SOCIAL AND ETHICS COMMITTEE REPORT

In a country still struggling with social and economic inequities, it is the duty of every company to contribute to transformation and socio-economic development, to build a future in which all South Africans have an opportunity to realise their full potential. Shareholders don’t primarily focus on financial returns. They seek social returns and the sustainability of the Group depends on vigilant attention to both. AfroCentric takes its responsibility as a corporate citizen seriously, and is proud to play a leading transformational role in its industry. The Social and Ethics Committee oversees the Group’s activities as they relate to legislative compliance and social responsibility.

The Group’s Social and Ethics Committee is constituted as a formal Committee of the Board in terms of the Companies Act.

The Committee has an independent role and is governed by a formal charter. This report is prepared in compliance with the requirements of the Companies Act.


ROLE OF THE COMMITTEE

The Social and Ethics Committee acts in terms of the delegated authority of the Board and assists the Directors in monitoring the Group’s activities in terms of legislation, regulation and codes of best practices relating to:
  • Group policies (ethics, whistle-blowing, anti-corruption and procurement)
  • Employment equity
  • Socio-economic development
  • Environmental impact
  • B-BBEE impact on the Group and measures taken to comply with legislation
  • Internal labour organisation

RESPONSIBILITIES OF THE COMMITTEE

The responsibilities of the Committee are as follows:
  • Monitor the Company’s activities relating to social and economic development, good corporate citizenship, the environment, and health and public safety
  • Ensure appropriate short- and long-term targets are set by management
  • Monitor progress on strategic empowerment and performance against targets
  • Monitor changes in the application and interpretation of empowerment charters and codes
  • Monitor functions required in terms of the Companies Act and its regulations

COMPOSITION AND FUNCTIONING
The Committee comprises:
  • Mr GL Napier (Co-Chairperson)
  • Ms M Mashigo (Co-Chairperson)
  • Ms Y Masithela
  • Dr NB Bam

The effectiveness of the Committee is assessed as part of the annual Board and Committee self-evaluation process.

ACTIVITIES OF THE COMMITTEE
The Committee met three times during the year under review and performed the following activities:
  • Reviewed the Committee’s terms of reference
  • Monitored social and economic development in terms of the goals and purposes of:
    • The principles set out in the United Nations Global Compact
    • Employment Equity Act
    • Preferential procurement
    • Broad-based Black Economic Empowerment Act
    • Procurement policies
    • Health and Safety policies
  • Reviewed the Group’s contribution to the development of communities in which it operates
  • Reviewed the Group’s philosophy and performance in respect of social investment (sponsorships, donations and charitable giving)
  • Reported internally on ethics performance to the Group
  • Reporting on and disclosing the Group’s ethics performance
  • Monitored changes in legislation and compliance thereof

EMPOWERMENT (B-BBEE) AND TRANSFORMATION – WE ARE PROUDLY A LEVEL 2 CONTRIBUTOR TO B-BBEE

It is the responsibility of every company operating in South Africa to incorporate the country’s economic transformation agenda into business strategy. Companies should actively seek opportunities to support existing government initiatives aimed at driving economic transformation within their operations. More importantly, they should contribute to the upliftment of the communities they serve.

AfroCentric continues to review and re-align its policies and business strategy with the evolving transformation legislation to ensure that the Group’s contribution remains relevant and meaningful to the country’s overall transformation.

Compliance with relevant legislation is a pillar of our transformation strategy and we believe that we do more than comply. We focus on development and health-related initiatives, believing that the activities of the Group should have a meaningful and sustainable impact on the lives and communities of beneficiaries; as well as provide sustainable healthcare.

TRANSFORMATION STEERING COMMITTEE

Transformation and B-BBEE remain the focus of the Transformation Steering Committee, which comprises members of the Executive Committee and Heads of business. Individual members are allocated responsibility for various aspects of transformation. They are accountable for the Group’s performance and performance in the areas of the business for which they are directly responsible. In this way, transformation becomes a collective responsibility of members of the Group’s Executive Committee and the heads of the business.

