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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 (“Clicks Group” or “the company”) 2009 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 Clicks Group is disclosed here.

2. DETAILS AND RATIONALE
Clicks Group will issue 23 000 000 (twenty-three million) ordinary shares of 1 cent each to New Clicks South Africa (Pty) Limited (“New Clicks SA”), a wholly-owned subsidiary of Clicks Group. The shares may be issued in one or more tranches and will be issued at the market value at the close of business on the day prior to the application for the listing of such shares being submitted to the JSE Limited. 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 Clicks Group shareholders. The distributions which will be made from capital reserves will be consistent with distributions made in the past to Clicks Group shareholders.

In the past three years there have been no issues of securities other than in terms of Clicks Group’s share incentive scheme and the previous issue of shares to New Clicks SA, for which Clicks Group’s directors have been granted the relevant authority.
 
3. FINANCIAL EFFECTS OF THE TRANSACTION
The specific issue of shares for cash will have no effect on Clicks Group’s earnings, headline earnings, net asset value or tangible net asset value.
 
4. SHARE CAPITAL
As at 31 August 2009, the authorised and issued share capital of Clicks 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  
  302 841 401 ordinary shares of 1 cent each 3 029
  Share premium –
  Total 3 029
  Treasury shares – 26 535 1821 of 1 cent each (265)
  Total after treasury shares – 276 306 219 of 1 cent each 2 764
  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  
  300 792 521 ordinary shares of 1 cent each 3 008
  Share premium 549 470
  Total 552 478
  Treasury shares – 24 486 3022 of 1 cent each (549 714)
  Total after treasury shares and issue of shares for cash – 276 306 219 of 1 cent each 2 764
  Notes:  
  1. For illustrative purposes, all of the treasury shares as at 31 August 2009, except for those treasury shares held by the New Clicks Holdings Share Trust for purposes of delivery to participants in terms of the share incentive scheme, have been cancelled.  
  2. For purposes of this note it has been assumed that the shares are issued at the market value at the close of business on 15 October 2009 being R23.90 (this is for illustrative purposes only).
 		  
5. INFORMATION RELATING TO THE DIRECTORS  
  5.1 Directors’ names and addresses  
    David Nurek Chairman  
    Appointed: June 1997  
    Age: 59  
    Business address: 36 Hans Strijdom Avenue, Foreshore, Cape Town, 8001  
    Qualifications: Dip Law, Grad Dip Company Law  
    Fatima Abrahams Non-executive director  
    Appointed: March 2008  
    Age: 47  
    Business address: PO Box 31222, Grassy Park, 7888  
    Qualifications: B Econ (Hons) (cum laude), M Com and D Com  
    John Bester Non-executive director  
    Appointed: October 2008  
    Age: 63  
    Business address: Belmont Office Park, Belmont Road, Rondebosch, 7700  
    Qualifications: B Com Hons, CA (SA), CMS (Oxon)  
    Bertina Engelbrecht* Human resources director  
    Appointed: March 2008  
    Age: 46  
    Business address: Cnr Searle and Pontac Streets, Cape Town, 8001  
    Qualifications: B Proc, LL M, admitted attorney  
    Michael Harvey* Managing director, Clicks  
    Appointed: April 2006  
    Age: 40  
    Business address: Cnr Searle and Pontac Streets, Cape Town, 8001  
    Qualifications None  
    Fatima Jakoet Non-executive director  
    Appointed: March 2008  
    Age: 49  
    Business address: PO Box 5142, Cape Town, 8000  
    Qualifications: B Sc, CTA, CA (SA), Higher certificate in financial markets  
    David Kneale*# Chief executive officer  
    Appointed: April 2006  
    Age: 55  
    Business address: Cnr Searle and Pontac Streets, Cape Town, 8001  
    Qualifications: BA  
    Martin Rosen Non-executive director  
    Appointed: April 2006  
    Age: 59  
    Business address: MV Media Commerce House, 374 Rivonia Blvd, Rivonia 2128  
    Qualifications: None  
    Keith Warburton* Chief financial officer  
    Appointed: April 2006  
    Age: 51  
    Business address: Cnr Searle and Pontac Streets, Cape Town, 8001  
    Qualifications: B Com, CA (SA)  
    * executive directors    
    # British    
  The following directors are also directors of New Clicks SA in the same capacity as in Clicks Group: David Kneale, Michael Harvey and Keith Warburton.
 
