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 427 Lewis, 88 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 here

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, 1 100 000 shares were cancelled, arising from open market purchases of its own shares by the company.

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 7.1 and 7.2 for more detail.

The Lewis Employee Incentive Scheme Trust effectively holds 1 020 780 shares, of which 224 194 are unallocated and 796 586 retained to cover share awards granted to executives. Details have been set out in note 7 and 17.3 to the financial statements.

Dividends
The following dividends have been declared or proposed for the financial year ended 31 March 2009:

	Dividend	Date	Payable
	per share	declared
Interim declared	144 cents	10 Nov	26 Jan
		2008	2009
Final proposed	179 cents	18 May	27 July
		2009	2009
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 2009 has been declared, payable to the holders of ordinary shares recorded in the books of the company on Friday, 24 July 2009. The last day to trade cum dividend will therefore be Friday, 17 July 2009 and Lewis shares will trade ex-dividend from Monday, 20 July 2009. Payment of the dividend will be made on Monday, 27 July 2009. Share certificates may not be dematerialised or rematerialised between Monday, 20 July 2009 and Friday, 24 July 2009, 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.

In terms of the Articles of Association of the company, David Morris Nurek and Professor Fatima Abrahams will retire and have offered themselves for re-election.

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 on the inside cover.

Directors’ interests
At 31 March 2009, the directors’ beneficial direct and indirect interest in the company’s issued shares were as follows:

	2009		2008
	Direct	Indirect	Direct	Indirect
D M Nurek	–	10 000		10 000
H Saven	–	2 940		2 940
A J Smart	260 555	40 259	260 555	40 259
L A Davies	50 000	25 337	50 000	15 530
	310 555	78 536	310 555	68 729

The following share awards have been made to directors:

A J Smart	146 571
L A Davies	116 622

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 Listing 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 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:

	2009 Rm	2008 Rm
Profits	571.0	646.8
Losses	–	(0.1)

Borrowing powers

Borrowings were R737.0 million at 31 March 2009 (2008: R703.4 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 15 August 2008, 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 Listing Requirements as presently constituted and which may be amended from time to time.”