New Clicks dividend up 30% on strong trading performance
Release Date: 2009/04/30
Cape Town – Healthcare retail group New Clicks Holdings today reported strong trading and financial results for the six months to February 2009, with diluted headline earnings per share increasing 18.8% to 80.3 cents.
The interim distribution was increased by 30.3% to 24.5 cents per share, reflecting the board’s confidence in the group’s performance and prospects.
Group chief executive, David Kneale, said retail turnover from continuing operations grew 13.6% in increasingly tough trading conditions, driven by the excellent performance of Clicks which lifted turnover by 15.4%.
Operating margin increased from 5.3% to 5.9%, resulting in an 18.5% growth in operating profit to R355 million.
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 R335 million from R137 million last year.
Kneale said the group has entrenched its leadership in healthcare 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.
“We have also continued to invest for long-term growth. This included opening and refurbishing Clicks stores, extending the Clicks pharmacy network by opening 23 dispensaries and investing R30 million in expanding UPD’s pharmaceutical distribution capability,” he said.
On the trading performance, Kneale said growth in Clicks 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 and increasing its retail pharmacy market share to 13.0%.
UPD, the group’s pharmaceutical wholesaler and distributor, is being repositioned to focus on more profitable and loyal customers. This resulted in sales growth slowing in line with expectations to 1.7%. UPD’s core customer groups of Clicks, Clicks Direct Medicines, hospitals and Link pharmacies now account for 76% of UPD’s wholesale business. UPD’s distribution and export business grew by 47.9%.
Market leading entertainment business Musica increased turnover by 3.3% as the slowdown in consumer spending continued to impact discretionary purchases.
Turnover in The Body Shop benefited from new store openings and increased by 9.2%.
On the outlook for the remainder of the financial year, Kneale said retail trading conditions are expected to remain challenging in the months ahead.
“However, our business is defensive and we enjoy competitive advantage owing to the strength and scale of our brands. Sales for the first two months of the second half of the financial year have continued in line with the performance for the first half.”
“We expect diluted headline earnings per share to increase by between 15% and 20% for the year to 31 August 2009,” he said.
The listing of New Clicks on the JSE will be transferred to the Food and Drug Retailers sector on 22 June 2009 to more accurately reflect the current and future composition of the group’s earnings.