Clicks Group Limited · JSE:CLS

Clicks — FY2012 Earnings Presentation

39 slides from Clicks's earnings presentation, 2012

  1. Slide 1: Annual Results for the Year Ended 31 August 2012

    ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2012

  2. Slide 2: Presentation Outline

    PRESENTATION OUTLINE  Review of the year  Financial results  Trading performance  Outlook  Questions CLICKS GROUP ANNUAL RESULTS 2012 2

  3. Slide 3: Review of the Year

    REVIEW OF THE YEAR DAVID KNEALE

  4. Slide 4: Review of the Year

    REVIEW OF THE YEAR  Middle income consumers under pressure  Health and beauty markets driven by promotions  Minimal real growth in private healthcare market  Low selling price inflation  Diluted headline earnings per share up 9.5% CLICKS GROUP ANNUAL RESULTS 2012 4

  5. Slide 5: Review of the Year continued

    REVIEW OF THE YEAR continued  Retail  Margin under pressure in Clicks  Costs contained but pharmacist retention impacted  Market share gains in all key markets  Continued benefit from customer loyalty  Musica and The Body Shop both performed well  UPD  Tripled distribution agency contracts t

  6. Slide 6: Financial Results

    FINANCIAL RESULTS MICHAEL FLEMING

  7. Slide 7: Financial Highlights

    FINANCIAL HIGHLIGHTS  Group turnover up 9.2%  Retail turnover up 8.2%  UPD turnover up 11.1%  Selling price inflation of 0.5%  Operating margin maintained at 6.6%  Diluted headline EPS up 9.5% to 273.4 cps  Cash generated by operations R1.1 billion  Total distribution of 152.0 cps, up 21.6%

  8. Slide 8: Turnover

    TURNOVER % same R’m % % 2012 2011 change store inflation growth Clicks 10 686 9 789 9.2 5.9 1.2 Musica 871 896 (2.7) 0.0 (4.9) The Body Shop 123 108 14.1 13.8 (1.9) Total retail 11 680 10 793 8.2 5.5 0.7 UPD 6 224 5 602 11.1 0.1 Intragroup turnover (2 467) (2 259) 9.2 Total group 15 437 14 136 9.2 0

  9. Slide 9: Total Income

    TOTAL INCOME 2012 2011 % 2012 2011 R’m R’m change % margin % margin Clicks 3 421 3 146 8.7 32.0 32.1 Musica 313 319 (2.1) 35.9 35.7 The Body Shop 80 75 7.5 65.3 69.3 Total retail 3 814 3 540 7.7 32.7 32.8 UPD 520 454 14.6 8.4 8.1 Intragroup (58) (48) Total group 4 276 3 946 8.4 27.7 27.9  Impact of

  10. Slide 10: Operating Expenditure - Retail

    OPERATING EXPENDITURE - RETAIL R’m 2012 2011 % change Depreciation and amortisation 156 136 14.6 Occupancy costs 470 421 11.6 Employment costs 1 448 1 375 5.3 Other operating costs 885 805 10.0 Total retail costs 2 959 2 737 8.1  Comparable retail costs up 5.0%  Depreciation and occupancy costs -

  11. Slide 11: Operating Expenditure - UPD

    OPERATING EXPENDITURE - UPD R’m 2012 2011 % change Depreciation and amortisation 15 14 14.2 Occupancy costs 3 3 15.9 Employment costs 135 121 11.1 Other operating costs 212 185 14.2 Total UPD costs 365 323 13.0  Comparable costs up 6.7%  Additional variable distribution costs of R9.3m  Other oper

  12. Slide 12: Operating Profit

    OPERATING PROFIT 2012 2011 % 2012 2011 R’m R’m change % margin % margin Clicks 788 751 4.9 7.4 7.7 Musica 42 31 36.3 4.9 3.5 The Body Shop 24 21 15.9 19.4 19.1 Total retail 854 803 6.4 7.3 7.4 UPD 155 131 18.5 2.5 2.3 Intragroup 2 4 Total group 1 011 938 7.9 6.6 6.6 CLICKS GROUP ANNUAL RESULTS 2012

  13. Slide 13: Inventory

    INVENTORY Days in stock* Inventory (R’m) 2012 2011 2012 2011 % change Clicks 66 63 1 394 1 203 15.9 Musica 74 83 116 136 (14.0) The Body Shop 144 125 18 12 48.0 Total retail 67 65 1 528 1 351 13.2 UPD 34 31 561 463 21.2 Intragroup inventory (9) (11) Total group 63 60 2 080 1 803 15.4  Clicks invest

  14. Slide 14: Cash Generation

    CASH GENERATION R’m 2012 2011 Profit before tax 958 898 Non-cash adjustments 277 177 Operating profit before working capital changes 1 235 1 075 Working capital changes, excl derivative (161) (266) Disposal of derivative hedge - 161 Net interest and tax paid (310) (293) Cash inflow from operations 7

  15. Slide 15: Cash Utilisation

    CASH UTILISATION R’m 2012 2011 Cash inflow from operations 764 677 Capital expenditure (256) (226) Distributions paid (337) (296) Share buy-backs (12) (552) Other investing activities 8 17 Other financing activities (159) 246 Net cash generated/(utilised) 8 (134) CLICKS GROUP ANNUAL RESULTS 2012 15

  16. Slide 16: Capital Management

    CAPITAL MANAGEMENT  Group will remain cash generative  Investing in the business – R356m capex planned in FY2013  R161m stores  R85m IT systems  R67m UPD  R43m other  Return balance of cash to shareholders  Dividend cover 1.8 times  Continued share buybacks CLICKS GROUP ANNUAL RESULTS 2012

  17. Slide 17: Medium-Term Financial Targets

    MEDIUM-TERM FINANCIAL TARGETS 2012 – 2014 Achieved 2013 – 2015 target in 2012 target ROE (%) 55 – 65 59.9 55 – 65 ROA (%) 14 – 18 15.3 14 – 18 Inventory days 55 – 60 63 55 – 60 Group operating margin (%) 6.0 – 7.0 6.6 6.0 – 7.0 Operating margin (%) Clicks 7.0 – 8.0 7.4 7.0 – 8.0 UPD 2.5 – 3.0 2.5 2.

  18. Slide 18: Trading Performance

    TRADING PERFORMANCE DAVID KNEALE

  19. Slide 19: CLICKS GROUP ANNUAL RESULTS 2012

    CLICKS GROUP ANNUAL RESULTS 2012 19

  20. Slide 20: Sales Performance

    SALES PERFORMANCE % change % contribution Health Scheduled medicines 8.4 27.3 Front shop health 15.1 28.7 Beauty 7.9 23.4 General merchandise 4.0 20.6 Total turnover 9.2 100.0 CLICKS GROUP ANNUAL RESULTS 2012 20

  21. Slide 21: Health

    HEALTH  Dispensary sales +9.4% (value) and +9.9% (volume)  Genericisation and more self-medication  109 000 Discovery MedSaver/HealthyCare members  MedSaver basket 40% higher  Good growth in other key categories  Vitamins and supplements +9.9%  Baby +37.0%  Increased market share % 2012 2011

  22. Slide 22: Beauty

    BEAUTY  Consistent performance  Skincare +10.1%  Colour cosmetics +8.9%  Fragrance +8.6%  Haircare +6.7%  Stronger second half performance  Strong promotions  More innovation  Increased market share % 2012 2011 Skincare** 33.8 33.4 Haircare** 30.4 29.5 ** Per AC Nielsen CLICKS GROUP ANNUAL

  23. Slide 23: General Merchandise

    GENERAL MERCHANDISE  Impact of underperformance of homeware  Up 1.3% in second half  Ranges being refreshed  Good performance in other key categories  Confectionery +8.0%  Electrical and hi-tech +9.0%  Good market share growth % 2012 2011 Small household appliances*** 19.3 18.2 *** Per GfK (r

