Strategy
Performance indicators and targets
| MATERIAL ISSUE | KEY PERFORMANCE INDICATORS | TARGET | ACHIEVED | ||
|---|---|---|---|---|---|
| 2012 | Medium term | 2011 | |||
| Credit management | • | Debtor costs as a percentage of net trade receivables | 9% – 10% | 8% | 10.2% |
| • | Satisfactory paid customers | 74% – 75% | 75% | 74.5% | |
| Merchandising | • | Gross profit margin | 35% – 37% | 35% – 37% | 36.3% |
| • | Inventory turn | 5.0 – 6.0 | 5.0 – 6.0 | 5.7 | |
| Execution of business |
• | Operating margin | 23% – 24% | 26% | 23.0% |
| model | |||||
| • | New store openings | 40 | 30 – 40 p.a. | 40 | |
| • | Credit sales as a percentage of total sales | 70% – 72% | 70% – 72% | 71.4% | |
| • | Operating cost ratio (excluding debtor costs) | 35% – 36% | 35% – 36% | 35.1% | |
| Capital management | • | Gearing | 28% – 32% | <35% | 26.8% |
| • | Dividend payout | 50% | 50% | 50% | |
| Human capital | • | Skills development – number of staff trained p.a. | >3 000 | >3 300 | 3 096 |
| • | B-BBEE level contributor | 5 | 4 | 5 | |
Management plan
Material issues, strategic objectives and key risks
| MATERIAL ISSUE: CREDIT MANAGEMENT | |||||
|---|---|---|---|---|---|
| Strategic objective | Key risks | Management plans | Reference | ||
| Optimise the quality of the debtors’ book by improving collections, reducing debtor costs and exploring further sales opportunities | Inability to maintain optimal quality of debtors’ book owing to: | • | Focus on increasing satisfactory paying customers | Credit report | |
| • | Customer segmentation and credit | ||||
| • | High levels of unemployment | limit strategies | |||
| • | Deteriorating economic conditions | ||||
| MATERIAL ISSUE: MERCHANDISING | |||||
|---|---|---|---|---|---|
| Strategic objective | Key risks | Management plans | Reference | ||
| Maintain competitive advantage through sourcing exclusive, quality, value-for-money merchandise | • | Suppliers and distribution partners performing below standard | • | Ensure reliable backup supplier channel | Chief Executive Officer’s Report |
| • | Lack of depth in supplier base | • | Further improve supply chain management through system enhancements | ||
| • | Exchange rate fluctuations | ||||
| • | Manage foreign currency risk | ||||
| MATERIAL ISSUE: EXECUTION OF BUSINESS MODEL | |||||
|---|---|---|---|---|---|
| Strategic objective | Key risks | Management plans | Reference | ||
| Execute the business model | • | Poor execution of the customer-focused business model | • | Growing the customer base through new customer acquisition initiatives | Business Model |
| • | Expanding store footprint | ||||
| • | Insufficient experienced operational staff | • | Focus on stable store management through training, recruitment and selection strategies | ||
| MATERIAL ISSUE: CAPITAL MANAGEMENT | ||||
|---|---|---|---|---|
| Strategic objective | Key risks | Management plans | Reference | |
| Effective management of financial risks and the liquidity requirements of the business | Ineffective capital management could impact on profitability and returns to shareholders | • | Ensure access to capital at all times | Chief Financial Officer’s Report |
| • | Manage currency exposure | |||
| • | Manage investment portfolio | |||
| MATERIAL ISSUE: HUMAN CAPITAL | ||||
|---|---|---|---|---|
| Strategic objective | Key risks | Management plans | Reference | |
| Ongoing development of staff for management positions; retention of current management and attract competent individuals as required | Inability to attract, develop and retain suitable staff for executive and operational management positions | • | Training and development programmes | Human Capital and Remuneration Report |
| • | Remuneration retention schemes | |||
| • | Focused recruitment and selection | |||
| practices | ||||
| • | Transformation through broad-based | |||
| black economic empowerment | ||||