Clicks Group Limited · JSE:CLS

Clicks — H1 2016 Earnings Presentation

29 slides from Clicks's earnings presentation, April 2016

  1. Slide 1: Interim Results for the Six Months Ended 29 February 2016

    INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2016

  2. Slide 2: Presentation Outline

    PRESENTATION OUTLINE  Review of the period  Financial results  Trading performance  Outlook  Questions CLICKS GROUP INTERIM RESULTS 2016 2

  3. Slide 3: Review of the Period

    REVIEW OF THE PERIOD DAVID KNEALE

  4. Slide 4: Review of the Period

    REVIEW OF THE PERIOD  Challenging consumer environment continues  Excellent retail performance, especially over Christmas  Strong value and product offer  Good volume growth  UPD growth in line with expectations  Diluted headline earnings per share up 15.1%  Continuing to invest for longer te

  5. Slide 5: Financial Results

    FINANCIAL RESULTS MICHAEL FLEMING

  6. Slide 6: Financial Highlights

    FINANCIAL HIGHLIGHTS  Group turnover up 13.4%  Health & beauty retail turnover up 14.1%  UPD turnover up 12.8%  Operating margin up from 6.0% to 6.1%  Diluted HEPS up 15.1% to 204.4 cps  Interim dividend of 76.0 cps, up 16.0%  Return on equity of 53.1% CLICKS GROUP INTERIM RESULTS 2016 6

  7. Slide 7: Turnover

    TURNOVER % same % store % R′m Feb 2016 Feb 2015 change growth inflation Retail 8 263 7 288 13.4 10.3 3.5 Distribution 5 437 4 820 12.8 6.0 Intragroup turnover (1 607) (1 444) 11.2 Total group 12 093 10 664 13.4 4.4  Strong Christmas trading by retail brands  UPD benefited from earlier implementati

  8. Slide 8: Total Income

    TOTAL INCOME Feb 2016 Feb 2015 % Feb 2016 Feb 2015 R′m R′m change % margin % margin Retail 2 796 2 478 12.8 33.8 34.0 Distribution 408 372 9.7 7.5 7.7 Intragroup (48) (41) Total group 3 156 2 809 12.3 26.1 26.3  Investment in every day competitive pricing in Clicks  Impact of business mix in UPD C

  9. Slide 9: Operating Expenditure - Retail

    OPERATING EXPENDITURE - RETAIL R′m Feb 2016 Feb 2015 % change Depreciation and amortisation 108 104 3.8 Occupancy costs 339 306 10.7 Employment costs 1 129 1 008 12.0 Other operating costs 597 526 13.4 Total retail costs 2 173 1 944 11.7  Investing in stores and pharmacies  Comparable employment c

  10. Slide 10: Operating Expenditure - Distribution

    OPERATING EXPENDITURE - DISTRIBUTION R′m Feb 2016 Feb 2015 % change Depreciation and amortisation 14 14 6.2 Occupancy costs 2 2 (2.7) Employment costs 115 107 7.2 Other operating costs 162 137 18.3 Total distribution costs 293 260 12.9  Other operating costs impacted by additional security investme

  11. Slide 11: Operating Profit

    OPERATING PROFIT Feb 2016 Feb 2015 % Feb 2016 Feb 2015 R′m R′m change % margin % margin Retail 624 534 16.8 7.5 7.3 Distribution 114 112 2.1 2.1 2.3 Intragroup (6) (6) Total group 732 640 14.4 6.1 6.0  Retail accounts for 85% of group profit  UPD margin within target range  Group margin benefited

  12. Slide 12: Inventory

    INVENTORY Days in stock Inventory (R′m) Feb 2016 Feb 2015 Feb 2016 Feb 2015 % change Retail 84 81 2 498 2 119 17.9 Distribution 43 41 1 247 1 063 17.3 Intragroup inventory (36) (16) Total group 73 71 3 709 3 166 17.1  Investment in stock ahead of price increases  SEP increase effective during Febr

  13. Slide 13: Cash Generation

    CASH GENERATION R′m Feb 2016 Feb 2015 Profit before tax 711 611 Non-cash adjustments 177 189 Operating profit before working capital changes 888 800 Working capital changes (47) (248) Net interest and tax paid (255) (223) Cash inflow from operations 586 329 CLICKS GROUP INTERIM RESULTS 2016 13

