Clicks Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1996/000645/06
JSE share code: CLS
ISIN: ZAE000134854
CUSIP: 18682W205
LEI: 378900E967958A677472
(“Clicks Group” or “the group”)

REVIEWED ANNUAL GROUP RESULTS FOR THE YEAR ENDED 31 AUGUST 2022 AND CASH
DIVIDEND DECLARATION

SHORT-FORM ANNOUNCEMENT

KEY FEATURES




•   Group turnover up 6.0%
•   Retail turnover up 11.7%
•   Group diluted HEPS up 33.5%
•   Dividend up 30.0% to 637 cents per share
•   Diluted HEPS adjusted for impact of civil unrest up 11.9%*
•   Return on equity increased to 48.0%
•   R4.3 billion cash generated by operations
•   R1.7 billion returned to shareholders
*   continuing operations

Financial reporting for impact of civil unrest
The civil unrest in KwaZulu-Natal in July 2021 had a significant impact
on the group. Certain financial information has been adjusted for the
impact of the civil unrest and the subsequent insurance recoveries to
present a normalised view of the underlying operating performance of the
group.

Overview
Clicks Group continued to show the resilience of its business model and
the defensiveness of its core retail categories as the group overcame
severe headwinds to deliver an 11.9% increase in adjusted diluted
headline earnings per share.

Retail trading was hampered by the prolonged impact of the July 2021
civil unrest, significantly higher levels of load shedding disruption in
the second half of the year, and depressed consumer spending and
confidence.

In this environment Clicks performed well as the beauty category
recovered strongly post Covid-19 and the chain supported the national
Covid-19 vaccination programme. As the largest vaccination provider in
the private sector, Clicks has administered over 3.5 million vaccinations
since the start of the programme.

Turnover growth in UPD was impacted by the high base set in the prior
financial year which included the second and third waves of Covid-19.

The group generated cash inflows from operations of R4.3 billion. The
dividend was increased by 30.0% to 637 cents per share, in line with
group HEPS which grew by 33.5%. Return on equity increased from 38.2% to
48.0%, at the upper end of the group’s medium-term target range of 40% -
50%.

Financial performance
Group turnover increased by 6.0% to R39.6 billion. Retail sales grew by
11.7%, with selling price inflation of 4.0%. During the year Clicks
administered 2.9 million Covid-19 vaccinations which generated turnover
of R1.1 billion. This resulted in an uplift of 3.5% in retail sales and
2.5% in group sales.

Distribution turnover declined by 2.6% due to the base effect caused by
strong demand for medicines during the severe waves of Covid-19 in the
2021 financial year.

Adjusted total income grew by 9.8% to R11.0 billion. The retail margin
reduced by 30 basis points due to the impact of the lower margin
vaccinations and the return of the cold and flu season. The distribution
margin improved by 50 basis points as a result of growth in the bulk
distribution business. The group total income margin expanded by 90 basis
points to 27.7% due to the faster growth of retail as the economy
recovered from the impact of Covid-19.

Adjusted retail costs were held below turnover growth and increased by
10.5%, with comparable costs contained to growth of 5.0%. Adjusted
distribution costs were impacted by the new bulk distribution contracts
as well as higher fuel, security, insurance and electricity costs and
increased by 6.2%, below the 7.6% growth in total managed turnover.

Adjusted group operating profit increased by 9.2% to R3.3 billion. The
group’s adjusted operating margin increased by 20 basis points to 8.4%.
Headline earnings from continuing operations grew by 28.6% to R2.5
billion. Earnings per share from continuing operations increased by 39.4%
to 1 080 cents with HEPS from continuing operations increasing by 30.1%
to 1 033 cents.

Adjusted headline earnings from continuing operations grew by 10.7% and
adjusted diluted HEPS from continuing operations by 11.9%.

Group inventory days increased to 72 days (2021: 66 days) owing to
inventory levels in UPD increasing by 13 days due to lower than expected
demand from the hospital channel arising from reduced Covid-19
hospitalisations and the slower return of elective surgical procedures.
Inventory levels are expected to normalise towards the end of October
2022 as hospital occupancy rates continue to improve. Retail inventory
days improved from 74 to 71 days.

