25 April 2013

Release Date: 2013/04/25

Cape Town – Clicks Group today reported turnover growth of 11.4% to
R8.5 billion for the six months to February 2013, with headline earnings increasing by 10.0% to R366 million.

The interim dividend was increased by 10.0% to 48.5 cents per share, while the group’s return on equity is the highest in the retail sector at 58.2%.

Chief executive, David Kneale, said trading conditions have remained challenging, particularly for the Clicks chain, where its middle income customers are facing increasing financial pressures.

“Constrained consumer spending has resulted in slower revenue growth, compounded by relatively low selling price inflation. Despite these headwinds, Clicks has strengthened its competitive position and gained share in all of its core health and beauty markets,” he said.

Turnover growth of 7.0% in Clicks was driven by increased promotional activity.
Clicks extended its store footprint to 430, with 324 having in-store pharmacies. Membership of the Clicks ClubCard loyalty programme reached the 4 million mark during the reporting period.

Kneale said the group’s other retail brands, Musica and The Body Shop, both performed well. Musica increased operating profit by 27.3% through tight cost management. The brand continued to gain market share in CDs and DVDs, despite the net closure of eight stores. The Body Shop increased turnover by 10.1% and operating profit by 10.9%.

UPD’s integrated pharmaceutical wholesale and distribution strategy continues to gain traction. Turnover increased by 20.3% as UPD grew its share of the private pharmaceutical market from 23.2% to 25.7%. The business now services 20 distribution agency contracts.

The group’s operating profit increased by 8.7% and the operating margin was 20 basis points lower at 6.2% as a result of the faster growth rate in the lower margin UPD business.

Diluted headline earnings per share (HEPS) grew by 8.5% to 142.7 cents, reflecting the dilutionary impact of the group’s broad-based employee share ownership scheme.

The group remains strongly cash generative with cash inflow from operations increasing 14% to R244 million. The group returned R451 million to shareholders through distribution payments and share buy-backs and invested R145 million in capital expenditure.

On the outlook for the remainder of the financial year, Kneale said the group aims to further strengthen its position in health and beauty retail and healthcare supply.

“The retail environment will remain tough for the Clicks chain. In these conditions our focus will be on driving revenue growth, maintaining margin and containing costs. UPD will also continue to drive turnover growth while optimising costs and driving efficiencies.”

He said the group expects to increase diluted HEPS by between 5% and 10% for the financial year to August 2013.

Issued by Tier 1 Investor Relations on behalf of the Clicks Group
For further information kindly contact
Graeme Lillie, Tier 1 Investor Relations 021 702 3102 / 082 468 1507

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