Management approach

The group’s risk management process addresses all risks to the business, including sustainability-related risks. Sustainability related risks over the reporting year included:

• The group operates an extensive and dispersed store and pharmacy network to service its customer base. As a result, any risk of civil unrest needs to be monitored and appropriate mitigation measures put in place.
• The country is experiencing unprecedented levels of load shedding which places significant levels of risk to the group’s supply chain operations.
• The group has an extensive supply chain network, so the need for ethical sourcing practices and adherence to the supplier code of ethics and global best sustainable practices are an area of focus.
• The increased focus of climate change risks by key stakeholders (investors and lending institutions) and its impact on the group’s value chain has become a matter of importance. The group’s response to this risk may impact its cost of capital.

The group’s strategic focus on accessible healthcare services requires an in-depth understanding of South African social dynamics, risks, and opportunities. 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.

As part of the group’s transformation imperatives, it prioritises the development and support of SMMEs. The group maintains a strong emphasis on local procurement and as a result only 7.6% (2022: 5.4%) of its products are imported directly. The group’s commitment to this strategy is reflected in its support of local SMMEs with purchases exceeding R1 billion for the third successive year.