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Bertina Engelbrecht: Good afternoon and a warm welcome to the webcast of our annual results for the year ended 31 August 2025. I am Bertina Engelbrecht, Chief Executive Officer of the Clicks Group. Joining me here today is Gordon Traill, our Chief Financial Officer. We will be taking you through the presentation of our annual results and respond to your questions after the conclusion of our presentation. This slide sets out the outline we will follow. I will start with a review of our financial year. Gordon will follow with an overview of our financial results. I will take you through the trading performances of our business units; first Clicks, then UPD; and I will then close with the outlook for the group. Please submit any questions that you may have via the webcast platform during and after the conclusion of our presentation. Sue Hemp from our Investor Relations team will read out your questions to which Gordon and I will respond. I will now commence with a review of the year. At the macro environment level, green shoots are starting such as a slight expansion of GDP growth, the easing of domestic inflationary pressures and lower debt servicing costs. Although confidence levels are below historic averages, the latest consumer confidence index reported a modest easing of pessimism. Despite some challenges, particularly the high unemployment rate and fiscal constraints, we maintained performance momentum because of our focused results orientation, resilient business model, brand strength and incredibly loyal ClubCard customers. In the year, we delivered diluted headline earnings per share growth of 14.1%. This is comfortably within our guidance range and an enviable return on equity of 49.2%. We are reaping the benefit of the foresight of past leaders who launched our loyalty program in 1995. In August, our ClubCard celebrated its 30th anniversary with over 12.6 million active members who contributed 82.6% to our sales. Last year, I said I would be disappointed if we did not exceed our store and pharmacy rollout targets. True to form, our teams did not disappoint. We increased our Clicks store count to 990, pharmacy count to 780 and primary care clinics to 225. We are strengthening our relationship with the Department of Health, a key stakeholder. Post the year-end, additional pharmacy licenses are being issued. This supports our pharmacy expansion program. In a subdued trading environment, customers focus on value by switching to lower priced brands, buying on promotion and using loyalty programs. As a value retailer with a respected private label program, we were well positioned to leverage our market-leading shares in defensive retail categories. Customers responded favorably to our product and price offers resulting in market share gains in our core health and beauty categories. I will provide greater detail on the market share and category performances in the retail segments review stabilized and the business is gaining positive traction. Purchasing compliance from both Clicks and the listed private hospital groups have recovered. Expense management, as Gordon will share in more detail, was exceptional. As a group, we embrace inclusive transformation with a strong emphasis on gender diversity and local empowerment, the results of which are reflected in our BBBEE level 3 rating and our top achiever status in the UN Women's Empowerment Principles. I now hand over to Gordon, who will take you through the group's financial results.
Gordon Traill: Thank you, Bertina. Good afternoon. As in previous years, we will cover the financial performance of the group starting with the group highlights. If we consider the financial highlights, group turnover increased by 5.3%. Retail turnover grew 6% for the year with half 2 slightly slower due to new stores and pharmacies being opened later in the year and lower inflation. UPD had a slower second half after the recovery from the system implementation in the previous year. Total income margin grew by 90 basis points resulting from strong growth in private label, supply chain efficiency income and lower shrink in the retail business. The group trading margin at 9.8% increased by 60 basis points due to the growth of retail and good cost control from UPD. Diluted headline earnings per share for the group increased to ZAR 13.62 per share, up 14.1% on last year within our guided range of 11% to 16%. The group's operations generated strong cash inflows of ZAR 6.6 billion. During the year, we returned over ZAR 2.7 billion to shareholders in dividends and share buybacks. The group's return on equity at 49.2% increased from 46.4% in the prior year. And the dividend declared for the year has been increased by 14.2% to ZAR 0.886 per share, which is a 65% payout ratio. Retail had a slower second half due to the later opening of stores and pharmacies, inflation remaining muted and a slower flu season. UPD's compliance levels in both its main channels continued improving resulting in good growth in sales to Clicks while positive growth was maintained in the hospital channel. If we exclude the Unicorn disposal in the prior year, retail grew 7% with same stores growing 4.7% excluding the additional trading day in the prior year. New stores and pharmacies added 2.3% to the top line while selling price inflation averaged 2.6% for the year, lower in the second half. Distribution business had a consistent performance in the second half with good compliance from its major sales channels. The business grew despite continuing genericization in the hospital channel and lower inflation. Bertina will cover the detail of each business' performance later in the presentation. This slide reflects our total income earned, which has increased by 8.4% for the year. You can see the total income margin in retail was 70 basis points higher than last year as there was good growth across pharmacy, health and beauty and personal care driven by private label. In addition, the previous investments in systems has allowed us to generate additional supply chain efficiency income. UPD's total income margin was down 10 basis points to 9.9% and this was due to the higher SEP increase granted in the previous year. Overall, the faster growth of the retail business at 8.1% and the growth in UPD has resulted in the group's total income margin being 90 basis points higher than last year. Retail costs grew 7.9%, which was lower than in the first half and remained well controlled. In the second half, cost growth was 7.3%. Store staff bonuses have increased by 9%, which is on top of a 21% increase in the prior year and is well deserved based on this year's performance. In the year, we have added a net 55 Click stores and a net 60 pharmacies. We are looking forward to continue accelerating our pharmacy growth in the next financial year. We would also like to thank the Department of Health for their support in the last year in working with us to close the gap in stores without pharmacies. Comparable