Cash generated from operating activities before dividends paid totalled
R3.2 billion. Capital expenditure of R838 million (2021: R690 million)
was invested mainly in new stores and pharmacies, store refurbishments,
supply chain and information technology.

The group returned R1.7 billion to shareholders in dividend payments
(R1 287 million) and share buy-backs (R446 million). At year end, the
group held cash resources of R2.0 billion and the final dividend
totalling R1.1 billion will be paid to shareholders in January 2023.

Outlook
Trading conditions will remain extremely constrained owing to the
increasing pressures on consumer disposable income in the current low
growth, high inflationary environment. This will be compounded by the
trading disruption from ongoing electricity load shedding.

Management has shown its confidence in the growth prospects of Clicks by
increasing its long-term target from 900 to 1 200 stores, with 40 to 50
stores and 40 to 50 pharmacies planned to open each year.

Record capital investment of R936 million is planned for the new
financial year. This includes R477 million for new stores and pharmacies
and the refurbishment of 60 stores. R459 million will be invested in
supply chain, technology and infrastructure.

Final dividend
The board of directors has approved a final gross ordinary dividend for
the period ended 31 August 2022 of 457.0 cents per share (2021: 347.5
cents per share). The source of the dividend will be from distributable
reserves and paid in cash.
Additional information:
Dividends Tax (DT) of 20% amounting to 91.4 cents per ordinary share will
be withheld in terms of the Income Tax Act. Ordinary shareholders who
are not exempt from DT will therefore receive a dividend of 365.6 cents
net of DT.
The Company has 243 969 611 ordinary shares. Its income tax reference
number is 9061/745/71/8.
Shareholders are advised of the following salient dates in respect of the
final dividend:

Last day to trade “cum” the dividend        Tuesday, 24 January 2023
Shares trade “ex” the dividend              Wednesday, 25 January 2023
Record date                                 Friday, 27 January 2023
Payment to shareholders                     Monday, 30 January 2023

Share certificates may not be dematerialised or re-materialised between
Wednesday, 25 January 2023 and Friday, 27 January 2023, both days
inclusive.


David Nurek       Bertina Engelbrecht       Michael Fleming
Chairman          Chief executive officer   Chief financial officer

Cape Town
20 October 2022

This short-form announcement is the responsibility of the Clicks Group
board of directors and is a summary of the information in the detailed
annual results announcement and does not contain full or complete
details.
The full announcement can be downloaded from
https://senspdf.jse.co.za/documents/2022/jse/isse/CLS/FY2022.pdf or on
the group’s website at www.clicksgroup.co.za. The announcement is
available for inspection, at no charge, at Clicks Group’s registered
office during business hours for a period of 30 calendar days following
the date of this announcement. Any investment decision in relation to
Clicks Group’s shares should be based on the full announcement.
Ernst & Young Inc., the group’s independent auditor, has reviewed the
preliminary condensed consolidated financial statements contained on
pages 4 to 14 of this preliminary report and has expressed an unmodified
review conclusion on the preliminary condensed consolidated financial
statements. Their review report is available for inspection at the
company’s registered office together with the preliminary
condensed consolidated financial statements identified in the auditor’s
report. These condensed financial statements have been prepared under the
supervision of Mr M Fleming CA (SA), the chief financial officer of the
group.

Directors: DM Nurek* (Chairman), F Abrahams*, JA Bester*, BD Engelbrecht
(Chief Executive Officer), M Fleming (Chief Financial Officer), NNA
Matyumza*^, PM Moumakwa*, MJN Njeke*, SS Ntsaluba*°, M Rosen*
* Independent non-executive
° Appointed 1 September 2021
^ Appointed 1 September 2022

Registered office: Cnr Searle and Pontac Streets, Cape Town 8001

Transfer secretaries: Computershare Investor Services (Proprietary)
Limited

www.clicksgroup.co.za
Sponsor
Investec Bank Limited