Slide 1: Annual Results for the year ended 31 August 2022
ANNUAL RESULTS for the year ended 31 August 2022
Slide 2: Presentation outline
Presentation outline 01 Review of the year 02 Financial results 03 Trading performance 04 Strategy and outlook 05 Questions
Slide 3: Review of the year
01 Review of the year Bertina Engelbrecht
Slide 4: Review of the year
Review of the year • Performance continues to prove the resilience and defensiveness of the group • Continuing adjusted dHEPS up 11.9% • Clicks administered over 2.9 million Covid vaccinations • Strong recovery in Beauty category • UPD impacted by high base in hospital business in 2021 • Record inve
Slide 5: ESG integrated into the business
ESG integrated into the business • Included in FTSE4Good Index for last six years • AA ESG rating from MSCI • Recognised as Top Employer* in retail sector for 6th year • Investing in alternative energy solutions * Top Employers Institute CLICKS GROUP ANNUAL RESULTS 2022 5
Slide 6: Financial results
02 Financial results Michael Fleming
Slide 7: Financial highlights
Financial highlights Turnover up Operating margin Continuing Group dHEPS up 6.0% up from 8.2% to adjusted dHEPS up 33.5% Retail turnover up 11.7%, 8.4%* 11.9%* to 1 033 cps with 3.5% uplift from vaccinations UPD reported turnover down 2.6% Cash generated Returned to Return on equity up Dividend up b
Slide 8: Impact of civil unrest
Impact of civil unrest Reported Adjustment Adjusted Adjusted R’m 2022 (see notes below) 2022 2021* % change Turnover 39 587 39 587 37 339 Gross profit 8 432 8 432 7 606 Other income 2 867 (325)¹ 2 542 2 392 Expenses (7 649) (7 649) (6 953) Operating profit 3 650 (325) 3 325 3 045 9.2 Capital items 1
Slide 9: Turnover
Turnover % same % stores % R’m 2022 2021 change growth inflation Retail 29 405 26 329 11.7 8.4 4.0 Distribution 16 922 17 378 (2.6) 1.5 Intragroup turnover (6 740) (6 368) 5.8 Total group 39 587 37 339 6.0 3.0 • Administered 2.9m vaccines in the year with turnover of R1.1bn, an uplift of 3.5% to ret
Slide 10: Total income
Total income % 2022 2021 R’m 2022 2021 change % margin % margin Retail 9 662 8 746 10.5 32.9 33.2 Distribution 1 544 1 494 3.4 9.1 8.6 Intragroup turnover (232) (243) Total group 10 974 9 997 9.8 27.7 26.8 • Retail margin impacted by lower margin vaccinations and return of cold & flu season • UPD be
Slide 11: Operating expenditure – Retail
Operating expenditure – Retail % R’m 2022 2021 change Depreciation – PPE 462 399 15.7 Depreciation – ROU asset 820 744 10.3 Occupancy costs 160 160 (0.3) Employment costs 3 678 3 358 9.5 Other operating costs 1 773 1 576 12.6 Total retail costs 6 893 6 237 10.5 % of turnover 23.4% 23.7% Finance cost
Slide 12: Operating expenditure – Distribution
Operating expenditure – Distribution % R’m 2022 2021 change Depreciation – PPE 29 30 (5.3) Depreciation – ROU asset 10 6 48.8 Occupancy costs 5 3 103.5 Employment costs 325 301 8.0 Other operating costs 613 584 4.9 Total distribution costs 982 924 6.2 • Cost growth contained below total managed turn
Slide 13: Operating profit
Operating profit % 2022 2021 R’m 2022 2021 change % margin % margin Retail 2 769 2 509 10.3 9.4 9.5 Distribution 563 569 (1.2) 3.3 3.3 Intragroup (7) (33) Total group 3 325 3 045 9.2 8.4 8.2 • Impact of very low margin of vaccinations in Retail • Lower wholesale turnover in UPD largely offset by new
Slide 14: Inventory
Inventory Days in stock Inventory (R’m) 2022 2021 2022 2021 % change Retail 71 74 4 109 3 913 5.0 Distribution 48 35 2 183 1 657 31.8 Intragroup inventory (128) (121) Total group 72 66 6 164 5 449 13.1 • UPD inventory impacted by lower hospital demand, but already normalising post year end CLICKS GR
Slide 15: Cash management
Cash management 5 023 (880) (744) (136) R’m (938) (838) 2 207 54 2 015 (1 287) (446) Cash Operating Repayment Working Net Taxation Capex* Dividends Share Other Cash FY2021 profit of lease capital finance buybacks investing FY2022 before liability movements* costs and activities* working settlement c
Slide 16: Capital expenditure
Capital expenditure • R936m capex planned for FY2023, including R32m rolled forward from FY2022 • R477m on stores, including: - 40 - 50 new Clicks stores and 40 - 50 new pharmacies - 60 store refurbishments • R459m on infrastructure, including: - R189m on UPD IT and warehouse equipment - R270m on re
Slide 17: Medium-term financial targets
