Climate Change Data

Environmental Metrics

ESG Focus Areas

• Enterprise Risk Management
• Market risk and financial viability
• Reliance on key suppliers
• Supply chain management
• Supply chain disruption (Distribution Centres)
• Remaining fashionable
• International competitiveness
• Foreign currency
• Computer-based business processes
• Liquidity, cash reserves and treasury risk
• Credit risk
• Brand reputation
• Property investment portfolio
• Preservation of the organisational philosophy and structure
• Succession planning
• Chairman’s mentorship programme
• Recruitment and retention
• Training
• Transformation
• BEE ratings
• Water consumption
• Energy consumption
• Waste minimisation
• Carbon footprint
• Compliance with legislation
• Human capital development
• Social investment
• Occupational health and safety
• Environmental management
• Economic impacts

Environmental Achievements

• Achieved annual goal of 5% reduction in water consumption.
• Italtile Retail and CTM increased their ranges of water-saving products.
• Improved energy saving of 9.75% across the business (between FY2011 and FY2013 a saving of 3.63% was achieved) through installation of photovoltaic (PV) solar panels in seven stores and retro-fitting new efficient lighting in some of the Group’s older stores.
• Decrease of 30% in direct CO2 emissions per Rand value of turnover (FY2013: 16% decrease).

Social Achievements

• Improved training initiatives produced good results in growing our pool of high-performing individuals.
• Strengthening sense of responsibility amongst our future leaders, and a keen desire for empowerment and growth.
• Implemented an equity-settled staff share incentive scheme.
• Employment equity targets were once again met.
• Achieved an improved BBBEE contributor status Level 6 (2013: Level 8).
• Total number of training interventions undertaken increased to 1 311 (2013: 1 031).
• A total of 178 courses (2013: 86) were conducted.
• 193 (2013: 142) candidates completed the Academy’s Practical Tiling, Plumbing and Laminate course.
• CTM’s Operator Training Programme (OTP), in conjunction with Stellenbosch University’s Business School, produced 11 graduates for store management positions.

Governance Achievements

• Improved application in the business of the principles of the King Report on Governance for South Africa, 2009.
• Demonstrated Italtile’s continued commitment to a sustainable business and an ethical corporate culture.
• Appointed a new CEO and COO.
• Enhanced the Board’s endeavours to comply with relevant King legislation.
• Introduced a high-level Group Health and Safety Committee which will drive compliance of the business units with the relevant Health and Safety legislation.

Climate Goals & Targets

Environmental Challenges

• Slow but steady growth in renovations and professional projects segments, while the new build segment remained sluggish.
• Consumers remained highly price-sensitive, fuelling aggressive price competition.
• Weakening of the currency exacerbated margin pressure and led to further instability in the market.
• Increased inventory levels.
• Trading difficulties experienced in East Africa due to logistics constraints, political instability, intense competition and the ongoing challenge to source suitable store operators.
• Rand weakness.
• Increased imported raw material costs and higher fuel charges.
• Bureaucratic delays experienced in processing of building planning submissions.

Mitigation Strategies

• Intensified focus on ensuring the ‘right product at the right time, place and price’.
• Strategic advantage afforded by the integrated supply chain which supported competitive pricing in the stores and ensured consistent availability of affordable products.
• Implementation of further improvements across the business and supply chain and capitalising on opportunities in the industry.
• Pro-actively managing supplier relationships.
• Sourcing alternative supply from other local suppliers (adhesive and grout) or importers (tiles and sanitaryware).
• Improved supply chain functionality, focused on procurement and stock management.
• Ensuring optimal inventory levels.
• Improved range and supply and sale of products across the merchandise categories.
• Intensive cost containment.
• Improved stock availability and range, increased staff competencies, intensified marketing and enhanced exposure to the projects market.
• Deliberate strategy to support the Group’s competitive value offering by absorbing higher input costs, thereby sacrificing margins.
• Identifying opportunities to improve purchasing practices and contain overheads, amongst them shipping costs.
• Employment of experienced resources and scenario planning to counteract the impact of bureaucratic delays on network expansion programmes.

Supply Chain Management

Responsible Procurement

• Well-established, cooperative relationships with local and international suppliers

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: King Report on Governance for South Africa, 2009 (King III), JSE SRI index

Sustainable Products & Innovation

• Eco basin mixers and shower heads
• Water-saving toilet cisterns
• Eco range of basin mixers and shower heads

Environmental Metrics

ESG Focus Areas

• Energy
• Carbon Footprint Reduction
• Employee Well-being
• Responsible Citizenship
• Transformation Goals

Environmental Achievements

• Commissioned an additional 2.2 MW solar power purchasing agreement at the Gryphon factory.
• Converting 38 stores to hybrid power through a bridging battery solution.
• Completing phase 2 of a solar installation at Samca Wall (additional 0.6 MW power).
• Three entirely off-grid stores serving as pilot studies for further stores.

Social Achievements

• Improved outcomes-based training enhancing team expertise and aligning actions with high-performance culture and service expectations.
• Maintained high employee engagement score at CTM.
• Continued to contribute to job creation for unemployed youth through TopT’s one-year work experience programme.
• New staff share scheme implemented.

Governance Achievements

• Board composition changes: Mr Ravazzotti retired as non-executive Chairman, replaced by Luciana Ravazzotti Langenhoven.

Climate Goals & Targets

Environmental Challenges

• Deteriorating trading conditions in the second half of the year due to rising living costs, interest rates, unemployment, and real wage decreases.
• Currency depreciation and inflation-driven input cost increases.
• Record power cuts, deteriorating infrastructure, endemic crime and corruption, and uncertain foreign policy.
• Intensified competition in retail and manufacturing segments.
• Weak consumer demand due to constrained disposable income.
• Production inefficiencies, steep inflationary input costs, and weak market demand impacting Ceramic and Ezee Tile.
• Lack of development of alternative LNG imports.
• Persistent lack of specialist skills and small human capital pool.

Mitigation Strategies

• Strategic price ladders and margin absorption to support sales volumes.
• Organisational restructure and improved management at Ezee Tile and Ceramic.
• Back-to-basics plan to improve systems and management of efficiencies, quality, and costs.
• Improved retail excellence disciplines and enhanced operational efficiencies through innovation and technology.
• Intensified focus on reducing operating costs.
• Aggressive pursuit of projects to reduce reliance on the national grid and decrease carbon emissions (solar, biogas, combined heat and power).
• Warehouse optimisation at Cedar Point.
• Improved procurement planning at Ezee Tile.
• Enhanced stock demand forecast and planning at Cedar Point.

Supply Chain Management

Climate-Related Risks & Opportunities