Slide 1: Annual Results for the year ended 31 August 2023
ANNUAL RESULTS for the year ended 31 August 2023
Slide 2: Agenda
Agenda 01 Review of the year 02 Financial results 03 Trading performance 04 Strategy and outlook 05 Questions 2
Slide 3: Review of the year
01 Review of the year Bertina Engelbrecht 3
Slide 4: Review of the year
Review of the year • Performance continues to prove the resilience and defensiveness of the group • Adjusted dHEPS up 11.5% • Clicks opened 850th store and 700th pharmacy • Market share gains in all categories • Acquisitions of Sorbet, M-Kem and 180 Degrees • Better performance from UPD in H2 • Reco
Slide 5: ESG integrated into the business
ESG integrated into the business • In FTSE4Good Index for last seven years • AA ESG rating from MSCI • Top Employer* in retail sector for 7th year • Diversity leadership recognised in The Gender Mainstreaming Awards Africa • Solar on all owned DCs and head office, and investing in solar battery stor
Slide 6: Financial Results
02 Financial Results Gordon Traill 6
Slide 7: Financial highlights
Financial highlights Turnover up Operating margin Adjusted dHEPS up Total dHEPS up 8.2%** up from 8.4%* to 11.5%* 1.1% Retail turnover up 8.7% to 1 045 cps 12.2%** UPD reported turnover up 1.5% Cash generated Returned to Return on equity Total dividend up 6.6% by operations shareholders down from 48
Slide 8: Impact of insurance payout on base
Impact of insurance payout on base Reported Adjustment Adjusted R’m 2023 2022 (see notes below) 2022 % change Turnover 41 622 39 587 39 587 Gross profit 9 314 8 432 8 432 Other income 2 846 2 867 (325)¹ 2 542 Expenses (8 537) (7 649) (7 649) Operating profit 3 623 3 650 (325) 3 325 9.0 Capital items
Slide 9: Turnover
Turnover % same % stores % R’m 2023 2022 change growth* inflation Retail 31 725 29 405 7.9 7.7 7.0 Distribution 17 175 16 922 1.5 1.0 Intragroup turnover (7 278) (6 740) 8.0 Total group 41 622 39 587 5.1 4.9 • Retail turnover up 12.2% excluding vaccinations • Administered R4m vaccinations in 2023 ve
Slide 10: Total income
Total income % 2023 2022 R’m 2023 2022 change % margin % margin Retail 10 836 9 662 12.2 34.2 32.9 Distribution 1 600 1 544 3.6 9.3 9.1 Intragroup turnover (276) (232) Total group 12 160 10 974 10.8 29.2 27.7 • Retail margin continued to benefit from recovery in Beauty, strong growth in private labe
Slide 11: Operating expenditure – Retail
Operating expenditure – Retail % R’m 2023 2022 change Depreciation – PPE 511 462 10.7 Depreciation – ROU asset 903 820 10.0 Occupancy costs 187 160 17.2 Employment costs 4 035 3 678 9.7 Other operating costs 2 041 1 773 15.1 Total retail costs 7 677 6 893 11.4 % of turnover 24.2% 23.4% Finance costs
Slide 12: Operating expenditure – Distribution
Operating expenditure – Distribution % R’m 2023 2022 change Depreciation – PPE 29 29 2.4 Depreciation – ROU asset 18 10 79.0 Occupancy costs 4 5 (26.1) Employment costs 359 325 10.3 Other operating costs 703 613 14.8 Total distribution costs 1 113 982 13.4 • Employment costs increased during systems
Slide 13: Operating profit
Operating profit % 2023 2022 R’m 2023 2022 change % margin % margin Retail 3 159 2 769 14.1 10.0 9.4 Distribution 488 563 (13.4) 2.8 3.3 Intragroup (24) (7) Total group 3 623 3 325 9.0 8.7 8.4 • Benefit of recovery of higher margin categories in Retail; impact of low margin vaccinations in FY2022 •
Slide 14: Growth in turnover, profit and margin
Growth in turnover, profit and margin 8,7% 8,4% 8,3% 8,2% 4500 40 000 8,0% 41 622 4000 39 587 36 000 37 339 32 000 3500 33 889 3 623 31 352 3 325 28 000 3000 3 045 24 000 2 813 2500 2 506 20 000 2000 16 000 1500 12 000 1000 8 000 4 000 500 - 0 2019 2020* 2021* 2022* 2023 Turnover(R’m) Operating prof
Slide 15: Inventory
Inventory Days in stock Inventory (R’m) 2023 2022 2023 2022 % change Retail 75 71 4 656 4 109 13.3 Distribution 39 48 1 805 2 183 (17.3) Intragroup inventory (151) (128) Total group 71 72 6 310 6 164 2.4 • Retail days in prior year benefited from much faster stock turn of vaccines • Improved stock m
Slide 16: Cash management
Cash management R’m 5 191 673 (955) (969) (930) (1 563) (704) (241) 2 455 (62) 2 015 Cash FY2022 Operating Repayment Working Taxation Capex Dividends Share Acquisitions Other Cash FY2023 profit of lease capital buybacks operating before liability movements and working investing capital activities •
Slide 17: Acquisitions
Acquisitions • M-Kem – 1 April 2023 • 24-hour specialised pharmacy in Cape Town • Annual turnover of R240m and EBIT of R8-10m • – 1 May 2023 • Pharmacy software development company • R40-50m p.a. cost efficiencies and revenue generation on 3-year roll out • – 1 June 2023 • Beauty salon franchise cha
Slide 18: Capital expenditure
Capital expenditure • R880m capex planned for FY2024 • R487m on stores: - 40 – 50 new Clicks stores and 40 – 50 new pharmacies - 50 – 60 store refurbishments • R393m on infrastructure: - R77m on UPD IT and warehouse equipment - R316m on retail systems and infrastructure – including 6 000m² expansion
Slide 19: Medium-term financial targets
Medium-term financial targets Achieved Medium-term in FY2023 target ROE (%) 43.6 40 – 50 ROIC excluding IFRS 16 (%) 41.5 40 – 50 ROIC (%) 28.4 20 – 30 ROA (%) 13.8 11 – 15 Net working capital days 34 30 – 35 Group operating margin (%) 8.7 8.0 – 9.0 Retail 10.0 9.0 – 10.0 Distribution 2.8 2.8 – 3.3 D
Slide 20: Sustained financial performance
Sustained financial performance 65% 65% 62% 63% 62% 59% 59% 60% 60% 10-year 56% CAGRs 1 045 1 033 Total shareholder return³: 774 754 19.8% 679 664 637 575 Diluted HEPS: 502 490 450 445 13.4% 439 384 380 337 322 272 Dividend per 235 190 share: 2014¹ 2015¹ 2016¹ 2017¹ 2018¹ 2019 2020 2021 2022 2023 15
Slide 21: Trading Performance
03 Trading Performance Bertina Engelbrecht 21
Slide 22: Clicks business review
CLICKS GROUP LIMITED Clicks business review 22
Slide 23: Retail sales performance
Retail sales performance % change* % contribution Pharmacy 9.7 28.2 Front shop health 5.3 25.4 Beauty and personal care 18.3 31.0 General merchandise 15.1 15.4 Total turnover 12.2 100.0 • Comparable stores turnover growth of 7.7%* • Inflation 7.0% • Volume growth of 0.7% * Excluding vaccinations in
Slide 24: Market shares
Market shares % 2023 2022 Health Retail pharmacy* 24.0 23.6 Front shop health** 32.8 32.3 Baby** 21.0 20.5 Beauty Skincare** 43.6 42.1 Haircare** 33.0 32.3 Personal care** 21.1 20.2 General merchandise Small electrical appliances** 19.5 18.4 * Per IQVIA (Private Retail Pharmacy S1-6) (restated) ** P
Slide 25: Performance and strategy – Maintaining value
Performance and strategy • Maintaining value Clicks price index* vs: • Price competitive with Retailer A 98.2 Retailer B 99.0 all national retailers Retailer C 99.4 • Promotional sales +14.9% Retailer D 94.8 to 43.6% of turnover * Excluding all promotional pricing, bulk deals and 3 for 2 promotions
Slide 26: Performance and strategy – Differentiating our product offer
Performance and strategy • Differentiating our product offer • Private label +15.4% to 25.2% of sales (front shop 30.3%, pharmacy 11.3%) • Clicks Made 4 Baby nappy range won SA Product of the Year 2023 • Roll out of new look beauty halls • Strong performance from Sorbet • Extending Clicks Baby store
Slide 27: Performance and strategy – Engaging customers through personalisation
Performance and strategy • Engaging customers through personalisation • 10.4m active ClubCard members, 80.2% of sales • Best strategic use of data analytics / CRM applications¹ • Top brand for experience, function and meaning² • Coolest health and beauty store³ 1. South African Loyalty Awards 2023 2
Slide 28: Performance and strategy – Extending convenience
Performance and strategy • Extending convenience Format Total • 885 Clicks stores with 711 pharmacies Convenience 664 Destination 221 • 50% of population < 5.1km of a pharmacy Total 885 • Successful onboarding of M-Kem • 228 stores located in low income areas (22.5% of retail turnover), with 18 stor
Slide 29: UPD business review
UPD business review CLICKS GROUP ANNUAL RESULTS 2023 29
Slide 30: Fine wholesale turnover
Fine wholesale turnover 52.3% • Wholesale turnover up 3.5% Clicks (+6.6%) • Impact of systems change on Clicks 39.7% Private Hospitals purchases from UPD in H1 (+5.7%) • Hospital volumes +10.8% - shift in case and product mix 8.0% Independent Pharmacies • Wholesale market share down and other Channe
Slide 31: Review of the year – UPD
Review of the year • Total managed turnover +4.8% to R32.1bn • Rationalising portfolio to focus on profitable bulk contracts • Proven business continuity credentials • Improved H2 performance • Generic medicines +5.3% to 73% of volume • ERP and WMS implementation • Lea Glen DC went live on 1 Septemb
Slide 32: Strategy and outlook
04 Strategy and outlook Bertina Engelbrecht 32
Slide 33: Group strategic objectives
Group strategic objectives 1 2 3 Increase customer appeal Accelerate market share Promote UPD’s national and access by expanding gains in pharmacy and pharmaceutical wholesale the store, pharmacy and core front shop categories and distribution services to online presence grow market share 4 5 6 Deli
Slide 34: Outlook
Outlook • Consumer environment will remain extremely constrained • Target of 1 200 Clicks stores • Plan to open 40 - 50 stores and pharmacies per year • Focus on innovation in technology, products and service • Commitment to carbon neutrality • Business model remains resilient, with proven ability t
Slide 35: Questions
05 Questions 35
Slide 36: 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