B-BBEE PERFORMANCE

AfroCentric Health (Pty) Ltd, under the stewardship of the AfroCentric Group, is committed to B-BBEE. This is demonstrated by the Group’s majority black shareholding and considerable black female shareholding.

AfroCentric Health maintained a strong performance and averaged 90 points in the previous four verifications, and a score of 95.90 in the most recent exercise. This was conducted under a more rigorous scoring regime.

The table below depicts the scores obtained by the different elements for the past five verification periods.

                      AfroCentric Health scores
New elements   Total
score
2016
  Total 
available 
points 
(including bonus points)
  2015
achieved
  Previous
elements
  Total
available
points
  2014   2013   2012 2011
Ownership   25.00   25   25.00   Ownership   20.00   22.00   22.00   22.00 20.00
Management control   15.00   19   13.70   Management control   10.00   9.00   8.55   8.17 8.63
Skills development   17.00   25   15.55   Employment equity   15.00   11.09   11.10   10.13 10.60
Enterprise and supplier development   39.46   44   37.75   Skills development   15.00   11.27   13.74   13.57 5.42
Socio-economic development   5.00   5   3.90   Preferential procurement   20.00   19.76   19.12   17.43 18.14
                Enterprise development   15.00   10.98   11.56   14.49 12.54
                Socio-economic development   5.00   5.00   5.00   5.00 5.00
    101.46   118   95.90   Total   100.00   89.01   91.07   91.29 80.33
            Level 2   BEE contributor status       Level 2   Level 2   Level 2 Level 3

                Pharmacy Direct (Pty) Limited scores
Revised elements   Total
score
2016
  Total 
available 
points 
(including bonus points)
  Previous elements   Total
available
points
  2015
Ownership   24.72   25    Ownership   20.00   21.00
Management control   17.35   19    Management control   10.00   10.00
Skills development   22.42   25    Employment equity   15.00   12.30
Enterprise and supplier development   30.72   44    Skills development   15.00   12.00
Socio-economic development   5.00     Preferential procurement   20.00   11.58
            Enterprise development   15.00   15.00
            Socio-economic development   5.00   5.00
    100.21   118    Total   100.00   86.88
    Level 1       BEE contributor status       Level 2

OWNERSHIP

The Group’s black shareholding at year-end was 52.41%, with shares held by black females equating to 13.84%. This contributed to the Group achieving 25 points for this element in the B-BBEE scorecard out of a total of 25 available points.

MANAGEMENT CONTROL

The management control element of the scorecard measures the composition of the Board of Directors and Group Executive Committee, where 70% are black employees and 30% black females; and of top management, where 70% of positions are held by black employees and 20% by black females. This led to the Group achieving 13.70 out of the available 19 points for this element.

SKILLS DEVELOPMENT

The Group is committed to investing in the skills and training of its workforce as this improves the quality of service delivered and results in a qualified workforce.
R23.25 million was invested in training black employees in the last verification period.

Pharmacy Direct invested R3.9 million in Skills development with a specific investment in learning programmes for black employees with disabilities to the value of R150 000. This is included in the Group’s skills development spend.

Learnership and internship programmes provided 135 unemployed youth with training and mentoring while exposing them to the work environment, increasing their level of employability.

Within Pharmacy Direct specifically, 50 black employees of which 16 African Males and 20 African Females, were previously unemployed and are currently participating in learnerships.

Of these learnerships, 10 are disabled black employees.

In addition, a further 10 black employees have been employed by Pharmacy Direct upon successful completion of their learnerships in the current year. Most of the learnerships will qualify the learners as pharmacist assistants.

ENTERPRISE AND SUPPLIER DEVELOPMENT

The new B-BBEE element of enterprise and supplier development is a merger of preferential procurement and enterprise development. The purpose is to encourage firms to procure goods and services from black-owned and black-managed suppliers, and to contribute to the development of those suppliers as entrepreneurs. Preferential procurement is still managed under this element and is equally weighted with supplier development in terms of points allocated on the scorecard. AfroCentric Health worked diligently in recent years to implement a procurement process that supports B-BBEE-compliant suppliers and black-owned businesses, and performed well on that sub-indicator. Committed resources support and develop black suppliers and the Group looks forward to seeing that investment reflected in the supplier development score next year.

