Integrated Annual Report

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A message from our CEO

Jan Potgieter
Chief Executive Officer

Our customers' journey is defined by 'moments of truth'. Every touchpoint is measurable and every opportunity for engagement can and must be improved on. Accordingly, our integrated business model, evolved over our 50-year history, is designed to control and optimise the process from factory gate to our customers' homes. Our overriding goal is to deliver an unparalleled shopping experience by ensuring the right product displayed beautifully at the right time, place and price.


Operating environment

In my 2018 report, I noted that for our industry to grow, we would need the economy to be boosted sustainably, household prosperity to improve materially, and consumer confidence to be rebuilt to translate into positive investment sentiment. We cautioned that for the foreseeable future, factors such as high unemployment, escalating living costs, consumer indebtedness, endemic corruption, uncertainty regarding land ownership, and unstable power supply would weigh on homeowners, causing them to defer discretionary spend on their properties. In addition, we anticipated that a general wait-and-see attitude would prevail in the lead up to the national election, which would further delay investment decisions.

Disappointingly, the weak trading conditions and negative consumer sentiment persisted over the year under review, and deteriorated notably in the last quarter. Furthermore, while the local economic climate continued to decline, unfavourable trading conditions were also experienced in some of our export markets, specifically Zimbabwe and Zambia.

While consumers are facing greater economic hardship than before, they simultaneously have a far wider choice and better access to our industry than previously. This is facilitated by the increased use of technology and range of omni-channel purchasing options available, the globalisation of international fashion trends, and the proliferation of social and digital media, aligned with the role of influencers on consumers. The review period also witnessed an increasingly competitive landscape as higher numbers of opportunistic importers entered the market in light of the oversupply of tiles in countries including India, China and Spain.

In line with trends over the past several years, the new build market was virtually stagnant, with activity in the industry confined largely to commercial projects and residential renovations. While the commercial projects segment has remained reasonably buoyant over the past two years, it started to show signs of strain in the latter half of the review period, with projects either being respecified to achieve cost savings or temporarily deferred.

As turmoil persisted among the listed and large construction companies, consolidation and closures also increased in the smaller independent architectural and building space.

Our business

Major improvements in efficiencies and cost management implemented in the prior year gained momentum in the first half of the current fiscal, impacting positively on our performance. However, the slowdown in consumer spend in the second half of the year and particularly in the final quarter was worse than anticipated.

Notwithstanding the exceptionally difficult trading conditions, the Group has recorded a creditable performance for the review period. Our goal for the financial year was to continue to deliver improved headline earnings growth, which I am pleased to report we have achieved. In line with our guidance, our results for the first half of the year were stronger than the prior comparable period, due to a low-base effect, while the performance for the second half of the year was solid, albeit as forecast, less robust than the prior comparable period.

Management is satisfied that the results reported for the review period are a good reflection of the Group's:

  • robust Proudly South African 50-year trading history as the industry trend setter and style icon;
  • strategically structured resilient business model, which provides a total solution through our integrated supply chain;
  • competent team with clarity of purpose and clearly defined strategies;
  • mutually beneficial partnerships with longstanding franchisees and operators;
  • strong cash generative nature, disciplined cash management and cost leadership;
  • portfolio of market-leading retail brands which are strategically positioned to uniquely target specific customer segments;
  • consistent investment in the shopping experience and unwavering efforts to better execute retail excellence principles;
  • leading-edge technology employed in the manufacturing operations to produce high-quality, trendsetting fashionable product; and
  • leveraging growth opportunities in the business through an unrelenting focus on the customer.


Within the business, management's performance is rated according to a scorecard across the following broad key performance indicators ("KPIs"):

  • strategic plan;
  • financial performance;
  • human capital;
  • BBBEE;
  • customer satisfaction; and
  • cultural fit and values.

