Introducing The Report

Clicks Group has pleasure in presenting its sixth Integrated Report to shareholders for the 2016 financial year. In this report we aim to demonstrate how the group’s health, beauty and wellness strategy creates value for shareholders while balancing our responsibilities towards our other stakeholders.

Reporting scope and boundary

The report covers material information relating to the business model, strategy, material issues and related risks and opportunities, financial and operational performance, and governance for the period 1 September 2015 to 31 August 2016. In addition the report focuses on the strategic objectives, operating plans, targets and prospects for the 2017 financial year. The Integrated Report is supplemented by the annual financial statements.

Reporting covers the group’s main operating entities Clicks and UPD, which collectively account for 95% of turnover, and focuses on the operations in South Africa where the majority of revenue is generated.

The Integrated Report is aimed primarily at our shareholders who are the providers of financial capital. However, other key stakeholders also influence the group’s ability to create sustainable value, including our customers, staff, suppliers, industry regulators and financial institutions.

There have been no changes from last year in the reporting scope and boundary.

Reporting compliance

The reporting process has been guided by the Integrated Reporting Framework of the International Integrated Reporting Council (IIRC), the King Code of Corporate Principles 2009 (King lll), the JSE Listings Requirements and the Companies Act. Financial information is reported in accordance with International Financial Reporting Standards.

Materiality

The report focuses on information which the directors believe is material to investors’ understanding of the group’s ability to create value in the short, medium and longer term. The materiality test applied by the board is based on internal and external matters, both positive and negative, that substantively affect the group’s ability to deliver its strategy and could have a material impact on revenue and profitability.

Management has extensive interaction with shareholders and analysts, and this provides insight into the issues that the investment community considers important in their valuation of the business.

Assurance

The content of the Integrated Report has been reviewed by the board and management but has not been independently assured.

The annual financial statements have been assured by the group’s independent auditor, Ernst & Young Inc. (EY).

The non-financial and sustainability-related information contained in the report has been approved by the board’s social and ethics committee. Accredited service providers and agencies have provided selected non-financial performance metrics, including market share statistics and the BBBEE rating. Management has verified the processes for measuring all other non-financial information.

Capitals of value creation

The IIRC Framework recommends reporting to shareholders on the capital resources that are applied in the creation of value. These are classified as the financial, manufactured, intellectual, human, social and relationship, and natural capitals.

The performance and activities relative to these six capitals are covered throughout the report and highlighted here, although we have chosen not to present the Integrated Report according to these capitals.

Integrated Reporting Framework

The directors believe the group has materially reported in accordance with the IIRC Framework in the 2016 Integrated Report.

Directors’ approval

The board acknowledges its responsibility to ensure the integrity of the Integrated Report. The directors have collectively assessed the content and confirm the report addresses all material issues, and fairly represents the integrated performance of the group.

The audit and risk committee, which has oversight responsibility for integrated reporting, recommended the report for approval by the board. The 2016 Integrated Report was unanimously approved by the board on 10 November 2016 and signed on its behalf by: