Chairman’s report

I am pleased and honoured to report to shareholders for the first time following my appointment as independent non-executive chairman in January this year. The Clicks Group is an organisation of great stature which continues to deliver impressive performances.

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My predecessor, David Nurek, led the board with distinction for 27 years. During his tenure, he oversaw the growth of the group from soon after the JSE listing in 1996, when it had a market capitalisation of less than R1 billion, into one of the country’s foremost retail groups and a proud constituent of the FTSE/JSE Top 40 Index, with a market capitalisation of close to R90 billion at the time of his retirement.

I had the privilege of serving on the board under David’s chairmanship since 2020, and I thank him and my fellow non-executive directors for their support during the board leadership transition.

On behalf of the board, we wish David continued good health and happiness in the next chapter of his life.

Improving economic growth prospects

The group’s 2025 financial year began on an optimistic note, with consumer confidence reaching a five-year high following the formation of the coalition Government of National Unity (GNU), declining inflation and the start of the long-awaited interest rate reduction cycle. These developments contributed to positive sentiment and optimism around South Africa’s economic growth prospects.

However, optimism began to fade in the early months of calendar 2025 as uncertainty increased due to rising global and domestic uncertainty. Internationally, new trade tariffs unsettled global markets, while locally divisions within the GNU raised concerns over the government’s stability and longevity. This negatively impacted South Africa’s macroeconomic outlook and temporarily stalled the country’s economic recovery.

As the year progressed early improvements in South Africa’s macroeconomic indicators began to emerge, supporting the prospect of a medium-term recovery in retail spending. However, lower inflation and reduced debt servicing costs have not yet translated into increased consumer spending, with sentiment and discretionary spending remaining subdued.

Clicks is well positioned to respond to this muted spending with the resilience of its business model and defensiveness of its core product offering, which was reflected in the financial results for the year.

Industry-leading shareholder returns

Clicks Group offers a compelling investment case underpinned by strong long-term organic growth prospects and a track record of superior returns to shareholders, which supports the premium rating of the Clicks Group share.

In the past year group turnover increased by 5.3% to R47.8 billion, diluted headline earnings per share increased by 14.1% and the total dividend was increased by 14.2%, based on a 65% dividend payout ratio.

The performance also maintains the group’s consistent growth momentum and trajectory. Over the past 10 years diluted HEPS has grown at a compound rate of 13.5% per annum and dividends per share by 14.2% per annum.

Capital returned to shareholders

The group has remained highly cash generative, with cash inflows from operations increasing by R605 million to R6.6 billion. R2.7 billion was returned to shareholders in dividend payments and share buybacks while almost R1 billion was reinvested in capital projects. The group achieved an industry-leading return on equity of 49.2%.

Our shareholders continue to be well rewarded. Since 2015 the Clicks Group share price has grown at a 10-year compound annual growth rate (CAGR) of 15.1% relative to the growth of 4.6% in the Food and Drug Retailers Index and the 7.8% increase in the Top 40 Index.

The total shareholder return, based on share price appreciation and the reinvestment of dividends, has generated a 10-year CAGR of 17.3% per annum.

Since 2006, when the share buyback programme was initiated, the group has returned R22.3 billion to shareholders in dividends of R14.5 billion and share buybacks of R7.8 billion. At year-end the value of the shares repurchased totalled R61.2 billion.

Board and governance developments

Following my appointment as chairman, the board elected Sango Ntsaluba as the lead independent director. He is an experienced company director, chairman of the board’s remuneration committee as well as a member of the audit and risk committee. I congratulate Sango and I know he is well qualified to play this role.

Christine Ramon was appointed as chair of the audit and risk committee. A highly experienced financial executive, she has extensive board and committee expertise, having served as chair and member of audit committees across large listed and unlisted companies.

After the end of the reporting period we announced the appointment of Bertie van Sittert as an independent non-executive director with effect from 1 February 2026. Bertie has extensive and current retail and consumer experience gained over more than two decades at Clicks Group and Pepkor. We are confident he will add significant value to the board’s deliberations, particularly in his specialist areas of finance, retail operations and strategy.

Our board is balanced, diverse, independent and engaged, with all non-executive directors appointed within the past five years. Board diversity is essential to ensure that the interests of all stakeholder groups are considered and addressed. Our broader diversity policy includes voluntary targets for 50% black and 33% female representation at board level. At year-end 75% of the directors were black and 50% female and following the new director appointment from February 2026, the board will comprise 67% black and 44% female representation, far exceeding our diversity targets.

Acknowledgements

I thank my fellow non-executive directors for their support, wise counsel and commitment to the highest standards of governance and oversight.

I extend my appreciation to our CEO, Bertina Engelbrecht, CFO, Gordon Traill, and the group executive team, whose energetic and astute leadership ensures that Clicks Group remains the market leader in health and beauty retail. Our staff of more than 20 100 across head office, stores, pharmacies and distribution centres are commended for their passion, teamwork and unwavering focus on our customers.

Thank you to our external stakeholders, including our customers, shareholders, suppliers and regulators, for their continued support and engagement.

 

Mfundiso Njeke
Independent non-executive chairman

6 November 2025