  5.2 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.
 
  5.3 Directors’ interests in securities  
    As at 31 August 2009, directors’ direct and indirect holdings and outstanding options in the issued share capital of Clicks Group were as follows:
   
  Beneficial Number of share options*
Name Direct Indirect Total %  
David Nurek – 129 682 0.05 500 000
David Kneale 105 200 – 0.04 –
Michael Harvey 100 000 – 0.03 –
Keith Warburton – 5 000 0.00 –
Martin Rosen 2 000 – 0.00 –
John Bester 10 000 – 0.00 –
Total 217 200 134 682 0.12 500 000
   

* share options were offered on a deferred delivery basis

There have been no changes in the direct or indirect beneficial interests of the directors’ holding in the share capital of Clicks Group from 31 August 2009 to the last practicable date.

Directors not mentioned in the table above do not have a shareholding in Clicks Group.
 
  5.4 Directors’ interests in transactions
None of the directors of Clicks Group have any material beneficial interest, whether directly or indirectly, in any transaction effected by Clicks Group in the current or immediately preceding financial year, or during an earlier financial year where there remains any outstanding or underperformed aspect.
 
6. MATERIAL CHANGES
There have been no material changes in the financial or trading position of Clicks Group and its subsidiaries since the publication of Clicks Group’s final results for the 12-month period ended 31 August 2009.
 
7. MAJOR SHAREHOLDERS
In so far as is known to the directors of Clicks Group, the major shareholders, as at 31 August 2009, being the beneficial owners, directly or indirectly, of 5% or more of the issued share capital of Clicks Group, are as follows:
 
 
  Number of % of total
  shares owned issued shares
Government Employees Pension Fund 48 998 562 16.2
New Clicks SA (treasury shares) 25 048 880 8.3
Sanlam Investment Managers 20 855 529 6.9
Investment Solutions 16 687 499 5.5
Total 111 590 470 36.9


 
8. LITIGATION STATEMENT
There have been no legal proceedings in the past 12 months, including any proceedings that are pending or threatened of which Clicks Group is aware, which may have a material effect on Clicks Group’s financial position.
 
9. TRADING HISTORY OF CLICKS GROUP SHARES ON THE JSE
The high, low and closing prices of Clicks Group shares on the JSE, and the volumes and value traded, for the eight quarters ending September 2008, monthly from October 2008 to September 2009 and for each trading day from 10 September 2009 to the day preceding the last practicable date, were as follows:
 
