Corporate governance report
Accountability, transparency, ethical management and fairness are the principles that underpin the Clicks Group’s governance and compliance frameworks.
The board and top management are accountable for the group’s governance and consider governance to be critical to the group’s ability to execute its strategic objectives, to ensure that the group is sustainable and that it meets the expectations of its stakeholders.
Refer to the corporate governance and King IV report 2024 PDF
The group’s consistent focus on corporate governance has enabled the sustained strong performance of the business, reflected in the long-term equity outperformance. The group’s corporate governance standards are independently rated as aligning with global best practice.
In the past year, notable governance matters in the group included the following:
- proposing Mfundiso (JJ) Njeke to replace David Nurek as board chairman when Mr Nurek retires at the 2025 AGM. The multi-year programme to refresh the board will be completed when an additional non-executive director is appointed during the 2025 financial year;
- scheduling an additional meeting of the audit and risk committee each year with a dedicated focus on risk, placing greater emphasis on identifying risks and monitoring risk mitigation measures;
- assigning responsibility for nomination matters to the full board, and renaming and reframing the mandate of the remuneration committee (previously the remuneration and nominations committee);
- welcoming the appointment of KPMG by shareholders as the group’s auditors for the 2024 financial year; and
- appointing Annalize Barnard as company secretary, effective from 31 October 2024, following the resignation of Matthew Welz from the group.
The group has applied the King lV report throughout the 2024 financial year and the directors confirm that the group has in all material respects voluntarily applied the principles of the code. The application of King lV is covered in the corporate governance report 2024 published on the website. The board is not aware of any material non-compliance by the company with the Companies Act, 2008, the JSE Listings Requirements or the Clicks Group memorandum of incorporation. The group has adopted the JSE’s June 2022 guidance on sustainability and climate change disclosures in its annual reporting.
Role of the board
Elected by the shareholders, the directors are responsible for the sustainability of the business within the triple context of the economy, society and the environment.
The board fulfils a range of legal duties. The board is the primary source of effective, ethical leadership for the group. In executing its mandate the board is required to approve strategic plans, monitor operational performance, ensure that risk management and internal controls are effective, monitor regulatory compliance and promote good governance. It is also required to approve significant accounting policies and the annual financial statements, monitor transformation and empowerment, manage the process of selection and appointment of directors, and ensure that the group’s remuneration policies and practices are effective and fair. Certain of these functions are delegated to board committees. The board and its committees’ composition, authority, responsibilities and functioning are detailed in the memorandum of incorporation, the board charter and the committees’ terms of reference.
Governance structure
Board composition
Following the AGM to be held in January 2025, the board will consist of eight directors, with two salaried executive directors and six independent non-executive directors. The age, tenure, experience and expertise of each director is briefly set out in the board of directors’ report. From the conclusion of the January 2025 AGM, David Nurek will retire from the board after serving as a non-executive director for 28 years and as chair of the board for 27 years. Mr Ntsaluba and Dr Penny Osiris (née Moumakwa) retire in terms of the rotation of directors provisions in the memorandum of incorporation, and are both recommended for re-election to the board.
Richard Inskip, Christine Ramon, Ms Matyumza and Mr Ntsaluba will be recommended for election to the audit and risk committee. As the current chair of the audit and risk committee, Mr Njeke, is not standing for election to this committee due to his election as board chairman, the board will propose that Ms Ramon be appointed as chair of the audit and risk committee should she be elected to the committee by shareholders.
Independence of directors
All the directors understand their legal duty to act independently in the best interests of the company.
The board conducted an evaluation of the independence of the chairman and non-executive directors during the year. The factors contained in King IV and the JSE Listings Requirements which could impact on their independence and performance were considered. Both long tenure and length of concurrent tenure between non-executive directors and executive directors are metrics that are considered when assessing independence, which the board monitors and the group discloses to stakeholders. In the opinion of the board there are no factors which prevent the directors from exercising objective, unfettered judgement or acting in an independent manner. All of the non-executive directors are therefore appropriately classified as being independent.
The company has no controlling shareholder or group of shareholders and there is no direct shareholder representation on the board.
Key issues addressed in 2024
In addition to the matters set out above, the board addressed the following key issues during the year:
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approving the group’s three-year strategic plans and budgets, including capital investment in acquisitions, IT systems and physical infrastructure;
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monitoring the execution of projects and initiatives approved in preceding years, including specific focus on the rollout of the new dispensing system in Clicks pharmacies, the warehouse management system and enterprise resource planning system replacement at UPD, the disposal of Unicorn Pharmaceuticals Proprietary Limited to address the finding of the Constitutional Court that the group’s corporate structure made it ineligible to hold community pharmacy licences, the integration of the Sorbet Group and revising the group’s organisational design to better equip it for sustained growth into the future;
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further entrenching environmental, social and governance practices in the group’s ways of working, including reviewing the group’s environmental and climate change policy;
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reviewing the group’s remuneration policy, with specific focus on long-term incentives for senior executives and non-executive director remuneration, and monitoring progress in the attainment of the minimum shareholding requirement for the top four executives in the group. The group’s remuneration report is available on its website at www.clicksgroup.co.za; and
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reviewing talent and succession plans for the business.
