Wrap Text
Interim Condensed Consolidated Results for the six months ended 28 February 2015 and interim dividend
CLICKS GROUP LIMITED
Registration number: 1996/000645/06
Share code: CLS
ISIN: ZAE000134854
CUSIP: 18682W205
INTERIM CONDENSED CONSOLIDATED RESULTS
for the six months ended 28 February 2015
Group turnover up 14.1%
Diluted headline EPS up 12.8%
Interim dividend up 22.4%
Return on equity 53.6%
COMMENTARY
OVERVIEW
Trading conditions continued to be challenging over the past six months as consumers
remained cash constrained and value conscious. In this environment the group has
continued to trade well, with all the retail brands delivering real volume growth and
gaining market share. The group's pharmaceutical distribution business, UPD, also
continues to gain market share.
The group's diluted headline earnings per share for the half-year increased by 12.8%
to 177.6 cents. The interim dividend was increased by 22.4% to 65.5 cents per share
based on the reduced annual dividend cover ratio of 1.7 times.
The performance for the six months translated into a sector-leading return on equity
of 53.6%.
FINANCIAL PERFORMANCE
Group turnover increased by 14.1% to R10.7 billion, with retail sales growing by 9.9%
and UPD by 20.7%. Selling price inflation was contained to 3.5% for the period.
Total income increased by 11.3%. The faster turnover growth in UPD has resulted in
the group's total income margin reducing 70 basis points to 26.3%.
Operating expenses in retail were 11.5% higher due to increased investment in stores,
staff and advertising costs. Comparable retail cost growth was contained at 7.9%.
UPD expenses grew by 9.4% owing to increased variable costs from the growth in the
distribution business, and by 6.2% on a comparable basis.
Operating profit grew by 12.2% to R640 million. The retail business improved operating
margin by 10 basis points to 7.3%. UPD increased operating profit by 15.7% although
the increase in the lower margin generics business continues to place pressure on the
margin which reduced by 10 basis points to 2.3%.
Inventory days improved from 75 to 71 days and inventory levels were 9.4% higher at
the end of the reporting period.
Cash inflow from operations before working capital changes increased by R93 million to
R800 million. The group returned R448 million to shareholders through dividend payments
of R333 million and share buy-backs of R115 million.
Capital expenditure of R148 million was invested during the first half with a further
R231 million committed for the second half of the year, mainly on store expansion and
refurbishment, as well as IT systems.
TRADING PERFORMANCE
The Clicks chain increased sales by 10.5% and by 7.6% in comparable stores, driven by
innovative value-oriented promotions. The store footprint was expanded to 473, with
346 dispensaries and 150 clinics.
The Body Shop and GNC, the group's health and beauty franchise brands, continue to
differentiate the Clicks offer. The Body Shop increased turnover by 12.2% and now has
a presence in 92 Clicks stores, with 47 standalone stores. The recently launched
GNC brand has four stores and a presence in 250 Clicks outlets.
Musica increased sales by 2.4% and continued to gain market share.
UPD benefited from the expected growth in its preferred supply chain partner contracts
and increased turnover by 20.7%, with volume growth of 24.3%.
OUTLOOK
Trading conditions are expected to remain unchanged in the second half of the year
with consumer disposable income under continued pressure. Loadshedding in the winter
months poses a further risk to sales in the second half of the year.
Despite the headwinds in the consumer environment the Clicks chain is well positioned
for continuing growth, supported by a strong value proposition, the benefits of the
relaunched ClubCard and a sustainable pipeline of new stores and pharmacies. UPD will
continue to entrench its leadership position in the pharmaceutical distribution market
by growing scale and extracting efficiencies.
Record levels of capital expenditure of R379 million will be invested this year.
FULL-YEAR EARNINGS FORECAST
The directors forecast that diluted headline earnings per share for the financial year
ending 31 August 2015 will increase by between 10% and 15% over the 2014 financial year.
The forecast is based on the following key assumptions: the current consumer
environment will not materially deteriorate; selling price inflation will average 4%
to 5% for the year; and the group will continue to invest for longer-term growth,
mainly in new stores and pharmacies.
Shareholders are advised that this forecast has not been reviewed or reported on by
the group's independent auditor.
