sustainability report

Introduction

New Clicks recognises that sustainability is synonymous with good governance and is committed to managing the business in a socially responsible manner that ensures enduring prosperity for all stakeholders.

By adopting the integrated sustainability reporting guidelines outlined in King ll, social, economic and environmental performance measurement is being introduced into the group’s business practices.

Importantly, in the South African context, transformation and broad-based black economic empowerment are critical components in creating a sustainable business.

Against this background the group has expanded its reporting to shareholders by producing a sustainability report for the first time.

Management acknowledges the need to improve sustainability reporting while continuing to enhance financial returns to shareholders and will endeavour to provide shareholders with non-financial performance goals and targets in future.

Economic sustainability

Social sustainability

Employees

The focus of the human resources (HR) function over the past year has been on building organisational capability through people. This has included structuring HR across the group along functional reporting lines, with HR executives being appointed to the operating boards of all of the group’s business units.

In line with the rest of the business, HR has concentrated on getting the basics right, which has included:

• Aligning annual salary increases to performance ranking results;
• Implementing short and long-term incentive schemes aligned to business goals;
• Completing a talent review of the leadership across the group;
• Designing a store operations development programme; and
• Introducing an employee wellness programme.

Employee turnover analysis

Employee profile

Employment equity

The group’s human resources policies promote the empowerment and advancement of previously disadvantaged people, aimed at creating racial and gender equity.

• Black staff comprise 86.9% of the total staff complement (2006: 82.7%);
• 69.2% of management are black;
• Black staff accounted for 84.0% of new appointments (2006: 82.5%);
• Women comprise 60.2% of staff (2006: 60.3%);
• 34.5% of management are women; and
• 22% of directors are black (2006: 20%), with one female director.

Training and skills development

New Clicks invested R16.5 million in training and skills development during the year, equating to 2.76% of the basic payroll cost. This excludes the costs of training and development practitioners, travel, venues and related expenses.

A total of 2 657 of our staff attended training courses, with black employees accounting for 84.4% of the total people trained.

Employee development and training is co-ordinated by the skills development unit within the human resources division. The unit is responsible for compliance with the Skills Development Act and the sector education and training authority (SETA). The group has partial accreditation with the Wholesale and Retail SETA. The healthcare businesses are accredited with the Health and Welfare SETA.

During the year 381 level 2 learnerships, accounting for 4.2% of the staff complement, were registered with the Wholesale and Retail SETA.

Financial assistance of R332 000 was provided to employees for further education. Study loans are provided to employees and repaid over the duration of the course, with the cost being reimbursed on the successful completion of a course.

Building a sustainable pharmacy profession

As one of the country’s leading retail pharmacy chains Clicks is committed to developing future capacity within its pharmacies and contributing significantly to the long-term sustainability of the profession.

Recognising the shortage of pharmacy skills, Clicks established the Pharmacy Healthcare Academy (PHA) in 2003 to manage the skills development needs of the group as well as offering training services to external bodies.

As a registered training provider with the SA Pharmacy Council (SAPC) the Academy works closely with the Health and Welfare SETA and applies a distance learning model, utilising in-store tutors and external trainers.

The Academy offers a range of courses, including a two-year pharmacist’s assistants course, learnership programmes, internship courses and a continuing professional development programme for registered pharmacists.

Our PHA provides the pharmacist’s assistants training course for the Department of Health in the Western Cape and the Free State.

A summary of the courses and participants over the past year is as follows:

Employee wellness

An employee wellness programme was launched at the start of the 2007 financial year to provide a free counselling service to all permanent staff and their families. Managed by behavioural risk consultancy, ICAS, 19.5% of staff used the programme in the first year, the highest in the retail sector.

The main components of the programme include:

• Counselling and advisory services including a 24-hour helpline providing services such as psycho-social counselling, financial, legal and medical advice and family support;
• HIV management and treatment programme administered by Qualsa, the health risk service provider in the Metropolitan group. The programme provides free HIV testing, antiretroviral treatments, preventative HIV treatment, five free HIV-related doctor visits and blood tests per year, vitamins, counseling and support;
• Lifecare education training for all employees at head office and stores; and
• Health awareness events aligned with the national health calendar which provide employees with advice on holistic well-being and managing diseases. One of the objectives of the programme is to empower employees to make informed lifestyle decisions that positively impact their well-being and encourage them to take responsibility for their health.

HIV/AIDS management

The New Clicks HIV/AIDS policy is based on the core principles of non-discrimination and confidentiality. The group is compliant with all workplace legislation relating to HIV/AIDS and is committed to protecting employees against unfair discrimination on the basis of their HIV status. The right to confidentiality is also guaranteed.

The group-funded HIV workplace programme focuses on education, awareness and support is available to all permanent employees who are not members of a medical aid fund. While the number of staff taking advantage of the voluntary counselling and testing service is low, it is recognised that the programme is still in its infancy.

An actuarial risk assessment conducted by Metropolitan Life in 2006 estimated the HIV prevalence rate of employees to be 8.7%.

Currently 52 employees are receiving treatment on the group’s HIV management and medical aid programmes, translating into approximately 7% of the employees living with HIV/AIDS. While this is low it is in line with most large companies offering HIV management programmes and the programme is in its initial phase.

