| Thu 26 Apr 2012, 8:30 | | CLS - Clicks Group Limited - Interim group results for the six months ended 29 |
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CLS
CLS
CLS - Clicks Group Limited - Interim group results for the six months ended 29
February 2012
CLICKS GROUP LIMITED
Registration number: 1996/000645/06
Share code: CLS
ISIN: ZAE000134854
INTERIM GROUP RESULTS for the six months ended 29 February 2012
Group turnover up 6.8%
Diluted headline EPS up 7.6%
Interim dividend up 19.2%
Return on equity increases to 60.7%
COMMENTARY
Trading environment
The six month period to 29 February 2012 was characterised by tough trading
conditions.
The retail trading environment has been highly competitive, with increased
promotional activity to attract value conscious consumers. Low or negative
selling price inflation has also led to a slowdown in the growth of the health
and beauty market.
In this challenging climate the group has nevertheless increased its volumes and
share of the total health and beauty market, thereby maintaining its competitive
advantage.
Financial performance
Group turnover increased by 6.8% to R7.7 billion, with selling price deflation
of 0.2% for the period. Retail turnover grew by 8.3% with price inflation of
0.1%, while UPD increased turnover by 5.0% as price deflation averaged 0.5%. In
this low inflationary environment all the group`s businesses showed real growth
in sales.
Total income, comprising gross profit and other income, increased by 6.9% and
the total income margin at 28% was consistent with the comparable period.
The group has focused on cost management and operating expense growth was well
contained at 7.3%. Retail costs increased by 7.4% (comparable costs up 2.7%)
despite the opening of 30 new Clicks stores and 29 dispensaries in the past 12
months. UPD`s cost growth of 10.2% includes further investment in distribution
capacity, while comparable costs grew by 5.0%.
Operating profit increased by 5.8% for the period and the group`s operating
margin declined slightly from 6.5% to 6.4%.
Headline earnings increased by 3.2% to R333 million. Diluted headline earnings
per share benefited from the group`s share buy-back programme and grew by 7.6%
to 131.5 cents.
The interim dividend was increased by 19.2% to 44.1 cents per share. As
previously advised to shareholders, the board has reduced the distribution cover
from 2.0 times to 1.8 times for the 2012 financial year, in line with the
commitment to return surplus cash to shareholders.
Inventory days in stock moved from 59 to 66 days. Inventory levels were 20.4%
higher at the end of the period as Clicks and UPD bought additional stock ahead
of supplier price increases.
Stock levels are expected to normalise by year-end.
The group remains strongly cash generative with cash inflow from operations
totalling R214 million.
Return on shareholders` equity (ROE) increased to 60.7% from 55.8% in 2011.
Trading performance
The Clicks chain grew turnover by 9.6% and benefited from new store openings
during the period. Comparable store sales increased by 5.5%. The store base
increased to 412 following the addition of 12 new stores in the past six months,
while the pharmacy footprint was expanded by 12 to 295. Clicks increased its
retail pharmacy market share to 16.1% (2011: 14.5%).
The operating margin came under pressure from an aggressive promotional
programme and changed sales mix, with operating profit increasing by 5.7%.
Musica performed well in a declining market and was impacted by industry
deflation and continued store closures. The brand increased market share in CDs,
DVDs and gaming and grew operating profit by 11.7%. The Body Shop posted a
strong performance for the first half, with turnover increasing by 14.5% and
operating profit by 18.4%.
UPD grew wholesale turnover by 5.0% and increased its share of the private
pharmaceutical market to 23.2% (2011: 22.9%). Four new distribution agency
contracts were taken on during the period. Operating profit increased by 3.3%.
Prospects
The health and beauty markets are expected to remain highly competitive. Selling
price inflation is anticipated to be less than 2% for the full year.
In these market conditions, the group`s focus will be on driving volume growth
and containing costs. Management is committed to maintaining the investment in
the longer term growth of the business, with capital expenditure of R183 million
committed for the second half of the year.
The group remains well positioned in the medium-term through the market
leadership and growth potential of both Clicks and UPD.
Full-year earnings forecast
The group currently anticipates that diluted headline earnings per share for the
year to 31 August 2012 will increase by between 6% and 11% over the previous
financial year.
This forecast is based on the following assumptions: The health and beauty
markets will remain highly competitive; selling price inflation will be below 2%
for the financial year; further organic growth will be generated from store
expansion, the opening of additional pharmacies and the benefit of distribution
agency contracts; and there will be no marked changes in trading conditions, the
regulatory environment and in the macro-economy that will impact on consumer
spending.
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 has approved and declared a gross interim ordinary
dividend of 44.1 cents per share (2011: 37.0 cents per share). The source of the
dividend will be from distributable reserves and paid in cash.
