| Thu 30 Apr 2009, 8:30 | | NCL - New Clicks Holdings - Interim Group Results for the six months ended |
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NCL
NCL
NCL - New Clicks Holdings - Interim Group Results for the six months ended
28 February 2009
NEW CLICKS HOLDINGS LIMITED
Share code: NCL
ISIN: ZAE000014585
INTERIM GROUP RESULTS
for the six months ended 28 February 2009
* Retail turnover - continuing operations up 13.6%
* Diluted headline EPS up 18.8%
* Distribution per share up 30.3%
* Return on equity increases to 38.1%
Commentary
Overview
In a period characterised by increasingly tough retail conditions, New Clicks
delivered pleasing financial and trading results.
The group further entrenched its leadership in healthcare retail and supply
through the growth of pharmacy in Clicks and the acquisition of a 60% stake in
the courier pharmacy business Direct Medicines with effect from 1 December
2008.
New Clicks has also continued to invest for long-term growth, with a capital
expenditure plan focusing on opening and refurbishing Clicks stores, extending
the national pharmacy network within Clicks and expanding UPD`s pharmaceutical
distribution capability.
The board`s confidence in the group`s performance and prospects is reflected in
a 30.3% increase in the interim distribution to 24.5 cents per share
(2008: 18.8 cents). As previously advised to shareholders, distribution cover
is being reduced to two times headline earnings for the 2009 financial year.
Financial performance
Continuing operations
Group turnover from continuing operations increased by 7.0% to R6.0 billion
(2008: R5.6 billion). The retail turnover growth of 13.6% was driven by the
excellent trading performance of Clicks which lifted turnover by 15.4%. Selling
price inflation for the retail businesses was 6.3%.
The repositioning of the UPD business model to focus on more profitable and
loyal customers resulted in sales growth slowing in line with expectations to
1.7%. Price inflation for the period was 3.8%.
Total income (gross profit plus other income) increased 12.3% to R1.5 billion.
Operating expenses increased by 10.5%. Excluding the costs relating to the
investment in new stores, pharmacies and Direct Medicines, expense growth was
well contained to 7.1%.
Operating margin increased from 5.3% to 5.9%, resulting in an 18.5% growth in
operating profit to R355 million (2008: R299 million).
Total group
Headline earnings increased 10.6% from R209 million to R232 million. Diluted
headline earnings per share increased 18.8% to 80.3 cents per share, enhanced
by the share buy-back programme.
Return on shareholders` interest (ROE) showed a healthy improvement from 32.6%
to 38.1%.
Cash generated from operations increased by 15.7% to R424 million. The free
cash flow increased to R355 million from R137 million last year. This was
positively impacted by the improved trading performance of the group and
favourable funding from trade payables.
Trading performance
Clicks continued its strong sales growth trend and lifted turnover by 15.4%,
with real sales growth of 8.9%. Comparable store sales rose by 13.7%. Growth
was driven by the health and beauty merchandise categories which together
account for 75.2% of total Clicks sales. Clicks has accelerated the pace of its
pharmacy expansion programme, growing the pharmacy base to 180 following the
opening of 23 dispensaries in the period. Further improvements in operating
efficiencies lifted the operating margin from 6.0% to 6.6% which translated into
operating profit growth of 27.2%.
Following the repositioning of UPD towards more profitable volume, its core
customer groups of Clicks, Clicks Direct Medicines, hospitals and Link
pharmacies now account for 76% of UPD`s wholesale business, up from 64% in
2008. UPD`s distribution and export business grew by 47.9%. Good expense
management and improved operating efficiencies contributed to a 12.0% increase
in operating profit.
Musica increased turnover by 3.3% as the slowdown in consumer spending
continued to impact discretionary purchases. Operating profit for the period
was down 1.9%.
Turnover in The Body Shop benefited from new store openings and increased 9.2%,
with operating profit up 9.0%.
Prospects
Retail trading conditions are expected to remain challenging in the coming
months. However, the group`s business is defensive and competitively
advantaged.
The listing of New Clicks on the JSE will be reclassified to the Food and Drug
Retailers sector on 22 June 2009, which will more accurately reflect the
current and future composition of the group`s earnings.
The group continues to be cash generative and R140 million has been committed
to capital investment for the remainder of the year.