retail cost growth, excluding new stores, was up 5% for the year with costs growing at a lower rate in the second half. The IFRS 16 interest charge increased as a result of the increase in number of renewals in the period. The growth has slowed from the prior year. UPD's costs have grown lower than turnover as the systems implementation was completed and efficiencies have been extracted. It is pleasing to note that costs grew 1.6% in the first half and 2.2% in the second half. Employment costs in the second half continued to be well controlled although were ahead of the first half due to the provision of performance bonuses. Other costs fell by 3.9% in the second half as a result of good cost control and lower debtor provisions required. The investments in solar have paid off with electricity, water and generator costs for the year declining by 35% despite the higher electricity tariffs. Our investment in electric vehicles has resulted in further efficiencies with transport costs down 0.2% year-on-year. Further investments have been made to allow delivery with electric vehicles, which will come through in our financial year 2026. This further supports reducing our carbon footprint. Retail grew trading profit by 8.4% with the margin improving by 30 basis points to 10.5%. This has been due to good sales growth, strong other income generation together with efficient cost management. UPD's trading profit increased by 9% with the trading margin increasing by 10 basis points to 3.3% and this was due to consistent sales growth and good cost control. Overall, the group's trading profit increased by 12.1% to ZAR 4.7 billion for the year. This slide reflects the growth in turnover, trading profit and margin of the group over the past 5 years. The company has sustainably grown its performance through various economic cycles. And to note that in last year, inflation has moderated, interest rates have reduced and we have all benefited from the lack of load shedding in the past year. There are some concerns though with the impact of external tariffs further straining the economy. That said, the group has demonstrated its ability to continue to evolve the trading margin over the past 5 years. Inventory levels for the group has increased by 4 days to 78 days. Retail stock days are 1 day higher than last year and inventory remains well controlled although increased due to the later opening of new stores in the year and higher levels of inventory being held ahead of the warehouse management system going live in Cape Town. UPD stock days at 45 days are 3 days higher than last year partially due to higher levels of GLP-1 buy-ins and Unicorn stock held at year-end. Overall, working capital was well managed with net working capital days at 34 days. This slide shows the movement of cash during the year. As you can see, we started the year with cash of ZAR 2.7 billion reflected in dark blue on the left-hand side and ended the year with ZAR 3.3 billion on the right-hand side of the slide. The group has generated cash of ZAR 6.5 billion highlighted in green, working capital inflows of ZAR 73 million, repayment of lease liabilities amounting to ZAR 1.1 billion and tax payments of ZAR 1.2 billion. ZAR 985 million was reinvested in capital expenditure across the group. From this amount: ZAR 599 million was invested in new stores as well as quick store refurbishments, ZAR 152 million was spent in distribution centers including the expansion of our Centurion DC and ZAR 234 million was spent in IT and other retail infrastructure. We returned ZAR 2.7 billion to shareholders this year and this was in the form of dividends of over ZAR 1.9 billion and share buybacks of ZAR 751 million. Final cash dividend of ZAR 1.5 billion will be paid out to shareholders in January. This slide shows our commitment to a disciplined approach to capital allocation. We expect to continue to invest in the business and return capital to our shareholders through dividends. Over and above this, our preference is to return any excess cash through share buybacks, which is demonstrated in this graph. Since 2006, we have bought back 164 million shares at a cost of ZAR 7.8 billion. At the closing share price on 31 August 2025, the value of these shares would have amounted to ZAR 61.2 billion. CapEx of over ZAR 1.2 billion is planned for the year ahead. ZAR 662 million will be invested in our store and pharmacy network and this will include 40 to 50 new Clicks stores and pharmacies and 70 to 80 retail store refurbishments. ZAR 594 million will be spent on IT systems and infrastructure, ZAR 88 million of this amount will be invested in UPD IT and warehouse equipment and we will invest the balance of ZAR 506 million in retail IT systems and infrastructure. This will include the completion of our new pharmacy management system and rollout of the implementation of the new warehouse management systems to our 2 other DCs and further investment in solar. We will continue to grow and invest in the retail footprint. UPD is positioned for growth now that the implementation has been completed and we will continue investment in systems for pharmacy and our distribution centers in the retail business. This slide reflects our medium-term financial targets. We have made good progress against these. Importantly, the group has continuing headroom for growth, particularly in expanding the retail store base. While we have shown good progress, these targets will not be revised at this stage. As indicated earlier, we have increased our investment in the business for growth. In framing these medium-term targets, we continue to seek to optimize the balance sheet, improve working capital efficiency, enhance cash returns to shareholders and maintain the dividend payout ratio between 60% and 65%. This slide demonstrates how the group has sustained its financial performance over the past decade. This is reflected in the 10-year compound annual growth rates achieved in diluted headline earnings per share of 13.5% per annum and dividend per share growth of 14.2% per annum. The compound annual total shareholder return over the past 10 years equates to 17.3% per annum. These excellent growth rates have been driven by strong organic growth, particularly in our health and beauty business, which has been supported by an efficient supply chain. This has in turn translated into strong cash returns, which have not only been reinvested in the business, but also allowed us to progressively increase our dividend. This graph shows the group's share price performance over the last 10 years. This performance is all the more pleasing when compared to the return in the Food and Drug Retailers Index of 4.6% and the Top 40 index of 7.8%. This performance is a testament to the hard work of all our employees throughout the group. Earlier, I noted that bonuses for employees have again increased. It is pleasing to note that our long-term shareholders have also benefited. I will now hand over to Bertina to cover the trading performance.
