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Picture: FREDDY MAVUNDA
Picture: FREDDY MAVUNDA

Pharmacy group Dis-Chem has acquired three of five distribution centres that it now leases for more than R3.7m from companies owned by directors, previous directors and shareholders in a bid to reduce rental expenses.

“The transactions allow Dis-Chem to own three of its five distribution centres and achieve a reduction in rental expenses incurred outside the group,” it said in a statement. “The ownership of the assets ensures that the group holds the necessary strategic assets for long-term growth.”

The groups’ finance lease obligation regarding the rental of certain stores and warehouses amounted to R0.9bn on August 31 2021, having reached R1bn in 2020, according to the interim results announcement for the six months to August 2021.

The retail pharmacy group with a market capitalisation of more than R31.4bn said it has entered into a sale and purchase agreement for the three commercial properties with Commercial Properties and Minlou Holdings, companies that are wholly owned by current and previous directors, as well as by shareholders.

Dis-Chem said it will acquire CT Distribution Centre in Belville, Western Cape, from Commercial Properties Holdings for a cash consideration of R75.5m. The group was coughing up R1.9m monthly at the location.

From the same company, it will buy a warehouse in KwaZulu-Natal for R73,785,315 cash, where it previously was charged R1.2m in rent.

The third property, in Delmas, Mpumalanga, will be bought for a cash consideration of about R67.5m from Minlou Holdings and Commercial Properties, for which it previously paid R494,316 in monthly rental fees.

From March 1 2021 to August 31 2021, Dis-Chem recorded group revenue growth of 16.6% to R14.9m. Retail revenue grew 16.0% to R13.2bn with comparable store revenue at 6.8%.

Pending approval by competition authorities, the transactions come into effect on March 1.

The share price of the group, which specialises in the retail and distribution of pharmacy and health-care products, was down 1.78% at R35.93 on Tuesday.

gumedemi@businesslive.co.za

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