Hello and Welcome to the Deutsche Bank Deposit Receipts Versus Investor Conference, DBV. I'm Zafar Aziz from the Deutsche Bank team. I'm pleased to announce our next presentation will be from Clicks Group Limited. Before I introduce our speaker, a few points to note. Please submit your questions in the questions box. All of today's presentations will be recorded and can be accessed by the Deutsche Bank website, adr.db.com. At this point, I'm very pleased to welcome Clicks Group Limited that trades on the JSE under the symbol CLS and on OTC under the symbol CLCGY. Good morning. Thank you very much for joining us here today. I'm Bertina Engelbrecht, the Chief Executive Officer of the Clicks Group. I'm joined by my trusted colleague, Gordon Traill, who is our Chief Financial Officer. Also on this side with us is Sue Hemp from our Investor Relations team. I'm going to go straight away into the presentation and I'll start with the strategic roadmap. Just to preface, first of all, before I start off, we are assuming that you are quite on point in terms of our latest interim results. What we thought to do today was to really take you through the elements of the strategic roadmap, dealing first of all with the retail part of the business and then UPD. Really what we wanted out of today was to grant you the opportunity to have as many of your questions posed and responded to in this particular session. Really strategically, what we look to do in our organization is three things on the retail side. First is how do we leverage our investments. Secondly, very important for us, and we think one of the underpinning reasons for our performance, is how do we ensure that we stick to our core. Of course, for any organization that wishes to have a sustainable future, how do we build for that future? In leveraging our investments, it is really about the work that we do in terms of our existing store base. Importantly here, we focus on the modernization of our stores, ensuring that they do not fall behind in terms of rejuvenation and renovation. What we do in terms of the stores always is to look for what are the kinds of things that we can do to elevate performance in core areas within the stores, such as, for example, beauty, health, and electrical. What we do is we do very particular elevations in those stores. Baby stores are very important for us because, of course, we've done the work around the Baby customer. What we do know is that the Baby customer is an incredibly loyal and an incredibly valuable customer. The Baby stores really, in terms of Clicks standalone stores, are for us to create a halo. We execute Baby very well in our entire estate, but the Baby stores are about creating the halo, ensuring that we've got a much wider range, supported, of course, by our online offering in Baby as well, and very experienced consultants in the Baby stores themselves. E-commerce, you know, I think most organizations today, you cannot not invest in e-commerce. When we talk about building for the future, we'll take you through some of the things that we are doing to drive e-commerce in terms of an omnichannel experience within our retail format in particular. Interestingly, I'm sure it will be some of the questions that will come up, but our omni really growing exceptionally well over the last two years and really, I think, supporting the decision to continue to invest in our omni capability. Project LEAP is really one of the investments. It was an acquisition that we made in terms of pharmacy software. We can go through some of the reasons for that, but incredibly important was for us to have a modern software system within pharmacy that would enable us to really deliver exceptional service within pharmacy, ensure that we could have opportunities to minimize the time that the pharmacist spends on looking for medicines and the administrative tasks in a pharmacy so that they could actually improve the time that they spend on consultation. That, of course, drives additional sales opportunities within the pharmacy. Assortment optimization is the big investment that we made in our [Beyonder] software in terms of merchandise systems. Really what assortment optimization does, it allows us to ensure that we are able to have the most optimal assortment from a ranging point of view in our stores. It allows for us to really do much improved forecasting capability. Once we are able to do that, it means that we are able to reduce lost sales. Really in the 2023 and 2024 year, we saw the value of the investment that we had made in our [Beyonder] project in particular. Sticking to our core, incredibly important for us, we tend not to get distracted within our business. You'll have seen by the interims we had grown our retail store footprint to over 950. The guidance to the market was that in the course of this financial year, we gave an expanded range of 45 new stores-55 new stores. I had indicated at the time that I felt fairly confident that we would be able to hit the upper limits of that particular guidance. Similarly, in expanding our pharmacy footprint, you will know that for a number of years, we were really hamstrung in terms of pharmacy openings because of the court decision in terms of our private-label pharmacy company. That was resolved in early 2024. It took quite a while, but in November, we got the first new pharmacy licenses issued. At the interim results, I indicated that in fact, in terms of new pharmacy openings, we had gone beyond and above the front store openings for the first half of this financial year. Similarly, in terms of the pharmacy footprint, we guided that we would be above the medium-term range of 40 new pharmacies-50 new pharmacies in this financial year and that we would in fact deliver 45 new pharmacies -55 new pharmacies. -55 new pharmacies. We are well on track in terms of that. Once again, very confident that we will hit the upper limits of the guidance. Of course, differentiation through private label, exclusive brands, as well as service is incredibly important. You'll have noted that in terms of private label and exclusive contributions, we had actually gone above the 31% at the interims. That is a key area of focus. What private label and exclusive does, of course, it allows us to maintain our total income margin as we open new pharmacies, which has got regulated pricing. ClubCard innovation and growth, very important for us. We continue to really have the most generous ClubCard or loyalty program in the country. We have once again regained our crown, if you will, as being the loyalty program most loved by customers or consumers within the South African environment. We have grown the loyal ClubCard base to over 12 million by the interims. Those