Bertina Engelbrecht: Thank you so much, Gordon. I will now take you through our trading performances starting with Clicks followed by UPD. This is the review of the Clicks business. Despite the subdued trading environment and a muted cold and flu season, the retail business delivered a solid result. Existing stores grew sales by 4.7% excluding the extra trading day in 2024. Inflation slowed down from 6.3% last year to 2.6% this year and we achieved volume growth of 2.1%. I now turn to the 4 categories to provide you with greater detail. Pharmacy sales grew 6.9% despite a soft cold and flu season as well as significant price reductions in key molecules to align with medical scheme formulary compliance requirements. Turnover in our 24-hour UniCare format achieved growth of 8% driven by strong support from doctors, the implementation of our after-hours doctor service and the exceptional performances of wound care, diabetes, primary care and IV clinics. Despite the delay in opening new pharmacies, we accelerated in the second half to open a total of 62 new pharmacies for the year, of which 29 were in the last quarter. ClubCard customers contributed over 87% of pharmacy sales and we continue to be rated as the customer's first choice retail pharmacy. We have increased our primary care clinic count to 225. Clinic sales increased by 10% driven by medical aid funded services and support for our virtual doctor consultation services. Front shop health and baby achieved strong growth with value growth of 8% and volume growth of 10.1%. In the baby category, volumes were up 15.3% compared to value growth of 6.2%. Front shop health growth was driven by the extension of our health care elevation to 138 stores, exceptional performances in sports and slimming which was up 27% and the continuing strong momentum of branded supplements up 29%. Our integrated baby strategy is entrenching our position as the leader in baby. Despite price deflation driven by supplier branded diapers and baby foods as well as supplier infill challenges. This category is continuing to perform well with private label and exclusive ranges the key to our success. Sales in our stand-alone Clicks baby stores were up 23%. Baby store-in-store sales grew by 12.4% and online baby sales grew 27%. Sales growth, as you can see, is gaining momentum and we are evolving margin. Sales in our beauty and personal care category was up 7.4%. Despite a heavily competed beauty market and the disappointing performance of The Body Shop, we grew sales ahead of the market fueled by new launches and the continued rollout of the elevated beauty hall concept in key nodes. The personal care category delivered a strong performance up 9.8% driven by strong private label sales which was up 17.6%, strong promotional sales and innovation in [indiscernible], Being Kind, Dove and Vaseline product ranges. Our exclusive body freshness range was up 42.6% driven by exponential growth in Spritzer, which was up 44%. In May, the new Body Shop owners unveiled their post-acquisition turnaround strategy with new product development launches such as Spa of the World and Passionfruit. These new ranges are in store and the teams are working to improve the infill rate. General merchandise sales performance was disappointing, up just 4.4% due to our underperformance of small household electrical appliances. In the next section, I will provide you with more detail. Despite the increasingly competitive environment, we are continuing to extend our market shares in core beauty and beauty retail categories. Let me take you through these starting with health. It is a relief to report that our intentional efforts at engaging collaboratively with the Department of Health to advance our public health agenda of improving the accessibility and affordability of health care is delivering results. We opened 62 new pharmacies in the year. Although 29 pharmacies only opened in July and August, we gained market share of 20 basis points creating positive momentum for our new financial year. Front shop health declined by 30 basis points despite strong gains across sports and slimming up 140 basis points, first aid up 290 basis points and incontinence up 100 basis points. Our comprehensive baby execution; which integrates our private label and online offering, convenient locations, competitive pricing and Baby ClubCard benefit strategy; drove our market share gain of 80 basis points in baby. Exceptional gains were recorded in diapers up 110 basis points, baby wet wipes up 270 basis points and baby dry foods up 230 basis points. Pleasingly, we have identified even more opportunities to grow our share of baby. We continue to gain market share in beauty and personal care. Skin care gained another 20 basis points fueled by strong share gains in face wash, lip care and moist wipes and we defended our market-leading share in hair care. Personal care continues to gain market share up 60 basis points across every measurement period with strong gains in body freshness, [ sun pro ] and sun care. In general merchandise, we declined by 40 basis points in our legacy category of small household appliances. This was due to significant out of stocks in the first half and an oversupply in the market. What is encouraging though is that over the last quarter, we were once again regaining market share. I now turn to the key drivers that support our growth starting with value. Our brand position of feel good, pay less supported by generous ClubCard rewards, extensive private label and exclusive ranges and convenient locations resonated with consumers. Despite heightened competition, we stayed true to our legacy as a value retailer with great everyday pricing and promotions. In so doing, we maintained our competitive pricing against all major retailers on a volume-weighted price index that excludes our 3 for 2 promotions, bulk offers and ClubCard cashbacks. We grew promotional sales by 12.4% to account for 47% of turnover across all front shop categories. We are committed to delivering on our public health care agenda of extending access to affordable health care for all. The convenience of our pharmacy and clinic network, virtual doctor offering and partnerships with health care funders enable us to deliver on our agenda. In the year, generics grew by 8.8% accounting for 59% of sales by value and 71% of sales by volume. Cash rewards are relevant especially in a tough economic environment. During the year and with the support of our affinity partners, we returned ZAR 855 million to loyal customers in the form of cashback rewards. Our differentiation strategy is premised on responding to changes in consumer demographics, preferences and shopping behaviors within the context of the trading environment we face. Our private label and exclusive ranges are core to offering the consumer choice. Private label and exclusive brands delivered sales of ZAR 9.7 billion as it continues its momentum of growing sales ahead of total retail sales. Customers trust our private label brands because of their proven quality and price positioning. This year, 1 in every 3 products sold in our front shop was a private label or exclusive product. Private label and exclusives contributed 25.9% to total sales, 30.6% to front shop and 12.3% to pharmacy sales. Our private label and commercial teams drive innovation and quality in addition to supporting our sustainability and local empowerment goals. In the year, 6 of the private label products won SA Product of the Year in their respective categories. Sales in our 6 stand-alone baby stores grew 23.7%. We increased our store-in-store executions from 5 last year to 14 this year. This is what enabled our gains in baby market share as we also improved margins in this category. The execution of our elevated beauty halls, which is now in 44 stores is driving increased sales in the big beauty brands and in brands exclusively available in Clicks. Our affinity partnership with and equity investment in ARC, a retail brand focused on the premium beauty market, enables us to extend our access to the premium beauty customer. In this month, ARC opened the largest beauty store in Africa at Sandton City to great acclaim. This year we are celebrating the 30th anniversary of the Clicks ClubCard loyalty program. The nostalgic reflections of loyal customers who shared their ClubCard journey with us and on their social media platforms fill us with pride. 