SUPPLIER DEVELOPMENT

Seven black-owned Exempt Micro Enterprise (“EME”) or Qualifying Small Enterprise (“QSE”) suppliers from the supply chain who meet the criteria for grant allocation were targeted and a total amount of R5.5 million was spent on them to increase capacity in their businesses and provide them with financial and operational sustainability.

These suppliers were also enrolled in the AfroCentric Health supplier development mentoring programme.

Products and services of selected suppliers include outdoor and innovative marketing, placement programmes, wellness promotions and providing professional training. The relationship with developing suppliers will have a positive impact on the services provided to AfroCentric Health and the communities they serve.

A total of R5.5 million was spent on supplier development and a total of R691 million on B-BBEE-qualifying procurement.

ENTERPRISE DEVELOPMENT

It is the responsibility of the private sector and government to implement and drive initiatives that are aimed at growing small, medium and micro enterprises (“SMMEs”) into self-sustaining entities through skills development and the provision of professional services. This is true in the South African context where smaller businesses make a significant contribution to job creation while at the same time being the first ones to experience the negative impact of the economic setbacks.

Wherever possible, AfroCentric ensures that the Enterprise Development (“ED”) contributions result in greater synergies and improved relationships with customers and suppliers. Therefore, the focus of ED projects is to enhance the revitalisation of public health facilities, support suppliers and to address the severe shortage of medical personnel in our country.

The total spent on enterprise development 2015/2016 amounted to R2.63 million.

Recent ED projects include:

  Project   Overview   Funding provided     Social impact
  Eluthandweni Maternity Clinic   Provision of quality healthcare and maternity facilities (non-profit hospital)   R691 000     Improved the clinics resources via infrastructure expansion which enhanced its capacity to service the community
  A’Dare Women’s Wellness Centre   Preventative healthcare, wellness and lifestyle solutions through health screening and consultations   R919 770     Improved the clinic’s resources and enhanced its capacity to service the community
  Xenia Information Technologies   IT consulting and services   R497 986     Increased technology capabilities and equipment to assist the business to grow sustainably
  Karogano Trading and Projects   Burglar bar installation and provision of security upgrades   R521 244     Enhanced prospects for success of this business, assisting it to expand and grow sustainably
  TL Nursing Agency   Placement programme training nursing personnel at all levels (with a database of 2 800 nurses nationally)

Wellness promotion at community and corporate level including health risk assessments by hosting health days

HIV/AIDS awareness

Home nursing, occupational health, KAPP survey and satisfaction survey

  R1 240 000     Purchase of a company vehicle to assist the Nursing agency to provide mobile services to the community
  Provision Research and Events   Professional training, conferences, summits and exhibitions across industries

Females employed as a means to empower and develop black females

  R240 000     Increased staff thereby creating employment in the community and improved infrastructure to better service their clients and make business more sustainable
  On Point Mobile Spa   Mobile services:

  • Wellness days
  • Massages
  • Reflexology
  • Manicures, pedicures, facials and image consulting
  R500 000     Increased equipment to expand services and grow the business further
  Kwelanathi CC   Executive search, permanent placement, ad response handling, head-hunting, specialist sourcing and talent management   R304 000     Enhanced personnel resources thereby creating employment and improved equipment
  Zwide Photos   Photography services to companies, corporations and private individuals   R500 000     Improved equipment for services rendered to clients, therefore building the business and ensuring sustainability of their service offering. This allowed the business to become a preferred supplier to AfroCentric
  Black Ground Outdoor   Outdoor advertising agency and Media Consultancy   R1 068 500     Improved equipment and other infrastructure to improve their service offering
  The Media Writers Firm   Media and PR Agency   R560 000     Hired additional personnel and equipment which assisted the business to become a preferred supplier for AfroCentric Health


A total of R7.04 million was invested in enterprise development.