Additional information
In determining the Dividends Tax ("DT") to withhold in terms of the Income Tax
Act, Secondary Tax on Companies ("STC") credits amounting to 44.1 cents per
share, utilised by the company should be taken into account. Shareholders will
therefore receive a dividend of 44.1 cents net of DT. The company has
276 123 498 ordinary shares in issue and its income tax reference number is
9061/745/71/8.
Shareholders are advised of the following salient dates in respect of the
interim dividend:
2012
Last day to trade "cum" the dividend Friday, 22 June
Shares trade "ex" the dividend Monday, 25 June
Record date Friday, 29 June
Payment to shareholders Monday, 2 July
Share certificates may not be dematerialised or rematerialised between Monday,
25 June 2012 and Friday, 29 June 2012, 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, 22 June 2012, 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
26 April 2012
Consolidated statement of comprehensive income
Six months to
Six months to 28 February Year to
29 February 2011 31 August
2012 (unaudited) % 2011
(unaudited) (restated)* change (restated)*
R`000
Revenue 8 022 039 7 495 901 7.0 14 833 118
Turnover 7 657 499 7 166 768 6.8 14 135 948
Cost of merchandise
sold (5 873 924) (5 485 442) 7.1 (10 879 173)
Gross profit 1 783 575 1 681 326 6.1 3 256 775
Other income 361 200 324 266 11.4 688 935
Total income 2 144 775 2 005 592 6.9 3 945 710
Expenses (1 655 839) (1 543 291) 7.3 (3 008 120)
Depreciation and
amortisation (83 309) (72 401) 15.1 (149 714)
Occupancy costs (229 697) (208 434) 10.2 (422 596)
Employment costs (817 255) (768 469) 6.3 (1 496 491)
Other costs (525 578) (493 987) 6.4 (939 319)
Operating profit 488 936 462 301 5.8 937 590
Loss on disposal of
property, plant and
equipment (2 579) (2 509) 2.8 (6 250)
Profit before
financing costs 486 357 459 792 5.8 931 340
Net financing costs (25 108) (17 213) 45.9 (33 626)
Financial income 3 340 4 867 (31.4) 8 235
Financial expense (28 448) (22 080) 28.8 (41 861)
Profit before taxation 461 249 442 579 4.2 897 714
Income tax expense (130 078) (121 690) 6.9 (246 749)
Profit for the period 331 171 320 889 3.2 650 965
Other comprehensive
(loss)/income:
Exchange differences
on translation
of foreign subsidiaries (93) 66 (220)
Cash flow hedges (3 003) - 2 105
Change in fair
value of effective
portion (4 171) - 2 924
Deferred tax on movement
of effective portion 1 168 - (819)
Other comprehensive
(loss)/income for the
period, net of tax (3 096) 66 1 885
Total comprehensive
income for the period 328 075 320 955 652 850
Profit attributable to:
Equity holders of
the parent 331 085 320 863 650 932
Non-controlling interest 86 26 33
331 171 320 889 650 965
Total comprehensive
income attributable to:
Equity holders of
the parent 327 989 320 929 652 817
Non-controlling interest 86 26 33
328 075 320 955 652 850
Earnings per share (cents) 130.8 121.8 7.4 248.3
Diluted earnings
per share (cents) 130.8 121.6 7.6 248.0
* Refer note 1.2
Headline earnings reconciliation
Six months to Six months to Year to
29 February 28 February 31 August
2012 2011 % 2011
(unaudited) (unaudited) change (audited)
R`000
Total profit for the
period attributable to
equity holders of the
parent 331 085 320 863 650 932
Adjusted for:
Loss on disposal of
property, plant and
equipment 1 857 1 806 4 500
Headline earnings 332 942 322 669 3.2 655 432
Headline earnings per
share (cents) 131.6 122.4 7.5 250.1
Diluted headline earnings
per share (cents) 131.5 122.2 7.6 249.7
Condensed consolidated statement of financial position
As at As at As at
29 February 28 February 31 August
2012 2011 2011
(unaudited) (unaudited) (audited)
R`000
Non-current assets 1 413 884 1 378 980 1 414 484
Property, plant and equipment 959 216 924 052 949 906
Intangible assets 301 510 307 032 301 579
Goodwill 103 510 103 510 103 510
Deferred tax assets 43 870 28 201 53 756
Loans receivable 5 778 16 185 5 733
Current assets 3 216 643 2 624 550 2 840 299
Inventories 2 060 097 1 710 711 1 802 557
Trade and other receivables 1 053 883 848 621 998 944
Loans receivable 9 181 15 745 17 901
Cash and cash equivalents 88 401 40 324 17 790
Derivative financial assets 5 081 9 149 3 107
Total assets 4 630 527 4 003 530 4 254 783
Equity and liabilities
Total equity 1 082 755 1 015 933 965 187
Non-current liabilities 254 031 254 043 264 829
Interest-bearing borrowings - 10 046 19
Employee benefits 83 675 80 172 92 473
Deferred tax liabilities 38 254 42 047 46 695
Operating lease liability 132 102 121 778 125 642
Current liabilities 3 293 741 2 733 554 3 024 767
Trade and other payables 2 567 899 2 353 250 2 431 756
Employee benefits 124 637 155 678 164 669
Provisions 2 167 5 375 5 217
Interest-bearing borrowings 545 603 174 828 375 217
Income tax payable 47 718 38 583 44 489
Derivative financial liabilities 5 717 5 840 3 419
Total equity and liabilities 4 630 527 4 003 530 4 254 783
Notes
Accounting policies
1.1 These interim financial results for the six months ended 29 February 2012
have been prepared in compliance with International Financial Reporting
Standards ("IFRS"), the AC 500 Standards as issued by SAICA, the disclosure
requirements of IAS 34,the South African Companies Act (71 of 2008, as amended)
and have been consistently applied with those adopted for the year ended 31
August 2011.
