“The challenge facing business is to find a balance between short-term profitability targets and the longer term needs of society.”

The King ll Report has heightened the need for corporates to broaden their traditional financial reporting to cover issues which ultimately determine the sustainability of the business. This is generally referred to as integrated sustainability reporting, or triple bottom line reporting, where companies address the economic, social and environmental aspects affecting their performance and the relationship with stakeholders in these areas.

Sustainability reporting is particularly relevant in South Africa as extensive resources are being applied to address transformation, both within companies and in the external environment.

The challenge facing business is to find a balance between short-term profitability targets while at the same time meeting the longer term needs of the society within which they operate. This report outlines the progress that New Clicks has made in addressing these needs and the contribution the group is making to social upliftment in the country.

Staff development and welfare
Employment equity is a corporate priority and sound progress has been made in addressing the staff profile and gender equity. The accompanying table provides detailed statistics on the group’s employees.

Previously disadvantaged individuals represent 89% of the total SA staff complement. Black managers represent 42% of total managers. Progress in appointing previously disadvantaged individuals into management has been slower than the group would have wanted. Women currently make up 58% of the total and represent 48% of management. The composition of the board of directors is currently being reviewed to increase the level of diversity and representivity.

Employment equity is integrated into all people development processes, including the graduate training programme and the store management trainee programme. The group’s policy is to favour previously disadvantaged individuals for employment
opportunities.

The group has complied with all the legislative requirements of the Employment Equity Act and plans are submitted to the Department of Labour on an annual basis.

During the year, new requirements under the Labour Relations Act led to a change in definition of part-time employees and these staff now qualify for annual and sick leave benefits.

New Clicks encourages staff to further their education and enhance job-related and technical skills. A study scheme enables staff to enrol for approved courses and during the past year 201 people completed degrees, diplomas and short courses with registered institutions at a cost to the company of R946 500. A further R200 000 was invested in job skills courses undertaken at the group’s request.

The housing assistance programme has enabled many employees to own homes for the first time and improve their living standards. More than R13 million has been made available through low-interest loans to staff through this programme.

HIV/AIDS management
New Clicks recognises that the HIV/AIDS pandemic poses a serious threat to its business in South Africa, as well as to employees, their families and the broader society in which it operates. The group has been actively committed to managing HIV/AIDS-related issues in the workplace and during the year a formal AIDS policy was developed after extensive negotiation with internal and external role players.

The policy provides consistent guidelines for dealing with HIV/AIDS and addresses issues including confidentiality and disclosure, employee benefits, education and prevention programmes, counselling, support and the management of infected employees.

Central to the group’s strategy is to limit new infections through education and guidance, extend the life expectancy of HIV-positive employees, and to eliminate discrimination and prejudice towards infected employees.

HIV/AIDS is a life-threatening disease. Based on current medical and scientific evidence, HIV causes AIDS and cannot be transmitted through casual personal contact under normal working conditions. Infected employees therefore do not present a risk to the health or safety of colleagues or customers.

Employees are encouraged to know their status, but have a common-law right to privacy and are under no obligation to disclose their status to the group. No pre-employment medical testing is conducted for any positions in the group, while no one will be refused employment or promotion on the basis of their HIV status.

Employees with HIV/AIDS can continue with employment until they are certified as being medically unfit to work. The group will pay for triple anti-retroviral therapy and counselling for employees in the case of reported rape.

Although no formal assessment has been commissioned on the impact of HIV/AIDS on the group’s business and its markets, New Clicks is exposed to a wide range of socio-economic groups given the diversity of its operations and the target markets served by the different brands.

Owing to the confidential nature of employee’s HIV/AIDS status, accurate figures of prevalence rates are not available but are estimated to be below the published national and provincial averages.

Healthcare
While the legislative changes enabling corporates to own pharmacies presents a unique business opportunity, it also allows the group to make a meaningful contribution to the country in line with the Government’s broader healthcare strategy as outlined in the National Drug Policy.

The aim of this policy is “to ensure an adequate and reliable supply of safe, cost-effective drugs of an acceptable quality, to improve access to medicines for all South Africans and to improve rendering of pharmaceutical services”. New Clicks is committed to working with Government to make this a reality, and in the spirit of the new regulations, will endeavour to make affordable healthcare more accessible to broader communities.

New Clicks plans to operate company-owned, joint venture and franchise stores with pharmacies, which could provide empowerment opportunities at a store level in the future, notably for entrepreneurial retailers and pharmacists in disadvantaged areas.

The group is assisting Government in training pharmacy staff, and is actively involved in training pharmacists’ assistants on behalf of the Department of Health in the Free State. A similar programme is being considered in the Western Cape, Gauteng and KwaZulu-Natal.

A disease management programme was launched during the year, aimed at educating pharmacists and the public on chronic states of health. By elevating the level of understanding of chronic conditions, pharmacists are able to provide more effective counselling to customers and reach a wider community. Following the success of the first campaign around asthma, educational programmes on hypertension, diabetes and depression will be introduced during the year.

Environment
New Clicks is fully committed to waste minimisation and recycling, and has several initiatives in place to support environmental awareness.

One area is the support of the Department of Environmental Affairs and Tourism (DEAT) in its attempts to reduce the volume of plastic carrier bags in the country and to clean up the environment.

When regulations to address this were first mooted in early 2000, the group was instrumental in creating a working forum of some 20 retail companies to address the impact of the proposals on our industry. New Clicks was also at the forefront of establishing a working group last year to represent the major retailers in the debate with Government, labour and the plastics manufacturing, converting and recycling industries and retailers.