INTERIM DIVIDEND
The board of directors have approved an interim gross ordinary dividend of 65.5 cents
per share (2014: 53.5 cents per share). The source of the dividend will be from
distributable reserves and paid in cash.
ADDITIONAL INFORMATION
Dividends Tax (DT) amounting to 9.825 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 55.675 cents net of DT.
The company has 246 137 763 ordinary shares and 29 153 295 ordinary "A" shares in issue.
Its income tax reference number is 9061/745/71/8.
Shareholders are advised of the following salient dates in respect of the interim
dividend:
Last day to trade "cum" the dividend Friday, 26 June 2015
Shares trade "ex" the dividend Monday, 29 June 2015
Record date Friday, 3 July 2015
Payment to shareholders Monday, 6 July 2015
Share certificates may not be dematerialised or rematerialised between Monday,
29 June 2015 and Friday, 3 July 2015, both days inclusive.
The directors of the company have determined that dividend cheques amounting to R50.00
or less due to any ordinary shareholder will not be paid unless a written request to
the contrary is delivered to the transfer secretaries, Computershare Investor Services
Proprietary Limited, by no later than close of business on Friday, 26 June 2015, being
the day the shares trade "cum" the dividend. Unpaid dividend cheques will be aggregated
with other such amounts and donated to a charity to be nominated by the directors.
By order of the board
David Janks
Company Secretary
23 April 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
R'000 Six months to Six months to Year to
28 February 28 February 31 August
2015 2014 % 2014
(unaudited) (unaudited) change (audited)
Revenue 11 200 717 9 811 411 14.2 20 203 300
Turnover 10 664 306 9 348 825 14.1 19 149 524
Cost of merchandise sold (8 388 559) (7 284 418) 15.2 (15 026 159)
Gross profit 2 275 747 2 064 407 10.2 4 123 365
Other income 533 194 459 758 16.0 1 048 279
Total income 2 808 941 2 524 165 11.3 5 171 644
Expenses (2 168 825) (1 953 569) 11.0 (3 953 943)
Depreciation and amortisation (117 077) (107 538) 8.9 (219 871)
Occupancy costs (307 943) (279 017) 10.4 (564 469)
Employment costs (1 115 787) (1 010 011) 10.5 (2 033 605)
Other costs (628 018) (557 003) 12.7 (1 135 998)
Operating profit 640 116 570 596 12.2 1 217 701
(Loss)/profit on disposal of
property, plant and equipment (4 082) (3 346) 22.0 29 687
Profit before financing costs 636 034 567 250 12.1 1 247 388
Net financing costs (24 740) (22 700) 9.0 (40 660)
Financial income 3 217 2 828 13.8 5 497
Financial expense (27 957) (25 528) 9.5 (46 157)
Profit before taxation 611 294 544 550 12.3 1 206 728
Income tax expense (172 701) (154 665) 11.7 (341 883)
Profit for the period 438 593 389 885 12.5 864 845
Other comprehensive income/(loss):
Items that may be subsequently
reclassified to profit or loss
Exchange differences on translation
of foreign subsidiaries 760 559 (236)
Cash flow hedges 27 808 (3 224) (11 584)
Change in fair value of
effective portion 38 622 (4 476) (16 087)
Deferred tax on movement of
effective portion (10 814) 1 252 4 503
Other comprehensive income/(loss)
for the period, net of tax 28 568 (2 665) (11 820)
Total comprehensive income for
the period 467 161 387 220 853 025
Profit attributable to:
Equity holders of the parent 438 593 389 733 864 612
Non-controlling interest - 152 233
438 593 389 885 864 845
Total comprehensive income
attributable to:
Equity holders of the parent 467 161 387 068 852 792
Non-controlling interest - 152 233
467 161 387 220 853 025
Earnings per share (cents) 182.2 158.5 15.0 352.4
Diluted earnings per share (cents) 176.4 156.5 12.7 347.4
HEADLINE EARNINGS RECONCILIATION
R'000 Six months to Six months to Year to
28 February 28 February 31 August
2015 2014 % 2014
(unaudited) (unaudited) change (audited)
Total profit for the period
