$4$

$.$

$2$

$$In the CEO

$$

s statement on page

$7$

$7$

$$of the IAR he states:

$$

The rapid growth of

the Group has necessitated additional warehouse capacity

$$

$.$

$$Which one of these

forces

$($

stakeholders

$)$

$$most likely influenced the Dis

$-$

Chem Group

$$

s decision to

acquire a new distribution centre?

CEO statement

Group revenue $7\mathrm{.}4\%$

R$32\mathrm{.}7$ billion

Total income margin

of $31\mathrm{.}1\%,$ ahead of

internal target of $30\%$

Earnings per share $17\mathrm{.}2\%$

$116\mathrm{.}3$ cents

Full$-$year dividend $17\mathrm{.}3\%$

$46\mathrm{.}6$ cps

The Group is pleased with a good set of results in a tough environment. We believe our

investment in an integrated healthcare ecosystem will bode well for more South Africans

and in turn the Group.

The Group$$s latest results are testament to

the resilience of a business that has withstood

challenging trading conditions and celebrated

successes on an ongoing basis. The trading

environment during the last financial year was

challenging and complex, with normalised

shopping patterns offset by the impact of

rising fuel and food costs, while embattled

consumers continued to experience interest

rate escalations.

Against this backdrop, the Group$$s total revenue increase

of $7\mathrm{.}4\%,$ to R$32\mathrm{.}7$ billion, is commendable. Our businesses

performed extremely well, with operating profit increasing

$13\mathrm{.}4\%$ to R$1\mathrm{.}7$ billion, and we continued to see market share

gains across healthcare, medical, baby and dispensary

categories. The latter entrenched our position as South

Africa$$s largest retail pharmacy Group, by dispensary market

share.

These consistent gains prove that Dis$-$Chem$$s customercentric

philosophy and well$-$priced goods and services

make the Group a shopping destination of choice for valueconscious

consumers, especially during these challenging

times. While there has not been a significant change in the

items that are being purchased, buyers are increasingly

shopping for value$-$based promotions. We have also seen a

polarisation of spending towards end$-$of$-$month payday cycles,

another sign of financial pressure.

Load shedding has had a significant impact on the economy,

affecting consumers as well as businesses of all sizes.

Fortunately, the Group$$s early investment in generator capacity

has made it possible for all our stores to remain open during

electricity blackouts, although this has led to a considerable

increase in operational costs, with diesel costs up by $65\%$ to

R$91$ million.

The last financial year and subsequent trading months have

been significant for the Group, with various developments

paving the way for further growth and opportunity.

Strategic initiatives

We achieved a milestone with the opening of our $300$th retail

store, having opened $13$ new Dis$-$Chem stores and eight new

Dis$-$Chem Baby City stores during the period. Our store growth

continues apace $-$ at the end of the financial year the Group

had $312$ stores across all nine provinces in South Africa, four in

Namibia and three in Botswana.

The rapid growth of the Group has necessitated additional

warehouse capacity. This will be addressed with the imminent

acquisition of a $63,000$m$^2$ distribution centre, ultimately

resulting in a $75\%$ increase in warehouse space. This significant

growth in available space positions us superbly well to double

our current store count and grow our market share in the

independent market.

Integrated healthcare offering

The Group has continued its focus on developing an integrated

healthcare value chain to drive down costs, while making

private healthcare accessible to more South Africans.

Dis$-$Chem Health, our medical insurance and gap cover

offering, continues to gain traction and the launch of extra, our

policyholders$$ rewards programme, further supports our goal of

making private, quality healthcare affordable for the estimated

$12$ million employed people who do not have medical aid. These

consumers often buy medication at pharmacies and, in some

cases, private facilities at a premium rate, and Dis$-$Chem is well

placed to offer medicines at a lower cost, specifically using

generics.

OVERVIEW OF THE GROUP CREATING SUSTAINABLE VALUE CORPORATE GOVERNANCE FINANCIAL PERFORMANCE SHAREHOLDER INFORMATION

Dis$-$Chem Integrated Report $202377$