| Thu 22 Apr 2010, 8:30 | | CLS - Clicks Group - Interim results for the six months ended 28 February 2010 |
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CLS
CLS
CLS - Clicks Group - Interim results for the six months ended 28 February 2010
CLICKS GROUP LIMITED
Registration number: 1996/000645/06
Share code: CLS
ISIN: ZAE000134854
Formerly New Clicks Holdings Limited
INTERIM CONDENSED CONSOLIDATED RESULTS
For the six months ended 28 February 2010
Retail turnover up 15.2%
Diluted HEPS up 24.5%
Interim distribution 30.5 cents
Return on equity increases to 46.2%
COMMENTARY
Overview
Clicks Group has continued to deliver a sustained financial performance through
the focus on its core strategic objectives of building pre-eminence in
- health and beauty retailing; and
- healthcare supply and pharmacy management.
While there has been no marked improvement in consumer spending over the
period, the health and beauty markets in which the group operates have
continued to show their resilience and grown well ahead of the overall retail
sector.
All the group`s businesses traded well during the period and strengthened their
market-leading positions.
Financial performance
Retail turnover increased by 15.2% to R4.8 billion for the six months to
February 2010 as the Clicks chain continued its strong growth trend and lifted
turnover by 17.5%. Selling price inflation for the retail businesses was 7.9%.
UPD`s turnover grew by 6.7% (by 14.9% on a comparable basis as the wholesaler`s
distribution agency business is no longer reflected in turnover).
Group turnover increased by 9.5% to R6.6 billion.
Total income, comprising gross profit and other income, rose by 15.4% to
R1.7 billion.
Operating expenses increased by 16.4%. Retail costs were 17.7% higher, impacted
by the continued investment in new stores and dispensaries, and increased
performance-related costs which were partially offset by the increase in
valuation of the share incentive hedge. Excluding these costs, underlying
retail expense growth was contained at 12.1%. UPD`s cost growth was well
managed at only 4.2%.
The group`s operating profit margin improved from 5.9% to 6.0%, resulting in an
11.9% increase in operating profit to R397 million.
Headline earnings increased by 18.7% to R275 million. Diluted headline earnings
per share for the period increased by 24.5% to 100 cents per share, in line
with the earnings guidance provided in the trading statement on 30 March 2010.
The board declared an interim distribution of 30.5 cents per share, an increase
of 24.5% over the previous interim period.
The group`s return on equity has continued to show pleasing improvement and
increased from 38.1% to 46.2%.
Inventory levels were again tightly managed across the group and reduced by
10.8%, while inventory days in stock improved from 67 to 56 days.
Trading performance
Clicks increased turnover by 17.5%, with strong real sales growth of 8.6%.
Comparable store sales grew by 13.3%. Clicks recorded market share gains across
all core merchandise categories. A further 17 in-store dispensaries were opened
which extended the pharmacy network to 224 out of a total store base of 354. The
operating profit margin increased to 6.6% (2009: 6.5%) through improved
inventory management, good control of shrinkage and waste, and better margins on
front shop products. This translated into operating profit growth of 18.1%.
UPD grew wholesale turnover by 14.9%. This performance was driven by the focus
on the core customer groups of Clicks, hospitals, Link pharmacies and the
export business, which collectively accounted for 81% of wholesale turnover.
UPD has continued to improve its cost efficiency ratio. The 4.5% decline in
operating profit is a result of the annual increase in the single exit price of
medicines only being effective from May this year and not from February as in
the previous year.
Musica continued to show its resilience by increasing turnover by 0.5% in an
entertainment market which experienced negative growth. Musica continues to
gain market share and remains the country`s leading music and entertainment
retailer. The business maintained its operating margin at 6.7%.
The Body Shop increased turnover by 7.7%, lifted by new store openings, with
operating profit up 19.8%.
Prospects
The retail trading environment is expected to remain challenging and any
recovery in consumer spending is unlikely to benefit the group in the second
half of the financial year. The impact of the 2010 FIFA World Cup on retail
spending remains an unknown factor. Price inflation for the group should
moderate in the months ahead.
Trading for the first seven weeks of the second half of the financial year has
continued in line with the performance for the first half. Management will
continue to maximise organic growth opportunities in the health and beauty
markets with a clear value proposition for customers, and are confident of
sustaining the current performance levels in the second half.
Employee share scheme
The group is currently evaluating the viability of a broad-based employee share
ownership scheme. Extending equity ownership to employees will accelerate
transformation and build on the progress that has been made across all other
areas of black economic empowerment within the group. In addition, this will
enable the group to attract and retain scarce and specialist skills. Any
proposed share ownership scheme will be subject to shareholder engagement and
approval.