Trading for the first two months of the second half of the financial year has
continued in line with the performance for the first half.
Full-year earnings forecast
In the absence of any marked deterioration in trading conditions and any
unforeseen changes in the macro-economy, the group expects diluted headline
earnings per share to increase by between 15% and 20% for the year to 31 August
2009. This forecast has not been audited or reviewed by the company`s auditors.
Shareholder distribution
The board of directors has approved an interim distribution of 24.5 cents per
share (2008: 18.8 cents per share), the source of such distribution will be made
known on or before Thursday, 25 June 2009.
Shareholders are advised of the following salient dates relating to the
distribution:
Last day to trade "cum" the distribution Friday, 3 July 2009
Shares trade "ex" the distribution Monday, 6 July 2009
Record date Friday, 10 July 2009
Payment to shareholders Monday, 13 July 2009
Share certificates may not be dematerialised or rematerialised between Monday,
6 July 2009 and Friday, 10 July 2009, both days inclusive.
By order of the board
Annalize Booysen
Company Secretary
30 April 2009
Consolidated Income Statement
6 months to 6 months to
28 February 29 February
2009 2008
(unaudited) (unaudited)
R`000 (restated)
Continuing operations
Revenue 6 278 681 5 838 542
Turnover 5 994 535 5 600 805
Cost of merchandise sold (4 757 073) (4 479 015)
Gross profit 1 237 462 1 121 790
Other income 276 269 226 634
Expenses (1 159 148) (1 049 267)
Depreciation and amortisation (55 314) (46 410)
Occupancy costs (171 847) (152 091)
Employment costs (551 360) (490 060)
Other costs (380 627) (360 706)
Operating profit 354 583 299 157
(Loss)/profit on disposal of property,
plant and equipment (938) 18 806
Profit on disposal of business - 1 244
Profit before financing costs 353 645 319 207
Net financing costs (35 011) (16 406)
Financial income 7 877 11 103
Financial expense (42 888) (27 509)
Profit before taxation 318 634 302 801
Income tax expense (87 610) (82 082)
Profit for the year from continuing operations 231 024 220 719
Discontinued operations
Profit for the year from discontinued operations - 33 681
Total profit for the year 231 024 254 400
Attributable to:
Equity holders of the parent 230 971 254 400
Minority interest 53 -
231 024 254 400
Earnings per share (cents) 80.5 83.1
Diluted earnings per share (cents) 80.0 82.2
Distributions per share (cents)
Interim proposed/paid 24.5 18.8
Final paid - -
24.5 18.8
Year to
31 August
% 2008
change (audited)
R`000 (restated)
Continuing operations
Revenue 7.5 11 711 517
Turnover 7.0 11 193 577
Cost of merchandise sold 6.2 (8 984 267)
Gross profit 10.3 2 209 310
Other income 21.9 499 209
Expenses 10.5 (2 118 071)
Depreciation and amortisation 19.2 (95 378)
Occupancy costs 13.0 (306 488)
Employment costs 12.5 (986 128)
Other costs 5.5 (730 077)
Operating profit 18.5 590 448
(Loss)/profit on disposal of property,
plant and equipment 13 925
Profit on disposal of business 1 244
Profit before financing costs 10.8 605 617
Net financing costs 113.4 (51 184)
Financial income 18 731
Financial expense (69 915)
Profit before taxation 5.2 554 433
Income tax expense 6.7 (146 897)
Profit for the year from continuing operations 4.7 407 536
Discontinued operations
Profit for the year from discontinued operations 33 538
Total profit for the year (9.2) 441 074
Attributable to:
Equity holders of the parent (9.2) 441 201
Minority interest (127)
441 074
Earnings per share (cents) (3.1) 148.0
Diluted earnings per share (cents) (2.7) 145.2
Distributions per share (cents)
Interim proposed/paid 30.3 18.8
Final paid 42.3
30.3 61.1
Headline Earnings Reconciliation
6 months to 6 months to
28 February 29 February
2009 2008
(unaudited) (unaudited)
R`000 (restated)
Total profit for the year attributable to equity
holders of the parent 230 971 254 400
Adjustments for
(Loss)/profit on disposal of property,
plant and equipment 675 (16 237)
Profit on disposal of business - (28 742)
