ANNEXURE 1 – EXPLANATORY NOTES
pertaining to ordinary resolutions number 9 and 10 – specific authority to issue shares

1. Introduction
  The explanatory notes have been incorporated in the Clicks Group Limited (“the company”) 2010 annual report to provide shareholders with information pertaining to the specific issue of shares for cash, in order for shareholders to consider and vote on ordinary resolutions number 9 and 10.
   
  The address and registration number of the company is disclosed on the back inside cover of the annual report.
   
2. Purpose of this annexure
  The purpose of this annexure, which includes all the relevant information pertaining to the specific issue of shares for cash in accordance with the Listings Requirements of the JSE Limited (“JSE”), is to inform the company’s shareholders of the implications thereof, and to enable them to make an informed decision as to how to vote at the annual general meeting to be held at 10:00 on Tuesday, 18 January 2011, for the purpose of considering, and if deemed fit, approving the ordinary resolutions necessary to perform the specific issue of shares for cash.
   
3. Details and rationale
  The company will issue 15 000 000 ordinary shares of 1 cent each to New Clicks South Africa (Pty) Limited (“New Clicks SA”), a wholly-owned subsidiary of the company. The ordinary shares may be issued in one or more tranches and will be issued at a value, determined as the volume weighted average traded price (“VWAP”) of the company’s share on the JSE measured over the 30 (thirty) business days prior to the date the application for the listing of shares is submitted to the JSE. The shares held by New Clicks SA will be accounted for as treasury shares and will have no voting rights. New Clicks SA is considered to be a non-public shareholder in terms of the JSE Listings Requirements.
   
  The capital raised from the specific issue will be used to make distributions to the company’s shareholders. The distributions which will be made from capital reserves will be consistent with distributions made in the past to the company’s shareholders.
   
  In the past three years there have been no issues of the company’s shares other than in terms of the issue of ordinary shares to New Clicks SA, for which the company’s directors have been granted the relevant authority. The company has issued in aggregate 8 741 227 shares over the past three years to New Clicks SA for a total consideration of R323 980 898. The capital raised from these issues was used to make distributions to the company’s shareholders as will the specific issue of shares for cash being contemplated in this annexure.
   
4. Financial effects
  The specific issue of shares for cash to New Clicks SA is an inter-company transaction and will have no effect on the company’s consolidated earnings, headline earnings, net asset value or tangible net asset value.
   
5. Material changes
  There have been no material changes in the financial or trading position of the company and its subsidiaries (“the group”) since the publication of the group’s annual results for the year ended 31 August 2010.
   
6. Share capital and reserves
  As at 2 November 2010 (“last practicable date”), the equity position of the group before and after the specific issue of shares for cash is as follows:
   
    R'000
  Before the specific issue  
  Authorised share capital  
  600 000 000 ordinary shares of 1 cent each 6 000
  Total authorised 6 000
  Issued share capital  
  284 006 929 ordinary shares of 1 cent each 2 840
  Share premium
  Treasury shares (20 281 509 ordinary shares of 1 cent each) (203)
  Total after treasury shares 2 637
  After the specific issue  
  Authorised share capital  
  600 000 000 ordinary shares of 1 cent each 6 000
  Total authorised 6 000
  Issued share capital  
  279 521 420 ordinary shares of 1 cent each1 2 795
  Share premium2 622 650
  Treasury shares (15 796 000 ordinary shares of 1 cent each) (622 808)
  Total after treasury shares and issue of shares for cash 2 637
  Notes :  
 
1 For illustrative purposes all of the treasury shares as at 2 November 2010, except for those treasury shares held by the New Clicks Holdings Share Trust for purposes of delivery to participants of the share incentive scheme, have been cancelled.
2 For the purposes of this note it has been assumed that all the ordinary shares are issued at the 30 day VWAP until the close of business on 26 October 2010, being R41.52 (this is for illustrative purposes only).
   
7. Major shareholders
  In so far as is known to the directors, the major shareholders as at 31 August 2010, being the beneficial owners, directly or indirectly, of 5% or more of the issued share capital of the company, are as follows:
       
    Number of % of total
    shares owned issued shares
  Government Employees Pension Fund 49 886 356 17.6
  New Clicks SA 16 888 151 5.9
  Total 66 774 507 23.5
       
