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Outline of presentation

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  1. Outline of presentation • Introduction & Strategy Trevor Honneysett • Healthcare Trevor Honneysett • Financial Results Peter Green • New Clicks South Africa Errol Gray • New Clicks Australia Jeff Sher • Conclusion Trevor Honneysett

  2. Healthcare Growth Value Results Efficiency Opportunity Today’s Focus Tomorrow’s Vision Review of New Clicks Strategy

  3. Strengthen/rejuvenate SA retail brands Australian retail brands Drive efficiency & productivity through Shared Services Boost profitability through improved turnover & margins Create value for stakeholders World class Trans-national Dominate Southern Africa Australasia Specialised Health Beauty Lifestyle Multiple brands Variety of ownership models Today’s Focus Tomorrow’s Vision New Clicks Strategy

  4. Multibrand Strategy Health Beauty Lifestyle Consolidated Retail Pharmacy Specialist Wholesale

  5. Shared Services & Multiple Ownership Owned Stores (100%:0%) Merchandising OD / HR Marketing Logistics Joint Venture Stores (e.g. 80%:20%) IT Fin & Admin Store Design Store Develop Supply Chain Franchise Stores (0%:100%) Distribution& Wholesale Buying Store Services

  6. Why Healthcare? • Paradigm shift occurring • Positioned to lead change • Affordable healthcare • Growth of business • South Africa • PM&A + Link + UPD • Australia • Priceline Pharmacy franchise model • Integrated channel to market

  7. Booklet only The Healthcare Opportunity • Industry facing tough challenges • Pharmacists seeking alliances to improve efficiency & productivity • Corporate ownership/partnership models thriving in many markets • New Clicks can add significant value • funding • bulk buying • retail services & experience

  8. Funding Interest Fees for services 56% UPD Link Investment Trust Purchase Milton & Associates Multicare Distribution Franchise Stores Independents 76 stores 250 stores 5 200 customers Today’sStructure New Clicks Holdings Limited New Clicks South Africa 100% nowJV in future Clicks / Discom 445 stores (267 Clicks +178 Discom)

  9. Fees for services 56% UPD Link Investment Trust Multicare Distribution Franchise Stores Independents 250 stores Migration of pharmacy licences Post Deregulation Structure New Clicks Holdings Limited New Clicks South Africa 100% 100% / JV Clicks + Pharmacy Discom 178 stores 343 stores Selected stores to convert

  10. Australian Healthcare Strategy • Measured approach • Sustaining pharmacists’ goodwill • Compliant franchise format • Implement three scenarios: • Convert existing pharmacies to Priceline Pharmacy • Convert Pricelines to Priceline Pharmacy • Secure new locations • Alliance - wholesale distribution

  11. Booklet only Our Healthcare Strategy • Extend New Clicks retail presence & expertise into pharmacy • Establish (within five years) national networks of efficient, compliant & profitable low-cost drugstores in South Africa & Australia • Promote co-ownership model in South Africa • Roll out franchise model in Australia • Improve front to back shop ratio • Synergies from combining pharmacy with current offering - lower overheads & increase footfall • Increase net margin

  12. Financial Results Peter Green

  13. Performance

  14. Undiluted headline earnings per share

  15. Operating profit

  16. Clicks turnover growth

  17. Booklet only Segmental contribution – Operating profit

  18. Booklet only Group operating margin

  19. Interest • Increase due to: • Increase in rates • Funding for PM&A • Funding for acquisition of Price Attack

  20. PM&A • Loss for the period R8.2m before interest to New Clicks • Budgetingan operating profit for the full year • Cash generating towards end of the financial year

  21. PM&A

  22. Booklet only Tax rate

  23. Balance sheet Note - The Feb 2002 figures for Australia included above have been adjusted to the current exchange rate to allow comparison

  24. Booklet only Goodwill Forex revaluation adjustment R 25 030 k UPD goodwill acquired R 98 972 k

  25. Booklet only Asset turn

  26. Booklet only Loans to third parties

  27. Cash flow Note - UPD acquisition through share issue

  28. Future focus • Continue to focus on: • Asset turnover • Cash generation • Improving margins • UPD willlower margin, but has high asset turnover • Resulting in improving: • Returns & EVA