Full-year earnings forecast
The group currently anticipates that diluted headline earnings per share for
the year to 31 August 2010 will increase by between 20% and 25% over the
previous financial year.
This forecast is based on the following assumptions: The group`s operational
and trading performance for the second half will continue in line with the
results achieved for the period under review; further organic growth will be
generated from store expansion and the opening of additional pharmacies; and
there will be no marked changes in trading conditions, the regulatory
environment and in the macroeconomy that will impact on consumer spending.
Interim distribution
The board of directors has approved an interim distribution of 30.5 cents per
share (2009: 24.5 cents per share). The source of the distribution will be
either from distributable reserves and paid as a cash dividend or a capital
reduction out of share premium. The source of the distribution will be made
known on or before Friday, 18 June 2010.
Shareholders are advised of the following salient dates in respect of the
interim distribution:
Last day to trade "cum" the interim distribution Friday, 25 June 2010
Shares trade "ex" the interim distribution Monday, 28 June 2010
Record date Friday, 2 July 2010
Payment in respect of the interim distribution Monday, 5 July 2010
Share certificates may not be dematerialised or rematerialised between Monday,
28 June 2010 and Friday, 2 July 2010, both days inclusive.
By order of the board
David Janks
Company Secretary
22 April 2010
Condensed Statement of Comprehensive Income
Six months Six months
28 February 28 February
2010 2009
R`000 (unaudited) (unaudited)
Revenue 6 861 712 6 278 681
Turnover 6 565 754 5 994 535
Cost of merchandise sold (5 109 066) (4 757 073)
Gross profit 1 456 688 1 237 462
Other income 289 808 276 269
Expenses (1 349 710) (1 159 148)
Depreciation and amortisation (60 508) (55 314)
Occupancy costs (200 808) (171 847)
Employment costs (694 079) (551 360)
Other costs (394 315) (380 627)
Operating profit 396 786 354 583
Loss on disposal of property, plant
and equipment (1 175) (938)
Profit before financing costs 395 611 353 645
Net financing costs (19 379) (35 011)
Financial income 6 150 7 877
Financial expense (25 529) (42 888)
Profit before taxation 376 232 318 634
Income tax expense (103 473) (87 610)
Profit for the period 272 759 231 024
Other comprehensive (loss)/income:
Exchange differences on translation
of foreign subsidiaries (467) 357
Other comprehensive (loss)/income for
the period, net of tax (467) 357
Total comprehensive income for the period 272 292 231 381
Profit attributable to:
Equity holders of the parent 274 109 230 971
Non-controlling interest (1 350) 53
272 759 231 024
Total comprehensive income attributable to:
Equity holders of the parent 273 642 231 328
Non-controlling interest (1 350) 53
272 292 231 381
Earnings per share (cents) 100.2 80.5
Diluted earnings per share (cents) 99.7 80.0
Distributions per share (cents)
Interim proposed/paid 30.5 24.5
Final paid - -
30.5 24.5
Year to
31 August
% 2009
R`000 change (audited)
Revenue 9.3 12 754 202
Turnover 9.5 12 175 312
Cost of merchandise sold 7.4 (9 657 930)
Gross profit 17.7 2 517 382
Other income 4.9 564 482
Expenses 16.4 (2 372 694)
Depreciation and amortisation 9.4 (113 665)
Occupancy costs 16.9 (352 055)
Employment costs 25.9 (1 156 928)
Other costs 3.6 (750 046)
Operating profit 11.9 709 170
Loss on disposal of property, plant
and equipment (7 177)
Profit before financing costs 11.9 701 993
Net financing costs (44.6) (54 773)
Financial income 14 408
Financial expense (69 181)
Profit before taxation 18.1 647 220
Income tax expense 18.1 (174 619)
Profit for the period 18.1 472 601
Other comprehensive (loss)/income:
Exchange differences on translation
of foreign subsidiaries (285)
Other comprehensive (loss)/income for
the period, net of tax (285)
Total comprehensive income for
the period 472 316
Profit attributable to:
Equity holders of the parent 472 387
Non-controlling interest 214
472 601
Total comprehensive income attributable to:
Equity holders of the parent 472 102
Non-controlling interest 214
472 316
Earnings per share (cents) 24.5 165.6
Diluted earnings per share (cents) 24.6 163.8
Distributions per share (cents)
Interim proposed/paid 24.5 24.5
Final paid 59.5
24.5 84.0
Headline Earnings Reconciliation
Six months Six months
28 February 28 February
2010 2009
R`000 (unaudited) (unaudited)
