Apex Healthcare Berhad

 
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Sustainability Statement


Apex Healthcare Berhad (“AHB” or “the Group”), with its mission of “Restoring Health, Enhancing Life” upholds sustainability in all aspects of its business operations and in a way which brings value to all stakeholders.

The Sustainability Statement of AHB sets out its approach towards sustainable development and management of economic, environmental and social risks and opportunities, based on a foundation of considering the impact of its business endeavours on the economic conditions of its stakeholders (“Economic”), on living and non-living natural systems (“Environmental”) and on the social system (“Social”).

A. Governance Structure

As there is no “one size fits all” approach, the Board of Directors (“the Board”) of AHB adopts a sustainability governance approach that is fit for the Group’s purpose considering amongst others, its culture, needs, sustainability-related risks and opportunities and level of maturity of its sustainability thinking and readiness.

The Board is responsible for embedding sustainability into the Group to complement its business strategy. The Board reviews and approves AHB’s sustainability strategies and ensures that adequate resources, systems and processes are in place for managing sustainability matters. The Board sets the tone from the top and assumes the highest governance body in setting the Group’s purpose, values and strategies which incorporate sustainability considerations. Ultimately, the Board is accountable for managing sustainability matters in AHB.

For the purpose of supporting the Board in implementation of sustainability-related strategies, the Board has established a Sustainability Committee which is responsible for monitoring the implementation of sustainability-related strategies, measures and actions in achieving AHB’s sustainability goals as approved by the Board. The Sustainability Committee is responsible for identifying, evaluating, monitoring and managing Economic, Environmental and Social(”EES”) risks and opportunities and ensuring all material sustainability matters are being considered and managed by the Apex Healthcare Group through its business operations including stakeholder engagement and materiality assessment.

The preparation of sustainability disclosures for approval by the Board as required by laws and regulations and sustainability reporting also come under the purview of the Sustainability Committee. The Sustainability Committee of AHB is an executive management committee comprising the Chief Executive Officer (“CEO”) as Chairman of the Sustainability Committee and members of the Executive Committee, namely the Chief Operating Officer, Senior Vice President and Financial Controller.

For the day-to-day management of sustainability issues and to support the Sustainability Committee in implementing sustainability initiatives as approved by the Board are key personnel from the subsidiaries of the Group who report to the Sustainability Committee. These personnel serve as touchpoints to gather input from the relevant departments or functions, execute sustainability plans as determined by the Sustainability Committee and support the Sustainability Committee in ensuring robust processes are in place.

B. Materiality Assessment Process

Scope
Xepa-Soul Pattinson (Malaysia) SdnBhd (“XEPA”) and Apex Pharmacy Marketing SdnBhd (“APM”) are key subsidiaries of AHB. The Board considers it appropriate in this regard to limit the scope of the materiality assessment and by extension the sustainability disclosure to these two subsidiaries. XEPA and APM operate predominantly in Malaysia and as such the geographical boundary of their materiality assessment is confined within Malaysia. The scope within which materiality applies as far as operations are concerned is limited to manufacturing and distribution which are the core operations of XEPA and APM respectively.

Identification and Categorisation of  Sustainability Issues
As sustainability is a risk management tool which helps the Group to evaluate its management of business operations, the Sustainability Committee regularly identifies and categorise issues which the Group should take into account and assesses the impact of those issues on the business over the near, medium and long-term.

The initial list of sustainability issues are identified from a combination of internal and external sources. The main internal sources are derived from internal analysis of trends that are relevant to AHB, its business strategies taking into account the Group’s short, medium and long-term goals and risk management assessments of the Group. The external sources are obtained from concerns raised by stakeholders during stakeholder engagements including but not limited to Annual General Meeting and sessions with analysts and media, examination of emerging and development of relevant laws and regulations and business environment which impact on sustainability. 

Stakeholder Engagement
In the overall objective of identifying and prioritising material sustainability matters, AHB engages with different stakeholder groups as such interactions are crucial to identify, prioritise and address material sustainability matters. Engagements are carried out on a regular basis with various stakeholders as they are integral to the business development and commitment of the Group to sustainability. The website of AHB, Annual Reports, Quarterly Reports and the e-commerce platform of its retail subsidiary and any other announcements which are issued by AHB from time to time are also used as regular channels to provide information to the stakeholders.

