Stakeholder Engagement

Clicks Group has adopted a board-endorsed stakeholder engagement process across the business. Five primary stakeholder groups have been identified that management believe are the most likely to influence the group’s ability to create sustainable shareholder value.

Management also acknowledges the role and importance of other stakeholder groups such as trade unions, industry organisations, statutory bodies, property landlords, financial institutions, service providers, media and the communities in which the group operates. The group engages in open and transparent mutually beneficial relationships. Qualitative and quantitative performance indicators have been developed for each primary stakeholder group to determine the outcome of the engagement, and these measures are refined on an ongoing basis. These metrics are used in the formal reporting process on stakeholder engagement at board meetings.

CUSTOMERS

             
Rationale for engaging   Primary means of engaging   Key engagement issues   Outcome of engagement
             
  • Meet customer needs by providing products and services to generate returns for shareholders
  • Create trust in products and pharmacy practices
  • Customer loyalty
    and retention
  • Grow market share
  Retail:
  • Customer interaction
  • Dispensing medicine
    in pharmacies
  • Primary health services
    in clinics
  • Media advertising
  • ClubCard communications
  • Promotional activity
  • Internet
  • Market research
UPD:
  • Sales representatives
  • Customer interaction
  • Internet
 
  • Product range
  • Service levels
  • Price competitiveness
  • Pharmacy and clinic services
  • ClubCard benefits
  Retail:
  • 93.2 million customer transactions
    (2011: 88.9 million)
  • 22.2 million prescriptions (2011: 18.9 million) processed
  • ClubCard membership increased to 3.9 million (2011: 3.4 million) and accounts for over 77%
    of sales (2011: 76%)
  • Market share gains in all
    key categories
  • Clicks independently rated by customers as first for price and value in health
    and beauty retailing
UPD:
  • Range – 13 943 lines
    (2011: 13 641)
  • Delivery frequency –
    3.0 times per week
    (2011: 2.9 times)
  • Customer contact –
    18 711 visits (2011: 15 065)
 

SHAREHOLDERS AND INVESTMENT COMMUNITY

             
Rationale for engaging   Primary means of engaging   Key engagement issues   Outcome of engagement
             
  • Facilitate access to capital by attracting investors
  • Informed investor community
  • Balanced analysis
    of company
  • Fair market rating relative
    to peers
 
  • Management meetings
  • Interim and annual results presentations
  • Road shows to international investors
  • Integrated annual report
  • Shareholder meetings
  • Regulatory and voluntary SENS releases
 
  • Group strategy
  • Trading environment
  • Trading and financial performance
  • Regulatory environment
  • Pharmaceutical wholesaling and distribution
  • Store and pharmacy expansion plans
  • Capital management
  • Prospects
 
  • 260 management meetings and conference calls with local and international shareholders and analysts (2011: 196)
  • Research coverage by
    14 brokerages (2011: 11)
  • Participation in three stockbroker conferences (2011: four)
  • Seven analyst site visits
    (2011: five)
  • Volume of shares traded 138% (2011: 178%)
  • International share ownership 58% (2011: 61%)
 

EMPLOYEES

             
Rationale for engaging   Primary means of engaging   Key engagement issues   Outcome of engagement
             
  • Attract, motivate and
    retain talent
  • Increase productivity
  • Engender loyalty
  • Accelerate transformation
 
  • Induction programme
  • Regular personal and electronic communication
  • Employer of Choice programme for pharmacists
  • Employee wellness programme
  • Employee satisfaction survey
  • Ongoing liaison and wage negotiations with trade unions
  • Engaging pharmacy schools at universities
    to increase capacity
 
  • Remuneration and benefits
  • Employee share ownership scheme
  • Performance management
  • Personal development
  • Career path planning
  • Training and skills development
 
  • Staff turnover 21.7%
    (2011: 19.4%)
  • Pharmacist turnover 43% (2011: 23%)
  • Employee wellness utilisation rate 18% (2011: 23%)
  • Employment equity
    • Black staff as a % of total staff 85.3% (2011: 84.8%)
    • Female staff as a % of total staff 63.3% (2011: 63.0%)
  • Training and skills development spend
    R40 million (2011: R47 million)
  • 423 learners through Pharmacy Healthcare Academy in past year
    (2011: 408)
  • 35 pharmacy interns engaged (2011: 23)
  • Employee satisfaction index 65% (2011: 68%)
 

GOVERNMENT AND INDUSTRY REGULATORS

             
Rationale for engaging   Primary means of engaging   Key engagement issues   Outcome of engagement
             
  • Legislative and regulatory compliance
  • Lobby for regulatory reform and fair legislation that will not adversely affect returns to shareholders
  • Best practice governance standards
 
  • Written and oral submissions on draft regulations and legislation
  • Formal meetings with Department of Health and relevant industry regulators
  • Ongoing liaison with regulators
  • Membership of industry bodies
 
  • Legislation
  • Regulation
  • Compliance
 
  • Constructive engagement
    with regulators
  • Insight into regulatory framework
  • Formal submissions made in response to draft regulations
 

SUPPLIERS

             
Rationale for engaging   Primary means of engaging   Key engagement issues   Outcome of engagement
             
  • Ensure stable supply of merchandise
  • Understand market movement and new product launches that may change buying patterns
  • Quality standards maintained
  • Brand exclusivity
  • Secure other income to support brand and marketing effort to customers
 
  • Supplier and partner meetings
  • Contractual and service level agreements
  • Clicks Pharmacy Conference
  • Suppliers conference
  • Audit of suppliers
 
  • Quality and safety standards
  • Product availability and exclusivity
  • Product innovation, strength of brands
  • Private label products
  • Transformation and BEE scorecards
  • Legislative compliance
 
  • Supplier infill levels
    • Clicks 82% (2011: 79%)
    • UPD 83% (2011: 78%)
  • Preferential procurement
    • 42% (2011: 48%) from
      level 4 BBBEE and
      higher-rated suppliers
  • Consistent supply and maintenance of franchise agreement with The Body Shop International

Creating value for stakeholders

Stakeholder group Value created 2012
R’m
2011
R’m
Customers Turnover received from customers for merchandise and services 15 437 14 135
  Returned to customers in Clicks ClubCard cash-back vouchers 231 223
Shareholders Returned to shareholders through distribution payments and share buy-backs 349 848
Employees Remuneration paid to employees, including salaries, share-based settlements 1 650 1 562
Suppliers Purchase of merchandise and services from suppliers 12 890 11 719
  Cost of water and electricity 103 83
  Distribution and logistics fees and other cost recoveries from suppliers 801 689
Government Taxes paid to national and local government 304 293
Property landlords Paid to landlords for rental of premises 472 423
Financial institutions Paid to financial institutions as a return on capital utilised 39 29
Communities Investment in communities through Clicks Foundation 1 1
  Financial and product donations by business units 6 9