The group is also exposed to the HIV/AIDS risk from customers. While no formal assessment has been conducted on the impact of the disease on the group’s business and customer base, it is assumed that the published national and regional HIV/AIDS prevalence rates would apply to customers.

Industrial relations

Clicks has a long-standing relationship with SACCAWU (South African Commercial Catering and Allied Workers’ Union) which is governed by a formal recognition agreement. SACCAWU represents 58% of full-time permanent employees in the Clicks bargaining unit.

While UPD currently has no union recognition agreement, a formal understanding exists with CEPPAWU (Chemical, Energy, Paper, Printing, Wood and Allied Workers’ Union) which is the majority union representing approximately 34% of UPD’s employees. A process has been initiated to formalise this relationship.

The group has focused on building and enhancing relationships with SACCAWU and CEPPAWU, and no trading days were lost to labour action.

Clicks reached a two-year wage settlement from July 2007 to July 2009. UPD concluded a one-year wage agreement while certain substantive conditions such as minimum wages were locked into a two-year agreement.

Transformation

Following the finalisation of the Department of Trade and Industry’s (DTI) codes of good practice on BEE in February 2007, the group conducted a self-assessment and was rated as a level 7 BBBEE contributor. New Clicks is committed to external verification of its transformation status and will commission an independent evaluation in the 2008 financial year.

The group has identified the following plans in striving to meet its 2010 targets:

• Improve level of representation of black senior managers;
• Identify opportunities for employing people with disabilities;
• Target 3% learnerships across the group;
• Engage with major suppliers on transformation strategies;
• Seek opportunities for enterprise development; and
• Ensure each business unit has a clear transformation plan.

Corporate social investment

New Clicks is committed to a corporate social investment (CSI) programme that assists in the upliftment of disadvantaged communities and makes a contribution to sustainable development.

The CSI activities across the group are co-ordinated by the New Clicks Foundation. The Foundation is managed by a board of internal trustees comprising the chief executive officer, group human resources director and company secretary. These trustees determine the funding policy, evaluate requests for financial support and monitor the utilisation of funds. Trustees are encouraged to visit the projects to gain an understanding of the needs and challenges facing these organisations.

The Foundation supports projects which encourage self-help and are both empowering and uplifting. Potential beneficiaries seeking financial assistance should be public benefit organisations with professional management which are non-political and not confined to a particular religious group.

In the past year the Foundation invested R427 000 in social programmes.

The majority of the funding was allocated to specific projects which are aligned with one of the group’s business units, including

• A skin cancer awareness campaign with CANSA (Clicks);
• Deaf awareness through DeafSA (Musica); and
• The Red Cross Children’s Hospital (Clicks).

New Clicks has also been one of the main supporters of the Woodstock Upliftment Project, a programme to address the social challenges facing the community of Woodstock where the group’s head office is located.

Enterprise development

UPD outsources distribution to owner/drivers

UPD operates an innovative black empowerment scheme where the majority of distribution is outsourced to self-employed drivers operating their own vehicles.

Delivery agreements have been signed with 106 independent contractors, many of whom are former employees.

These contractors account for 85% of UPD’s deliveries.

UPD maintains an interest in the ongoing business development of these contractors and several of them have been able to successfully expand their contracting businesses.

Customers

In-store primary care clinics

Clicks supports government’s vision of making healthcare more affordable and more accessible. Through its pharmacy network Clicks operates primary care clinics which provide a professional, convenient and affordable alternative for basic medical advice, injections and simple health checks.

Services offered in the clinics include:

• Blood pressure, cholesterol and glucose screening;
• Baby immunisation, consultation and advice;
• Wound care;
• Treatment of minor ailments;
• General counselling and advice; and
• HIV/AIDS testing and counselling.

Customer loyalty programmes

Shareholders

New Clicks is committed to regular and transparent communication with the investment community while always providing information equally and simultaneously to all market participants. The group has an active investor relations programme focused on shareholders and analysts both locally and internationally.

The group retains the services of an investor relations consultancy to co-ordinate and advise on all aspects of the investor relations and financial communications programmes.

All investor meetings are formally documented and attended by at least two executives to ensure information is not disclosed on a selective basis.

All information released on SENS is distributed to an extensive database of analysts and investors. Additional non-price sensitive information is communicated regularly to provide operational updates to investors.

Investor relations activities over the past year included:

• Interim and final results presentations in Cape Town which were broadcast nationally on subscriber television;
• Results presentations webcast to broaden access to investors locally and offshore;
• Post-results roadshows to sell-side analysts and institutional investors in Cape Town and Johannesburg;
• 88 meetings with management and local and international fund managers and analysts;
• The chief executive undertook an investor roadshow in London, together with an investor relations representative; and
• Management attended and presented at broker and industry conferences.

Environmental sustainability

New Clicks is committed to meeting the needs of its customers and employees in an environmentally sound and sustainable manner. This includes:

• Accepting responsibility for the safety of products sold through all retail stores;
• Ensuring the safety of all facets of the group’s operations;
• Complying with all appropriate environmental legislation and regulation;
• Encouraging suppliers to reduce the environmental impact of packaging;
• Reducing waste, conserving energy, optimising water usage and encouraging recycling; and
• Educating employees on good environmental practice.