8. Directors    
 

8.1

Directors’ information

  David Nurek# Non-executive chairman
  Business address: 36 Hans Strijdom Avenue, Foreshore, Cape Town, 8001
  Principal activities: Regional chairman of Investec’s Western Cape business, Investec global head of legal risk, non-executive chairman of Distell Group, Foschini Group and Lewis Group, non-executive director of Aspen Pharmacare, Sun International, Trencor and Mobile Industries
  Fatima Abrahams# Non-executive director
  Business address: PO Box 31222, Grassy Park, 7888
  Principal activities: Senior professor at the University of the Western Cape, chairperson of TSiBA Education, non-executive director of Foschini Group and Lewis Group
  John Bester# Non-executive director
  Business address: Belmont Office Park, Belmont Road, Rondebosch, 7700
  Principal activities Non-executive director of Personal Trust International, HomeChoice Holdings and Western Province Rugby (Proprietary) Limited, and a trustee of Children’s Hospital Trust
  Bertina Engelbrecht* Group human resources director
  Business address: Corner Searle and Pontac Streets, Cape Town, 8001
  Michael Harvey * Managing director, Clicks
  Business address: Corner Searle and Pontac Streets, Cape Town, 8001
  Fatima Jakoet# Non-executive director
  Business address: PO Box 5142, Cape Town, 8000
  Principal activities: Non-executive director of the SA Reserve Bank Group, Metropolitan Holdings Group, Tongaat Hulett and MTN West and Central Africa Region
  David Kneale *† Chief executive officer
  Business address: Corner Searle and Pontac Streets, Cape Town, 8001
  Dr Nkaki Matlala# Non-executive director
  Business address: Medi-Clinic Tshwane Region, Boardwalk Lakeside, Block J, 107 Haymeadow Drive, Faerie Glen, 0043
  Principal activities: Chief clinical officer and director of Medi-Clinic Southern Africa and chairman of the Hospital Association of South Africa and Phodiso Holdings
  Martin Rosen# Non-executive director
  Business address: MV Media Commerce House, 374 Rivonia Boulevard, Rivonia, 2128
  Principal activities: Executive director of MegaVision Media (Proprietary) Limited
  Keith Warburton* Chief financial officer
  Business address: Corner Searle and Pontac Streets, Cape Town, 8001
     
 
 
 
   
  The following directors are also directors of New Clicks SA in the same capacity as in the company: David Kneale, Michael Harvey and Keith Warburton.
   

8.2

Directors’ remuneration

  There will be no variation in the remuneration to be received by any of the directors as a consequence of the specific issue of shares for cash.
   

8.3

Directors’ interests in securities

  As at the end of the financial year, being 31 August 2010, the direct and indirect holdings and outstanding options in the issued share capital of the company were as follows:
   
 
    Beneficial Percentage of
      Held by issued share
Director Direct Indirect associates capital (%)
John Bester 10 000 10 000 1 000 0.01
Bertina Engelbrecht 34 591 0.01
Michael Harvey 143 815 0.05
David Kneale 214 646 0.08
David Nurek 329 682 0.11
Martin Rosen 2 000 0.00
Keith Warburton 46 121 5 000 0.02
Total 451 173 344 682 1 000 0.28
   
  Directors not mentioned in the table above do not have a shareholding in the company.
   
  The only dealing by the directors of the company for the period commencing 1 September 2010 and terminating 12 November 2010 of this annexure is set out below:
   
 
          Percentage
      Number of Price per share of issued share
Director Date Nature of transaction  shares (cents) capital (%)
David Nurek 26 October 2010 Sale 50 000  4 435 0.02
   

8.4

Directors’ interests in transactions

  None of the directors of the company have any material beneficial interest, whether directly or indirectly, in any transaction effected by the group in the current or immediately preceding financial year, or during an earlier financial year where there remains any outstanding or underperformed aspect.
   
9. Litigation statement
  There have been no legal proceedings, including any proceedings that are pending or threatened of which the group is aware, which may have or have had in the recent past, being at least the previous 12 months, a material effect on the group’s financial position.
   
10. Trading history of Clicks Group Limited shares on the JSE
  The high, low and closing prices of the company’s shares on the JSE, and the volumes and value traded, for the eight quarters ending December 2009, monthly from November 2009 to October 2010 and for each trading day for the 30 trading days prior to the last practicable date were as follows:
   
