Listed health, beauty and pharmacy retailer New Clicks Holdings has reported a 13,3% decline in its diluted headline earnings per share from all operations for the year to the end of August 2005, to 63,2 cents from 72,9 cents a year earlier.
The company declared a final dividend of 18,5 cents per share, for a total dividend for the year of 29,7 cents per share, 15% lower than the 35 cents distributed in 2004.
The result was in just below market expectations — a consensus of four research analysts surveyed by I-Net Bridge had expected diluted headline earnings per share of 67,8 cents for the year and a total dividend of 31,6 cents.
New Clicks owns the retail chains Clicks, Discom, CD Wherehouse, Musica and wholesale distributor New United Pharmaceutical Distributors, and has been rolling out pharmacy dispensaries in its Clicks stores across the country.
The company’s results — which it described as “disappointing” — were primarily affected by the lower pharmacy dispensing fees introduced by the government in August last year, as well as continued high levels of shrinkage at Clicks.
Reporting its final results on Wednesday, New Clicks said diluted headline earnings per share from continuing operations were only 5,3% lower at 63,2 cents versus 66,7 cents a year earlier.
Turnover from continuing operations rose 18,2% to R8,7-billion, bolstered by the inclusion of the pharmacy operations for the full year, compared with only six months in 2004. However, a 28,5% fall in operating profit of Clicks, to R209,7-million from R293,5-million the previous year, had adversely impacted the group’s overall results.
This decline at Clicks resulted mainly from a loss of approximately R70-million in the pharmacy business for the year, the continued high level of shrinkage in the Clicks stores and a proportionately higher allocation of central costs.
Approximately R48-million of the pharmacy losses could be attributed to the impact of the lower dispensing fees adopted by Clicks in line with the government’s new medicine-pricing policy, the company said.
Overall, the Clicks brand improved turnover by 17,9% to R4,5-billion, although when the turnover from pharmacy operations was excluded, turnover was 9% higher.
Because Clicks’ operations comprise such a large proportion of the overall New Clicks group, overall operating profit fell by 8,6% to R358,6-million, while net profit attributable to shareholders came in at R204,6-million, compared with a loss of R18,5-million in 2004.
Headline earnings from continuing operations totalled R221,6-million, down 16,2% from the R264,7-million recorded a year earlier.
The group said working capital management remained a key area of focus. Net cash flow from operations totalled R479,4-million, down from R546,7-million the previous year, and there was a cash outflow of R345,3-million for the year.
The cash was applied to capital formation in its stores, improved information technology, loan repayments, dividends, share repurchases and working capital funding, the company said.
Looking ahead, New Clicks said the performance of the Clicks brand stabilised in the second half of the year and started to show the early signs of a turnaround. The shrinkage trend continued, however.
While the trading improvement is likely to continue, realistically management considers
that the full benefits of the recovery are not likely to be achieved in the short term.
The other businesses within the New Clicks stable, however, are likely to continue to build on their recent success. Overall, the stronger platform achieved is expected to contribute to improved profitability and earnings in the new financial year. — I-Net Bridge