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Chairman's report

David Nurek

David Nurek

Clicks Group continues to drive organic growth to deliver sustained financial performance which generates competitive returns and creates long-term value for shareholders.

In an environment of low growth, deteriorating economic conditions and constrained consumer spending, the group produced another excellent performance and entrenched its position as the country’s foremost health and beauty retailer.

Creating value in a weak economy

Group turnover grew by 9.1% to R29.2 billion off a high base created by several years of outstanding performance. Cash generated from operations increased by 20.7% to R2.5 billion and diluted headline earnings per share (HEPS) rose by 15.1% to 578 cents. Shareholders will receive a total dividend of 380 cents per share, 18.0% higher than last year.

The performance of the past year again highlights the group’s resilient business model, with over 80% of turnover in defensive health and beauty merchandise categories. This is core to the group’s investment case of offering investors non-cyclical equity exposure to the retail and healthcare markets in South Africa.

Over the past 10 years the group has generated a compound annual total shareholder return of 32.5% and returned more than R6.7 billion to shareholders. Diluted HEPS has grown by a compound rate of 16.0% and the dividend per share by 20.1% per annum. The dividend payout ratio has been increased progressively from 46% in 2008 to 62% in 2018.

This sustained performance has contributed to strong share price appreciation and consequent growth in market capitalisation, resulting in the group being elevated to the FTSE/JSE Top 40 Index for the first time in June this year. Clicks Group also qualified for inclusion in the MSCI Emerging Markets Index, further acknowledgement of the growing stature of the group.

“Clicks Group was elevated to the FTSE/JSE Top 40 Index in June this year”

Clicks Group remains attractive to international investors, evidenced by the group’s offshore shareholding increasing to 69.9% at year-end and nine of the top 10 shareholders being based offshore.

In the Sunday Times Top 100 Companies survey for 2018 Clicks Group was ranked in the top three best-performing companies on the JSE, based on a five-year compound growth in shareholder value.

Change in leadership

After 13 years at the helm, David Kneale will be retiring as chief executive officer (CEO) and as an executive director with effect from 1 January 2019.

David is an exceptional leader who has made a significant contribution to the growth, development and value creation in the business. Under David’s leadership since 2006 the store base has more than doubled, revenue has trebled, operating profit has increased six-fold and the market capitalisation on the JSE has grown from R3.2 billion to close to R50 billion. Clicks and UPD are now established market leaders with significant organic growth prospects. Significantly, in these times, more than 6 000 jobs have been created across the group over this period.

On behalf of the board and our employees, we thank David for his immense contribution and wish him well as he embarks on the next chapter of his life.

David will assume the role of group strategic adviser while he serves his contractual notice period until 31 August 2019. This will enable the business to leverage David’s vast experience and ensure a seamless transition to the new CEO, Vikesh Ramsunder.

Vikesh is the natural successor to David and has held numerous roles across multiple disciplines and business units in his 25 years with the group. Prior to assuming his current role as chief operating officer of Clicks, Vikesh served as the managing director of UPD where he was responsible for the implementation of UPD’s successful distribution strategy. He has been an integral member of the group executive team for several years and has been instrumental in driving the strong growth in Clicks over the past three years.

“Under David Kneale’s leadership, more than 6 000 jobs have been created across the group”

Vikesh inherits an experienced leadership team which we are confident will continue to deliver. The board joins me in wishing him every success in his new role. He will be appointed to the board as an executive director on 1 January 2019.

Board tenure

Clicks Group has a diverse, stable and independent board comprising three executive directors and six non-executive directors. Five of the non-executive directors, including myself as chairman, have served on the board for 10 years or longer. We believe that the extensive collective knowledge of these long-serving directors adds significant value to boardroom debate and ensures a consistent approach to the group’s strategy.

While the tenure of non-executive directors is not a determinant of independence in terms of King lV, the board nevertheless conducts a stringent annual evaluation of the independence of the chairman and the other non-executive directors. The evaluation involves both an analysis of compliance with governance and regulatory regimes and an evaluation of each director’s behavioural approach.

“Currently 44% of our directors are female and 44% are black, exceeding the voluntary targets of 25% in our board diversity policy”

Following this year’s evaluation the remuneration and nominations committee again concluded that there are no factors limiting the directors from exercising independent judgement or acting in an independent manner, and all the non-executive directors are appropriately classified as independent.

New non-executive directors will be appointed from time to time to maintain fresh and critical thinking and to ensure the board has the necessary expertise to meet its oversight responsibilities.

Board diversity

Diversity at board level encourages constructive debate and ensures that the needs and concerns of all our stakeholder groups are addressed. Currently 44% of our directors are female and 44% are black, exceeding the voluntary targets of 25% contained in our board race and gender diversity policy. After the leadership changes planned for January 2019 black directors will constitute 55% of the board, while black executives will comprise 66% of the executive directors.


The performance of the past year was truly a team effort. Thank you to David Kneale for his astute and decisive leadership, so ably supported by his highly competent executive team, as well as all our employees across the country for their commitment to meeting the needs of our customers and for ensuring we remain the market leader.

My fellow non-executive directors provide valuable insight and guidance and I thank them for their ongoing support.

Thank you to our external stakeholders, including our customers, shareholders, suppliers and industry regulators, for your ongoing support and contribution to our success.

David Nurek

David Nurek

Independent non-executive chairman