Total profit for the period attributable
to equity holders of the parent 274 109 230 971
Adjustments for
Loss on disposal of property, plant and
equipment 846 675
Headline earnings 274 955 231 646
Headline earnings per share (cents) 100.5 80.7
Diluted headline earnings per share (cents) 100.0 80.3
Year to
31 August
% 2009
R`000 change (audited)
Total profit for the period attributable
to equity holders of the parent 472 387
Adjustments for
Loss on disposal of property, plant and
equipment 6 100
Headline earnings 18.7 478 487
Headline earnings per share (cents) 24.5 167.7
Diluted headline earnings per share (cents) 24.5 165.9
Condensed Consolidated Statement of Financial Position
As at As at As at
28 February 28 February 31 August
2010 2009 2009
R`000 (unaudited) (unaudited) (audited)
Non-current assets 1 333 177 1 298 678 1 361 915
Property, plant and equipment 840 602 756 605 829 513
Intangible assets 308 233 303 424 302 313
Goodwill 96 124 95 668 96 124
Deferred tax assets 56 539 79 750 88 243
Loans receivable 31 679 63 231 45 722
Current assets 2 692 914 2 716 068 2 819 291
Inventories 1 506 827 1 689 032 1 421 496
Trade and other receivables 891 201 812 684 908 398
Loans receivable 16 842 11 169 11 342
Cash and cash equivalents 132 241 171 465 409 754
Derivative financial assets 145 803 31 718 68 301
Total assets 4 026 091 4 014 746 4 181 206
Equity and liabilities
Total equity 1 098 177 1 126 582 1 125 263
Non-current liabilities 286 281 346 460 317 753
Interest-bearing borrowings 32 082 67 956 37 428
Employee benefits 73 419 95 786 91 134
Deferred tax liabilities 69 547 81 167 83 351
Operating lease liability 111 233 101 551 105 840
Current liabilities 2 641 633 2 541 704 2 738 190
Trade and other payables 2 197 512 2 232 059 2 408 117
Employee benefits 219 556 156 585 240 596
Provisions 5 273 20 608 6 254
Interest-bearing borrowings 194 178 105 383 29 877
Income tax payable 18 839 25 248 33 316
Derivative financial liabilities 6 275 1 821 20 030
Total equity and liabilities 4 026 091 4 014 746 4 181 206
Condensed Consolidated Statement of Cash Flows
Six months Six months Year to
28 February 28 February 31 August
2010 2009 2009
R`000 (unaudited) (unaudited) (audited)
Operating profit before working
capital changes 376 681 423 749 825 407
Working capital changes (324 699) 101 378 489 583
Net interest paid (14 291) (26 671) (28 337)
Taxation paid (99 463) (143 274) (229 158)
Cash (outflow)/inflow from
operating activities before
distributions (61 772) 355 182 1 057 495
Distributions paid to
shareholders (162 790) (125 541) (191 099)
Net cash effects of operating
activities (224 562) 229 641 866 396
Net cash effects of investing
activities (74 586) (94 279) (218 630)
Acquisition of business - (8 785) (9 924)
Capital expenditure (84 898) (82 473) (224 625)
Other investing activities 10 312 (3 021) 15 919
Net cash effects of financing
activities 21 635 (65 036) (339 151)
Purchase of treasury shares (145 101) (142 037) (337 501)
Other financing activities 166 736 77 001 (1 650)
Net (decrease)/increase in cash
and cash equivalents (277 513) 70 326 308 615
Condensed Consolidated Statement of Changes in Equity
Six months Six months Year to
28 February 28 February 31 August
2010 2009 2009
R`000 (unaudited) (unaudited) (audited)
Opening balance 1 125 263 1 141 604 1 141 604
Acquisition of subsidiary -
non-controlling interest - 1 469 1 925
Acquisition of option in
subsidiary - (4 987) (4 987)
Share cancellation expenses
written off - - (99)
Net cost of own shares
purchased (136 889) (117 749) (295 114)
Total comprehensive income for
the period 272 292 231 381 472 316
Share-based payment reserve
movement 301 405 717
Distributions to shareholders (162 790) (125 541) (191 099)
Total 1 098 177 1 126 582 1 125 263
Segmental Analysis
The Body
R`000 Clicks Musica Shop
Six months to 28 February 2010
Segmental turnover 4 242 584 540 947 62 087
Inter-segmental turnover - - -
Reportable segmental profit before tax 278 134 36 433 12 643
Reportable segmental assets 1 731 289 233 976 24 926
Capital expenditure 57 553 6 488 1 776
Reportable segmental liabilities 1 503 267 124 551 11 519
Six months to 28 February 2009
Segmental revenue 3 611 899 538 245 57 633
Inter-segmental revenue - - -
Reportable segmental profit before tax 235 484 36 208 10 553
Reportable segmental assets 1 682 262 259 519 22 105
Capital expenditure 61 884 7 625 1 262
Reportable segmental liabilities 1 270 664 144 336 13 302