30 years on, we are still growing with an active ClubCard membership base that increased to 12.6 million this year. The contribution of ClubCard members to total sales increased to 82.6% accounting for 80.7% of front shop and 87.4% of pharmacy sales. The 2025 Truth and BrandMapp loyalty white paper confirmed the ClubCard program as the most used loyalty program in South Africa. It continues to provide us with the mechanism to attract, engage and retain customers through personalized experiences that reinforce emotional affiliation to our brand. The use of advanced analytics to drive focused customer segmentation and tailored personalized rewards is critical to the success of the ClubCard loyalty program. This is an area that requires targeted investment in technological enablement as well as in the correct skill sets. Although online sales grew by 15.9%, we can and we will do better. Pharmacy is a key driver of our sustained performance. By November, we will have completed the national deployment phase of our LEAP pharmacy management system. We can now leverage the system to enhance service levels and increase sales. The expansion of our store network is progressing well and we are accelerating our pharmacy and clinic rollout program because of its proven positive impact on front shop growth. Internally, we have invested in people and improved processes to support our growth aspirations. We ended the year on 990 Clicks stores, 1 UniCare specialized 24-hour pharmacy store, 780 Clicks pharmacies and 225 primary care clinics. We remain committed to delivering affordable, accessible health care. 53.2% of the South African population live within a 5-kilometer radius of a Clicks pharmacy. We have increased our primary care clinics to 225. These are profitable due to medical aid funded services such as diabetes and the extension of our virtual doctor consultations. Now that M-Kem has been integrated and the rebranding of the UniCare concept approved, we will be extending our specialized 24-hour UniCare format by 2 greenfield sites and 2 acquisitions by February of next year. As with property, we have invested in the skills required to accelerate the growth of this format and we are accelerating our presence in lower income areas with 247 of our stores located in such areas contributing 23.7% of turnover. That completes the review of the Clicks business. I will now turn to UPD's trading performance. UPD's fine wholesale turnover, which excludes bulk distribution and preferred supplier contracts, was up 5.2% despite the subdued cold and flu season and lower inflation, a pleasing improvement against last year's negative 0.5% performance. This performance is attributable to greatly improved service levels, which has always been a core UPD strength. All operational service metrics are being met and the investments we made in systems, people and processes are bearing results. I will briefly turn to the core customers in this channel. As UPD's largest customer, Clicks contributed 58.4% of the turnover. Sales to Clicks pharmacies grew by 9.5% as purchasing compliance improved to over 98%. Clicks is growing ahead of the market and is accelerating its new pharmacy openings and importantly, actively driving purchasing compliance. This will greatly benefit UPD. Sales to the private hospital channel, which contributed 36.2% of turnover, grew by just 1.4% despite improved purchasing compliance. Volumes were up 8.8% due to increasing genericization and growth in the nonlisted acute hospital space. The continued decline of sales to independent pharmacies and other smaller channels is eroding UPD's market share, which is down to 26.2%. The improved purchasing compliance from both Clicks and the private hospitals as well as the stabilization of UPD's operational and service metrics will sustain its performance. UPD's total managed turnover, which includes fine wholesale sales as well as turnover managed on behalf of bulk distribution clients, was up 2% to ZAR 30.5 billion. In the prior year, UPD's total managed turnover was down 6.7%. So this is a good turnaround. The growing contribution of generics now 75.7% of volume versus 68.8% last year coupled with lower price inflation had a deflationary impact on turnover. The UPD team focused on improving quality and service levels and invested in its key account management principles to drive sales. During the year, UPD stock levels were elevated to improve stock availability for retail pharmacy and hospital formulary lines and to also improve access to GLP-1 medicines for its customers. The termination of excess property leases has been completed. We have, as Gordon pointed out, extracted the surplus costs carried during the wholesale system rollout and we have now also implemented more effective management practices to reduce variable employment costs. The UPD team achieved excellent cost management at a low growth of just 1.9% aided by its early investments in solar, batteries and electric vehicles. The wholesale systems implementation is complete. On the bulk side, the new systems have been rolled out to 7 distribution clients with the rollout to the remaining distribution clients on track to be completed by March next year. In support of our commitment to a sustainable carbon neutral future, we are in the process of ordering another 40 electric vehicles for use nationally. This completes the review of our trading performance for the year. It was a challenging year. Despite positive shifts in macroeconomic indicators, the early promise of an improved trading environment did not fully materialize. The resilience of our business model and our teams was tested. I am incredibly proud of our performance. It was forged by teams with an unrelenting focus on excellence. In retail, the teams delivered superior income growth and margin expansion coupled with truly outstanding shrink and wastage results. The continued growth of private label and exclusive ranges inspires confidence and the contribution of ClubCard to turnover is positive. Our new stores, pharmacies and clinic openings as well as the record number of store revamps exceeded expectations. Bongiwe Ntuli has inherited a healthy business from Vikash Singh. I'm confident that she will lead the team to even greater success. Gwarega Mangozhe and the new Rest of Africa team delivered a stellar performance with sales growth in every territory exceeding target due to strong delivery of the operational and customer service metrics. I'm going to call out Corne Visser and the Namibia team in particular who delivered a consistent exceptional performance. The UPD's team performance in the second half of the year was outstanding. The operational and customer service metrics are aligned to our goals and the work that Trevor McCoy and the team have put into improving the business has created positive momentum for the new financial year. Our group services team under the leadership of my colleague here, Gordon Traill, has been instrumental on delivering and might even say getting very, very close to the upper end of our medium-term financial targets. The IT team under his control has partnered well with the business to progress our IT investments. We still have so many opportunities to increase our scale, to leverage our loyalty and strengthen customer loyalty, to extend our private label offer, to extract efficiencies and to improve on our digitization. What matters most is our people, especially our store, pharmacy teams and our DC teams. Last night, we were privileged to have our Top 10 store managers and our Top 10 pharmacy managers as well as our Clicks and UPD DC general managers join our senior leadership team as we took our teams through