  14. Slide 14: Cash Utilisation

    CASH UTILISATION R′m Feb 2016 Feb 2015 Cash inflow from operations 586 329 Dividends paid (406) (333) Share buy-backs (290) (115) Capital expenditure (203) (148) Other investing activities (16) - Other financing activities 156 133 Net cash utilised (173) (134)  R455m capex planned for FY2016 CLICKS

  15. Slide 15: Trading Performance

    TRADING PERFORMANCE DAVID KNEALE

  16. Slide 16: Health & Beauty Sales Performance

    HEALTH & BEAUTY SALES PERFORMANCE % change % contribution Pharmacy 13.3 25.4 Front shop health 15.8 22.2 Beauty and personal care 13.5 34.7 General merchandise 14.5 17.7 Total turnover 14.1 100.0  Health & beauty comprises Clicks, The Body Shop, GNC and Claire’s  Excellent growth across all catego

  17. Slide 17: Pharmacy and Front Shop Health

    PHARMACY AND FRONT SHOP HEALTH  Pharmacy  Continued switch to generics +17.1% (46.9% of sales)  OTC medicines +15.9%  177 clinics now open  Front shop health helped by broader distribution of GNC  Continuing strong growth in baby +21.9%  % market shares Feb 2016 Feb 2015 Retail pharmacy* 19.0

  18. Slide 18: Beauty and General Merchandise

    BEAUTY AND GENERAL MERCHANDISE  Beauty and personal care  Benefit of range extension and new launches in fragrance +20.3%  Good growth in skincare +18.4%  The Body Shop +16.1%  Claire’s in 75 stores  General merchandise  Confectionery +11.8%  Electrical +15.0%  % market shares Feb 2016 Feb

  19. Slide 19: Customer Engagement

    CUSTOMER ENGAGEMENT  Almost 1 million new ClubCard members in the past year  5.7 million active members  77% of sales  Launch of transactional website on track for H2 2016  Private label up to 21.7% from 20.4% of sales  Front shop at 27.6%  Pharmacy at 4.5%  Partnership to develop Sorbet Bra

  20. Slide 20: Stores and Pharmacies

    STORES AND PHARMACIES  60 standalone health & beauty franchise stores  496 Clicks stores with 384 pharmacies  10 stores and 23 pharmacies opened in past six months  28 stores refurbished  25 stores outside SA, with sales up 31%  Considerable scope for organic store growth in SA  Opening 500th

  21. Slide 21: Musica

    MUSICA AWORLD AWAITS

  22. Slide 22: Performance

    PERFORMANCE Turnover Market share* % change % contribution Feb 2016 Feb 2015 CDs 0.7 39.5 68.1% 59.4% DVDs (3.1) 23.5 50.8% 42.2% Gaming 6.7 18.8 14.4% 11.8% Technology 11.4 18.2 Total turnover 3.4 100.0  Market share growth continues in all categories, driven by improved availability and promotion

  23. Slide 23: UPD

  24. Slide 24: Fine Wholesale Turnover

    FINE WHOLESALE TURNOVER % change % contribution Clicks 13.0 43.4 Hospitals 11.5 33.2 Independent pharmacy (10.3) 16.4 Other channels (8.0) 7.0 Fine wholesale turnover 6.3 100.0  Strong growth from core customers  Wholesale market share 24.5%* * MAT per IMS CLICKS GROUP INTERIM RESULTS 2016 24

  25. Slide 25: Performance

    PERFORMANCE  Slower growth in distribution as expected  1.9% growth in total managed distribution business  H1 turnover boosted by customers buying in ahead of earlier SEP increase  Continued margin pressure from product mix  Generics increased from 44.9% to 47.8% of reported turnover  SEP inc

  26. Slide 26: Outlook

    » OUTLOOK =~ DAVID KNEALE

  27. Slide 27: Outlook

    OUTLOOK  Consumer spending to come under more pressure  Group is well positioned for a tough environment  Trading in resilient markets  Clicks brand has a strong value proposition  Continued expansion of store and pharmacy footprint  All businesses continue to focus on cost management  Strong

  28. Slide 28: Thank You

    es | Y, ® THANK YOU -

  29. Slide 29: Disclaimer

    DISCLAIMER Clicks Group has acted in good faith and has made every reasonable effort to ensure the accuracy and completeness of the information contained in this presentation, including all information that may be defined as 'forward-looking statements' within the meaning of United States securities

Clicks Group — H1 2016 Earnings Presentation on 6ix