SOCIO-ECONOMIC DEVELOPMENT

AfroCentric has always been committed to making a difference in the communities it serves. The Group aims to make contributions that will have a sustainable impact on beneficiaries and seeks to establish long-term relationships with the organisations that we invest in.

Verde to the initiatives below. Our CSI initiatives involved our contribution to the Bongi Ngema Zuma foundation witch support initiatives directed at fighting Diabetes, screening tests for various diseases and educational seminars on healthy lifestyles.

Recent socio-economic development initiatives include:

  Project   Overview   Funding provided     Social impact
  Charlotte Maxeke Johannesburg Hospital School   AfroCentric funded the complete refurbishment and equipping of the school and sponsored the installation of a custom-designed playground, which provides a safe environment for children with impaired immune systems.   R896 874     Johannesburg Hospital School caters for learners from Grades R to 12 who are admitted to hospital for extended treatment. The school makes it possible for learners to receive medical treatment without interrupting their education.
  Home of Hope for Girls   AfroCentric through its subsidiary Medscheme, recently made a donation of R250 000 and 75 shoe boxes filled with gifts to the Home of Hope for Girls.   R250 000     Education and wellness support for over 75 girls who are currently being provided for by the home.
  PHEF and Social Compact Fund   Medscheme is a signatory to the Social Compact Forum launched by the Minister of Health, Dr Aaron Motsoaledi, on 8 November 2012.

The forum is a ground-breaking initiative through which government aims to guide discussions between the public and private healthcare sectors, with a view to developing solutions to major challenges facing the industry.

  R981 225     One of the key features of the forum is the establishment of a public health enhancement fund (“PHEF”). The fund is expected to provide funding to support government to:

  • Expand the intake of medical students
  • Support postgraduate students pursuing health-related studies
  • Build additional capacity in the management of Tuberculosis (“TB”), HIV and Aids
  • Provide support to the newly established Leadership and Management Academy for Health
  Nursing service of South Africa   Pharmacy Direct contract with the nursing services of South Africa and provided funding to administer flu vaccinations.   R168 207     Assistance in administering flu vaccination to over 12 000 black patients.


A total of R2 296 306 million was invested in socio-economic development programmes.

EMPLOYMENT EQUITY AND EMPLOYEE DEVELOPMENT

EMPLOYMENT EQUITY AND EMPLOYEE PROFILE

Employment equity is no longer measured per se on the B-BBEE scorecard. However, it remains an important feature of the Group’s human capital strategy. As such, AfroCentric continues to monitor its employment equity statistics to ensure diversity of its workforce and fairness in its recruitment and selection practices.

It is important that AfroCentric has a diverse company profile, with a specific focus on black employees, especially females. The table below illustrates the composition of the AfroCentric workforce by race and gender.

As per the Department of Labour EEA10 form, the tables below reflect the EE profiles for the business as at 31 May 2016.

AFROCENTRIC HEALTH (PTY) LIMITED

Total workforce profile (including employees with disabilities) as at 30 June 2016

  Male Female   Total
Occupational Levels   A   C   I   W   A   C   I   W    
Top management   1   1   2   5   2         11
Senior management   8   1   5   16   3   2   3   11   49
Professionally qualified and experienced specialists and mid-management   40   17   32   55   47   37   44   131   403
Skilled technical and academically qualified workers, junior management, supervisors, foremen, and superintendents   357   214   95   78   961   649   179   431   2 964
Semi-skilled and discretionary decision making   31   2   6   3   61   13   3   21   140
Unskilled and defined decision making   5   2     1   5   1   1     15
GRAND TOTAL   442   237   140   158   1 079   702   230   594   3 582

Total workforce (including employees with disabilities)

Total – 3 582 Male – 977 Female – 2 605

 