 
  High Low Close Volume Value
  (cents) (cents) (cents) (shares) (R’000 )
Quarter ended          
31 March 2008  1 750 1 300 1 414 67 064 111 940 238
30 June 2008  1 550 1 200 1 238 62 748 021 877 067
30 September 2008  1 615 1 119 1 550 83 446 288 1 171 452
31 December 2008  1 745 1 276 1 700 59 443 741 895 094
31 March 2009  1 800 1 208 1 500 51 749 551 776 090
30 June 2009  1 950 1 400 1 835 59 370 856 985 017
30 September 2009  2 300 1 800 2 290 43 913 311 867 448
31 December 2009  2 750 2 075 2 725 52 561 354 1 309 640
Monthly          
30 November 2009  2 699 2 301 2 515 21 218 366 539 242
31 December 2009  2 750 2 480 2 725 16 700 324 428 227
31 January 2010  2 850 2 451 2 650 22 584 594 586 708
28 February 2010  2 815 2 558 2 760 21 868 914 586 396
31 March 2010  3 194 2 761 2 964 29 368 123 875 171
30 April 2010  3 255 2 920 3 095 30 955 110 957 933
31 May 2010  3 293 2 802 3 254 36 520 999 1 129 393
30 June 2010  3 603 3 100 3 395 52 299 975 1 760 304
31 July 2010  3 799 3 351 3 615 25 975 192 940 812
31 August 2010  3 790 3 370 3 750 20 609 148 728 905
30 September 2010  4 435 3 704 4 420 28 351 514 1 125 597
31 October 2010  4 640 4 055 4 570 49 987 541 2 118 830
Daily          
21 September 2010  4 009 3 859 3 990 2 300 954 91 580
22 September 2010  4 100 3 890 3 970 2 323 071 92 984
23 September 2010  4 016 3 918 3 960 1 306 759 51 754
27 September 2010  4 098 3 960 3 990 1 821 869 73 140
28 September 2010 4 010 3 964 3 989 1 833 065 73 238
29 September 2010  4 298 4 000 4 233 2 454 849 101 391
30 September 2010  4 435 4 224 4 420 1 836 483 80 468
01 October 2010  4 447 4 250 4 272 1 319 908 57 360
04 October 2010  4 300 4 087 4 097 2 467 060 102 131
05 October 2010  4 127 4 080 4 088 2 078 042 85 131
06 October 2010  4 125 4 055 4 079 14 425 936 589 421
07 October 2010  4 130 4 080 4 107 3 833 867 157 335
08 October 2010  4 146 4 070 4 090 435 298 17 834
11 October 2010  4 410 4 064 4 117 4 266 840 176 374
12 October 2010  4 268 4 110 4 207 1 985 960 82 779
13 October 2010  4 344 4 216 4 250 908 225 38 768
14 October 2010  4 335 4 255 4 306 3 231 909 138 441
15 October 2010  4 369 4 270 4 369 1 537 950 66 406
18 October 2010  4 441 4 275 4 428 328 256 14 351
19 October 2010 4 626 4 411 4 552 2 138 386 97 454
20 October 2010  4 590 4 495 4 500 659 310 29 884
21 October 2010  4 599 4 429 4 460 1 691 784 76 155
22 October 2010  4 460 4 375 4 384 1 279 390 56 453
25 October 2010 4 482 4 385 4 416 1 298 605 57 459
26 October 2010  4 537 4 420 4 505 1 594 195 71 281
27 October 2010  4 640 4 417 4 525 669 061 30 302
28 October 2010  4 572 4 419 4 520 2 347 579 105 965
29 October 2010  4 600 4 497 4 570 1 489 980 67 546
01 November 2010  4 660 4 555 4 620 1 220 877 56 443
02 November 2010  4 672 4 580 4 630 1 273 961 58 847
   
11. Expenses
  The expenses relating to the specific issue of shares, as detailed below, are estimated to be approximately R240 757 (excluding VAT) and relate, inter alia, to:
   
    R'000
  JSE documentation fee 10
  JSE listing fees* 156
  Investment bank and sponsor 75
  Total 241
 
     
12. Directors’ recommendation  
  The company’s board is of the opinion that the specific issue of shares for cash will benefit shareholders and accordingly recommend that shareholders vote in favour of ordinary resolutions number 9 and 10 set out in the notice of annual general meeting. Those directors who hold ordinary shares intend to vote in favour of ordinary resolutions number 9 and 10.
   
13. Directors’ responsibility statement
  The company’s directors, in so far as any information in this annexure relates to the company and the group, collectively and individually accept full responsibility for the accuracy of the information given and certify that, to the best of their knowledge and belief there are no other facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this document contains all information required by law and the JSE Listings Requirements.
   
14. Consent
  The sponsor to the company has consented in writing to act in the capacity stated in this document and to his name being stated in this document and has not withdrawn his consent prior to the publication of this document.
   
15. Documents available for inspection
  Copies of the following documents, in relation to the company and its subsidiaries, will be available for inspection at the company’s registered office and at Investec’s office in Johannesburg during normal office hours up to the date of the annual general meeting, being Tuesday, 18 January 2011:
   
 
  • the memorandum and articles of association of the company and its subsidiaries;
  • the audited financial statements for the three financial years ended 31 August 2008, 2009 and 2010;
  • the consent letter referred to in paragraph 14 above; and
  • a signed copy of this annexure.

For and on behalf of the board

Clicks Group Limited

Keith Warburton
Director

Cape Town
12 November 2010