Twelve months to 31 August 2009
Segmental revenue 7 424 362 947 773 105 432
Inter-segmental revenue - - -
Reportable segmental profit before tax 468 875 50 422 16 338
Reportable segmental assets 1 601 168 207 131 21 393
Capital expenditure 128 882 16 068 1 548
Reportable segmental liabilities 1 042 234 122 109 15 885
R`000 UPD Total
Six months to 28 February 2010
Segmental turnover 2 510 600 7 356 218
Inter-segmental turnover (790 464) (790 464)
Reportable segmental profit before tax 71 376 398 586
Reportable segmental assets 1 646 645 3 636 836
Capital expenditure 6 057 71 874
Reportable segmental liabilities 1 542 288 3 181 625
Six months to 28 February 2009
Segmental revenue 2 352 874 6 560 651
Inter-segmental revenue (566 116) (566 116)
Reportable segmental profit before tax 74 720 356 965
Reportable segmental assets 1 492 147 3 456 033
Capital expenditure 10 444 81 215
Reportable segmental liabilities 1 205 971 2 634 273
Twelve months to 31 August 2009
Segmental revenue 5 037 215 13 514 782
Inter-segmental revenue (1 339 470) (1 339 470)
Reportable segmental profit before tax 174 775 710 410
Reportable segmental assets 1 702 543 3 532 235
Capital expenditure 37 432 183 930
Reportable segmental liabilities 1 707 711 2 887 939
Supplementary Information
28 February 28 February 31 August
2010 2009 2009
(unaudited) (unaudited) (audited)
Number of ordinary shares in
issue (`000) 281 546 302 639 302 841
Number of ordinary shares in
issue (net of treasury
shares) (`000) 270 609 284 472 276 306
Weighted average number of
shares in issue (net of
treasury shares) (`000) 273 555 286 949 285 249
Weighted average diluted number
of shares in issue (net of
treasury shares) (`000) 274 890 288 590 288 349
Net asset value per
share (cents) 406 396 407
Net tangible asset value per
share (cents) 256 256 263
Depreciation and amortisation
(R`000) 64 977 59 363 121 917
Capital expenditure (R`000) 84 898 82 473 224 625
Capital commitments (R`000) 139 557 140 800 224 455
Notes
1. 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 2009 with the
following exception:
During the period the group adopted the following new and amended IFRS
statements to the extent that they are applicable to its activities:
- IAS 1: Presentation of Financial Statements
- IAS 32: Financial Instruments
- IAS 39: Eligible Hedged Items
- IAS 39: Embedded Derivatives
- IFRS 8: Operating Segments
- Annual improvements to IFRS statements (2008 and 2009)
2. Segmental reporting
The group has adopted IFRS 8: Operating Segments with effect from
1 September 2009. IFRS 8 requires operating segments to be identified on the
basis of internal reports about components of the group that are regularly
reviewed by the board of directors (identified as the chief operating decision-
maker of the group in terms of IFRS 8 requirements) in order to allocate
resources to the segments and to assess their performance.
The group`s reportable segments under IFRS 8 are therefore as follows:
Clicks (including Clicks Direct Medicines), Musica, The Body Shop and United
Pharmaceutical Distributors (UPD).
28 February 28 February 31 August
2010 2009 2009
Turnover
Segmental turnover 7 356 218 6 560 651 13 514 782
Inter-segmental turnover (790 464) (566 116) (1 339 470)
Group turnover 6 565 754 5 994 535 12 175 312
Profit before tax
Reportable segmental profit
before tax 398 586 356 965 710 410
Loss on disposal of property,
plant and equipment (1 175) (938) (7 177)
External interest received 6 150 7 877 14 408
External interest paid (25 529) (42 888) (69 181)
Inter-segmental profit (1 800) (2 382) (1 240)
Group profit before tax 376 232 318 634 647 220
Assets
Reportable segmental assets 3 636 836 3 456 033 3 532 235
Other - Group Services 1 081 781 690 392 1 377 458
Inter-segmental assets (692 526) (131 679) (728 487)
4 026 091 4 014 746 4 181 206
Liabilities
Reportable segmental
liabilities 3 181 625 2 634 273 2 887 939
Other - Group Services 430 173 377 587 914 248
Inter-segmental liabilities (683 884) (123 696) (746 244)
2 927 914 2 888 164 3 055 943
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,
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: CLS ISIN: ZAE000134854
Formerly New Clicks Holdings Limited
This information, together with additional detail is available on the Clicks
Group Limited website: www.clicksgroup.co.za
Date: 22/04/2010 08:30:01 Produced by the JSE SENS Department.
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