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.
Against the background of several high-profile corporate accounting scandals and oversight failures in South Africa, governance practices are under increasing scrutiny from local and international investors. In this environment we welcome the opportunity to engage with our 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.
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 structure.
We have pleasure in presenting Clicks Group’s 2019 integrated report which aims to demonstrate in a balanced manner how our health, beauty and wellness strategy creates value for shareholders while balancing our responsibilities towards our other stakeholders.
The integrated report is aimed at our shareholders who are our primary providers of capital as well as the broader investment community. We also recognise the role of other key stakeholders in creating value, namely our customers, staff, suppliers, industry regulators and funding institutions.
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 voluntarily applied the principles of the King IV Report on Corporate Governance (King lV) throughout the 2019 financial year. The application of King IV is covered in the corporate governance report 2019 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, governance, financial and business performance, and directors’ remuneration for the period 1 September 2018 to 31 August 2019. In addition the report outlines the strategic objectives, operating plans and prospects for the 2020 financial year as well as the group’s medium-term financial targets which have been revised to take account of the anticipated impact of adopting IFRS 16 – Lease Accounting in 2020. 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 96% of turnover, and focuses on the operations in South Africa where the majority of revenue is generated.
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.
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 non-financial and sustainability-related information contained in the report has been approved by the board’s social and ethics committee. Accredited service providers and agencies have provided 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 2019 integrated report was unanimously approved by the board on 8 November 2019.
Independent non-executive chairman
Chief executive officer