The Board is cognisant of the fact that engaging with all issues and concerns expressed by all stakeholder groups are resource-intensive and inefficient. Hence, stakeholder prioritisation is conducted to determine the levels of influence and dependence of a stakeholder group over AHB’s relevant sustainability issues. Based on the concerns as well as key discussion points expressed by AHB’s stakeholder groups during the engagement sessions, the Group is able to identify and prioritise issues which are most relevant to each of its stakeholder groups. Each stakeholder group is weighted by the Sustainability Committee based on their influence and dependence on AHB:

  • Highly influential stakeholder groups are most able to impact AHB’s achievement of strategic objectives.
  • Highly dependent stakeholder groups are more positively or negatively impacted by AHB’s operations.

Through a Stakeholder Prioritisation Matrix, the stakeholder groups are ranked and AHB has identified these key stakeholder groups in terms of priority; namely Employees, Shareholders and Communities.

Prioritisation of Sustainability Matters
The sustainability issues which have been identified and categorized are then prioritised to determine the material sustainability matters, by considering the risks and opportunities associated with these issues. The sustainability issues considered by the Group include training and development of employees, energy conservation, community investment, digitisation and waste management, and are further assessed on materiality of each in the context of the Group.

C. Material Sustainability Matters

Sustainability matters are considered material if they reflect AHB’s significant EES impacts on the business or substantively influence the assessments and decisions of stakeholders. Taking into consideration that the level of importance of a sustainability matter to the business may be different from that as perceived by its stakeholders, the Sustainability Committee employs a Materiality Matrix as a tool to determine the materiality of each identified sustainability matter. This tool takes into consideration the significance of the Group’s EES impacts on the business and the EES influence on stakeholder assessments and decisions.

Significance of AHB’s EES impacts on the business is assessed by considering the following criteria which include revenue, cost, media response, strategic and operational risk and business opportunities. Influence on stakeholder assessments and decisions is assessed through stakeholder engagement and assigning weightage to each stakeholder group according to its priority to AHB which has been earlier assessed via a Stakeholder Prioritisation Matrix.

The Materiality Matrix revealed that the following sustainability matters are material as they have the greatest significance to the Group’s long-term business value as well as substantively influence stakeholders’ decisions and interests:

  1. Training and Development
  2. Energy Conservation
  3. Community Investment

D. Management of Material Sustainability Matters

Material Sustainability Matter: Social
Training and Development

Policy
The Group believes that a strong culture of learning plays a vital role in enhancing sustainable growth. As a matter of policy, the training and development programs of the Group focus on leadership, broadening professional knowledge and enhancing productivity.

Measures and Actions
Within the Group, Apex Healthcare Berhad Continuing Professional Development (“Apex Healthcare CPD”) was launched in January 2013 as part of the Group’s training and development strategies. Apex Healthcare CPD provides a platform for the employees to leverage their talents and to develop their skills and competencies. Since its inauguration, various programs encompassing management and leadership skills, financial management, pharmacy and therapeutics, marketing and selling skills, safety and health workshops, topics in relation to Sustainability, Personal Data Protection Act 2010, Companies Act 2016 have been conducted under the auspices of Apex Healthcare CPD for its employees.

In 2017, the programs that were organised by Apex Healthcare Cpd cover a range of topics including marketing, financial management, occupational safety and health for Klang Valley warehouse personnel, situational leadership and presentation skills. Intradepartmental training and development programs relevant to the specific needs of various departments of the Group are also provided by their respective departmental heads. XEPA is also recognised by the Pharmacy Board Malaysia as one of the Training Premises for Provisionally Registered Pharmacist (PRP). The PRPs are exposed to various areas relevant to pharmacy practice; encompassing production and packaging, laboratory testing, quality assurance, innovation and development, regulatory affairs and marketing and distribution. This accreditation further consolidates the commitment of the Group to providing training and development of junior pharmacists in their pursuit of professional excellence.

Indicators
a. Choice of Indicator
The number of training hours per annum by employee category is adopted by the Board as the indicator. The number of training hours of employees of AHB’s key subsidiaries, namely XEPA and APM, which are scoped within this Sustainability Statement are organised in different job grades, namely “Manager to Senior Manager”, “Executive” and “Non-Executive”.

b. Baseline
Year 2015 is adopted as the baseline against which the data for training and development will be benchmarked to determine if the performance in this area has improved.  The said year is adopted as the Board considers that the 2-year time period following the establishment of Apex Healthcare CPD will be able to provide the Group reasonable experience in formalising its training and development programs.

