Q&A: Clicks CEO Bertina Engelbrecht tells of anxiety over payments by department of health

Clicks posted an increase of 10.2% in headline earnings per share in the half-year to end-February.

This figure excluded insurance payouts for losses it suffered in its previous financial year.

We asked its relatively new CEO Bertina Engelbrecht about her first four months as the head honcho, as well as whether it expects to get the R819m the department of health owes it for administering Covid-19 vaccines.

Are you pleased with the half-year results?

We are. More so because we have faced some extraordinary events. At the end of July [2021], we had civil unrest, but the teams really rallied.

When you think about the events over the past 10 years or longer, every single time we rallied and that points to the defensiveness of the business model.

Clicks is the largest private sector provider of Covid-19 vaccinations, having administered more than

3-million shots. As vaccination slows, will you see fewer customer visits and fewer extra sales?

Over the past month and a half, there has been a decline in the number of daily vaccinations.

But we’ve never really built a business case around vaccinations. To be completely honest with you, it comes at a low margin. It impacted our own gross [profit] margin [negatively].

We’ve really done this because we believe it’s important for the economy. I think as a nation we see the benefits of vaccination in the easing of restrictions.

The department of health owes you R819m, but you owe it R951m for vaccines. Can you explain this?

This vaccine is procured by the health department and we need to pay them for it, while they owe us for the service that we provide to the uninsured, which comes at an extremely low margin.

Why hasn’t Clicks paid the department of health almost R1bn?

The payments process into the health department hasn’t been fully sorted out. It’s nothing to do with us. But they have done an incredible amount of work with our teams; we are very close to fully resolving that. I think we have come to the point of resolving payments due up to the end of December.

There are a couple of issues, but it looks like it’s going to all be sorted out by the end of the financial year [August 2022].

Do you think the department of health will pay you? R800m is even more than your entire Sasria insurance claim after the riots.

That is something that our CFO, Michael Fleming, has been really anxious about. It’s incredibly important for us because, of course, the external auditor will ask: what are the prospects of you actually getting paid?

So, we’ve been paying a lot of attention to that. We are, however, confident that we will be paid by the end of the financial year.

Clicks flagged load-shedding in its results as bad for consumer confidence. Do people stop shopping when the power is off?

[When there is load-shedding] many people want to get home as soon as possible. They experience lots of traffic as well [as a result of the power cuts]. If people are stuck in traffic then they are not spending money in stores.

Also, not all malls have generators. When a mall is dark, you just don’t feel safe enough to continue shopping.

What can Clicks do about ongoing load-shedding?

We’ve invested over R17m in batteries for our stores to ensure that they can continue trading. But to recharge those batteries, you need at least four hours in between. During stage 4 load-shedding, we are not able to recharge the batteries.

Clicks is setting aside R311m for the distribution centre IT upgrades and solar panels?

Solar installations are going to power all of our distribution centres. This will reduce our utilisation of energy from the national grid. It doesn’t make us completely independent, but it will mean that the cost of electricity over time will be lower.

You took over as CEO in January from Vikesh Ramsunder, who moved to Australia. How have these four months at the helm been?

I think it is amazing and incredibly important to be a woman in a job like mine. We are excellent at multitasking and are resilient. I often find myself juggling many different balls.

But great results are never dependent on a single individual [but] teams of people.

Although I’m the CEO and well aware that I’m the face of the company, in reality, our performance is dependent on thousands of people.

childk@businesslive.co.za