | |
| for or authorised and contracted at the end of the year | | |
| under review. | | |
| 8. | Cash flow from trading | | |
| Operating profit | 589.7 | 505.6 |
| Adjusted for: | | |
| Depreciation and amortisation | 37.3 | 37.7 |
| Profit on sale of property, plant and equipment | (4.7) | (3.1) |
| Movement in debtors impairment provision | (23.7) | (16.1) |
| Movement in retirement benefits provisions | 0.6 | 2.3 |
| Movement in other provisions | 11.5 | 9.5 |
| | 610.7 | 535.9 |
| 9. | Working capital movement | | |
| Increase in inventory | (5.5) | (28.9) |
| Decrease/(increase) in trade and other receivables | 21.9 | (28.6) |
| (Decrease)/increase in trade and other payables | (1.9) | 30.5 |
| | 14.5 | (27.0) |
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