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Shareholder Information
Material issues have been identified which could significantly impact positively or negatively on the group’s ability to create and sustain value. These material issues are reviewed annually by the board and management where all relevant internal, industry and macroeconomic factors are evaluated. The needs, expectations and concerns of the stakeholder groups that are most likely to influence the group’s ability to create sustainable value, notably customers, suppliers, regulators, staff, shareholders and providers of financial capital, are central to determining the material issues.
Following the review for the 2018 financial year, the directors have included information technology as a material issue owing to the increasing relevance of data security, and the need for our IT systems and architecture to remain relevant in a world with an ever-increasing demand for real-time IT systems.
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Trading environment |
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Competition |
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Regulation |
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Information Technology |
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People |
Risks relating to each material issue are based on the major risks on the group’s register. The accompanying risk heat map indicates the levels of risk before (inherent risk) and after (residual risk) mitigation plans have been implemented.
Opportunities are presented for each material issue to indicate how the group is using its competitive advantage to manage the impacts of the material issues on value creation.
Economic conditions, political uncertainty, sovereign credit rating downgrades and the resultant negative consumer sentiment are impacting South Africa’s already constrained retail trading environment. Consumer disposable income is being further eroded by higher health insurance costs, increased tax rates, rising energy and general living costs.
Clicks faces competition on several fronts, including national food retailers and general merchandise chains, and other pharmacy businesses.
Healthcare markets are highly regulated across the world and approximately 50% of the group’s turnover is in regulated pharmaceutical products. The group supports regulation that advances the government’s healthcare agenda of making medicines more affordable and more accessible but opposes regulation which inhibits access to affordable healthcare and limits customer choice.
Real-time, uninterrupted IT systems are essential in today’s technology-driven business environment while robust IT security and governance processes are required to limit breaches of customer privacy and loss of data to avoid legal liability and reputational damage.
Retail and healthcare skills are scarce and in high demand locally and internationally. Attracting and retaining talent is therefore critical to the group’s continued success. As the largest employer of pharmacy staff in the private sector in South Africa the group is actively building capacity to address the critical shortage of pharmacists which is a challenge the world over.