Lewis Group Unaudited Interim Results

for the six months ended 30 September 2006


notes to the group interim financial statements
1.	Basis of accounting
	These consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”), specifically IAS 34 on interim financial reporting, and are consistent with those applied for the year ended 31 March 2006 and the six months ended 30 September 2005.
		30 Sept 2006	30 Sept 2005	31 March 2006
		Rm	Rm	Rm
		Unaudited	Unaudited	Audited
2.	Cost of merchandise sales
	Purchases	579.4	560.0	1 077.4
	Movement in inventory	(31.2)	(92.7)	(56.8)
	Cost of merchandise sales	548.2	467.3	1 020.6
	Merchandise gross profit	286.2	256.7	547.2
3.	Debtor costs
	Bad debts, bad debt recoveries and
	repossession losses	42.6	46.4	132.9
	Movement in doubtful debts provision	28.1	4.3	(17.4)
		70.7	50.7	115.5
4.	Net finance (income)/costs
	Interest paid:
	– Bank and loans	6.9	5.8	12.7
	– Forward exchange contracts	–	2.5	6.0
		6.9	8.3	18.7
	Interest received:
	– Bank	(1.3)	(3.0)	(5.9)
	– Forward exchange contracts	(8.9)	–	–
		(10.2)	(3.0)	(5.9)
		(3.3)	5.3	12.8
5.	Trade and other receivables
	Instalment sale and loan receivables	3 069.8	2 734.7	2 921.4
	Provision for unearned finance charges
	and unearned maintenance income	(528.8)	(452.8)	(508.0)
	Provision for doubtful debts	(396.1)	(389.7)	(368.0)
	Provision for unearned insurance premiums	(192.5)	(159.8)	(184.8)
	Unearned insurance premiums	(311.8)	(263.9)	(300.9)
	Less: re-insurer’s share of unearned
	premiums	119.3	104.1	116.1

	Net instalment sale and loan receivables	1 952.4	1 732.4	1 860.6
	Other receivables	36.7	47.5	35.9
		1 989.1	1 779.9	1 896.5
	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.
6.	Material capital commitments
	There were no material capital commitments contracted for or authorised and contracted at the end of the period under review.
7.	Cash generated from operations
	Operating profit	368.8	251.0	670.2
	Adjusted for:
	Depreciation and amortisation	23.0	21.5	35.0
	Share-based payments	1.4	58.4	58.7
	Surplus on disposal of property, plant
	and equipment	(2.4)	(2.5)	(6.0)
	Movement in provision for doubtful debts	28.1	4.3	(17.4)
	Movement in retirement benefits
	provision	1.8	1.8	3.4
	Movement in other provisions	5.1	3.4	9.8
	Changes in working capital:
	Increase in inventory	(31.8)	(94.4)	(62.0)
	Increase in trade and other receivables	(114.2)	(47.8)	(152.2)
	Increase in trade and other payables	46.8	108.3	53.7
		326.6	304.0	593.2
8.	Net cash outflow from financing activities
	Purchase of treasury shares	(213.4)	(92.0)	(152.2)
	Dividends paid	(126.7)	(72.9)	(156.9)
	Other	3.1	(4.4)	(4.8)
		(337.0)	(169.3)	(313.9)

Lewis Group Unaudited Interim Results

notes to the group interim financial statements