Five of the country’s major retail groups, including New Clicks, signed a memorandum of agreement on behalf of the working forum in October 2002 which paved the way for the introduction of the regulations governing plastic bags in May this year. The group has complied fully with the requirements and all stocks of the old plastic bags were recycled.

The retail industry, represented through the Consumer Goods Council of SA, has reached agreement with the Minister of Environmental Affairs and Tourism that no further legislation is required and that market forces should be allowed to prevail in the pricing of plastic bags. The industry remains committed to the DEAT’s position on the environment and plastic bags and believes that their objectives will be met through self-regulation.

Occupational health and safety
The group’s compliance with the Occupational Health and Safety Act focuses predominantly on the operations of the distribution centres. A safety, health and environmental (SHE) policy has been developed, as outlined in the King ll report.

All employees and contractors have undergone a SHE induction and representatives have been appointed in all distribution centres. Emergency teams have also been appointed, and fire and emergency drills take place regularly.

The business continuity plan is available on the Intranet, with awareness training being conducted on an ongoing basis.

The distribution centres are also subject to external scrutiny. An occupational health and safety audit conducted by Alexander Forbes indicated high levels of compliance for all the audited distribution centres, while compliance certificates have been issued by the Automatic Sprinkler Inspection Bureau.

The safety, health and environmental programme now needs to be extended to all other areas of the business, notably the group support structures and the store network, to move towards complete compliance with King ll.

Corporate social investment
New Clicks Holdings is aware of the need to redress the social imbalances of the past, and is committed to investing funds in projects which lead to community upliftment and personal empowerment. The New Clicks Foundation, which was formed in 2000, manages the group’s corporate social investment programme and is the conduit for the disbursement of funds.

The Foundation is managed by a board of trustees who determine the funding criteria and meet regularly to assess the progress of current programmes, monitor the appropriate usage of funds and evaluate requests for future funding.

Over the past year approximately R500 000 was committed to social investment programmes, bringing the total disbursement since the formation of the New Clicks Foundation to R2 million.

Major projects are required to have a strong business or strategic alignment with one of the group’s brands, and should have a national impact rather than a regional or local focus. Funding is provided on three levels – community support, social projects and business-aligned support:

Community support
Staff are encouraged to play a role in social investment programmes, particularly through the network of stores around the country which serve a diverse range of communities. All Clicks stores are allocated a fund to respond to requests from their local communities. An additional budget is administered centrally for small, community-focused requests for financial assistance.

New Clicks is also actively involved in the Woodstock Upliftment Project, a programme to address the needs of the community in which the group’s head office is located. New Clicks has looked to play the role of catalyst in bringing together community role players to address crime prevention, education, old age care, waste management, environmental and social issues.

Social project support

• New Clicks Foundation continues to support The Big Issue, an upliftment project aimed at assisting homeless people to earn a living and integrating them back into the formal job market. The funding was partly used to run workshops for vendors of The Big Issue, staff training workshops, a mobile distribution unit and assisting disadvantaged staff to obtain driver’s licences. More than R560 000 has been invested in The Big Issue project over the last three years.
  
• Indecomp is a computer bureau based in Athlone in the Western Cape which provides people with disabilities the opportunity to be trained and employed as data capturers. Clicks has contracted Indecomp for the past two years to provide data services for its ClubCard membership base. An increasing workload resulted in the need for more staff, additional customised workstations and computer equipment, and this expansion has been funded by the Foundation.
  
• The Red Cross Children’s Hospital is the only specialist paediatric facility of its kind in Southern Africa, and serves children throughout the continent. The hospital’s trauma unit caters for the increasing number of victims of accidental and non-accidental injury, treating more than 10 000 children annually. The trauma unit is in desperate need of being upgraded and adequately equipped and the Foundation has contributed towards the funding of this project.
  
• Epilepsy South Africa run the annual Casual Day project, where people pay R5.00 to go to work or school in casual clothing and show their support for those with disabilities. Funds raised from Casual Day are distributed to a range of institutions providing services and assistance to the disabled. New Clicks SA and the New Clicks Foundation have supported this campaign since 1998.
  
• Childline works in partnership with the Departments of Health, Social Services, Administration and Community Safety to address issues from child abuse to rape, youth violence, HIV/AIDS, community health and job creation. The Foundation has committed funds to the community outreach programme undertaken by Childline’s team of permanent staff members and a large group of voluntary workers. In addition, The Body Shop has aligned itself with Childline and will be raising funds to educate and train counsellors.

Business-aligned support
The Foundation is a major supporter of The Living Music Workshop Series, a grassroots music education project co-ordinated by Compact Disc Wherehouse, one of the brands in New Clicks’ music division. The workshop series was started in August 2002 in partnership with Paul Bothner’s Music, music development company New World Productions, and Tomecy (Township Music Education for Children & Youth in Guguletu). Four workshops are held every month in community centres, aimed at developing the local music industry and nurturing young black talent.

Investor relations
New Clicks is committed to open and transparent dialogue with institutional shareholders and investment analysts, and fully aware of its obligation to disclose accurate and timely information to the market.

The group has adopted a more formalised investor relations strategy during the year, and appointed an external consultancy to manage the programme on an outsourced basis.

The group leader, the country head of Australia and heads of finance in South Africa and Australia, are accessible to investors and regular meetings are held with local and international shareholders and analysts.

Presentations are made to investors in Johannesburg and Cape Town on the interim and final results, as well as around other major developments in the company. These presentations are generally webcast to ensure simultaneous dissemination of information to shareholders across the globe.