Board diversity
The directors are diverse in terms of gender, race and professional backgrounds, contributing to strong decision-making and ensuring that a range of perspectives are brought to bear on matters under consideration by the board. The directors have extensive experience and specialist skills across a range of sectors, including retail, commercial, governance, human resources, remuneration, accounting and finance, legal, healthcare and information technology (IT). The board’s broader diversity policy contains voluntary targets for race and gender of 50% black and 33% female representation at board level. Currently 67% of the directors are black and 44% are female.
Director election
A third of non-executive directors are required to resign at each annual general meeting (AGM) and executive directors are required to resign on the third anniversary of their appointment or most recent re-election to the board. This provides shareholders with the ability to hold directors to account and to appoint directors to the board who shareholders believe will add value to the business. At the 2025 AGM three non-executive directors retire and two of these are recommended for re-election to the board.
Board and committee meeting attendance
Annual performance evaluation
An internal assessment of the board’s effectiveness was conducted, which concluded that the board, its committees, its chairman and directors, and the company secretary are highly effective. The last external assessment of board effectiveness was conducted by Deloitte in 2021.
Board and executive relationship
The roles of the chairman and the chief executive officer (CEO) are formalised, separate and clearly defined. This division of responsibilities at the helm of the company ensures a balance of authority and power, with no individual having unrestricted decision-making powers. The chairman leads the board and the CEO is responsible for the executive management of the group. While the board and executive management collectively determine the strategic objectives of the group, the board is responsible for approving the group’s strategy and the executive is responsible for executing this strategy and for the ongoing management of the business. Regular reporting by the executive on progress made in executing its mandate allows the board to monitor implementation of strategy and to assess the effectiveness thereof. Non-executive directors have direct access to management and may meet with management independently of the executive directors.
Board oversight
The board discharges its oversight function both directly and through its three committees. The board and its committees are each chaired by independent non-executive directors. The composition of the committees conformed to regulatory requirements and King IV for the reporting period. Detailed disclosure on the roles, functions and composition of the committees is contained in the corporate governance report available on the website.
Risk governance
While the board recognises that certain risks are necessary to ensure sustainable growth and competitive returns, the directors acknowledge that the group and its stakeholders should be protected from avoidable risks. Risk management and governance processes are therefore aimed at creating an appropriate balance between risk and reward.
The audit and risk committee is responsible for overseeing risk management for the board, with particular focus on combined assurance arrangements, ensuring that the group has implemented an effective policy and mitigation plan for risk, and that disclosure of these risks and mitigation plans is comprehensive, timely and relevant. The committee is tasked with ensuring that the combined assurance model provides a co-ordinated approach to assurance activities and that the combined assurance received addresses all significant risks facing the group. The group and business unit risk registers are regularly reviewed and updated, containing current and emerging risks as well as risks associated with future strategic initiatives and identifying mitigating measures to address specific risks. Risk registers are updated as the nature of the risk changes over time or as mitigation measures take effect, and a comprehensive review of the group’s risk identification, management and reporting process has taken place in the course of the 2024 financial year. Major group risks are detailed in the managing material issues report.
Group internal audit monitors the progress of the group and business units in managing risks and reports its findings to the audit and risk committee. Any significant weaknesses in the design, implementation or execution of the group’s internal financial controls which could result in material financial loss, fraud, corruption or error, are reported to the audit and risk committee and disclosed in the audit and risk committee report. No material issues were brought to the attention of the committee during the reporting period.
Ethics and values
The group subscribes to high ethical standards of business practice. A set of values and a behavioural code of conduct require staff to display integrity, mutual respect and openness. Members of staff have an obligation to challenge others who are not adhering to these values. The social and ethics committee is responsible for monitoring ethical practices. The group has various documented policies which require all employees to adhere to ethical business practices in their relationships with one another, suppliers, intermediaries, shareholders and investors. These policies also set stringent standards relating to the acceptance of gifts from third parties and declarations of potential conflicts of interests. A fraud prevention policy ensures that a firm stance is taken against fraud and the prosecution of offenders.
Anti-competitive conduct
Oversight, governance and risk management processes are in place to promote compliance with statutory prescripts relating to competition and the effectiveness of these processes is borne out by the fact that the group has not been sanctioned for anti-competitive conduct.
The group has market-leading positions in South Africa in healthcare retailing and supply. This emphasises the need for the group to remain vigilant in guarding against engaging in anti-competitive practices.
Governance focus areas in 2025
The expansion of the group’s top executive structure and executives being appointed into new roles are changes that will impact the entire organisation. Ensuring that the importance of strong governance is well understood at all levels of the group will help to ensure the smooth transition to the new structure. The expansion of the group into new markets brings with it additional complexity from a regulatory and governance perspective, as does changes in corporate governance and regulatory requirements in markets in which the group already operates. With the increasing importance of IT and data in the operations of a modern retailer, the group will have to maintain its investment in data governance and cybersecurity to mitigate the attendant risks. The election of Mr Njeke as board chair will necessitate the election of a new chair of the audit and risk committee and a new lead independent director.