Clicks Group Limited · JSE:CLS

Clicks — H1 2015 Earnings Presentation

29 slides from Clicks's earnings presentation, April 2015

  1. Slide 1: Interim Results for the Six Months Ended 28 February 2015

    INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2015

  2. Slide 2: Presentation Outline

    PRESENTATION OUTLINE  Review of the period  Financial results  Trading performance  Outlook  Questions CLICKS GROUP INTERIM RESULTS 2015 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  Consumers still under pressure  Limited benefit from fuel price decrease offset by loadshedding  Retail brands gaining market share  All showing volume growth  UPD growing market share in wholesale and distribution  Continuing to invest for longer term  Targeting 600 Cli

  5. Slide 5: Financial Results

    FINANCIAL RESULTS MICHAEL FLEMING

  6. Slide 6: Financial Highlights

    FINANCIAL HIGHLIGHTS  Group turnover up 14.1%  Clicks turnover up 10.5%  UPD turnover up 20.7%  Operating margin at 6.0%  Diluted HEPS up 12.8% to 177.6 cps  Interim dividend of 65.5 cps, up 22.4%  Annual dividend cover lowered to 1.7 times  Return on equity of 53.6% CLICKS GROUP INTERIM RES

  7. Slide 7: Turnover

    TURNOVER % same R′m Feb Feb % % change store 2015 2014 inflation growth Clicks 6 693 6 060 10.5 7.6 3.9 Musica 506 495 2.4 1.2 0.5 The Body Shop 89 79 12.2 8.8 3.8 Total retail 7 288 6 634 9.9 7.2 3.6 UPD 4 820 3 993 20.7 3.3 Intragroup turnover (1 444) (1 278) 13.0 Total group 10 664 9 349 14.1 3.5

  8. Slide 8: Total Income

    TOTAL INCOME Feb 2015 Feb 2014 % Feb 2015 Feb 2014 R′m R′m change % margin % margin Retail 2 478 2 219 11.7 34.0 33.4 Distribution 372 334 11.2 7.7 8.4 Intragroup (41) (29) Total group 2 809 2 524 11.3 26.3 27.0  Well managed promotional activity and private label margin growth in Clicks  UPD marg

  9. Slide 9: Operating Expenditure - Retail

    OPERATING EXPENDITURE - RETAIL R′m Feb 2015 Feb 2014 % change Depreciation and amortisation 104 95 8.7 Occupancy costs 306 276 11.0 Employment costs 1 008 911 10.7 Other operating costs 526 461 14.1 Total retail costs 1 944 1 743 11.5  Impact of employee share ownership plan (ESOP) on employment co

  10. Slide 10: Operating Expenditure - Distribution

    OPERATING EXPENDITURE - DISTRIBUTION R′m Feb 2015 Feb 2014 % change Depreciation and amortisation 14 12 9.9 Occupancy costs 2 3 (39.3) Employment costs 107 99 8.5 Other operating costs 137 123 11.4 Total distribution costs 260 237 9.4  Increased variable costs from growth in distribution business 

  11. Slide 11: Operating Profit

    OPERATING PROFIT Feb 2015 Feb 2014 % Feb 2015 Feb 2014 R′m R′m change % margin % margin Retail 534 476 12.2 7.3 7.2 Distribution 112 97 15.7 2.3 2.4 Intragroup (6) (2) Total group 640 571 12.2 6.0 6.1  Retail accounts for 83% of group profit  Distribution continues to gain scale  Margins within t

  12. Slide 12: Inventory

    INVENTORY Days in stock* Inventory (R′m) Feb Feb Feb Feb % 2015 2014 2015 2014 change Retail 81 81 2 119 1 916 10.6 Distribution 41 46 1 063 986 7.8 Intragroup inventory (16) (8) Total group 71 75 3 166 2 894 9.4  Record availability of 96.7% in retail  SEP increase effective one month later than

  13. Slide 13: Cash Generation

    CASH GENERATION R′m Feb 2015 Feb 2014 Profit before tax 611 545 Non-cash adjustments 189 162 Operating profit before working capital changes 800 707 Working capital changes (248) (119) Net interest and tax paid (223) (188) Cash inflow from operations 329 400 CLICKS GROUP INTERIM RESULTS 2015 13

