Clicks Group Limited · JSE:CLS

Clicks — H1 2017 Earnings Presentation

31 slides from Clicks's earnings presentation, Feb 28, 2017

  1. Slide 1: Interim Results for the Six Months Ended 28 February 2017

    INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017

  2. Slide 2: Presentation Outline

    PRESENTATION OUTLINE  Review of the period  Financial results  Trading performance  Outlook  Questions CLICKS GROUP INTERIM RESULTS 2017 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  Strong health & beauty retail sales performance  Good real volume growth  Increased market shares  Buoyant Christmas trading  Great value and differentiated product offer  Implemented outsourcing agreement with Netcare  Excellent profit growth in UPD  Diluted headline e

  5. Slide 5: Financial Results

    FINANCIAL RESULTS MICHAEL FLEMING

  6. Slide 6: Financial Highlights

    FINANCIAL HIGHLIGHTS  Group turnover up 8.5%  Clicks turnover up 13.1%  UPD turnover up 7.5%  Operating margin up from 6.1% to 6.4%  Diluted HEPS up 13.5% to 232.0 cps  Interim dividend of 88.0 cps, up 15.8%  Return on equity of 47.2% CLICKS GROUP INTERIM RESULTS 2017 6

  7. Slide 7: Turnover

    TURNOVER % same % store % R′m Feb 2017 Feb 2016 change growth inflation Retail 9 238 8 263 11.8 7.5 5.2 Health & beauty 13.1 Musica (7.0) Distribution 5 846 5 437 7.5 4.4 Intragroup turnover (1 959) (1 607) 21.9 Total group 13 125 12 093 8.5 4.8  Strong performance by health & beauty brands  UPD i

  8. Slide 8: Total Income

    TOTAL INCOME Feb 2017 Feb 2016 % Feb 2017 Feb 2016 R′m R′m change % margin % margin Retail 3 124 2 796 11.7 33.8 33.8 Distribution 427 408 4.6 7.3 7.5 Intragroup (52) (48) 7.9 Total group 3 499 3 156 10.9 26.7 26.1  Retail margin maintained despite higher level of promotions  UPD impacted by timin

  9. Slide 9: Operating Expenditure - Retail

    OPERATING EXPENDITURE - RETAIL R′m Feb 2017 Feb 2016 % change Depreciation and amortisation 122 108 13.6 Occupancy costs 375 339 10.6 Employment costs 1 280 1 129 13.4 Other operating costs 647 597 8.3 Total retail costs 2 424 2 173 11.6 % of turnover 26.2% 26.3%  Investing in stores and pharmacies

  10. Slide 10: Operating Expenditure - Distribution

    OPERATING EXPENDITURE - DISTRIBUTION R′m Feb 2017 Feb 2016 % change Depreciation and amortisation 15 14 3.9 Occupancy costs 1 2 (33.4) Employment costs 116 115 0.7 Other operating costs 155 162 (4.4) Total distribution costs 287 293 (2.2)  Improvements in employee productivity and transport utilisa

  11. Slide 11: Operating Profit

    OPERATING PROFIT Feb 2017 Feb 2016 % Feb 2017 Feb 2016 R′m R′m change % margin % margin Retail 700 624 12.3 7.6 7.5 Distribution 140 114 22.1 2.4 2.1 Intragroup - (6) Total group 840 732 14.7 6.4 6.1  Both divisions grew margin  Group benefiting from stronger retail topline growth CLICKS GROUP INT

  12. Slide 12: Inventory

    INVENTORY Days in stock Inventory (R′m) Feb 2017 Feb 2016 Feb 2017 Feb 2016 % change Retail 81 84 2 706 2 498 8.3 Distribution 42 43 1 324 1 247 6.2 Intragroup inventory (40) (36) Total group 73 73 3 990 3 709 7.6  Good inventory control  Investment in stock in UPD ahead of SEP increase CLICKS GRO

  13. Slide 13: Cash Generation

    CASH GENERATION R′m Feb 2017 Feb 2016 Profit before tax 812 711 Non-cash adjustments 160 177 Operating profit before working capital changes 972 888 Working capital changes (242) (47) Net interest and tax paid (248) (255) Cash inflow from operations 482 586 CLICKS GROUP INTERIM RESULTS 2017 13

  14. Slide 14: Cash Utilisation

    CASH UTILISATION R′m Feb 2017 Feb 2016 Cash inflow from operations 482 586 Capital expenditure (249) (203) Dividends paid (469) (406) Share buy-backs - (290) Other investing activities - (16) Other financing activities (18) 156 Net cash utilised (254) (173)  Record dividend payout and capital expen