ClubCard customers contributed more than 80% of our total sales. Importantly, because, of course, pharmacy is a key driver of footfall traffic and a destination shopping experience, we see that the ClubCard contribution in pharmacy is higher than that within the total retail store footprint. Building for the future, we had developed a new large specialized pharmacy format, which we called UniHealth. In fact, it will now be called UniCare because the regulator did not agree with the UniHealth name. They have now agreed to UniCare. That is a 24-hour, 365 days a week specialized large pharmacy format. What that does, it creates preeminence for us in terms of total health and wellness. It is really quite an attractive proposition, not only for customers. We find that the catchment area for the UniCare format is actually much broader. It goes up to a 50-km radius, whereas we normally look for a 5-km radius in terms of our retail stores. We are working very hard on the refresh of our website and our pharmacy app. In fact, I had indicated at the interims that we had grown the downloads of our total business app actually by 800,000 over the period. Importantly, app shopping had grown by over 37%. Implementing central compounding is quite critically important because if we look at it today, over 60% of our sales in pharmacy is through chronic, is our chronic sales. You know how much more efficient can we become if we were able to achieve central compounding? That just means that the pharmacist needs to spend less time on compounding and getting the patient parcels ready. We can do that centrally. It means that we can become so much more efficient in our stores and, of course, enable us to engage much more effectively with customers. Of course, expanding our Centurion DC, as well as implementing the warehouse management systems, that in particular will support the retail part of the business. The strategic pillars in health and beauty at the core really is around customer care. We do that through a number of initiatives. Of course, importantly, you know it's the ClubCard customer, but all other customers. It's the fact that we've got the repeat prescription service, that we've got the reminder service. It's the fact that we've got virtual doctors. It's the fact that we've got a dedicated customer care center here at the center for both pharmacy and front shop customers. Core to the retail, of course, is value. Within the current economic environment, that's incredibly important. We have seen just how the shopper shops for value, the increase in participation in promotional campaigns. We are very, very particular that we do not drive away from our core value proposition, which is you pay less at Clicks. The pillars of personalization, which is really facilitated through our ClubCard data that we've got, convenience, which is not just about our store locations. We now have got over 51% of the South African population living within a 5-km radius of our closest Clicks store. It's all the other things that we do to drive convenience. Differentiation, importantly, through private label and exclusive brands. These are all enabled through strategic enablers such as our centralized supply chain, our Information Technology or IT platforms, and then, of course, our people. I'm going to hand over to Gordon, and he's going to take you through our distribution business. Good morning. UPD is a fairly mature business now, although it's had tremendous growth over the last 15 years. A few years ago, we made a decision to upgrade the systems within UPD, and we implemented SAP and [CAD]. The last two years, UPD faced some issues in the implementation, which they've now got over. They're now positioned for growth into the future. During that period in time, we had to make a very difficult decision with two of our clients where we looked at the relative profitability, and we decided that it wasn't giving us the return that we wanted to. We thought that, in them exiting the business, that would give us further capacity in which we could take on distribution clients and grow our wholesale business more profitably. The strategic objectives within UPD are really about growing share within existing clients. One of the areas that we've been working on the last year post the implementation was the reduction of the byways through the Clicks business. Now, Clicks represents 58% of UPD's turnover and is growing in line with the Clicks business. We have a target of a 98% compliance buy through UPD from Clicks. I'm happy to say now that post the systems implementation, we are now hitting 98% fairly easily. The other area of growing was in compliance through the hospital channels. Ensuring through service that they maximize their orders. This is the other important channel of sales for UPD. We currently hold approximately 85% of the market share within the private hospital market. The third area where we have realized that we should focus on, which probably hasn't been a focus area in the last few years, is the independent market. Not purely the independent pharmacies, but the Link brand, the service and independent pharmacies. Our estimate is that independents, although they will continue to lose market share to the corporates over the next few years, such as Clicks and some of our large competitors, there still will be a large independent market within South Africa. UPD should be serving that market through loyal independents that are part of our Link buying group. If we just considered the protection of our income, it's obviously maintaining the existing business that we have now, that we are happy with. The profitability of those clients and looking for future profitable distribution client growth. Another area where we believe that UPD can grow income is on the med tech side. UPD currently serves hospitals and pharmacies. If we are to increase our presentation through our med tech offering, we can do that efficiently and we can bring a wide range of med tech products to hospitals and to pharmacies. This market is quite fractured and customers are looking for a one-stop shop where they can get their med tech offering, such as PPE, the bandages, etc. Not high-end equipment, but the lower end of med tech. The third pillar that UPD has to concentrate on in terms of its future performance is driving efficiencies using the investments that we've made over the last few years. Implementing SAP and [CAD], that has allowed us to improve the replenishment planning within the UPD business so we can better service our customers and improve our on-time infill performance with Clicks and with hospitals and with our link customers. It's also allowed us, if you look at the performance of