The information contained in the interim report has neither been audited nor
reviewed by the group`s external auditors. These condensed financial statements
have been prepared under the supervision of M Fleming CA(SA), the Chief
Financial Officer of the group.
1.2 The statement of comprehensive income as at 28 February 2011 and 31 August
2011 have been restated for the reclassification of income and expenses between
turnover, cost of sales, other income and other operating expenses. This has
resulted in an increase in cost of sales in Clicks of R13.4 million (28 February
2011) and R49.9 million (31 August 2011) with a corresponding increase in other
income. Within UPD turnover has increased by R29.2 million (28 February 2011)
and R82.9 million (31 August 2011) with a corresponding increase in other
operating expenses. The inter-segmental elimination increased by R13.4 million
(28 February 2011) and R49.9 million (31 August 2011) relating to turnover and
cost of sales with a corresponding increase in the elimination relating to other
income and other operating expenses of a similar amount.
There has been no impact on profit, statement of financial position, statement
of changes in equity or statement of cash flows.
Condensed consolidated statement of cash flows
Six months to Six months to Year to
29 February 28 February 31 August
2012 2011 2011
(unaudited) (unaudited) (audited)
R`000
Operating profit before working
capital changes 591 237 503 774 1 075 227
Working capital changes (235 462) 35 495 (105 055)
Net interest paid (17 307) (11 033) (21 113)
Taxation paid (124 043) (131 910) (271 988)
Cash inflow from operating
activities before distributions 214 425 396 326 677 071
Distributions paid to shareholders (225 616) (199 112) (295 507)
Net cash effects of operating
activities (11 191) 197 214 381 564
Net cash effects of investing
activities (90 457) (112 212) (209 353)
Capital expenditure (99 174) (108 651) (215 701)
Acquisition of businesses - (10 225) (10 225)
Other investing activities 8 717 6 664 16 573
Net cash effects of financing
activities 172 259 (196 730) (306 473)
Purchase of treasury shares - (251 483) (552 406)
Other financing activities 172 259 54 753 245 933
Net increase/(decrease) in cash
and cash equivalents 70 611 (111 728) (134 262)
Condensed consolidated statement of changes in equity
Six months to Six months to Year to
29 February 28 February 31 August
2012 2011 2011
R`000 (unaudited) (unaudited) (audited)
Opening balance 965 187 1 141 328 1 141 328
Purchase of treasury shares - (251 483) (552 406)
Disposal of treasury shares 1 973 1 963 2 579
Total comprehensive income for
the period 328 075 320 955 652 850
Share-based payment reserve movement 13 136 2 282 16 343
Distributions to shareholders (225 616) (199 112) (295 507)
Total 1 082 755 1 015 933 965 187
Dividend/distribution per share (cents)
Interim proposed/paid 44.1 37.0 37.0
Final declared/paid - - 88.0
44.1 37.0 125.0
Segmental analysis
The group`s reportable segments under IFRS 8 are as follows:
Clicks (including Clicks Direct Medicines), Musica, The Body Shop and United
Pharmaceutical Distributors (UPD)
Profit
before Total
R`000 Turnover taxation assets
Six months to
29 February 2012
(unaudited)
Clicks 5 381 727 362 904 2 418 661
Musica 504 913 36 843 226 262
The Body Shop 67 415 15 384 26 958
United Pharmaceutical
Distributors 2 866 016 74 631 2 123 363
Inter-segmental (1 162 572) (826) (886 986)
Total reportable
segmental balance 7 657 499 488 936 3 908 258
Non-reportable
segmental balance - (27 687) 722 269
Total group balance 7 657 499 461 249 4 630 527
Six months to
28 February 2011
(unaudited) (restated)*
Clicks 4 912 245 343 449 2 061 176
Musica 527 292 32 994 261 527
