GOVERNANCE REPORTS

STAKEHOLDER ENGAGEMENT

Clicks Group has followed a board-endorsed process of formalising stakeholder engagement across the business. Through this process five primary stakeholder groups have been identified that are most likely to influence the sustainability of the business in the short, medium and longer term.

Qualitative and quantitative performance indicators have been developed for each stakeholder group to determine the outcome of the engagement and these measures will be refined on an ongoing basis. These metrics are used in the formal reporting process on stakeholder engagement at board meetings.

Customers

Rationale for engaging	Primary means of engaging	Key engagement issues	Outcome of engagement
Meet customer needs by providing products and services to generate returns for shareholders Create trust in products and pharmacy practices Customer loyalty and retention Increase market share	Retail: Customer interaction in stores Dispensing medicine in pharmacies Primary health services in clinics Media advertising ClubCard communications Promotional activity CSI programmes Internet Market research UPD: Sales representatives Customer interaction Internet	Product range Service levels Price competitiveness Pharmacy and clinic services ClubCard benefits	Retail: 88.9 million retail customer transactions (2010: 83.0 million) 19.3 million prescriptions (2010: 17.2 million) processed ClubCard membership increased to 3.4 million (2010: 3.1 million) ClubCard holders account for over 76% of sales (2010: 74%) Market share growth in key healthcare categories Clicks independently rated by customers as first for pricing and value in health and beauty retailing Private label sales 18.2% of total Clicks sales (2010: 17.8%) Product availability: Clicks 95.6% (2010: 96%) CSI spend of R9.0 million (2010: R9.8 million) UPD: Product availability: UPD 92% (2010: 89%) Range – 13 641 lines (2010: 14 431) Delivery frequency – 2.9 times per week (2010: 2.6 times) Customer contact – 15 065 visits (2010: not measured)

Shareholders and investment community

Rationale for engaging	Primary means of engaging	Key engagement issues	Outcome of engagement
Facilitate access to capital by attracting investors Informed investor community Balanced analysis of company Fair market rating relative to peers	Management meetings with local and international investors and analysts Interim and annual results presentations Roadshows to international investors in the UK and USA Integrated annual report Statutory shareholder meetings SENS releases Investor conferences Group website	Group strategy Trading environment Trading and financial performance Regulatory environment Pharmaceutical wholesaling and distribution Store and pharmacy expansion plans Shortage of pharmacists Capital management Prospects	196 management meetings with local and international shareholders and analysts (2010: 173 meetings) Volume of shares traded 178% (2010: 113%) International share ownership 61% (2010: 47%) Research coverage by 11 brokerages Participation in four stockbroker conferences

Employees

Rationale for engaging	Primary means of engaging	Key engagement issues	Outcome of engagement
Attract, motivate and retain talent Increase productivity Engender loyalty Accelerate transformation	Induction programme Regular personal and electronic communication Management roadshows Employer of Choice programme for pharmacists Employee wellness programme Employee satisfaction survey Ongoing liaison and wage negotiations with trade unions Engaging pharmacy schools at universities to increase capacity	Remuneration and benefits Employee share ownership scheme Performance management Personal development Career path planning Training and skills development	Staff turnover 19.4% (2010: 19.8%) Pharmacist turnover 23% (2010: 34%) Employee wellness utilisation rate 21% (2010: 27%) Employment equity – Black staff as a % of total staff 84.8% (2010: 84.7%) – Female staff as a % of total staff 63.0% (2010: 62.7%) Training and skills development spend R47 million (2010: R57 million) 408 learners trained through Pharmacy Healthcare Academy in past year 23 pharmacy interns engaged Employee satisfaction index 68% (2010: 67%)

Industry regulators

Rationale for engaging	Primary means of engaging	Key engagement issues	Outcome of engagement
Legislative and regulatory compliance Lobby for regulatory reform Lobby for fair legislation which will not adversely affect returns to shareholders Best practice governance standards	Written and verbal submissions on draft regulations and legislation Formal meetings with Department of Health and relevant industry regulators Ongoing liaison with regulators Membership of industry bodies	Legislation Regulation Compliance	Constructive engagement with regulators Insight into regulatory framework Formal submissions made in response to draft regulations

Suppliers

Rationale for engaging	Primary means of engaging	Key engagement issues	Outcome of engagement
Ensure stable supply of merchandise Understand market movement and new product launches that may change buying patterns Quality standards maintained Brand exclusivity Secure other income to support brand and marketing effort to customers	Supplier and partner meetings Contractual agreements and service level measures Clicks Pharmacy Conference Suppliers’ conference Audit of suppliers	Quality and safety standards Product availability and exclusivity Product innovation, strength of brands Private label products Transformation and BEE scorecards Legislative compliance	Reliable, efficient and sustained supply chain Supplier infill levels – Clicks 79.1% (2010: 80.5%) – UPD 78% (2010: 83%) Preferential procurement 48% (2010: 35%) from level 4 BBBEE and higher rated suppliers Consistent supply and maintenance of franchise agreement with The Body Shop International