The number of training hours of employees of AHB’s key subsidiaries, namely XEPA and APM, which are scoped within this Sustainability Statement in 2015, 2016 and 2017 are as follows:

No of training hours 2015 2016 2017
Manager to Senior Manager 5,080 3,788 3,333
Executive 5,886 6,259 5,581
Non-Executive 10,470 9,643 11,254
Total 21,436 19,690 20,168

c. Goal
The Social goal of AHB is to ensure that all employees are provided with training and development according to the required skill sets dictated by their job.

d. Measurement of Progress
Continuous monitoring is conducted to provide a quantitative gauge that measures the adequacy of training and development provided to the employees. The number of training hours is reported on a yearly basis or more regularly as the Board sees fit to allow the Group to closely track its performance and determine if any change is required to ensure the goal is still achievable.

Material Sustainability Matter: Environmental
Energy Conservation

Policy
AHB’s environmental policy is foremost to improve energy efficiency and minimise energy consumption as far as possible while ensuring that the relevant regulations and standards are met.

Measures and Actions
In APM’s main warehouse in Subang Jaya, environmentally-responsible and efficient technologies and systems are adopted to reduce energy emission which include the progressive retrofitting of existing lighting of 48W fluorescent tubes with energy-saving 22W LED lights.

While in XEPA, the replacement of air-cooled chiller with new water-cooled chiller in the form of HVAC cooling system at the Liquids and Solids Production Plants in Melaka, has led to reduction in energy consumption while providing optimal cooling for the production plants

Indicators
a. Choice of Indicators
The Group’s indicator for energy consumption, as measured by the total energy consumed in terms of  Kilowatt hour (“kWh”) per million Ringgit (“RM”) revenue of XEPA and APM, both entities being the key subsidiaries of AHB, is monitored monthly and reviewed regularly. The measures and actions taken are poised to improve energy efficiency and minimise energy consumption

b. Baseline
The Group formalised the collection of data pertaining to energy conversation from XEPA and APM with effect from 2016 in accordance with Bursa Malaysia Securities Berhad’s emphasis on a robust sustainability framework. Thus, year 2016 is adopted as the baseline.

Average amount of energy consumption in kWh per million RM revenue by XEPA and APM in 2017 and 2016 are shown as follows:

Average kWh per million RM revenue 2016 2017 2017 vs 2016
XEPA 72,692 61,635 -15%
APM 4,155 3,808 -8.3%

c. Goal
The Environmental goal of AHB is to ensure that there is sustainability in energy conservation as measured by a reduction of energy consumption in terms of kWh per Million RM revenue year-on-year.

d. Measurement of Progress
The reduction in energy consumed in terms of kWh per Million RM revenue is tracked on a monthly basis. As and when there are new measures and actions instituted proposed by the Management, the Sustainability Committee will review and report to the Board.

Material Sustainability Matter: Economic
Community Investment

Policy
The Group’s strategic sustainability direction as far as community investment is concerned involves voluntary contributions in the form of cash donations and sponsorships to enhance socioeconomic benefits and to create a positive social impact.

Measures and Actions
The Group supports cash contribution to the following causes as determined by Sustainability Committee, namely Education, Disadvantaged, and Miscellaneous; as well as non-cash contributions in the form of participation in job fairs, factory visits, exhibitions, roadshows, social outreach programs.

Indicators
a. Choice of Indicators
The Group’s community investment is guided by contribution to the following causes: Education, Disadvantaged and Miscellaneous, the percentage of which is determined by the Sustainability Committee. The Sustainability Committee may vary the weightage of contribution depending on the needs of the communities within which the Group operates.

b. Baseline
The Group formalised its endeavours towards community investment with effect from 2017 and as a result, year 2017 is adopted as the baseline for purpose of Economic sustainability reporting.

In 2017, the notable contributions amongst several are as follows:

Education: University of Malaysia: Gold Sponsor and Best Achievement Award for Pharmacy Practice, preschool building project in interior of Sabah, UCSI University:  Best Achievement Award for Pharmacy Practice.

Disadvantaged: Persatuan Hospis Melaka, flood victims in Penang and Kedah, Persatuan Barah Malaysia, Persatuan Orang-Orang Cacat Anggota Malaysia.

Miscellaneous: Migrant Ministry Klang and its affiliated El Shaddai Centre, which is endorsed by United Nations High Commission for Refugees (UNHCR).

c. Goal
AHB aims to ensure that its business operations take into account the socioeconomic benefits through sustainable community investment year-on-year.

d. Measurement of Progress
The Sustainability Committee assesses and determines the quantum of contributions made by the Group as and when there are needs by the communities.