Introducing the integrated report

While the country has emerged from the pandemic and economic activity normalised, the retail trading environment is expected to remain challenging as global geopolitical and local socio-economic factors contribute to escalating costs which are eroding consumer disposable income.

Our 2022 integrated report aims to demonstrate in a balanced way how the group continues to create value for shareholders during these uncertain times while meeting our responsibilities towards all stakeholders.

Reporting scope and boundary

The report covers material information relating to the business model, strategy, material issues and related risks and opportunities, and performance for the period 1 September 2021 to 31 August 2022. The integrated report is supplemented by the annual financial statements which are also available on the group’s website.

Forward-looking information focuses on the strategic objectives, operating plans and prospects for the 2023 financial year as well as the group’s medium-term financial targets.

The financial reporting boundary covers the performance of the group’s main operating businesses Clicks and UPD, which collectively account for 99% of turnover, and focuses on the operations in South Africa where the majority of revenue is generated. The group has 50 stores in four neighbouring countries.

The integrated reporting boundary covers risks, opportunities and outcomes relating to the group’s operating environment, its operating businesses and engagement with key stakeholders that could influence the group’s ability to create and sustain value, and also the extent to which the group’s strategic objectives and targets have been achieved.

The integrated report is targeted at our shareholders, who are our primary providers of capital, and the broader investment community, while we also acknowledge the role of our customers, staff, suppliers, industry regulators and funding institutions in the process of value creation, preservation and erosion.

Materiality

The report focuses on information which we believe to be relevant and material to investors’ understanding of the group’s ability to create value. The financial materiality test applied by the board in measuring enterprise value is based on internal and external factors, 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. We are also measuring impact materiality as it relates to the social, environmental and economic impacts of our operations and plan to report on this in subsequent years.

Reporting and governance compliance

The report has been prepared in accordance with the Integrated Reporting Framework of the IFRS Foundation and the directors confirm that the integrated report has been prepared in accordance with this framework.

The framework recommends reporting to shareholders on the capital resources that are applied in the creation, preservation or erosion of value. These are classified as the financial, manufactured, intellectual, human, social and relationship, and natural capitals. While we have chosen not to present the integrated report according to these capitals, the impact of the six capitals on the group’s business activities and performance is covered in the relevant sections of the report.

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 2022 financial year. The application of King IV is covered in the corporate governance and King lV report 2022 which is available on our website.

We welcome the recent release of sustainability and climate change disclosure guidance by the JSE. The guidance combines global best practice with local relevance, in the context of multiple frameworks, guidelines, standards and ratings in the market, and we have started the process of applying this guidance in our sustainability report on page 68.

Independent assurance

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.

Integrated reporting process

Confirming the group’s commitment to integrated reporting, the annual process of preparing the integrated report is the responsibility of a working group led by the chief executive officer and chief financial officer, comprising senior members of the finance, marketing and sustainability teams, company secretary, head of corporate affairs and the external investor relations consultants.

The integrated report working group aims to enhance the reporting and disclosure each year. The process commences with an evaluation of the previous year’s integrated report to identify opportunities to enhance disclosure and continually align with best reporting practices. The content is prepared based on interviews and submissions from executive directors, business unit heads, the company secretary and divisional executives. Draft reports are initially reviewed by the CFO and the CEO, with specific reports being reviewed and approved by the board chairman and the respective board committee chairmen.

The draft of the integrated report is provided to all board members for review and their feedback, advice and suggestions are then incorporated into the final report. The chairman of the audit committee is responsible for the final approval of the report on behalf of the board, where after the integrated report is released to shareholders.