Profile of employees for people with disabilities as at 30 June 2016

  Male Female   Total
Occupational Levels   A   C   I   W   A   C   I   W    
Top management                  
Senior management                  
Professionally qualified and experienced specialists and mid-management     1     1       1   4   7
Skilled technical and academically qualified workers, junior management, supervisors, foremen, and superintendents   7   6   1   1   8   11   3   13   50
Semi-skilled and discretionary decision making   3     1     3     1   1   9
Unskilled and defined decision making                  
GRAND TOTAL   10   7   2   2   11   11   5   18   66


PHARMACY DIRECT (PTY) LIMITED
Total workforce profile (including employees with disabilities) as at 30 June 2016

  Male Female   Total
Occupational Levels A   C   I   W   A   C   I   W    
Top management 1       2   1         4
Senior management 9     1   1   9   2     7   29
Professionally qualified and experienced specialists and mid-management 9   1     9   19   4     40   82
Skilled technical and academically qualified workers, junior management, supervisors, foremen, and superintendents 20   5     3   49   7     7   91
Semi-skilled and discretionary decision making 94   2     1   91   3     3   194
Unskilled and defined decision making 1         5         6
TOTAL PERMANENT 134   8   1   16   174   16     57   406
Temporary employees 4         33       5   42
GRAND TOTAL 138   8   1   16   207   16     62   448

Total workforce (including employees with disabilities)

Total – 448 Male – 163 Female – 285

Profile of employees for people with disabilities as at 30 June 2016

  Male Female   Total  
Occupational Levels A   C   I   W   A   C   I   W      
Top management                  
Senior management                  
Professionally qualified and experienced specialists and mid-management               1   1  
Skilled technical and academically qualified workers, junior management, supervisors, foremen, and superintendents                  
Semi-skilled and discretionary decision making                  
Unskilled and defined decision making                  
TOTAL PERMANENT               1   1  
Temporary employees         20         20  
GRAND TOTAL         20       1   21  

TALENT AND LEADERSHIP DEVELOPMENT

AfroCentric is committed to attracting high-quality employees and growing and nurturing talent from within. Employees are encouraged to learn on a continual basis and to demonstrate a commitment to their personal growth and development. Employees are encouraged to adopt innovative means of study; traditional classroom-based learning is supplemented with on-the-job training, e-learning and self-study.

The Learning and Performance Academy provides internal and external learning programmes. The Academy also offers several accredited courses to employees, allowing them to achieve credits that lead to formal qualifications.

The strategy for the Academy is a proactive partnership with the business to achieve performance objectives by delivering innovative learning experiences. Through the Learning and Performance Academy, organisational capability is enhanced and competitive advantage heightened.

PERFORMANCE MANAGEMENT

AfroCentric uses a Balanced Scorecard (“BSC”) approach to performance management. The BSC provides management with the tools they require to drive future competitive success. It translates an organisation’s strategy into a set of performance measures that, provide the framework for a strategic measurement and management system.

In managing performance at an individual level, the aim is to create a ‘win-win’ environment, with clear expectations and shared understanding of objectives between manager and employee from the outset. Employees participate proactively in all phases of the process and share ownership of the outcomes with the organisation. Individuals understand how their performance and behaviour links to the organisational strategy. Emphasis is placed on self-management in achieving total quality and customer service and employees are encouraged to maximise their contribution in their current role, while having access to opportunities to grow and develop their careers within the AfroCentric Group.

EMPLOYEE WELLNESS PROGRAMME

AfroCentric’s passion for people, organisational performance and healthcare informs all human capital strategies, policies and structures. The Group employee wellness programme (“EWP”) forms an integral part of the components on the employee value proposition, linking health, wellbeing and overall performance.

The EWP is based on four pillars: physical wellbeing, emotional wellbeing, financial wellbeing and organisational wellbeing. It provides independent, confidential, professional counselling and advisory services to permanent and non-permanent employees and their direct household dependants. The programme continues to be valued by employees as evidenced by the high rate achieved during the 2016 employee satisfaction survey. The programme utilisation rate of 39% remains highest compared to the consumer services sector. In 2016, over 1 437 employees completed wellness screenings, which included blood pressure, glucose, cholesterol, body mass index and HIV tests on the wellness days, which are held nationally across head office, distribution centres and stores.