  24. Slide 24: Stores

    STORES  420 stores at August 2012  Slower growth in destination stores  Impact of centre upgrades and economic climate  Action plans  New development programme for top 40 managers  Improving depth of management  Broadening product offer  Investing in existing store base  20 revamps in FY201

  25. Slide 25: Gateway Store

    GATEWAY STORE CLICKS GROUP ANNUAL RESULTS 2012 25

  26. Slide 26: Pharmacy

    PHARMACY  306 dispensaries at August 2012  Costs contained too tightly  Staff costs +7.5%  Pharmacy staff turnover of 37%  Action plans  Greater management support for pharmacies  Streamlined recruitment process  Improved salaries for pharmacist assistants  Extra 200 pharmacist assistants b

  27. Slide 27: Customers and Brand

    CUSTOMERS AND BRAND  ClubCard membership now 3.9m  Net growth of 300 000 members  77.1% of sales (2011: 76.7%)  Basket value still double non-ClubCard  9 affinity partners  154 000 members of Baby Club  Private label up from 18.2% to 18.4% of sales  Front shop at 24.2%  39 private label med

  28. Slide 28: Musica

    MUSICA AWORLD AWAITS

  29. Slide 29: Musica Performance

    PERFORMANCE Market share* % change % contribution 2012 2011 CDs (5.1) 47 44% 41% DVDs (9.8) 26 28% 27% Gaming (3.4) 17 10% 9% Technology 31.6 10  Good second half performance  Continued growth in market shares despite net closure of 14 stores  Cost management will continue to improve efficiencies

  30. Slide 30: The Body Shop Performance

    PERFORMANCE  Good sales performance  Unit sales up 11.9%  Good gifting range and better availability  158 000 “Love Your Body” cardholders  55% of sales  Capsules in 44 Clicks stores and 5 store-in-store concepts  2 stores revamped with the new look  3 new stores planned in FY2013 CLICKS GRO

  31. Slide 31: UPD

  32. Slide 32: UPD Turnover

    TURNOVER % change % contribution Clicks 9.2 39.3 Hospitals 11.2 28.2 Link pharmacy (7.6) 14.0 Other independent pharmacy 5.1 9.3 Other 101.3 9.2 Total turnover 11.1 100.0 CLICKS GROUP ANNUAL RESULTS 2012 32

  33. Slide 33: UPD Performance

    PERFORMANCE  Market share increased from 23.1% to 24.3%*  Scheduled medicines up 11.5%  Originators +4.7%  Generics +23.1%, driven by preferred supplier contract  0.1% inflation  Front shop sales up 6.2%  Product availability improved to 93%  Successful take on of 10 distribution agency cont

  34. Slide 34: Outlook

    OUTLOOK DAVID KNEALE

  35. Slide 35: Healthcare Regulations

    HEALTHCARE REGULATIONS  Dispensing fees  No increase, but pushing for deregulation of Schedule 1 and 2  SEP increase  Increase of up to 6% proposed for 2013  Logistics fees  Support capping of the fee  Still not at an appropriate level  Definitions need to be clarified  Administratively bur

  36. Slide 36: Outlook

    OUTLOOK  Clicks  Upweighting management depth and calibre in top stores  Focus on improving pharmacy service  Stronger product offer for Christmas  Continue to invest in store revamps, new stores and new pharmacies  4 – 5% retail trading space growth  UPD  Drive wholesale turnover growth  M

  37. Slide 37: Outlook continued

    OUTLOOK continued  Muted consumer spending growth anticipated  Health and beauty market will remain promotionally driven  Selling price inflation in low single digits  All our businesses are market leaders  Demonstrated capability to gain market share  Confident of achieving medium-term financ

  38. Slide 38: Thank You

    THANK YOU

  39. Slide 39: 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 — FY2012 Earnings Presentation on 6ix