our results after close of the market. This provided them with the opportunity to represent their teams and for us to publicly recognize their contributions. In presenting our results here today, Gordon and I acknowledge that we do so on behalf of our people. From our Board and executive teams to all of our people and their extended families, thank you. I will now conclude our presentation with the outlook. Although the macroeconomic indicators are improving, the consumer remains constrained. The consumer is therefore prioritizing value, convenience and rewards from companies that inspire trust. Our retail strategic pillars of value, convenience and differentiation supported by our private label and exclusive program and ClubCard loyalty program is aligned to the consumer needs and positions us for sustained growth. In distribution, our strategic pillars of quality, efficiency and customer excellence is fundamental to profitable growth. We remain well positioned to thrive in this environment due to our competitive advantage in defensive health and beauty sectors, our growing market-leading shares in core retail categories and in pharmaceutical wholesale and distribution, our sustained long-term growth opportunities underpinned by our value proposition and customer service and our increasing scale which enables us to maximize efficiencies and leverage it for effective execution and reach. Over the past 5 years, we invested in systems in both retail and distribution for growth. We have invested in Lee, a modern pharmacy management system to fuel our pharmacy growth. We invested in infrastructure and in the expansion of our store, pharmacy and clinic network to support growth. And we invested in adjacencies in health and beauty to extend our access to market segments in which we are underindexed. We are now poised to fully leverage these investments made to improve service and increase sales in our network. In the 2026 financial year, we will increase the number of UniCare 24-hour specialized pharmacy stores to a total of 5. The Sorbet and ARC customers are our most profitable ClubCard customers. And increasingly, we still have opportunity to increase ClubCard penetration in these businesses. Our first Sorbet master franchises for Botswana and Mauritius will be concluded in 2026 and we are on track to extend the number of Sorbet stores in South Africa. We will deliver on our medium-term target of 1,200 Clicks stores. In 2026, we will open another 40 to 50 stores and 40 to 50 pharmacies and over the medium term, we will open 10 to 15 UniCare stores. Our private label and exclusive program is core to our offering and we are driving towards our goal of achieving a 35% contribution to our front shop sales. The objectives outlined above require investments, which will be supported by our planned CapEx spend of ZAR 1.3 billion per annum over the medium term. The increasing scale of the business and requirement to plan for succession necessitated a review of our executive structure. In September, the group executive was expanded to 6 members to drive focus, create capacity for growth, invest in core capabilities and to prepare for succession in our usual disciplined manner. The expanded group executive portfolios in addition to the CEO and CFO covers Retail South Africa, Rest of Africa Retail, UPD, our investments in health and beauty and people. The complementary diversity profile, broad sector experience and track record of performance of the expanded group executive team significantly strengthens our leadership capability. Earlier, Gordon shared with you our pleasing performance against our medium-term targets. No wonder I remain confident of the group's capability to continue to delight shareholders by delivering on our medium-term targets. Thank you so much for listening. I will now hand over to Sue Hemp, who will assist us with taking your questions.
Sue Hemp: The first set of questions I have come from Michael Jacks at Bank of America. Congrats on the solid results. I have 3. One, can you please elaborate a little more on the LEAP system implementation, expected benefits and whether it is a differentiator of Clicks or UPD versus peers?
Bertina Engelbrecht: I can take that one. So first of all, Michael, thank you very much for the message that you’ve sent us. Let's talk a little bit. By November, we will have completed the rollout of LEAP to all our pharmacies. In my notes, what I said is now the next step for us post deployment is to really utilize the system in order for us to improve service levels and of course as well to increase sales. How will we do that? It's to ensure that the pharmacists when they are consulting with the customer has the opportunity to now also talk about expanded services, first of all, within our network; but importantly, some of the complementary medicines that the patient ought to be taking. When we take an antibiotic, ideally we should be taking a probiotic as well. So that's what we mean in terms of the expanded benefits. We are of course also because of our ability to service the customer much more quicker, what it means is the pharmacist has more time to consult with a patient that is standing right there with them. Differentiation, all of the pharmacy management systems were built at a time when there was no corporate retail pharmacy. And so what we have done is to acknowledge that retail pharmacy is the bedrock of our performance. And so what we have done is really to ensure that we've got a modern system, which no one else has, that will create for us an incredible advantage going forward. The process to develop a modern pharmacy management system will take years. Gordon, I’m not sure if you wanted to add anything.
Gordon Traill: The only other point is probably the last point regarding does it give us a differentiation? Well, bottom line is it does give us a differentiation because there is no other system in the market just now that is modern and web based and our competitors are going to have to find something that they can use.
Sue Hemp: His second question, market share trends are positive in many categories, but you lost some share in general merchandise. Has this been due to online or offline competition?
Bertina Engelbrecht: The way that we look at the competitor is every competitor not only in South Africa in terms of bricks and mortar, but every online player within South Africa and every online player globally. That's really our competitive set because we had significant out of stocks in the first half of the year and there was a drought of supply in the market itself. And really what we have to take is we look at all of these opportunities and say where can we do better. And I would say we didn't do good enough and so now we are poised to really focus on that in our usual manner. And as I've noted, in the last quarter of the year, we were once again regaining market share in that legacy category of ours. I will not give up on it.
Sue Hemp: His third question. You mentioned earlier in the year that you were accelerating on e-commerce. The online store and app looks great, but delivery options and lead times are still limited. What are you doing to address this?
Gordon Traill: So I think we recognize that we can do better in this area. So over the next 12 months we are going to be replatforming our online system both on the app and the web and that's going to allow us further delivery options. But not only that, a lot of other functionality that we're going to be able to roll out. So I think the advice is watch this space and in 12 to 18 months, we should be in a very different position.
Sue Hemp: Another set of questions from Michael de Nobrega at Avior Capital Markets. Well done on the great set of results. His first question. On the beauty and health care segment, growth has moderate yet Clicks has maintained market share despite increased competition and accelerated rollouts from peers. Could you please elaborate on how you see the competitive landscape evolving and where you view growth to come from in this category?