  29. New Clicks South Africa Errol Gray

  30. Revitalisation of Clicks Profitability of PM&A Turnaround of Discom Supply chain & efficiency of stock management Integrated healthcare offering Established Discom African beauty & haircare offering Revitalised Lifestyle category High sales growth, low stock levels Variety of multi-ownership models & formats Today’s Focus Tomorrow’s Vision New Clicks South Africa

  31. Booklet only Clicks - Snapshot

  32. HIGHLIGHTS Health & Beauty continue to do well Positive impact of new leadership ClubCard loyalty programme generating results Datamining initiatives CHALLENGES Revitalisation of brand & stores Focus on Lifestyle category Lifting staff morale Operational efficiencies Customer service Increase size of ClubCard basket Integration of healthcare Clicks

  33. Clicks • KEY ACTION PLANS • Store refurbishment • You pay less at Clicks - used with other value propositions • Overhaul & repositioning lifestyle • Restructure operations & upgrade capability • Preparing to integrate healthcare • Improving value proposition • Stock availability • Leveraging ClubCard database • Injecting spirit into the team

  34. HIGHLIGHTS PM&A – more effective & efficient Turnover of UPD maintained UPD allows group to buy at better prices Interface between Clicks, UPD, PM&A & Link clearer & stronger Opportunity made available for pharmacies to buy at Clicks prices Success of Intercare pilot CHALLENGES Further improvement of PM&A performance Integration of pharmacy systems Integration of distribution systems Adding value to franchisees Healthcare

  35. Healthcare • KEY ACTION PLANS • Integration of IT platform • Buying compliance systems • Focused implementation team • Preparing for legislation • Building on turnaround in PM&A

  36. Booklet only Discom - Snapshot

  37. HIGHLIGHTS Improvement in efficiencies & cutting of costs Turned-on team Success of hair salon pilot Discom • CHALLENGES • Big steps in repositioning of African beauty brand • Need to improve basket size • Need to improve sales & margin • Sales in Lifestyle category

  38. Discom • KEY ACTION PLANS • Move into malls • Additional professional haircare opportunities • Focused Lifestyle buyers

  39. Booklet only Music Division - Snapshot

  40. HIGHLIGHTS Strong local music industry Increasing market share Supplier partnering CHALLENGES Drive to improve on last year Impact of worldwide music trends Music Division • KEY ACTION PLANS • Strong promotional programme • Broaden focus into entertainment

  41. Booklet only The Body Shop - Snapshot

  42. HIGHLIGHTS Successful niche market format Introduction of new Colour range CHALLENGES Maturity of brand worldwide The Body Shop • KEY ACTION PLANS • Continued rollout of stores

  43. HIGHLIGHTS Stock turn improvements continuing Restructuring categories starting to have impact Financial services restructure on track CHALLENGES Optimisation of supply chain efficiencies in stores Reducing costs and continuing to add value Shared Services • KEY ACTION PLANS • Implementation of ERP system • Implementation of merchandise planning system

  44. Stock Brands Profitability Healthcare Lifestyle African beauty & haircare Today’s Focus Tomorrow’s Vision New Clicks South Africa

  45. New Clicks Australia Jeff Sher

  46. Margin productivity – Priceline Building pharmacy capability New positioning – House Store growth – Price Attack Building franchisor skills Cost efficiency Enhanced distribution – Pharmacy Shared Services– brought to life Increased stakeholder value Today’s Focus Tomorrow’s Vision New Clicks Australia

  47. Booklet only Priceline - Snapshot

  48. HIGHLIGHTS Leadership changes Selected as preferred retailer by multi national supplier Lifestyle category expanded One millionth ClubCard customer Satisfactory results in the face of discounting Continue with organic growth CHALLENGES Weak December sales due to intensity of competition Margin productivity impacted underperformance of Lifestyle category intense competition Inventory management Priceline

  49. Priceline • KEY ACTION PLANS • New category team established • Inventory management programme established to enhancestock turns • Focus on improving high-margin categories • Promotional programme for thesecond 6 months enhanced