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Condensed Consolidated Annual Group Results for the year ended 31 August 2024 and Cash Dividend Declaration
Clicks Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1996/000645/06
JSE share code: CLS
ISIN: ZAE000134854
CUSIP: 18682W205
LEI: 378900E967958A677472
("Clicks" or "the group" or "the company")
CONDENSED CONSOLIDATED ANNUAL GROUP RESULTS FOR THE YEAR ENDED 31 AUGUST
2024 AND CASH DIVIDEND DECLARATION
Key features
- Group turnover up 9.2%
- Retail turnover up 11.7%
- Trading margin up 50 bps to 9.2%
- Diluted HEPS up 14.3%
- Total dividend up 14.3% to 776 cents per share
- R6.0 billion cash generated by operations
- R2.5 billion returned to shareholders
- Return on equity 46.4%
- Total shareholder return 20.7% CAGR over 10 years
Overview
Clicks Group continued to demonstrate the resilience of its business
model and the defensiveness of the core product offering as diluted
headline earnings per share increased by 14.3% to 1 193.5 cents,
supported by margin expansion, strong cash flow generation and industry-
leading shareholder return metrics.
The Clicks chain recorded market share gains across all core health and
beauty product categories, with the Clicks ClubCard loyalty programme
growing to 11.8 million active members.
Clicks increased its store base to 936 with the opening of a net 51
stores and the pharmacy network to 720 following the opening of a net 9
new pharmacies. While the number of pharmacy openings was below the
targeted range due to the Unicorn licensing matter, this was successfully
resolved with the Department of Health late in the financial year. Post
the year end, pharmacy licences are again being issued which is positive
for Clicks' expansion programme.
UPD successfully completed its large-scale systems implementation in the
first quarter of the financial year. Operational metrics have recovered
to pre-systems implementation levels and the business delivered a much
improved second half performance, also benefiting from the higher
increase in the regulated single exit price (SEP) of medicines in 2024
relative to the prior year.
The group maintained its momentum in shareholder wealth creation. The
total dividend was increased by 14.3% to 776 cents per share, based on a
65% dividend payout ratio, with R2.5 billion being returned to
shareholders in dividend payments of R1.7 billion and share buybacks of
R835 million. The group's market capitalisation increased by 34.9% to
R89 billion at year end. Over the past 10 years the group has delivered a
total shareholder return of 20.7% compound annual growth rate.
Financial performance
Group turnover increased by 9.2% to R45.4 billion. Retail turnover, which
includes Clicks, GNC, The Body Shop and Sorbet corporate stores,
increased by 11.7%. Comparable store turnover grew by 8.4% with inflation
of 6.3% and volume growth of 2.1%.
Distribution turnover grew by 3.3% as UPD delivered a stronger second
half performance following the completion of the systems implementation
at its main distribution centre in the first half of the year (H1:
increase 1.3%; H2: increase 5.2%).
Total income grew by 12.8% to R13.7 billion. The retail margin expanded
by 40 basis points following good growth across all categories, in
particular the beauty and personal care category, as well as the impact
of fewer pharmacies being opened in the year. The 70 basis point increase
in the distribution margin mainly reflects the benefit of the higher SEP
increase. The group's total income margin expanded by 100 basis points to
30.2% due to the faster growth of retail relative to distribution.
Retail costs increased by 12.5% due to pressure from higher insurance
costs, new stores, depreciation on capital expenditure and higher
performance-based incentive payments. Acquisitions concluded in the prior
year added 2.0% to retail cost growth. Comparable retail costs grew by
7.4%. Distribution costs increased by 7.4% primarily due to the impact of
the systems implementation in the first half of the year while costs were
maintained below turnover growth in the second half.
Group trading profit increased by 15.1% to R4.2 billion while the group's
trading margin increased by 50 basis points to 9.2%. The retail trading
margin expanded by 20 basis points to 10.2% due to the stronger growth in
higher margin product categories together with efficient cost management.
The group and retail trading margins both exceeded management's medium-
term target ranges. UPD increased its trading margin by 40 basis points
due to the ongoing recovery in turnover, the higher SEP increase and good
cost control.
Headline earnings grew by 11.9% to R2.8 billion. Basic earnings per share
increased by 14.2% to 1 190.3 cents and headline earnings per share
increased by 14.3% to 1 193.5 cents.