In my 2018 report, I outlined our future focus areas aligned to these KPIs and the strategic imperatives which would be implemented to attain our goals and targets. The following account provides an evaluation of the progress we made during the year against the scorecard:

  Superior achieve   Exceeded target
  Achieve   Achieved target
  Under achieve   Failed to meet target

Grow sales across the brands, which will have a positive
knock-on effect in the supply chain



One of the Group's key tactical advantages is its portfolio of market leading retail brands, which are strategically positioned to appeal to customers across the demographic and income spectrum, uniquely targeting specific market segments and customer profiles. Supporting this portfolio is an omni-channel shopping offering for ease of access (in-store, online, social and digital).

During the review period, our overriding focus was on improving the customer experience and driving sales growth. We continued to invest in our people, technology, store layouts, merchandising and range. Higher sales were reported across the brands, and the improved satisfaction scores achieved across our various measures, (in-store customer sentiment surveys, Mystery Shoppers and an independent brand health monitor), is pleasing reward for our efforts.


After a series of disappointing sets of results, CTM started to demonstrate signs of a turnaround, despite the brand's target market remaining under intense financial pressure. Key remedial measures which had a positive impact include:

  • good cost leadership and margin maintenance in a slow sales environment;
  • brand repositioning through the very successful Sithi Wena campaign which targeted a segmented range of consumer profiles and built meaningful equity for the brand;
  • focus on basic retail excellence principles including customer service; operational disciplines; warehouse management and business optimisation; and sales levers;
  • roll out of the new store format to a number of stores and revamp of older stores, including improved lighting which displayed products to better advantage;
  • review and better alignment of store operators;
  • range rationalisation and enhancement; and
  • introduction of online tools to upgrade and track the performance of individual sales team members.
Italtile Retail

The brand's double-digit sales and profit growth is a reflection of several factors:

  • a market leading range including products with strong eco-awareness credentials;
  • roll out of the new store look and ongoing revamps across the network;
  • very high training and service standards, including interior design courses for sales people, which differentiates the offering from competitors; and
  • consistently strong performance by the Projects division, which continued to gain traction in the professional commercial market sector.

This brand delivered another strong performance including double-digit like-on-like sales and profit growth, attributable to the following activities:

  • successful implementation of the business optimisation programme ("BOP"), which demonstrates a direct correlation between business critical in-stocks and sales growth. Optimal stock management is key in a business model which has numerous distribution points and limited warehouse capacity;
  • roll out of new stores to underserviced markets and a growing national presence;
  • constant range re-evaluation and responsiveness to customer demand; and
  • introduction of a range of profile building initiatives including a mobile store ("Gig Rig"), a webstore, community-linked marketing campaigns, and the launch of a dedicated training centre.

Our brand webstores (Italtile Retail; CTM South Africa, Kenya and Tanzania; and TopT) continue to report strong growth in unique visitors and online sales. During the year we migrated all of our webstores to an upgraded e-commerce platform and implemented an order processing and logistics solution to support omni-channel shopping, thereby enhancing the customer experience.

In-store sales growth was complemented by an increase of more than 25% in combined webstore revenue reported by CTM and Italtile Retail.

Continue to improve working capital and manage margins through robust cost leadership



Cost leadership, expense control and improving stock turn are constant imperatives across the business, and particularly key in an environment of negligible top-line growth and sustained margin pressure arising from the competitive landscape.

Across the operations we prioritised working capital and margin management, and continuously assessed opportunities to extract and leverage efficiencies. We succeeded in containing cost growth below inflation for the second consecutive year. Margins across most businesses in the Group improved.

The Group's cash reserves almost doubled in the review period to R1,2 billion from R679 million in the prior year, despite significant cash outflows of R1,6 billion, related to among others, payment of a special dividend, capital expenditure and share buy-backs.

Build on our reputation for retail innovation and disruptive technology



Throughout the Group's operations, retail innovation and technology were employed to enhance our capability and afford the business a competitive edge in the sector.