Bertina Engelbrecht: Well, let me talk about the market in terms of 3 segments. First of all, thank you very much, Michael, for the comment. The market really is in 3 sectors. So first is the super high LSM customer, which is super protected against any of the economic indicators in the country and you see that really in the performance of ARC. Now that's the reason 5 years ago we took an investment decision to invest in ARC and so we've got that exposure to that premium beauty customer. And the way in which it works, ARC is an affinity customer. That customer comes and redeems the cashback rewards within the Clicks store. We of course play very, very solidly within the middle and the end of the market and there the things that we have done is of course we use our ClubCard program and of course what we do is as well, we've got private label and exclusive brands. And so that I think is great. We have to grow our market share. We have specifically elevated our execution in beauty and that's the 44 elevated beauty halls that I speak about and we have seen incredible growth in those stores. We are learning from what we've done there and we are improving even more. Our performance and market share in skin care is not by accident. It is because of the way in which we have changed the customer journey by bringing skin care much more to the front of the store itself. And then there's the lower end of the market. Now interestingly, we have got a private label brand actually at the lower end of the market called [ Swatch ], which in the SA Product of the Year actually won the SA Product of the Year award -- 2 actually of the awards. So I think great opportunity for us there. But yes, here we competed and that's the reason why the way which we are preferring to, if you will, respond to the changes in the market and competitive activity is to really stratify the market into these 3 broad sectors and to ensure that we are acting in order to respond to the needs of every one of those segments.
Sue Hemp: His second question, could you please expand on the rationale for the WMS rollout across the 3 retail distribution centers? Do you expect any large operational disruption during the implementation and what efficiency or benefits do you anticipate once it's fully deployed?
Gordon Traill: So the rationale was to create capacity because the ways of working on the previous warehouse management system limited the amount of product that we could get through these DCs. So in introducing the new warehouse management system, it allows parallel working and just allows throughput through those DCs and extends the life of these without further expansion. Expansion will be necessary at some point and we've been doing that in Centurion over a period of time. Do we expect disruption? I haven't been through our system implementation yet, but there isn't some disruption. But what I am pleased to say is that yesterday, we were actually picking up in the Cape Town DC above levels that we were doing in the prior year. So it's hard work and I really commend our systems implementation partner, our IT teams and especially our DC teams for working with us. I think we've got over the hump in that one and everything is really firing at Cape Town DC now.
Sue Hemp: His third question. Clicks Group has built up a strong cash position of ZAR 3.2 billion. How are you thinking about capital allocation priorities going forward? In particular, would you consider accelerating store expansion or increasing share buybacks?
Gordon Traill: I think we always look at investing in the business and that we've been doing on a consistent basis for a number of years and reinvesting in our systems and we've also increased the number of stores. We've also done some acquisitions over the past few years. We've set out what our dividend policy is. We’ve given the range of 60% to 65% and where the opportunity has come up, any excess cash has been returned to shareholders through share buybacks. But I don't think any of that is going to change over the next few years. We would consider expanding or accelerating store growth where the opportunity came up and we've done that in the past where in certain years we've grown store expansion by 100 stores where there's been an acquisition.
Sue Hemp: Yes. Last question on post period trade is also asked by Sa'ad Chothia from Citi who says well done on the pleasing results. Can you give some color on post period trade?
Bertina Engelbrecht: One of the teams actually asked the question last night and I said well, I'm not displeased. Gordon and I certainly am not displeased by the performance since we started the new financial year.
Sue Hemp: His second question is what sort of inflation can we expect in FY '26?
Gordon Traill: I think since our Reserve Bank is doing such a great job on inflation and it's got to be commended for that, you would probably expect that inflation is going to be remaining on the lower side.
Bertina Engelbrecht: And if we could encourage the Reserve Bank to then also look at the interest rates, I think that the consumer would certainly welcome that.
Sue Hemp: [ Ander Tyami ] from Invest Securities says please can you provide some color on occupancy costs in retail remaining flat year-on-year despite higher than guided store growth?
Gordon Traill: I think the thing to bear in mind with occupancy cost growth is it's not actually rental related or it's not the rents and it’s largely the other aspects of store costs that include parking, et cetera. It does include some turnover rentals, but it's really the lowest element of the cost growth related to stores. Store cost growth sits in our ROU depreciation and our IFRS 16 charge.
Bertina Engelbrecht: But it also would be fair to say, Gordon, that we have taken control of that. We put in metering for example, we check all of the bills that are coming through for payment. We don't take it for granted. We've invested in solar. So there are a number of things. We've got automatic switches for example in the stores to switch off electricity at night when it's not trading. So it's also not as a consequence of luck. We have done work to get us to that point.
Sue Hemp: And it also asks about post period trade, which we've answered, but say particular store openings, including pharmacies. And I think we've given numbers in the presentation of 40 to 50 stores and 40 to 50 pharmacies. But if we get more opportunities, we will open more.
Bertina Engelbrecht: We will. And maybe the point to call out is that the teams have promised me that we will get to number 1,000 by December.
Sue Hemp: Jovan Jackson from Fairtree. How should we think about the normalization of intra-group profit on Unicorn stock? Do you recoup this through increased retail margin in FY '26?
Gordon Traill: So this is a little bit of an odd year. Because of the Unicorn disposal in the prior year, what we had was we had an intra-group profit related to the Unicorn stock that we had purchased when Unicorn was still our subsidiary. So that's been unwinding during the year, which is where the intra-group profit comes through. That is not a one-off because that does move into retail that will sit in the retail division next year. So this year is an odd year.
Sue Hemp: Kgomotso Mokabane from Sanlam Private Wealth says well done on the net 55 new stores. Can you give some color on the execution challenges or constraints that resulted in the bulk of openings being delayed until Q4 of the financial year?
Gordon Traill: We would always prefer to open our stores earlier. What impacted us probably more last year was some weather-related challenges that impacted landlords that just pushed store openings later. But it's not something that we plan to do, but it was an unfortunate impact.
Sue Hemp: Kgomotso also asks or says commercial and private label sales were both up strongly in double digits. And with internal inflation low, one would have expected a bit more of a pickup in volumes than the 2.1% reported. Can you give some color on what's driving the volume outcome?
