Dis-Chem has bought half of financial services business OneSpark for just under R156m as the pharmacy retailer continues to expand its operations beyond pharmaceuticals and chemists.
The group announced on Friday it had entered into a binding share subscription agreement with OneSpark and OneSpark Holdings to subscribe for a 50% interest in OneSpark.
With the expertise and experience to advance the healthcare vision of the group, OneSpark, founded in 2020, is an innovative technology and AI-driven financial services business specialising in life insurance products, Dis-Chem said in a statement.
“OneSpark’s capabilities and financial services expertise will significantly enhance Dis-Chem’s ability to augment and deliver a compelling customer value proposition, centred in an integrated health ecosystem, supporting Dis-Chem’s vision of increasing access to quality healthcare at the lowest cost,” it said.
“This acquisition is a core enhancement to the group’s integrated health ecosystem strategic focus area,” it added.
Also on Friday, Dis-Chem reported that revenue in the 12 months to end-February rose 11.1% to R36.3bn, though headline earnings per share declined 1.6% to 114.6c. The group declared a final dividend of 22.49c a share, making for a total dividend of 45.74c for the year.
Profit after tax was little changed at R1.02bn from R1.03bn the previous year.
The group said it was satisfied with its performance during the period, specifically the strong second half, in which earnings before tax increased 22%.
Retail revenue was up 9.7% to R31.7bn, with comparable pharmacy store revenue growth at 6.9%. Retail revenue growth was affected by Covid-19 vaccine administration and testing services in the prior period.
Biggest contributor
The group opened or bought 15 retail pharmacy stores in the review period, taking the total number of outlets to 273, with 54 retail baby stores.
Wholesale revenue rose 13.3% to R27.4bn. Wholesale revenue to the group’s own retail stores, still the biggest contributor, grew 11.8% while external revenue to independent pharmacies and The Local Choice (TLC) franchises was up 21.4% compared with the comparable period.
Independent pharmacy growth was 23.2%, attributable to new customers and increased support from the current base. TLC growth was 19.6% due to an increase in franchise stores from 171 to 205, and increasing support of the supply chain from existing TLC franchisees.
Retail expenses grew 11% as the group invested in new stores and acquisitions. Retail costs were affected by higher diesel expenses to run generators during load-shedding, higher IT costs due to the rollout of the remainder of the new point-of-sale system to stores, and increased advertising expenditure.
Dis-Chem said that for the three months from March 1 to May 25, group revenue grew 11.4% from the prior comparable period, though it expects consumers to remain constrained in the prevailing economic climate.
The group has identified eight areas of focus, which includes adding about 137,000m² of retail space over 36 months. Much of that will take place in the second and third years after it took a more analytical and proactive approach to selecting retail sites.
Dis-Chem also plans to expand its wholesale market share by supporting internal retail property growth and continuing to grow the independent pharmacy market ahead of its peers.
The company’s shares closed down 4.6% at R31.28 on the JSE on Friday.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.