 
    Close Low High Volume Value
    (R) (R) (R) (000) (R’000)
Quarterly            
2006 December 10.70 10.50 10.89 88 667 914 702
2007 March 12.60 12.50 12.65 87 034 963 676
  June 14.67 14.50 15.06 75 365 986 503
  September 14.70 14.30 14.80 74 085 1 150 832
  December 17.95 17.20 18.46 93 245 1 466 914
2008 March 13.35 13.10 13.35 74 905 1 172 384
  June 13.90 13.75 14.00 56 602 791 676
  September 13.15 13.00 14.00 77 774 1 045 936
Monthly            
2008 October 13.70 13.20 14.00 32 153 477 473
  November 15.50 14.50 15.50 15 914 237 188
  December 16.30 15.80 16.30 14 843 230 346
2009 January 16.40 15.75 16.50 7 495 123 667
  February 14.70 13.95 15.45 21 549 331 907
  March 14.80 14.30 15.79 20 049 283 704
  April 15.37 14.51 15.37 21 751 326 920
  May 17.00 16.55 17.31 19 670 319 805
  June 17.75 17.51 18.00 20 348 368 726
  July 19.50 19.15 19.69 10 074 187 381
  August 19.70 19.65 19.73 17 019 334 234
  September 21.40 20.63 21.40 15 187 305 343
Daily            
2009 10 September 20.00 19.81 20.90 2 082 41 631
  11 September 20.00 19.90 20.93 1 800 36 019
  14 September 19.67 19.60 20.00 195 3 844
  15 September 19.99 19.60 20.46 115 2 301
  16 September 19.90 19.74 20.29 2 769 54 778
  17 September 20.50 19.91 20.80 330 6 650
  18 September 21.35 20.02 22.05 402 8 434
  21 September 22.00 20.10 22.00 528 11 292
  22 September 21.20 20.15 21.48 155 3 237
  23 September 21.40 20.63 21.40 448 9 421
  25 September 21.45 20.50 21.50 301 6 334
  28 September 21.40 20.70 21.40 918 19 273
  29 September 21.90 19.65 22.49 1 265 27 718
  30 September 22.90 20.30 23.00 611 13 844
  1 October 22.98 22.60 23.95 1 385 31 858
  2 October 22.40 22.01 23.00 1 429 32 014
  5 October 22.60 22.12 24.39 399 9 002
  6 October 22.52 22.24 22.70 297 6 679
  7 October 22.10 22.00 23.15 193 4 335
  8 October 22.35 20.75 23.17 953 21 077
  9 October 23.00 22.35 23.10 541 12 190
  12 October 22.41 22.15 23.06 367 8 388
  13 October 23.00 22.42 23.11 157 3 598
  14 October 23.62 22.81 23.99 637 14 749
  15 October 23.90 23.01 24.95 2 152 52 256
  16 October 23.90 23.67 24.00 164 3 915
  19 October 23.99 23.65 24.01 256 6 115
  20 October 22.82 22.82 24.31 132 3 142
  21 October 22.85 22.85 23.65 885 20 485
  22 October 23.70 22.85 24.00 544 12 775

10.
WORKING CAPITAL STATEMENT
Having considered the possible effects of the specific issue of shares for cash to New Clicks SA the directors are of the opinion that:
 
  – the company and the group will be able in the ordinary course of business to pay its debts for a period of 12 months after the date of approval of the 2009 annual report, incorporating this annexure;
  – the consolidated assets of the company and the group are and will be in excess of their consolidated liabilities for a period of 12 months after the date of approval of the 2009 annual report, incorporating this annexure, measured in accordance with the accounting policies used in the audited consolidated annual financial statements for the year ended 31 August 2009;
  – the ordinary share capital and reserves of the company and group will be adequate for ordinary business purposes for a period of 12 months after the date of approval of the 2009 annual report, incorporating this annexure; and
  – the company and the group will have sufficient working capital for ordinary business purposes for a period of 12 months after the date of approval of the 2009 annual report, incorporating this annexure.
 
11. DIRECTORS’ RECOMMENDATION
The Clicks Group board is of the opinion that the specific issue of shares for cash will benefit shareholders and accordingly recommends 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.
 
12. DIRECTORS’ RESPONSIBILITY STATEMENT
The Clicks Group directors, in so far as any information in this annexure relates to Clicks 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.
 
13. EXPENSES
The expenses relating to the specific issue of shares for cash, as detailed below, are estimated to be approximately R231 376 (excluding VAT) and relate, inter alia, to:
 
 
  R
JSE documentation fee 9 515
JSE listing fees* 146 861
Investment bank and sponsor 75 000
Total 231 376
  * The JSE listing fee is based on the value of the shares being listed. For illustrative purposes it has been assumed that the shares are issued at the market value at the close of business on 15 October 2009 being R23.90.
 
14. CORPORATE GOVERNANCE
Information relating to compliance with the King Committee Report on Corporate Governance is contained in the Corporate Governance Report.
 
15. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents, in relation to Clicks Group and where applicable its subsidiaries, will be available for inspection at the company’s registered office and at Investec’s offices in Johannesburg during normal office hours up to the date of the annual general meeting being Monday, 18 January 2010:
 
  – the memorandum and articles of association;
  – the audited financial statements for the preceding three years; and
  – a signed copy of this annexure.
  For and on behalf of the board

Clicks Group Limited

KEITH WARBURTON
Director

Cape Town
12 November 2009