  14. Slide 14: Cash Utilisation

    CASH UTILISATION R′m Feb 2015 Feb 2014 Cash inflow from operations 329 400 Capital expenditure (148) (132) Dividends paid (333) (298) Share buy-backs (115) (101) Other financing activities 133 201 Net cash (utilised)/generated (134) 70  R379m capex planned for FY2015 CLICKS GROUP INTERIM RESULTS 20

  15. Slide 15: Trading Performance

    TRADING PERFORMANCE DAVID KNEALE

  16. Slide 16: Sales Performance

    SALES PERFORMANCE % change % contribution Pharmacy 13.8 25.9 Front shop health 14.6 22.1 Beauty and personal care 10.9 33.7 General merchandise 1.1 18.3 Total turnover 10.5 100.0  Driving volumes through value offer  Promotions now 29% of sales CLICKS GROUP INTERIM RESULTS 2015 16

  17. Slide 17: Pharmacy and Front Shop Health

    PHARMACY AND FRONT SHOP HEALTH  Pharmacy  Continued switch to generics +20.7%  OTC medicines +15.9%  Front shop health  Good growth in all categories: baby +18.7%, vitamins and supplements +12.1%, medicines +13.1%, first aid and diagnostics +19.8%  Market shares % Feb 2015 Feb 2014 Retail phar

  18. Slide 18: Beauty and General Merchandise

    BEAUTY AND GENERAL MERCHANDISE  Beauty and personal care  Strong Christmas for fragrance +19.1% and colour cosmetics +14.6%  Good growth in skincare +10.4%  Slower growth in haircare +5.2%  General merchandise  Non-core categories -27.6%  Confectionery +7.2%, electrical +3.2%  Market shares

  19. Slide 19: Customers and Stores

    CUSTOMERS AND STORES  ClubCard active membership now 4.8m, 75.6% of sales  Relaunched on 23 March  Private label up from 19.7% to 20.4%  Front shop at 25.9%  346 dispensaries and 150 clinics in 473 stores at 28 February  22 stores outside SA  Net 24 new stores in FY2015  Net 20 new pharmacie

  20. Slide 20: Musica

    o: Ww \ 7 i ls ) j | MHRA \ We \ a 7 ay @) MUSICA AWORLD AWAITS

  21. Slide 21: Franchise Brands

    FRANCHISE BRANDS  Differentiating the Clicks offer  Roll out of GNC continues  4 standalone stores and presence in 250 Clicks stores  305 products launched  2 new standalone stores planned in H2  Continuing to expand The Body Shop  Presence in 92 Clicks stores  47 standalone stores – 3 plann

  22. Slide 22: Performance

    PERFORMANCE Market share* % change % contribution Feb 2015 Feb 2014 CDs 1.5 40.3 59.1 49.4 DVDs (2.9) 24.9 41.8 33.0 Gaming 7.9 18.0 11.8 10.1 Technology 6.2 16.8  Market share growth continues in all categories, driven by competitor closures and improved availability  Strong performance in gaming

  23. Slide 23: UPD

  24. Slide 24: Turnover

    TURNOVER % change % contribution Clicks 11.8 29.5 Hospitals 6.0 22.9 Independent pharmacy 5.3 14.0 Other channels 56.1 33.6 Total turnover 20.7 100.0  Volume growth of 24.3%  Generics +35.2% CLICKS GROUP INTERIM RESULTS 2015 24

  25. Slide 25: Performance

    PERFORMANCE  Wholesale market share increased from 25.4% to 26.2%*  Distribution strategy on track  Achieving planned growth in preferred supply contracts  10% growth in third party agency business  Continued margin pressure from product mix  Generics increased to 44.9% of turnover  Extractin

  26. Slide 26: Outlook

    OUTLOOK DAVID KNEALE

  27. Slide 27: Outlook

    OUTLOOK  Consumer environment to remain unchanged  Selling price inflation expected to be 4 - 5% for the year  Clicks – well positioned for continuing growth  Strong value proposition  Relaunched ClubCard  New stores and pharmacies  UPD – continue to grow scale and extract efficiencies  Medi

  28. Slide 28: Thank You

    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 2015 Earnings Presentation on 6ix