The Covid‑19 pandemic has had a profound impact on our country and its people, with South Africa unfortunately having one of the highest infection rates globally, which created severe pressure on certain sectors of our healthcare system.
As essential healthcare service providers both Clicks and UPD continued to trade throughout the national lockdown to ensure a consistent supply of medicines and to meet our responsibility to protect our communities. While the pandemic has had a significant impact on the group in the second half of our 2020 financial year, our business model has proved to be resilient through the crisis.
The trading restrictions imposed during the extended lockdown have also had a devastating effect on the economy and the financial position of millions of South Africans.
Our 2020 integrated report aims to demonstrate in a balanced way how the group has continued to create value for shareholders during this humanitarian and financial crisis while meeting our responsibilities towards our other stakeholders.
While the integrated report is targeted at our shareholders, who are our primary providers of capital, and the broader investment community, we also acknowledge the role of other key stakeholder groups in creating value, namely our customers, staff, suppliers, industry regulators and funding institutions.
The report includes information which we believe is material to investors’ understanding of the group’s ability to create value. The materiality test applied by the board is based on internal and external matters, both positive and negative, that substantively affect the group’s ability to deliver its strategy and which could have a material impact of 5% or more on the group’s profit before taxation.
Reporting and governance compliance
The report has been prepared in accordance with the Integrated Reporting Framework of the International Integrated Reporting Council (IIRC). All financial reporting complies with International Financial Reporting Standards.
The directors confirm that the group has in all material respects applied the principles of the King IV Report on Corporate Governance (King lV) throughout the 2020 financial year. The application of King IV is covered in the corporate governance report 2020 which is available on our website.
Reporting scope and boundary
The report covers material information relating to the business model, strategy, material issues and related risks and opportunities, financial performance, the impact of Covid‑19, corporate governance and directors’ remuneration for the period 1 September 2019 to 31 August 2020.
Forward-looking information focuses on the strategic objectives, operating plans and prospects for the 2021 financial year as well as the group’s medium-term financial targets. The integrated report is supplemented by the annual financial statements which are also available on the website.
The financial reporting boundary covers the group’s main operating businesses Clicks and UPD, which collectively account for 98% of turnover, and focuses on the operations in South Africa where the majority of revenue is generated.
"Our 2020 integrated report aims to demonstrate in a balanced way how the group has continued to create value for shareholders during this humanitarian and financial crisis while meeting our responsibilities towards our other stakeholders."
The integrated report has been reviewed by the board but has not been independently assured. The annual financial statements have been assured by the group’s independent auditor, Ernst & Young Inc.
The sustainability information in the report has been approved by the board’s social and ethics committee. Accredited service providers have determined selected non-financial performance metrics, including market share statistics and the group’s BBBEE rating. Management has verified the processes for measuring all other non-financial information.
The board is responsible for ensuring the integrity of the integrated report. The directors have collectively assessed the content and confirm the report addresses all material issues, the integrated performance and the group’s strategy, as well as the short, medium and long-term prospects.
The audit and risk committee has oversight responsibility for integrated reporting and recommended the report for approval by the directors. The 2020 integrated report was unanimously approved by the board on 17 November 2020.
Independent non-executive chairman
Chief executive officer
Commitment to good governance
Sound corporate governance practices and an ethical culture form the foundation for sustainable value creation for shareholders and other stakeholders.
Good governance supports value creation through improved reporting to shareholders, greater transparency and disclosure, improved quality of management reporting to the board and enhanced accountability to shareholders.
The group’s approach to governance extends beyond regulatory compliance, with open and balanced disclosure being core to our governance framework. Transparent and credible financial reporting forms an essential element of our governance framework.
Management welcomes the opportunity to engage with shareholders on the group’s governance philosophy, processes and practices. We believe our governance practices are robust and this is confirmed in leading independent assessments of our governance standards.