attributable to equity holders
of the parent 438 593 389 733 864 612
Adjusted for:
Loss/(profit) on disposal of property,
plant and equipment 2 939 2 410 (26 250)
Headline earnings 441 532 392 143 12.6 838 362
Headline earnings per share (cents) 183.5 159.4 15.1 341.7
Diluted headline earnings per share
(cents) 177.6 157.4 12.8 336.8
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
R'000 As at As at As at
28 February 28 February 31 August
2015 2014 2014
(unaudited) (unaudited) (audited)
Non-current assets 1 938 555 1 614 031 1 771 636
Property, plant and equipment 1 150 461 1 067 116 1 135 007
Intangible assets 376 942 353 665 371 623
Goodwill 103 510 103 510 103 510
Deferred tax assets 195 165 55 545 126 335
Loans receivable 12 755 12 306 12 540
Financial assets at fair value through
profit or loss 17 248 21 889 22 621
Derivative financial assets 82 474 - -
Current assets 4 936 252 4 507 873 4 420 621
Inventories 3 166 137 2 894 162 2 614 196
Trade and other receivables 1 703 176 1 441 857 1 607 659
Cash and cash equivalents 61 154 162 394 195 631
Derivative financial assets 5 785 9 460 3 135
Total assets 6 874 807 6 121 904 6 192 257
Equity and liabilities
Total equity 1 701 782 1 375 890 1 566 973
Non-current liabilities 310 188 256 162 286 465
Employee benefits 133 274 90 306 115 336
Deferred tax liabilities - 5 048 2 782
Operating lease liability 176 914 160 808 168 347
Current liabilities 4 862 837 4 489 852 4 338 819
Trade and other payables 4 477 930 3 761 013 4 041 261
Employee benefits 138 635 132 200 190 494
Provisions 8 845 6 188 9 882
Interest-bearing borrowings 181 500 549 700 -
Income tax payable 54 588 40 677 94 342
Derivative financial liabilities 1 339 74 2 840
Total equity and liabilities 6 874 807 6 121 904 6 192 257
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
R'000 Six months to Six months to Year to
28 February 28 February 31 August
2015 2014 2014
(unaudited) (unaudited) (audited)
Operating profit before working
capital changes 800 243 706 991 1 490 840
Working capital changes (248 908) (118 914) 354 925
Net interest paid (20 984) (17 602) (30 978)
Taxation paid (201 649) (170 760) (350 204)
Cash inflow from operating activities before
dividends paid 328 702 399 715 1 464 583
Dividends paid to shareholders (333 124) (298 202) (429 277)
Net cash effects from operating activities (4 422) 101 513 1 035 306
Net cash effects from investing activities (147 962) (131 905) (299 096)
Capital expenditure (147 753) (129 024) (336 854)
Other investing activities (209) (2 881) 37 758
Net cash effects from financing activities 17 907 100 620 (632 745)
Purchase of treasury shares (115 356) (101 481) (285 146)
Treasury shares cancellation costs - (3 244) (3 244)
Acquisition of derivative financial asset (48 237) - -
Other financing activities 181 500 205 345 (344 355)
Net (decrease)/increase in cash and
cash equivalents (134 477) 70 228 103 465
Cash and cash equivalents at the beginning
of the period 195 631 92 166 92 166
Cash and cash equivalents at the end of
the period 61 154 162 394 195 631
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
R'000 Six months to Six months to Year to
28 February 28 February 31 August
2015 2014 2014
(unaudited) (unaudited) (audited)
Opening balance 1 566 973 1 376 838 1 376 838
Purchase of treasury shares (115 356) (101 481) (285 146)
Treasury shares cancellation costs - (3 244) (3 244)
Dividends paid to shareholders (333 124) (298 202) (429 277)
Total comprehensive income for the year 467 161 387 220 853 025
Share-based payment reserve movement 116 128 14 759 55 542
Acquisition on non-controlling interest - - (765)
Total 1 701 782 1 375 890 1 566 973
Dividend per share (cents)
Interim declared/paid 65.5 53.5 53.5
Final paid - - 136.5
65.5 53.5 190.0
SEGMENTAL ANALYSIS
The group's reportable segments under IFRS 8 are Retail and Distribution.
R'000 Profit
before Total Capital Total
Turnover taxation assets expenditure liabilities
Six months to
28 February 2015
(unaudited)
Retail 7 288 484 533 652 3 414 906 113 437 2 385 023
Distribution 4 820 087 111 931 4 108 180 14 447 3 173 945
Inter-segmental (1 444 265) (5 467) (1 659 158) - (1 643 482)
Total reportable
segmental balance 10 664 306 640 116 5 863 928 127 884 3 915 486
Non-reportable
segmental balance - (28 822) 1 010 879 19 869 1 257 539
Total group balance 10 664 306 611 294 6 874 807 147 753 5 173 025
Six months to
28 February 2014
(unaudited)
Retail 6 633 690 475 563 3 051 176 79 820 1 970 579
Distribution 3 993 195 96 780 3 424 738 27 709 2 713 167
Inter-segmental (1 278 060) (1 747) (1 257 901) - (1 248 753)
Total reportable
segmental balance 9 348 825 570 596 5 218 013 107 529 3 434 993
Non-reportable
segmental balance - (26 046) 903 891 21 495 1 311 021
Total group balance 9 348 825 544 550 6 121 904 129 024 4 746 014
Twelve months to
31 August 2014
(audited)
Retail 13 369 083 1 000 119 3 070 544 234 844 2 390 715
Distribution 8 563 104 220 960 3 492 247 47 041 2 667 547
Inter-segmental (2 782 663) (3 378) (1 347 924) - (1 337 715)
Total reportable
segmental balance 19 149 524 1 217 701 5 214 867 281 885 3 720 547
Non-reportable
segmental balance - (10 973) 977 390 54 969 904 737
Total group balance 19 149 524 1 206 728 6 192 257 336 854 4 625 284
R'000 Six months to Six months to Year to
28 February 28 February 31 August
2015 2014 2014
(unaudited) (unaudited) (audited)
Non-reportable segmental profit before
taxation consists of:
(Loss)/profit on disposal of property,
plant and equipment (4 082) (3 346) 29 687
Financial income 3 217 2 828 5 497
Financial expense (27 957) (25 528) (46 157)
(28 822) (26 046) (10 973)
SUPPLEMENTARY INFORMATION
As at As at As at
28 February 28 February 31 August
2015 2014 2014
(unaudited) (unaudited) (audited)
Number of ordinary shares in issue (gross)
('000) 246 138 246 138 246 138
Number of ordinary shares in issue including
"A" shares issued in terms of employee
share ownership programme (gross) ('000) 275 291 275 291 275 291
Number of ordinary shares in issue (net of
treasury shares) ('000) 240 572 245 032 242 260
Weighted average number of shares in issue
(net of treasury shares) ('000) 240 669 245 958 245 364
Weighted average diluted number of shares in
issue (net of treasury shares) ('000) 248 652 249 074 248 892
Number of ordinary shares purchased ('000) 1 688 1 848 4 620
Net asset value per share (cents) 707 562 647
Net tangible asset value per share (cents) 508 375 451
Depreciation and amortisation (R'000) 122 127 112 436 229 703
Capital expenditure (R'000) 147 753 129 024 336 854
Capital commitments (R'000) 231 200 217 500 369 700
NOTES
ACCOUNTING POLICIES
These financial results for the six months ended 28 February 2015 have been prepared
in compliance with International Financial Reporting Standards ("IFRS"), the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Council, the disclosure requirements
of IAS 34 and the South African Companies Act (71 of 2008, as amended).
The accounting policies and methods of computation applied in the preparation of the
interim financial results for the six months ended February 2015 are in accordance with
IFRS and are consistent with those applied in the preparation of the audited financial
statements for the year ended 31 August 2014.
The information contained in the interim report has neither been audited nor reviewed
by the group's external auditors. These condensed consolidated financial results have
been prepared under the supervision of Mr M Fleming CA (SA), the Chief Financial Officer
of the group.
Registered address: Cnr Searle and Pontac Streets, Cape Town 8001
PO Box 5142, Cape Town 8000
Directors: DM Nurek* (Chairman), F Abrahams*, JA Bester*, BD Engelbrecht,
M Fleming (Chief Financial Officer), F Jakoet*, DA Kneale# (Chief Executive Officer),
NS Matlala*, M Rosen*, KDM Warburton^
* Independent non-executive # British ^ Resigned 28 January 2015
Registration number: 1996/000645/06 Income tax number: 9061/745/71/8
Share code: CLS ISIN: ZAE000134854 CUSIP: 18682W205
Transfer secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107
Sponsor: Investec Bank Limited
www.clicksgroup.co.za
Date: 23/04/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
