annual report 2008

annual financial statements: 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 417 Lewis, 87 Best Electric and 21 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 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 share capital remained unchanged during the year. During the year, 842 041 shares were cancelled, arising from open market purchases of its own shares by the company.

Treasury shares

The group purchased 9 216 928 (9.2%) of its own shares on the open market through its subsidiary, Lewis Stores (Proprietary) Limited, acting in terms of the general authority granted by shareholders at a general meeting held on 3 August 2007. Refer note 7.1 and 7.2 for more detail.

The Lewis Employee Incentive Scheme Trust effectively holds 654 663 shares, of which 193 030 are unallocated and 461 633 retained to cover share awards granted to executives. Details have been set out in notes 7 and 17.3 to the financial statements.

Dividends

The following dividends have been declared or proposed for the financial year ended 31 March 2008.

  Dividend Date  
  per share declared Payable
       
Interim – declared 144 cents 12 Nov 28 Jan
    2007 2008
Final – proposed 179 cents 19 May 28 July
    2008 2008
For the year 323 cents    
       

Notice is hereby given that a final dividend of 179 cents per share in respect of the year ended 31 March 2008 has been declared payable to the holders of ordinary shares recorded in the books of the company on Friday, 25 July 2008. The last day to trade cum dividend will therefore be Friday, 18 July 2008 and Lewis shares will trade ex-dividend from Monday, 21 July 2008. Payment of the dividend will be made on Monday, 28 July 2008. Share certificates may not be dematerialised or rematerialised between Monday, 21 July 2008 and Friday, 25 July 2008, both days inclusive.

Directors

David Nurek, Alan Smart, Hilton Saven, Ben van der Ross and Professor Fatima Abrahams remained directors during the year. Les Davies, group chief financial officer, was appointed as a director with effect 1 April 2007.

In terms of the articles of association of the company, Alan Smart and Hilton Saven will retire and have offered themselves for re-election.

Company secretary

P B Croucher resigned as company secretary on 18 March 2008. M G McConnell was appointed in his stead on 18 March 2008. The address of the company secretary is that of the registered offices as stated here.

Directors interests

At 31 March 2008, the directors’ beneficial direct and indirect interest in the company’s issued shares was as follows:

  2008   2007
  Direct Indirect   Direct Indirect
D M Nurek – 10 000   – 10 000
H Saven – 2 940   – 540
A J Smart 260 555 40 259   235 428 21 806
L A Davies 50 000 15 530      
  310 555 68 729   235 428 32 346

The following share awards have been made to directors:

A J Smart   146 571
L A Davies   65 220

Full details of the terms and conditions in relation to these options and share awards are set out in note 17.4 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 or its subsidiaries and the directors or their associates, other than remuneration for services rendered to the company as set out in note 17.4 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:

  2008   2007
  Rm   Rm
Profits 646.8   602.6
Losses (0.1)   –

Borrowing powers

Borrowings were R703.4 million at 31 March 2008 (2007: R430.3 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.

Special resolutions

At the annual general meeting on 3 August 2007, the following special resolution was passed:

General authority to repurchase company shares

“Resolved that the Company hereby approves, as a general approval contemplated in Sections 85 and 89 of the Companies Act (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 for so long as the shares of the Company are listed on the JSE, subject to the JSE Listings Requirements as presently constituted and which may be amended from time to time.”