Gordon Traill: So we did have some really excellent growth in certain categories. Where it was probably a little bit slower in the year was on the pharmacy side and that was due to later opening of pharmacies, both this year and in the previous year when we couldn't open pharmacies. So although we've worked really well with the Department of Health, we still got over 100 applications for new pharmacies that are waiting to be considered there. So as we get these, we're really seeing a very nice volume boost in the pharmacy side and that also impacts the rest of the store as well as those pharmacies are rolled out because we see a real lift in front shop when we drop in the pharmacies.
Sue Hemp: Another question from Kgomotso. With the rollout of the new pharmacy management system LEAP, have there been any teething issues or disruptions to operations?
Gordon Traill: LEAP was a very different rollout because we could do it on a store-by-store basis so it was in a very controlled manner. So no, we haven't really seen any impact of the store rollout.
Bertina Engelbrecht: I was also going to say one of the things that we learned through the UPD system is that we have invested in project management capability. And secondly, understanding the changed management must be integrated into any UPD particular project as well as training. So I think that's the reason probably, Gordon, even if you look at SEP upgraded UPD September last year, looking at the LEAP program, we're looking even WMS; I think they've all gone a whole lot smoother because we've taken the lessons and we have applied those lessons and we are trying to do better.
Sue Hemp: Another question from Kgomotso. Can you comment on the performance of the 247 stores located in low income areas relative to convenience and destination formats? What percentage of these stores include a pharmacy component and have there been any unexpected trends or outliers in performance so far?
Gordon Traill: Generally, these stores actually ramp up in terms of sales much quicker and have been performing ahead of the rest of the estate. I think the trends that you see are probably in line with what you would expect. You see a very big component of baby in those stores and because we offer such good guarantees in our electrical and electrical is also a favorite destination in these stores. So while it's better, it’s not dissimilar to the performance that we see in the other stores.
Sue Hemp: A question from [indiscernible]. If 55% of population that's within 5 kilometers radius to Clicks, would that mean co-mobilization is possible?
Bertina Engelbrecht: The way that we look at it is it's 53.2% to a Clicks pharmacy and remember, we've got 780 pharmacies. So not every store currently has a pharmacy because, as Gordon called out, we still have the gap that we're working to close with the Department of Health in terms of the issue of the pharmacy licenses.
Sue Hemp: [indiscernible] says well done on the results. You mentioned that the wholesale market share loss is due to decreased sales to independents. Is this a strategic choice?
Bertina Engelbrecht: Well, we've always said the reason we acquired the UPD business in the first instance was for it to be the preferred supply chain partner to Clicks in order to fuel Clicks' growth in pharmacy and that it does very well. And if you look over the period how the Clicks market share within UPD's wholesale channel has just grown and that's good for UPD. The second one is that UPD has got strength in terms of the listed private hospital groups where you see that happening. And of course partly it's because UPD up until probably the first half of the year was a little bit hamstrung by the effects of its systems implementation, but that has now recovered. But what is happening within the private hospital space is there's increased genericization. So that's having an impact there. Now are we super concerned about independence? Not necessarily and the reason for that is because we've always said UPD because of its low margins has to always focus on efficiency and profitability. And what we shouldn't be is a place where people use us just to circle through because they are managing their credit risk.
Sue Hemp: Warwick Bam from RMB Morgan Stanley asks what are the challenges of The Body Shop?
Bertina Engelbrecht: The challenges of the Body Shop is as always when you've got a change of ownership, first of all, there are some transition challenges there. The second bit is that the new owners, as one could expect, focus on the areas that they wanted to turn around first, which was the Body Shop corporate portfolio in both the U.K. and of course within the U.S. And what that meant is that product development and innovation, which is so critical to any beauty brand, was maybe put later on the agenda. Now that's where we are and we can see the new product ranges coming through. So I mean I think we are cautiously optimistic about what the future holds.
Sue Hemp: His second question is about what we think about the medium-term prospects for the small electrical appliances sales growth. I don't know if there's anything more you want to add from what you’ve already said.
Bertina Engelbrecht: We didn't have sufficient stock in the first half and the market had an oversupply.
Sue Hemp: I have a very complicated list of questions here so I'll take them one by one. Given the disinflationary pressure on comparable store sales; volume growth, OpEx control and further total income margin expansion will likely be required to provide earnings support. With this in mind, could you provide a bit of color on, one, the GLP-1 opportunity for Clicks in SA?
Gordon Traill: GLP-1s have been growing very, very fast over the past 24 months and we referenced that at the interim. To bear in mind on the high sales, that’s because we maintain a very low dispensing fee, our income that we generate from those GLP-1 is much lower than any sales growth. The opportunity would be as the originators genericize and that is where there would be likely to be some margin that's possible because generally in the generics, you're earning a higher margin than the originators especially on UPD side in terms of distribution.
Sue Hemp: Secondly, is there any expected benefit to Clicks following the recent Supreme Court ruling allowing pharmacists to now administer HIV treatment?
Bertina Engelbrecht: What we have done is in that particular case, we did provide commentary. Obviously, our public health agenda is how do you extend access to affordable health care. And you're talking here about a vulnerable segment of the population that we could most certainly support both through our pharmacy program. So we are reviewing very carefully the implications of the decision or the judgment and what, if any, how would we respond to that. But we are supportive broadly of the outcome of the judgment.
Sue Hemp: Thirdly, the rollout of PCDT or primary care drug therapy pharmacist model and whether you're seeing any consumer traction here?
Bertina Engelbrecht: We're probably seeing more traction in terms of the virtual doctor consultations and most certainly an increase in medical aid co-funded services through the clinics itself. So those are probably the 2 areas we'll continue to focus on.
Sue Hemp: Four, are there any OpEx levers you can pull to drive positive operating leverage in existing stores?
Gordon Traill: I think some of that is going to come out of the systems investment because that was the reason for investing in LEAP so to free up the time of the pharmacist to consult with patients and hopefully to deal with more patients in the same period of time. There are always opportunities that we've got because we can look at the same that we've done with UPD, rolling out smaller electric vehicles within the retail DC network because we saw that UPD managed to slightly reduce the overall transport cost for those. So we're always on the lookout. The big things that we've done, but we've always been able to eke out further efficiencies.
