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Integrated Annual Report 2016


total shareholder return
three-year CAGR

Investment Case

Clicks Group offers attractive organic growth prospects for investors wanting non-cyclical equity exposure to the South African retail and healthcare sectors.


Favourable market dynamics

  • Healthcare markets are defensive and growing in South Africa
  • Increasing proportion of population entering the private healthcare market
  • Improving living standards, increasing urbanisation and longer life expectancy is contributing to a growing market for health and beauty products


Resilient business model

Over 80% of group turnover is in defensive merchandise categories

  • As a value retailer Clicks is price competitive with national retailers
  • As a cash retailer Clicks is less interest rate sensitive than credit retailers


Market leadership

Clicks and UPD occupy market-leading positions

  • Clicks is the largest retail pharmacy chain in South Africa
  • UPD is the country’s only national full-range pharmaceutical wholesaler


Expanding retail footprint

Over 500 conveniently located Clicks stores

  • Targeting to open 25 stores each year
  • 25 Clicks stores opened in 2016
  • Goal to expand Clicks store base in South Africa to 800 in the long term


Expanding pharmacy base

Objective to operate a pharmacy in every Clicks store in South Africa

  • Pharmacies currently in 82% of stores
  • Targeting to open 30 – 35 pharmacies each year
  • 39 pharmacies opened in 2016
  • Retail pharmacy market share goal of 30% in the long term
  • Primary care clinics in 195 Clicks stores


Differentiated product offer

Private label and exclusive brands offer differentiated ranges at higher margins

  • Target to grow private label to 25% of total Clicks sales; currently 21%
  • Exclusive health and beauty franchise brands differentiate Clicks offer


Growing customer loyalty

ClubCard is one of the largest retail loyalty programmes in South Africa

  • 6.2 million active ClubCard members generate 77% of sales
  • Target to reach 7.5 million members over the next three years


Efficient supply chain

UPD provides an efficient healthcare supply chain channel for Clicks

  • UPD offers wholesale and distribution services to pharmaceutical manufacturers
  • Centralised supply from company-owned distribution centres to all retail stores (96% of product through centralised distribution)


Effective cash and capital management

  • Highly cash-generative business
    – R5.4 billion cash generated by operations over past three years
  • Returns enhanced through active capital management
    – Industry-leading return on equity averaging 53.3% over past three years
    – R2.3 billion returned to shareholders in dividends and share buy-backs in past three years
  • Well invested store base and supply chain
    – R1.1 billion capital expenditure in past three years


Globally competitive operating margins

Retail and UPD operating margins rank in upper quartile of global drugstores and pharmaceutical wholesalers

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