Stakeholder engagement
The group’s stakeholder engagement strategy focuses mainly on the five primary stakeholders that management believe are most likely to impact on the delivery of the group’s strategic objectives and influence the ability to create value in the short, medium and long term. Proactive and transparent relationships enable the group to identify and address the needs, expectations and concerns of these stakeholder groups.
Shareholders and lending institutions
Shareholders:
Local and international institutional and private investors, as well as fund managers and analysts from the broader investment community.
Lending institutions:
South African financial institutions which provide funding and trade finance facilities to the group.
Appointment of Bertina Engelbrecht as CEO with effect from January 2022 following the resignation of Vikesh Ramsunder after less than three years as CEO, and concerns over the incoming CEO’s limited retail and operational experience.
The new CEO has been part of the executive leadership team for 15 years and a director of Clicks Group since 2008, integrally involved in the development of the group’s strategy and growth of the business. As she was relatively unknown to the investor community, a formal engagement programme was implemented to introduce the new CEO to major shareholders locally and internationally to establish investor confidence, reassure the market that the group’s strategy would not change and enable the CEO to outline her vision and plans for the group.
Financial impact of the civil unrest in KwaZulu-Natal in July 2021 on the group’s stores and supply chain and ongoing impact on trading in the region.
The civil unrest had a significant financial impact, with 6% of the store base and two distribution centres being damaged. Trading patterns were severely impacted for an extended period. Shareholders were regularly updated on the financial impact and related insurance claim to cover stock losses and damages to fixed assets through specific trading updates on SENS, the annual and interim results announcements and presentations, integrated report and during ongoing investor engagement.
The group’s remuneration policy and implementation report both failed to achieve the required 75% shareholder support in non-binding advisory votes at the AGM in January 2022.
A formal engagement process was initiated with dissenting shareholders, as recommended by King lV, while management embarked on a broader programme to understand specific remuneration concerns of shareholders. Feedback from investors has been incorporated into the 2022 remuneration report and has also informed amendments to the long-term incentive scheme which will be proposed to shareholders in 2023.
Customers
Clicks primarily targets consumers in the growing middle to upper income markets (LSM 6 – 10).
UPD customers include Clicks, major private hospital groups, pharmaceutical manufacturers and independent pharmacies.
Ongoing electricity load shedding disrupted store operations and negatively impacted on the customer shopping experience.
The group invested in lithium batteries to provide back up power in stores to minimise disruptions and enable customers to enjoy their shopping experience across the store network and have uninterrupted access to medicines. There is also ongoing engagement with landlords on the installation of generators in shopping centres.
Strong focus on the retention of UPD’s key corporate clients and maximising new business opportunities. The cancellation and slow uptake in elective surgeries at key client hospitals during and after the Covid-19 pandemic was an area of concern.
UPD’s key customer engagement involved regular meetings and periodic customer satisfaction surveys to support customer retention. Management also actively scanned the environment for new business opportunities as part of its business development strategies.
Employees
All permanent and part-time employees across the group.
The continued Covid-19 operational response and the socio-economic effects in local communities took a toll on employee well-being.
The group expanded its employee wellness response by increasing support in particular on the mental, financial and physical health pillars with a focus on enabling positive, resilient and sustainable lifestyle changes.
Skills shortages in the health sector, particularly in relation to pharmacists.
The group’s multifaceted approach to address the chronic skills shortage includes the provision of bursaries to pharmacy students, provision of training, tutorship and internship opportunities.
Suppliers
Local and international suppliers of products and services, including producers of exclusive brands and private label products.
Impact of the KwaZulu-Natal (KZN) floods in April 2022 on the distribution centre and store operations.
The group’s supply chain proved resilient in managing the disruptions and management activated contingency plans that ensured continuity of supply to the KZN distribution centre and store operations network.
Global supply chain disruptions brought on by supply constraints and rising energy prices impacted the group securing the right products at the right price.
Coordinated engagement with key suppliers minimised disruptions and ensured adequate stock availability levels to serve customers through the store network and omnichannels.
Impact of load shedding on the distribution centre network.
The group invested in renewable energy through the provision of rooftop solar energy at its eight distribution centres. This will contribute to the reduction in the group’s carbon emissions, reduce the cost of electricity and partially mitigate the impact of load shedding.
Government and industry regulators
Department of Health, SA Revenue Service and other government departments, industry regulatory bodies and local authorities. As a listed company, the JSE Limited is the primary regulator.
Approval and granting of pharmacy licenses.
The group lobbies and engages with the pharmacy licensing regulator on an ongoing basis to secure licenses, follow up on outstanding applications and resolve queries or disputes.
Approval of new private label medicines.
The group engages with the regulator regarding outstanding medical product approvals as well as any amendments to legislation.
Promulgation of the National Waste Management Strategy 2020 under the National Environmental Management: Waste Act, 2008 that addresses packaging waste.
The group actively participates in the relevant industry bodies and engages with regulators responsible for compliance with the legislative framework. In collaboration with industry bodies, the group has adopted packaging waste targets and strategies to ensure less plastic waste to landfills. The group promotes innovative practices to address sustainable renewable packaging.