Inventory levels grew by 11.9% and group inventory days increased by 3
days to 74 days. Retail inventory days were higher due to the earlier
import of stock to avoid shipping delays and management's increased focus
on in-store availability to drive sales.
Cash generated by operations totalled R6.0 billion. Capital expenditure
of R891 million (2023: R930 million) was invested mainly in new stores
and pharmacies, store refurbishments, supply chain and information
technology.
At financial year end, the group held cash resources of R2.7 billion,
with the final dividend totalling R1.35 billion to be paid to
shareholders in January 2025.
Outlook
While consumer spending is expected to remain constrained in the short-
term, the medium-term outlook for the consumer environment is
increasingly positive. Lower inflation, interest rate relief and
declining fuel costs, together with the stronger Rand and the extended
suspension of load shedding in the country are positive for consumer
sentiment and should ultimately support increased spending.
Management is confident that the group's competitive advantage and
market-leading positions in the health and beauty sectors, long-term
organic growth opportunities in Clicks and the increasing scale of the
business, supported by strong cash generation and a robust balance sheet,
should ensure that the group continues to deliver on its medium-term
financial targets.
Clicks plans to open 40 - 50 new stores and 40 - 50 pharmacies for the
2025 financial year and remains committed to its medium-term target of
1 200 stores.
UPD is well positioned to regain wholesale market share following the
improved performance in the second half and the momentum being carried
into the 2025 financial year.
Capital investment of R1 025 million is planned for the 2025 financial
year. This includes R578 million for new stores and pharmacies and the
refurbishment of 70 - 80 stores. A further R447 million will be invested
in supply chain, technology and infrastructure.
Final dividend
The board of directors has approved a final gross ordinary dividend for
the period ended 31 August 2024 of 566.0 cents per share (2023: 494.0
cents per share). The source of the dividend will be from distributable
reserves and paid in cash.
Additional information
Dividends Tax (DT) of 20% amounting to 113.2 cents per ordinary share
will be withheld in terms of the Income Tax Act. Ordinary shareholders
who are not exempt from DT will therefore receive a dividend of 452.8
cents per share net of DT.
The company has 238 062 465 ordinary shares. Its income tax reference
number is 9061/745/71/8.
Shareholders are advised of the following salient dates in respect of the
final dividend:
Last day to trade "cum" the dividend Tuesday, 21 January 2025
Shares trade "ex" the dividend Wednesday, 22 January 2025
Record date Friday, 24 January 2025
Payment to shareholders Monday, 27 January 2025
Share certificates may not be dematerialised or rematerialised between
Wednesday, 22 January 2025 and Friday, 24 January 2025, both days
inclusive.
David Nurek Bertina Engelbrecht Gordon Traill
Chairman Chief executive officer Chief financial officer
Cape Town
24 October 2024
This results announcement is the responsibility of the group's directors
and is a summary of the information in the detailed annual results and
does not contain full or complete details. The full results (condensed
consolidated financial statements) are available on the JSE's cloudlink
at https://senspdf.jse.co.za/documents/2024/jse/isse/CLS/H22024.pdf
and on the group's website at www.clicksgroup.co.za. Any investment
decision in relation to Clicks Group's shares should be based on the full
announcement.
Review report
KPMG Inc., the group's independent auditor, has reviewed the condensed
consolidated financial statements and has expressed an unmodified review
conclusion on the condensed consolidated financial statements. Their
review report is included in the full results and is available for
inspection at the company's registered office together with the condensed
consolidated financial statements. These condensed financial statements
have been prepared under the supervision of Gordon Traill CA, the chief
financial officer of the group.
Directors: DM Nurek* (Chairman), BD Engelbrecht (Chief Executive
Officer), RJD Inskip*, NNA Matyumza*, MJN Njeke*, SS Ntsaluba*, PM Osiris
(née Moumakwa)*, KC Ramon*, GD Traill† (Chief Financial Officer)
* Independent non-executive
† British
Registered office: Cnr Searle and Pontac Streets, Cape Town 8001
Transfer secretaries: Computershare Investor Services Proprietary Limited
www.clicksgroup.co.za
Sponsor
Investec Bank Limited
Date: 24-10-2024 08:00:00
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