Medium-term financial targets Achieved Medium-term in FY2022 target ROE (%) 48.0 40 – 50 ROIC (%) 29.6 20 – 30 ROA (%) 14.4 11 – 15 Net working capital days 36 30 – 35 Group operating margin (%) 8.4* 8.0 – 9.0 Retail 9.4* 9.0 – 10.0 Distribution 3.3* 2.8 – 3.3 Dividend payout ratio (%) 61.7 60 – 65
Slide 18: Growth in turnover, profit and margin
Growth in turnover, profit and margin 8.3% 8.4% 8.2% 8.0% 4500 40 000 7.0% 4000 39 587 36 000 37 339 32 000 3500 33 889 31 352 3 325 28 000 3000 29 239 3 045 24 000 2 813 2500 2 506 20 000 2000 2 032 16 000 1500 12 000 1000 8 000 4 000 500 - 0 2018* 2019 2020** 2021** 2022** Turnover (R'm) Operating
Slide 19: Sustained financial performance
Sustained financial performance 65% 62% 63% 62% 60% 60% 10-year 59% 59% 56% 56% CAGRs 1 033 Total shareholder return³: 774 754 20.9% 664 637 575 Diluted HEPS: 502 490 14.2% 450 445 439 384 380 337 322 298 Dividend per 272 235 190 share: 168 15.4% 2013¹ 2014¹ 2015¹ 2016¹ 2017¹ 2018¹ 2019 2020 2021 20
Slide 20: Trading performance
03 Trading performance Bertina Engelbrecht
Slide 21: Clicks business review
Clicks business review
Slide 22: Retail sales performance
Retail sales performance % change % contribution Pharmacy 7.7 27.6 Vaccinations >100 3.9 Front shop health 3.9 25.8 Beauty and personal care 13.1 28.3 General merchandise 8.2 14.4 Total turnover 11.7 100.0 • Comparable stores turnover growth of 8.4% • Inflation 4.0% • Volume growth of 4.4% CLICKS GR
Slide 23: Market shares
Market shares % 2022 2021 Health Retail pharmacy* 23.7 23.2 Front shop health** 32.4 32.4 Baby** 19.2 19.9 Beauty and personal care Skincare** 42.7 41.4 Haircare** 32.0 30.9 Personal care** 21.7 20.6 General merchandise Small electrical appliances*** 18.6 17.2 * Per IQVIA (Private Retail Pharmacy S1
Slide 24: Performance and strategy: Maintaining value
Performance and strategy • Maintaining value Clicks price index* vs: • Price competitive with Retailer A 92.7% Retailer B 92.5% all national retailers Retailer C 90.3% • Promotional sales +8.5% Retailer D 98.6% to 42.3% of turnover * Excluding 3 for 2 promotions • In pharmacy, generics +9.9% to 58%
Slide 25: Performance and strategy: Differentiating our product offer
Performance and strategy • Differentiating our product offer • Private label now 24.2% of sales (front shop 29.6%, pharmacy 10.2%) - impact of exclusive beauty brands exiting the country • New look beauty hall piloted and now being rolled out • Four Clicks Baby stores now open CLICKS GROUP ANNUAL RE
Slide 26: Performance and strategy: Engaging customers through personalisation
Performance and strategy • Engaging customers through personalisation • 9.7m active ClubCard members, 80.2% of sales • Clicks app downloaded by 3.0m customers • Voted best loyalty programme¹ • Coolest health and beauty brand² • Best experience and function³ 1. South African Loyalty Awards 2 Sunday T
Slide 27: Performance and strategy: Extending convenience
Performance and strategy • Extending convenience Format Total* Convenience 624 • 837 Clicks stores with 673 pharmacies* Destination 213 • 210 stores located in low income areas Total 837 (22.7% of retail turnover) • 50% of population < 5.3km of a pharmacy • Remaining 14 of 25 Pick n Pay pharmacies n
Slide 28: UPD business review
7 % O) Cc HW =) O QO oO =) review
Slide 29: Fine wholesale turnover
Fine wholesale turnover Clicks 50.8% (+6.5%) • Wholesale turnover down 5.2% Private hospitals (-8.5%) 38.8% • Hospitals had a strong base due to Independent 10.4% pharmacies and Covid-19 (up 37.5% in FY2021 and other channels (-32.4%) 3-year CAGR of 22.0% to FY2022) • Impact of consolidation of inde
Slide 30: Review of the year
Review of the year • Total managed turnover +7.6% to R30.6bn • Two new bulk distribution clients in H1 and one in H2 • Generic medicines +11.2% (73% of volume) • ERP and WMS implementation • Gqeberha DC completed in July 2022 • Cape Town DC due to be completed end November 2022 • Installation of sol
Slide 31: Strategy and outlook
04 Strategy and outlook Bertina Engelbrecht
Slide 32: 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 33: Outlook
Outlook • Consumer environment will remain extremely constrained • Continued impact of loadshedding and inflation • New 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 • Bu
Slide 34: Questions
CLICKS GROUP LIMITED Questions
Slide 35: 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