  15. Slide 15: Capital Management

    CAPITAL MANAGEMENT  R577m capex planned for FY2017  R343m on store refurbishments, new stores and pharmacies  R187m IT and retail supply chain  R47m UPD  Group continues to be cash generative  Funding organic growth CLICKS GROUP INTERIM RESULTS 2017 15

  16. Slide 16: Trading Performance

    TRADING PERFORMANCE DAVID KNEALE

  17. Slide 17: Health & Beauty Sales Performance

    HEALTH & BEAUTY SALES PERFORMANCE % change % contribution Pharmacy 20.2 27.3 Front shop health 15.8 22.5 Beauty and personal care 10.5 33.8 General merchandise 4.5 16.4 Total turnover 13.1 100.0  Comparable store turnover +8.4% CLICKS GROUP INTERIM RESULTS 2017 17

  18. Slide 18: Review of the Period

    REVIEW OF THE PERIOD  Strong performance in pharmacy and health  Benefit of extended cold and flu season  Continued switch to generics +27.3%  Promotional sales +19.7%  34.9% of turnover  More price competitive than ever Clicks price index on 3 000 lines vs: Retailer A 97.2% Retailer B 92.8% R

  19. Slide 19: Review of the Period (Continued)

    REVIEW OF THE PERIOD (CONTINUED)  Private label up to 22.8% from 22.6% of sales  Front shop at 29.3%; pharmacy at 5.4%  The Body Shop +10.2%  Extended distribution of GNC and Claire’s  6.5 million active ClubCard members  77.4% of sales  Digital capability expanding  Online incremental to st

  20. Slide 20: Expanding Store Network

    EXPANDING STORE NETWORK CLICKS GROUP INTERIM RESULTS 2017 20

  21. Slide 21: Expanding Store Network

    EXPANDING STORE NETWORK Total Including Front shop Average pharmacy only size Clicks stores 652m² - South Africa 495 418 77 - Rest of Africa 27 4 23 Medicross pharmacies 37 37 95m² Netcare front shops 41 41 51m² Total 600 459 141  89 net new stores  59 net new pharmacies  On track to achieve goal

  22. Slide 22: Market Shares

    MARKET SHARES % Feb 2017 Feb 2016 Health Retail pharmacy* 20.8 19.0 Front shop health** 30.1 29.6 Baby** 13.1 11.8 Beauty Skincare** 27.8 26.8 Haircare** 26.4 25.5 General merchandise Small household appliances*** 21.6 19.7 * Per IMS ** Per AC Nielsen (restated) *** Per GfK CLICKS GROUP INTERIM RESU

  23. Slide 23: Clicks Group Interim Results 2017

    CLICKS GROUP INTERIM RESULTS 2017 23

  24. Slide 24: Performance

    PERFORMANCE Turnover Market share* % change % contribution Feb 2017 Feb 2016 CDs (14.4) 36.3 74.8% 68.0% DVDs (10.3) 22.6 56.6% 50.8% Gaming (2.8) 19.6 15.0% 14.3% Technology 10.2 21.5 Total turnover (7.0) 100.0  Weak release schedule impacted CD and DVD sales  Strong performance in technology dri

  25. Slide 25: Clicks Group Interim Results 2017

    CLICKS GROUP INTERIM RESULTS 2017 25

  26. Slide 26: Fine Wholesale Turnover

    FINE WHOLESALE TURNOVER Other channels Independent +2.1% pharmacy 3.9% -1.8% 14.7% 50.1% Clicks +19.6% 31.3% Private hospitals +2.5%  Wholesale turnover up 9.6%  Core customers 81.4% of sales; Link Pharmacies +2.2%  Wholesale market share 24.6%* * MAT per IMS CLICKS GROUP INTERIM RESULTS 2017 26

  27. Slide 27: Performance

    PERFORMANCE  Total turnover managed up 5.4% to R7.9bn  H1 2016 turnover boosted by customers buying in ahead of earlier SEP increase  Generics increased from 46.0% to 48.4% of wholesale  Business managed efficiently  Higher stock availability and improved order fulfilment  Leveraging economies

  28. Slide 28: Outlook

    OUTLOOK DAVID KNEALE

  29. Slide 29: Outlook

    OUTLOOK  Inflation anticipated to be 5 - 6% for FY2017  Consumer spending to remain constrained  Health & beauty markets and business model are resilient  Clicks  Continue to drive value, differentiation and convenience  UPD  Seek opportunities to grow distribution business  Protect income,

  30. Slide 30: Thank You

    THANK YOU

  31. Slide 31: 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

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