Creating value through stakeholder engagement

Clicks Group’s stakeholder engagement process focuses primarily on the five primary stakeholders that management believes are most likely to influence the ability to create value in the short, medium and long term. Proactive and transparent relationships enable the group to identify and address the needs, expectations and concerns of these stakeholder groups.

Customers

Clicks targets consumers in the growing middle to upper-income markets (LSM 6 – 10)

UPD customers include Clicks, major private hospital groups, pharmaceutical manufacturers and independent pharmacies

Engagement issues in 2018

Value created through engagement

Product range in store and online Product availability in store and online Service levels Price competitiveness Pharmacy and clinic services ClubCard benefits

Clicks: Meeting customer needs and creating trust in products and practices: 125.7 million customer transactions 41.1 million prescriptions processed 11.7% growth in health and beauty sales Market share gains in all key categories Increasing customer loyalty 800 000 increase in ClubCard membership to 7.8 million active members ClubCard accounts for 77.2% of sales UPD: Meeting customer needs through range, availability and service Over 2 000 corporate and independent pharmacies serviced 230 million units of medicine delivered 96.7% order fulfilment to customers

Shareholders and lending institutions

Shareholders: Local and international institutional and private investors, as well as fund managers and analysts from the broader investment community.

Lending institutions: South African financial institutions which provide funding and trade finance facilities to the group

Engagement issues in 2018

Value created through engagement

Group strategy Current trading environment Impact of economic climate on consumers Trading and financial performance Store and pharmacy expansion plans Regulatory environment Capital management Growth prospects

Delivered total shareholder return of 39.0% and return on equity of 38.2% Meetings with 213 local and international funds and brokerages contributed to better-informed investor community High levels of investor interest with 122% of shares traded in the year Attractive investment case with 70% international share ownership Engagement issues addressed in annual and interim results presentations and webcasts, local and international investor roadshows, integrated report and annual financial statements Funding and trade finance facilities provided at competitive rates

Employees

All permanent and part-time employees across the group

Engagement issues in 2018

Value created through engagement

Remuneration and benefits Performance management Personal development Career path planning Training and skills development Transformation Employee share ownership plan (ESOP)

Total staff complement increased by 2.7% to 15 067, with 394 new jobs created Ability to attract and retain staff reflected in turnover of 13.9% R3.2 billion paid to employees R1.3 billion paid to over 5 800 employees in the first 50% payout under the broad-based ESOP Investment of R124.7 million in training and skills development Transformation of workforce evident in employment equity profile: Black staff 92% of total staff Female staff 63% of total staff

Government and industry regulators

Department of Health, SA Revenue Service and other government departments, industry regulatory bodies and local authorities. As a listed company, the JSE Limited is the primary regulator

Engagement issues in 2018

Value created through engagement

Pharmacy licences Registration of medicines Complementary and alternative medicines Legislative and regulatory compliance Tax compliance Submission of statutory returns

Clicks operates 510 pharmacies Slow pace of medicine registration by SA Health Products Regulatory Authority continues to restrict launch of new private label medicine ranges Direct engagement with industry regulators and indirect engagement with regulators through industry bodies Lobby for regulatory reform and fair legislation which will not adversely affect returns to shareholders Paid R267 million in direct and indirect taxes

Suppliers

Local and international suppliers of products and services, including producers of exclusive brands and private label products

Engagement issues in 2018

Value created through engagement

Quality, safety and ethical standards Product availability and exclusivity Product innovation, strength of brands Private label products Transformation and BEE scorecards Legislative compliance

Stable supply of merchandise reflected in supplier infill levels of 84.4% in Clicks and 96.4% in UPD Clicks offers over 13 800 private label and exclusive brand products Consistent supply and maintenance of franchise agreements with The Body Shop International, GNC and Claire’s Continued transformation of the supplier base with 64.1% preferential procurement R25.2 billion paid to suppliers of goods and services