Headline earnings 231 646 209 421
Headline earnings per share (cents) 80.7 68.4
Diluted headline earnings per share (cents) 80.3 67.6
Year to
31 August
% 2008
change (audited)
R`000 (restated)
Total profit for the year attributable to equity
holders of the parent 441 201
Adjustments for
(Loss)/profit on disposal of property,
plant and equipment (12 412)
Profit on disposal of business (29 162)
Headline earnings 10.6 399 627
Headline earnings per share (cents) 18.0
Diluted headline earnings per share (cents) 18.8
Condensed Consolidated Balance Sheet
As at As at As at
28 February 29 February 31 August
2009 2008 2008
(unaudited) (unaudited) (audited)
R`000 (restated) (restated)
Non-current assets 1 298 678 1 168 726 1 252 989
Property, plant and equipment 756 605 711 322 734 485
Intangible assets 303 424 289 174 302 141
Goodwill 95 668 83 950 85 811
Deferred tax assets 79 750 26 468 72 482
Loans receivable 63 231 57 812 58 070
Current assets 2 716 068 2 322 157 2 332 333
Inventories 1 689 032 1 316 347 1 370 889
Trade and other receivables 811 111 774 861 805 935
Income tax receivable 1 573 1 576 1 962
Loans receivable 11 169 6 722 8 064
Cash and cash equivalents 171 465 147 159 101 139
Derivative financial assets 31 718 75 492 44 344
Total assets 4 014 746 3 490 883 3 585 322
Equity and liabilities
Total equity 1 126 582 1 101 312 1 141 604
Non-current liabilities 346 460 325 568 370 635
Interest-bearing loans and
borrowings 67 956 72 901 61 460
Employee benefits 95 786 103 460 130 866
Deferred tax liabilities 81 167 49 325 80 216
Operating lease liability 101 551 99 882 98 093
Current liabilities 2 541 704 2 064 003 2 073 083
Trade and other payables 2 232 059 1 775 680 1 827 704
Employee benefits 156 585 92 516 104 262
Provisions 20 608 9 931 7 924
Interest-bearing loans and
borrowings 105 383 71 280 54 180
Income tax payable 25 248 114 596 75 956
Derivative financial liabilities 1 821 - 3 057
Total equity and liabilities 4 014 746 3 490 883 3 585 322
Condensed Consolidated Cash Flow Statement
6 months to 6 months to Year to
28 February 29 February 31 August
2009 2008 2008
(unaudited) (unaudited) (audited)
R`000 (restated) (restated)
Operating profit before working
capital changes 423 749 366 262 722 059
Working capital changes 101 378 (241 278) (222 516)
Net interest paid (26 671) (13 778) (42 612)
Taxation paid (143 274) (74 236) (192 609)
Cash inflow from operating
activities before distributions 355 182 36 970 264 322
Distributions paid to shareholders (125 541) (111 538) (156 793)
Net cash effects of operating
activities 229 641 (74 568) 107 529
Net cash effects of investing
activities (94 279) 282 484 183 139
(Acquisition of business)/proceeds
on disposal of business (8 785) 316 356 314 631
Capital expenditure (82 473) (65 696) (174 300)
Other investing activities (3 021) 31 824 42 808
Net cash effects of financing
activities (65 036) (474 032) (602 804)
Purchase of treasury shares (142 037) (492 074) (607 041)
Other financing activities 77 001 18 042 4 237
Net increase/(decrease) in cash
and cash equivalents 70 326 (266 116) (312 136)
Condensed Consolidated Changes in Equity
6 months to 6 months to Year to
28 February 29 February 31 August
2009 2008 2008
(unaudited) (unaudited) (audited)
R`000 (restated) (restated)
Opening balance 1 141 604 1 296 188 1 296 188
As restated for the adoption of
IFRIC 13 "Customer Loyalty
Programmes" - (1 641) (1 641)
Opening balance - restated 1 141 604 1 294 547 1 294 547
Acquisition of subsidiary -
minority interest - - 273
Share cancellation expenses
written off - (325) (383)
Net cost of own shares purchased (117 749) (338 238) (437 210)
Foreign currency translation
reserve 357 100 50
Acquisition of option in
subsidiary (3 518) - -
Profit for the year 231 024 254 400 441 074
Share option reserve 405 2 366 46
Distributions to shareholders (125 541) (111 538) (156 793)
Total 1 126 582 1 101 312 1 141 604
Segmental Analysis
The split per business unit of turnover and operating profit is as follows:
6 months to 6 months to
28 February 29 February
2009 2008
(unaudited) (unaudited)
R`000 (restated)
Turnover
Clicks 3 557 189 3 083 129
Musica 538 245 521 157
The Body Shop 57 633 52 786
UPD* 2 362 050 2 323 219
Intragroup elimination (520 582) (379 486)
Continuing operations 5 994 535 5 600 805
Discontinued operations - 50 140
Total 5 994 535 5 650 945
Operating profit
Clicks 236 254 185 773
Musica 36 208 36 915
The Body Shop 10 553 9 683
Style Studio - 357
UPD* 73 950 66 007
Intragroup elimination (2 382) 422
Continuing operations 354 583 299 157
Discontinued operations - 8 108
Total 354 583 307 265
Year to
31 August
% 2008
change (audited)
R`000 (restated)
Turnover
Clicks 15.4 6 147 634
Musica 3.3 940 650
The Body Shop 9.2 96 957
UPD* 1.7 4 864 586
Intragroup elimination 37.2 (856 250)
Continuing operations 7.0 11 193 577
Discontinued operations 50 140
Total 6.1 11 243 717
Operating profit
Clicks 27.2 373 586
Musica (1.9) 50 178
The Body Shop 9.0 15 602
Style Studio 532
UPD* 12.0 154 295
Intragroup elimination (3 745)
Continuing operations 18.5 590 448
Discontinued operations 7 277
Total 15.4 597 725
* Includes Direct Medicines
Supplementary Information
28 February 29 February 31 August
2009 2008 2008
(unaudited) (unaudited) (audited)
(restated) (restated)
Number of ordinary shares in
issue (`000) 302 639 325 957 324 139
Number of ordinary shares in
issue (net of treasury
shares) (`000) 284 472 295 491 290 325
Weighted average number of
shares in issue (net of
treasury shares) (`000) 286 949 306 053 298 166
Weighted average diluted number
of shares in issue (net of
treasury shares) (`000) 288 590 309 581 303 847
Net asset value per share (cents) 396 373 393
Net tangible asset value per
share (cents) 256 246 260
Depreciation and amortisation
(R`000) 59 363 49 687 102 648
Capital expenditure (R`000) 82 473 65 696 174 300
Capital commitments (R`000) 140 800 95 300 246 600
Notes
Accounting policies
These interim financial results have been prepared in accordance with the
recognition and measurement requirements of IFRS and the disclosure
requirements of IAS 34. The accounting policies are consistent with those used
in the annual financial statements for the financial period ended 31 August
2008 with the following exception - IFRIC 13: Customer Loyalty Programmes, all
related items in the group are now presented in accordance with this statement.
The group adopted IFRIC 13, "Customer Loyalty Programmes", on 1 September 2008.
The interpretation applies to customer loyalty award credits that an entity
grants to its customers as part of a sales transaction, in terms of IAS 18, and
subject to meeting any further qualifying conditions, the customer can redeem
in the future for free or discounted goods or services. The interpretation
requires that an entity recognises credits that it awards to customers as a
separately identifiable component of revenue, which would be deferred at the
date of the initial sale.
The results for the year ended 31 August 2008 have been restated accordingly.
The net impact on the income statement for the six months ended 29 February
2008 is a R0.6 million decrease to profit after tax. The net impact on the
balance sheet as at 31 August 2008 is a R2.9 million decrease in shareholders`
equity, and a R2.9 million increase in total liabilities.
Registered address: Cnr Searle and Pontac Streets, Cape Town 8001
PO Box 5142, Cape Town 8000
Directors: DM Nurek* (Chairman), F Abrahams*, JA Bester*, PFK Eagles*,
BD Engelbrecht, MJ Harvey, F Jakoet*, DA Kneale# (Chief Executive Officer),
M Rosen*, KDM Warburton (Chief Financial Officer)
* non-executive # British
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107
Sponsor: Investec Bank Limited
Registration number: 1996/000645/06
Share code: NCL
ISIN: ZAE000014585
This information, together with additional detail is available on the New Clicks
Holdings website
www.newclicks.co.za
Date: 30/04/2009 08:30:01 Produced by the JSE SENS Department.
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