Wrap Text
Reviewed Annual Condensed Consolidated Results
for the twelve months ended 28 February 2022
Dis-Chem Pharmacies Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/009766/06)
Share code: DCP
ISIN: ZAE000227831
("Dis-Chem" or "the Company" or "the Group")
Reviewed Annual Condensed Consolidated Results
for the twelve months ended 28 February 2022
12 months to 12 months to
28 February 28 February %
2022 2021 change
Group revenue R 30.4 billion R 26.3 billion 15.7%
Earnings per share 99.2 cents 77.8 cents 27.6%
Headline earnings per share 99.2 cents 77.8 cents 27.6%
Final dividend declared per share 20.2 cents 31.1 cents (35.0%)
Total dividend declared per share* 39.7 cents 31.1 cents 27.6%
* The total dividend comprises of the interim dividend of 19.5 cents declared in November 2021 and the final
dividend declared of 20.2 cents for the 2022 financial year (31.1 cents for 2021).
Overview
The Group is pleased with the good performance of its businesses during the current period considering the
constrained consumer environment, the challenges that were posed by the pandemic as well as the civil unrest
that was experienced in July 2021.
Earnings attributable to shareholders and headline earnings increased by 27.6% over the previous
corresponding period.
Earnings per share (EPS) and headline earnings per share (HEPS) are 99.2 cents per share respectively, an
increase of 27.6%.
Dis-Chem was affected by the civil unrest and looting that occurred in KwaZulu-Natal and Gauteng in July.
Our committed management and staff worked tirelessly, ensuring that three affected stores returned to regular
trading within a month, while the final affected Dis-Chem store reopened on the 7 October. The Group was
adequately insured. Dis-Chem, through its foundation and with focussed initiatives, continues to support
communities in need.
Dis-Chem continues to support the national response to the COVID-19 pandemic by operating a national
vaccination site network, comprising mass and in-store clinic sites. During the period under review, Dis-Chem
administered 1.4 million vaccine doses contributing R513 million in revenue.
Review of financial performance
Revenue
During the twelve-month period from 1 March 2021 to 28 February 2022, Dis-Chem recorded Group revenue
growth of 15.7% to R30.4 billion, exceeding R30 billion for the first time.
Retail revenue grew by 15.6% to R27.1 billion with comparable store revenue at 6.1%. During the twelve
months to 28 February 2022, twelve Dis-Chem and three Baby City stores were opened. 48 Medicare stores
were acquired, effective 1 October 2021, resulting in 254 retail pharmacy stores and 35 retail baby stores
as at February 2022.
Baby City and Medicare have been fully integrated into the Group including migration onto the Group's
common technology platforms. Management continues to focus on unlocking identified synergies with these
acquisitions which is expected to be further seen in the Group's performance in FY23.
Wholesale revenue grew by 13.7% to R21.9 billion. Wholesale revenue to our own retail stores, still the biggest
contributor, grew by 13.2%, while external revenue to independent pharmacies and The Local Choice ("TLC")
franchises grew by 10.9% and 25.2% respectively over the corresponding period. Independent pharmacy
growth is negatively influenced by once-off business-to-business sales included in the prior period that inflated
the comparable base by R59 million. When excluding this amount, independent pharmacy sales grew by
14.8%. TLC growth is due to a combination of an increase in TLC franchise stores from 122 to 147 together with
increasing support of the supply chain from existing TLC franchisees. Independent pharmacy growth is due to
new customers and increased support from the current base.
Total income
Total income grew by 18.4% to R8.8 billion, with the Group's total income margin being 28.9% compared to
28.3% in the prior comparative period.
Retail total income grew by 18.6% with the retail margin increasing from 27.5% to 28.2% over the comparable
period. The Group continued to experience normalisation in its sales and transaction gross margin mix. Higher
margin categories are now recovering, and the Group continues to see improvements in its back-end trading
terms and service income as a result of its ever increasing scale and Return on Invested Capital ("ROIC") focus.
Wholesale total income grew by 11.4% with the wholesale margin now at 7.5%.
Other expenses
Expenses (excluding depreciation) grew by 17.3% over the corresponding period. Excluding the Medicare cost
base, expenses grew by 15.2%.
Retail expenses (excluding depreciation) grew by 17.9% (excluding Medicare by 15.4%) as the Group invested
in new stores and acquisitions since the corresponding period. Retail costs were influenced by the investment
in pharmacists and clinic sisters to facilitate the national vaccine program.
Wholesale expenses (excluding depreciation) grew by 8.7% due to the increase in third-party sales resulting in
higher delivery costs compared to the prior comparable period. Wholesale employments costs which grew by
4.5% were well managed as the Group continues to focus on efficient shift pattern staffing.
Net finance costs
Net financing costs decreased by 4.4% from the prior comparable period. Excluding finance costs from IFRS 16,
net financing costs decreased by 29.7% due to the reduction in the prime interest rate as well as lower average
levels of working capital during the period due to the focus on ROIC. R125 million capital repayments have also
been made on the Absa loan reducing the interest paid on the long-term loan.