The Body Shop 58 868 12 994 26 752
United Pharmaceutical
Distributors 2 729 818 72 263 1 887 382
Inter-segmental (1 061 455) 601 (931 689)
Total reportable
segmental balance 7 166 768 462 301 3 305 148
Non-reportable
segmental balance - (19 722) 698 382
Total group balance 7 166 768 442 579 4 003 530
Twelve months to
31 August 2011
(restated)*
Clicks 9 789 459 750 836 2 234 077
Musica 895 600 31 418 202 074
The Body Shop 107 786 20 575 24 090
United Pharmaceutical
Distributors 5 601 891 130 808 1 951 839
Inter-segmental (2 258 788) 3 953 (835 282)
Total reportable
segmental balance 14 135 948 937 590 3 576 798
Non-reportable
segmental balance - (39 876) 677 985
Total group balance 14 135 948 897 714 4 254 783
Capital Total
R`000 expenditure liabilities
Six months to
29 February 2012
(unaudited)
Clicks 72 113 1 358 534
Musica 2 193 184 155
The Body Shop 1 239 13 939
United Pharmaceutical
Distributors 4 900 1 744 748
Inter-segmental - (875 259)
Total reportable
segmental balance 80 445 2 426 117
Non-reportable
segmental balance 19 227 1 121 655
Total group balance 99 672 3 547 772
Six months to
28 February 2011
(unaudited) (restated)*
Clicks 88 681 1 248 851
Musica 7 119 119 350
The Body Shop 1 173 10 506
United Pharmaceutical
Distributors 5 870 1 641 561
Inter-segmental - (917 436)
Total reportable
segmental balance 102 843 2 102 832
Non-reportable
segmental balance 6 427 884 765
Total group balance 109 270 2 987 597
Twelve months to
31 August 2011
(restated)*
Clicks 173 278 1 385 885
Musica 10 520 98 843
The Body Shop 1 797 13 139
United Pharmaceutical
Distributors 10 701 1 651 787
Inter-segmental - (824 381)
Total reportable
segmental balance 196 296 2 325 273
Non-reportable
segmental balance 19 405 964 323
Total group balance 215 701 3 289 596
As at As at As at
29 February 28 February 31 August
2012 2011 2011
(unaudited) (unaudited) (audited)
Non-reportable segmental profit
before taxation consists of:
Loss on disposal of property, plant
and equipment (2 579) (2 509) (6 250)
Financial income 3 340 4 867 8 235
Financial expense (28 448) (22 080) (41 861)
(27 687) (19 722) (39 876)
* Refer note 1.2
Supplementary information
As at As at As at
29 February 28 February 31 August
2012 2011 2011
(unaudited) (unaudited) (audited)
Number of ordinary shares in issue
(gross) (`000) 276 123 268 303 270 652
Number of ordinary shares in issue
including "A" shares issued in terms
of employee share ownership
programme (gross) (`000) 305 277 297 457 299 805
Number of ordinary shares in issue
(net of treasury shares) (`000) 253 259 260 518 252 959
Weighted average number of shares in
issue (net of treasury shares) (`000) 253 063 263 522 262 118
Weighted average diluted number of
shares in issue (net of treasury
shares) (`000) 253 191 263 945 262 515
Net asset value per share (cents) 428 390 382
Net tangible asset value per share (cents) 268 232 221
Depreciation and amortisation (R`000) 87 354 76 789 158 285
Capital expenditure (including
acquisition of businesses) (R`000) 99 672 119 495 225 926
Capital commitments (R`000) 182 826 131 730 257 100
Registered address: Cnr Searle and Pontac Streets, Cape Town 8001
PO Box 5142, Cape Town 8000
Directors: F Abrahams*, JA Bester*, BD Engelbrecht, M Fleming
(Chief Financial Officer), MJ Harvey, F Jakoet*, DA Kneale#
(Chief Executive Officer), N Matlala*, DM Nurek *
(Chairman), M Rosen* * independent non-executive # British
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107
Sponsor: Investec Bank Limited
This information, together with additional detail, is available on the Clicks
Group Limited website: www.clicksgroup.co.za
Date: 26/04/2012 08:30:01 Produced by the JSE SENS Department.
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