Management approach

The group’s risk management process addresses all risks to the business, including sustainability-related risks. Civil unrest (social) and climate change (environmental) were added to the group’s business risk profile in 2022. Sustainability-related risks are focused in three areas:

• The group operates a large, highly dispersed store and pharmacy network that is conveniently located for its customer base and therefore civil unrest remains one of its priority risks.
• Climate risk is a pervasive and highly-interconnected risk, with extreme weather events posing a risk to the accessibility of its store network and logistics operations. The group’s response to this risk may impact its cost of capital and investment rating.
• The group has an extensive supply chain network and depends on suppliers’ commitment to ethical and sustainable practices. The group’s Supplier Code of Conduct is an enabler of the group’s supplier management framework.

Given South Africa’s current challenges and the strong investor focus on anti-corruption, ethics management is integral to the group`s risk mitigation culture.

The group’s strategic focus on accessible healthcare services requires a keen awareness of South African social dynamics and trends.

The current inadequacies of the healthcare system present opportunities for the group to address shortcomings in the public healthcare services through its growing retail, pharmacy and clinic network. This remains the group’s primary growth area.

Additionally, the group, as the largest private sector vaccination provider, continued its Covid-19 vaccination programme in support of the national vaccination drive. More than 500 sites were made available. Since the inception of the vaccination programme, more than 3.5 million vaccinations have been administered of which 2.9 million were administered during this reporting period (approximately 73% of these administered vaccines were to those without access to private medical aid).

The group’s extensive supply chain presents a significant opportunity for support to small, medium and micro-enterprises (SMME) development. A strong focus on local suppliers resulted in only 5.4% (2021: 4.9%) of its products being imported directly. This also helped secure supply chains through cost reduction and minimisation of disruption while supporting local economic recovery and employment creation. The group’s commitment to this strategy is reflected in its 7.3% growth in purchases from SMMEs to R1.4 billion (2021: R1.3 billion).

Independent verification of the group’s BBBEE status

EmpowerLogic (Pty) Ltd, an independent South African National Accreditation System (SANAS) accredited verification agent, conducted a review of the group’s BBBEE credentials in accordance with the BBBEE Codes and gazetted verification manual. The below summary of the scorecard is for the period 1 September 2021 – 31 August 2022 and valid until 31 October 2023.