UPD in the last six to 12 months, in ensuring that we apply labor within our DCs efficiently. It's allowed us to identify where we've got too little or too much labor depending on the time of day and to deploy it efficiently. The key metric for UPD now is managing their DC expenses as a percentage of the turnover and as a percentage of hours operated within each of the DC. This also will allow us to focus on, or the systems allow us to focus on, the working capital within UPD. What we have found is, although we have an efficient inventory across the UPD business, there might be imbalances between the different DCs. That is now something that we are having a very close look at to ensure that we do not have a long tail of stock that is not working for us efficiently. UPD is quite a low, is a very low margin, operating margin business. It is absolutely key that they have efficient inventory that leads to efficient creditors. If we just consider some of our medium-term financial targets that we have set out. Most of these have not changed, but there is a couple that did change in the last 12 months. We will continue to target a return on equity of 40%-50%. Along with that, investors were looking for us to introduce a return on invested capital target, which was 20%-30%. That 20%-30% is inclusive of IFRS 16. We equally have an internal management target of return on invested capital of 40-50%, excluding IFRS 16. Shareholders funding to total assets, we are looking to keep within 30%-35% along with our return on total assets. Inventory days, we have been moving outside of this range recently, but we are targeting to move within 60 days-65 days for the group and net working capital days of 30 days-35 days. A couple of the operating targets that we did amend is the operating margin targets, where we actually changed the group target not to 8.5%-9.5%. That was my error. It was actually 9%-10% when I prepared the slide. And retail has been moved up to 10%-11%. I think you would have seen in the most recent results that the retail results, if you adjusted for the unicorn impact, was actually 10.2%. And we expect that we are now moving into that 10%-11% range. The distribution business, which is UPD, we kept just now at 2.8%-3.3% because we wanted to see them recover post the systems changes. And our dividend payout ratio remains at 60%-65%. What is not on this slide is that any excess cash that we have that is generated outside of our dividend payout ratio, we plan on returning to shareholders through share buybacks. That is something that we have done over the last few years. In our most recent results, we have just post interim results, we purchased a further ZAR 372 million of our own shares. You would have seen that in the shares being canceled if you looked at the equity at the beginning of the year and a month into a month post the end of February. Thank you for your questions. The first one is, how many stores are you planning to open over the next three years? Are you expanding your geographic footprint? Maybe I'll take that one soon. Thank you very much. The medium-term target is to get to 1,200 stores. We think that in the course of this year, we'll get to 1,000 stores. The target in terms of annual store openings are between 40 stores-50 stores. Over the last year and this year as well, we will probably get to 55 stores very easily now per year. We've got a very good pipeline of stores going ahead. The target of 1,200 is not the end of where we can be. You will know that corporate pharmacy in South Africa, the market share combined, there is just over 50%. We believe that independent pharmacies will probably be able to maintain a combined market share there of 25%-30%. There is real room for us to still grow our market share over the period itself. In pharmacy, the target is to have a pharmacy in every store. We've got a bit of a backlog because, of course, until 2004, we were not able to open any pharmacies. The legislation year precluded that. We won the case at the Constitutional Court for corporates to own a pharmacy. Since then, you actually see the rapid growth in our market share in pharmacy. In terms of expansion, we have a number of stores in Southern Africa. We very gingerly add to that because, of course, there's very little private medical aid membership in those territories. It's mainly state-funded medical aid in those territories. There's a very good place there for Clicks front shop to exist. No, we don't have a big goal to expand beyond Southern Africa. Africa in and of itself will remain an important focus of growth. That also answers another question, which is the growth potential across Southern Africa and are there plans to expand in the large markets of Western and Eastern Africa, which no, there are not at this stage. Another question is, how competitive is the labor market for pharmacists? We are the second largest employer of pharmacists. I must say, you know, we are also, in terms of the employer value proposition, the employer of choice for pharmacists. The reason I think that we have been able to achieve that is because we can show any young pharmacist who completes that we can offer them a career path that goes beyond being a pharmacist in any particular store. For example, the head of our store operations, who is a senior member of the Clicks Executive Team, is a pharmacist. One of our Chief Commercial Officers is also a pharmacist. I think that's the real value that we can show that there's a real path to grow their careers. Importantly, of course, we are the place of choice for pharmacists when they do their internships. We are completely oversubscribed. We've got about 60 openings per annum, and we get probably 400 + applicants for that. We also do a bursary program every year. We're probably about 80 bursaries are actually awarded through to pharmacists. Yeah, I think it's the fact that we've got a career path for pharmacists and that we can show that we've always invested in their career growth and development. How do your margins compare to retail peers? They seem to be above average. I think you've got to probably read into that. First of all, I want to just commend our commercial teams. They are exceptionally good at sourcing, but also at negotiating. We definitely need to send them on negotiation training programs. The other part, of course, is if you've got great market shares such as we have, if you look at an area like skincare, for example, you've got a 44% market share. What it means is that branded suppliers know that if they invest in our promotional campaigns and if they offer us marketing support, we are able to drive customers into the stores and therefore enable them to really grow their share.