Net working capital
During the current period, the Group's inventory increased by R67 million from February 2021 due to the
additional inventory held in Medicare stores of R109 million. Inventory has been well managed and inventory
days have decreased to 88.6 days from 91 days in the prior period.
Trade receivables continue to increase with the expansion of third-party sales within the wholesale segment.
Net working capital, at 26.5 days has continued to improve from 29.6 days at 28 February 2021 as the Group
continues to focus on ROIC. This has resulted in a net working capital cash inflow of R45 million in the current
financial period.
Capital expenditure
Capital expenditure on tangible and intangible assets of R377 million comprised of R237 million for
expansionary expenditure as the Group invested in additional stores as well as information technology
enhancements across both the retail and wholesale segments. The balance of R140 million relates to
replacement expenditure incurred to maintain the existing retail and wholesale networks.
Directorate
Mr. K Kobue was appointed on 23 November 2021 as a non-executive director.
Dividend declaration
Notice is hereby given that a gross final cash dividend of 20.20418 cents per share, in respect of the period
ended 28 February 2022 has been declared based on 40% of headline earnings. The number of shares in issue
at the date of this declaration is 860 084 483. The dividend has been declared out of income reserves as
defined in the Income Tax Act, 1962, and will be subject to the South African dividend withholding tax ("DWT")
rate of 20% which will result in a net dividend of 16.16334 cents per share to those shareholders who are not
exempt from paying dividend tax. Dis-Chem's tax reference number is 9931586144.
The salient dates relating to the payment of the dividend are as follows:
- Last day to trade cum dividend on the JSE: Tuesday, 7 June 2022
- First trading day ex dividend on the JSE: Wednesday, 8 June 2022
- Record date: Friday, 10 June 2022
- Payment date: Monday, 13 June 2022
Share certificates may not be dematerialised or rematerialised between Wednesday, 8 June 2022 and Friday,
10 June 2022, both days inclusive. Shareholders who hold ordinary shares in certificated form ("certificated
shareholders") should note that dividends will be paid by cheque and by means of an electronic funds transfer
("EFT") method. Where the dividend payable to a particular certificated shareholder is less than R100, the
dividend will be paid by EFT only to such certificated shareholder. Certificated shareholders who do not have
access to any EFT facilities are advised to contact the company's transfer secretaries, Computershare Investor
Services Proprietary Limited at Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196; on 011 370 5000;
or on 0861 100 9818 (fax), in order to make the necessary arrangements to take delivery of the
proceeds of their dividend. Shareholders who hold ordinary shares in dematerialised form will have their
accounts held at their CSDP or broker credited electronically with the proceeds of their dividend.
Outlook
For the period 1 March to 16 May 2022, Group revenue grew by 16.1% over the prior comparable period.
The Group expects that the consumer will continue to remain constrained. With the focus on ROIC, the
resilient nature of the markets in which the Group operates, together with the brand position, the Group is
continuing to adapt to the current environment, with a focus on mitigating the near-term impact whilst
positioning itself for success in the future.
Following several acquisitions during the period and the recent launch of a health insurance offering, the
Group's healthcare focus has evolved from only in-store clinics to a far broader offering including
telemedicine, medical insurance and gap cover. In the two months since launching medical insurance, uptake
has exceeded our initial expectations supporting our view of the market opportunity. Dis-Chem is well-placed
to play a leading role in extending access to primary healthcare to a much wider and under-served segment of
the population.
The information contained in the outlook commentary has not been audited or reviewed by the group's
independent auditor.
Approval
The condensed consolidated results of the Group were authorised for issue in accordance with a resolution of
the directors on 19 May 2022.
On behalf of the Board
Ivan Saltzman Rui Morais
Chief Executive Officer Chief Financial Officer
This short-form announcement is the responsibility of the Company's board of directors and is only a summary
of the information in the full announcement and therefore does not contain full or complete details. Any
investment decisions by investors and/or shareholders should be based on consideration of the full
announcement published on the Group's website www.dischemgroup.com and on the JSE website using
https://senspdf.jse.co.za/documents/2022/jse/isse/dcpe/FY22.pdf
Copies of the full announcement are available for inspection at the registered office of the Company and
the Company's Sponsor, at no charge, during office hours. For more information contact
investorrelations@dischem.co.za or visit our website.
The reviewed condensed consolidated results have been reviewed by the Group's external auditors and their
unmodified review report is available for inspection at the Company's registered office.
Supplementary information
Registered office: 23 Stag Road, Midrand, 1685
Non-executive directors: LM Nestadt (Chairman), MJ Bowman, A Coovadia, JS Mthimunye, A Sithebe and K Kobue
Executive directors: IL Saltzman (Chief Executive Officer), LF Saltzman (Managing Director), RM Morais (Chief
Financial Officer) and SE Saltzman (Alternate for LF Saltzman)
Company secretary: NJ Lumley (appointed 1 March 2021)
Registered auditors: Mazars
Sponsor: The Standard Bank of South Africa Limited
Transfer secretaries: Computershare Investor Services Proprietary Limited
23 May 2022
Midrand
Date: 23-05-2022 08:00:00
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