Sue Hemp: And I think we've answered his remaining 3 questions which are on Africa inflation, the benefits of LEAP and the WMS possible disruption. [ Lulama Qongqo ] from Mergence Investment Managers says well done on the performance. On UniCare, how are the store economics of the 24-hour store versus a normal Flexicare with the pharmacy in it? What are the opportunities with this kind of format?
Bertina Engelbrecht: Obviously it is about ensuring that we in the mind of the customer, in the mind of doctors and the health care profession are seen as a place to go to. So first, I think understand our position in terms of health care. What UniCare does? UniCare offers a comprehensive suite of services. So that's why we talk about the wound care clinic. In fact the catchment area, if your normal catchment area for a Clicks pharmacy is 5 kilometers, for a UniCare store it's actually 50 kilometers. And so you've got a much broader catchment area from which you draw patients. You now find that many of the specialist doctors actually refer their patients to a UniCare store. Thirdly, there is an opportunity for medical aid. So I think that the specific data point is that something like over 50% of medical aid members who go to an ER 24 service should not have gone there first if they could have gone to a doctor. So the fact that we've got a 24-hour doctor service attached to the 24-hour specialized pharmacy means that we can support medical aid scenes in that regard and of course the script flows into that store. There's other things such as for example diabetes management, the IV infusion clinics and the travel clinics. UniCare for example works a lot with corporates to drive vaccination. So very often corporate people that are traveling or local municipalities, the people that work for example in sanitation, they got to have certain vaccinations. And so it's a very, very different format; high, high, high service touch that we have there.
Sue Hemp: Junaid Bray from Laurium Capital says congrats on the results. How much of a concern is Sorbet's spa's expansion into pharmacy? And with regards to your market share gains, who are you gaining market share from?
Bertina Engelbrecht: I guess we're thinking about that one for a minute. First, I mean my own view always is competition is good because if we weren't doing a good job as a drug store, then no one would be interested in trying to emulate our success. So that's the first I'd take from that. The second is to always remember you mustn't be arrogant and you mustn't be complacent about your success. So that's the second part. Then we look at the competitors coming in and we understand that it's because we've been able to show them that you can do this successfully and profitably. And I think it's always been aware of what it is that they're doing and how do you respond to it. To really, really, really compete with us, you have to have an integrated pharmaceutical distribution, wholesale and retail pharmacy model supported by an independent group such as Clicks. And I think that is probably our single biggest advantage. Our single biggest advantage is that we've got a completely integrated strategy. And then of course the fact that if you spoke only about -- if you ask the customer maybe a pharmacy, well, we come up first consistently. Someone else comes up second not a grocer. And third comes up [ Clicks ] , which is a brand that we own. So I think that we are very well positioned without being arrogant and without being complacent because we are still nowhere as great as we could be. We are only on the path to greatness though.
Sue Hemp: [ Junie from AAP ] asks with 47% of sales now promotional, do you see that as a new normal? And how will you protect margins if that level persists?
Gordon Traill: I think if we look at the last few years, we have consistently grown promotional sales as a percentage of our total sales, which we've been happy to do because suppliers have worked with us because they wanted higher volumes and have funded the growth in promotions. It's also supported by the growth in our private label, which is at a higher margin and that's also allowed us to evolve margins over the last few years. I don't see that this is going to change.
Sue Hemp: Craig Metherell from Denker Capital. Given the trading margin is near the top of the medium-term target range and you've alluded to not updating your targets at this point, could you provide any further detail around the margin profile going forward?
Gordon Traill: I think we will always be aiming to evolve our margin, which is one of the graphs showed. However, we have also got to bear in mind that if you take something like the UniCare format, which is profitable and it's much higher turnover and to a certain extent that could result in a little bit of margin dilution, but not profit. So we've just got to bear that in mind over the next 12 to 18 months. But the rest of the business will be evolving the margin.
Sue Hemp: I have some more questions from Kgomotso Mokabane from Sanlam Private Wealth. Can you give some color on how Flexicare is performing and whether it's starting to gain real traction or scale within the business? Also, are there deliberate plans in place to accelerate growth of the offering?
Bertina Engelbrecht: We are working with the Discovery team. It would be fair I think to say that we are not satisfied with the performance of Flexicare. And so we are working with our partner, which is Discovery, to say what is it that we have to do to improve the performance of the Flexicare product.
Sue Hemp: And I think in the interest of time, the last question from Kgomotso. Can you give some color on the rationale behind strengthening and expanding the group executive team? Where did you identify capability gaps or areas needing reinforcement?
Bertina Engelbrecht: It's not so much about identifying gaps. It's about what is it that we have to do to ensure that we are positioned for the future. That's really what it is all about. So first South Africa, there can be no doubt South Africa has got tremendous opportunities for us to expand and it therefore made sense that we focus on South Africa and that is why Bongiwe Ntuli was appointed to specifically focus on South Africa. Then when I look at the Rest of Africa Retail and the complete unperformance of it made complete sense to say now what we do need is an executive that can focus specifically on the Rest of Africa because every market is different and we most certainly want to make sure that we get the offer right. So this is about Southern Africa and the areas in which we already are. If you look at Namibia as an example where we have added 2 stores in the last 12-month period, the forecast for Namibia's GDP growth is fantastic. Why would we not be there when it’s about focus on the Rest of Africa. The third one is around people. Are you seeing enough people in corporate affairs? And it was making sure that we do not neglect that in a retail business the people are the difference and that we needed to have a person at this level. And then finally, it's well, of course UPD. And then the final one is that we've made investments in adjacencies such as Sorbet and in M-Kem, which are all health and beauty. What we now need to do is to ensure that we've got dedicated focus on that as well. So that was the reason for expanding the group executive not gaps, but opportunities to do better. There being no further questions. Thank you so much, everyone, for dialing into our webcast. The questions that you asked were really great. It's made me think and I'm sure Gordon as well and we'll leave it at that. Thank you.