Our IT initiatives were centred on the customer experience through the following initiatives:

  • analytics: real-time actionable insights for store operators;
  • automation: integration of systems and processes to streamline operations; and
  • mobility: back-office and sales processes to increase productivity.

Across our webstores we made major technological inroads with the implementation of an upgraded e-commerce operating platform for the brands, the development of a bespoke CRM solution for the platform, enhanced credit options and payment methods, and we launched the TopT webstore. All of our brand webstores reported very strong double-digit growth in sales and unique visitor sessions.

Ceramic Industries continues to invest in international standard, industry-leading technology which positions its offering as a highly competitive import substitute.

Expansion of our lighting category and launch of a new brand – U-Light

During the review period, we expanded the lighting merchandise category in all the TopT stores. We also launched a new separate lighting offering, U-Light. To test the scalability and viability of the offering as a standalone brand, five pilot stores were opened in Gauteng by the end of October 2019, in Eastgate, Southgate, Northriding, Bryanston and Westgate. The five stores each comprise a slightly different format and target a different market segment. While launching a new retail offering in the current economic climate is challenging, the start-up business will benefit from existing store locations, customer base, business partners and an effective back-office set up.

PiViCal panels

In February 2019, our new plant commenced manufacturing PVC panels for the TopT brand. This import-replacement product substantially reduces the lead times of one of TopT's fastest growing merchandise categories, affords the Group a strategic advantage in the market, and contributes to our BBBEE scorecard in terms of preferential procurement and supplier development criteria.

We are optimistic about the future of this business, given the strong, proven demand for the product. In line with our goal to offer total solutions to our customers, we anticipate our lighting and PVC panel sales in TopT to be complementary.

Accelerate the Group's growth in select markets in Africa



East Africa

The CTM operation in East Africa delivered strong sales and profit growth, with the installation of an in-country managing director making a significant difference to the success of the business. We opened two new stores in the region (one shortly after the financial year end), acquired two sites, and finalised one lease agreement for stores to be opened over the next two financial years. The distribution centre in Kenya has also been relocated to new premises to allow for expansion of operations to support the growing store network in the region. In addition, the Ezee Tile factory in Mombasa has been upgraded.

Southern Africa


Our CTM operation in this region remained under pressure in the inclement economic climate. We are investigating the possibility of appointing an in-country joint venture partner to assist with achieving the potential we envisage for the region.

A site has been acquired in Botswana for development of a CTM and Italtile Retail store in the year ahead. We will also open two more TopT stores in the region.


We commissioned new Ezee Tile factories in Zambia and Zimbabwe with local joint venture partners. Further expansion opportunities are being investigated in Kenya, Tanzania and Uganda.

Ceramic Industries is exploring opportunities to open tile factories in Rwanda, Kenya and Ivory Coast in the longer term. The outcome of these investigations will be determined by the availability of adequate raw material and energy supplies and securing a partnership with a local operator.

We remain enthusiastic about the opportunities for growth in the rest of Africa, but are mindful of the rapidly intensifying competition from increasing numbers of Chinese operators in the region.

Advance the store roll out programme


Superior achieve

Our target for the year was to open 10 to 15 new stores and to close non-performing stores as required to ensure the sustainable vigour of the portfolio. During the review period, 17 stores were opened across the brands: one Italtile Retail; five CTMs; 10 TopTs and one U-Light store. Four non-performing TopT stores were closed in marginal or unsafe locations.

We have a good pipeline of sites in place and are on track to deliver on our target of 15 new stores in the 2020 financial year. Further details regarding the store footprint, capital investment incurred and other changes in the portfolio are discussed in the property investment report on Support services.

Progress improvements made in building a pipeline of talent



Our industry continues to suffer from a dire shortage of qualified, motivated retail personnel and one of our ongoing challenges is to develop a core of energetic and ambitious fit-for-purpose employees.

In order to ensure we recruit and retain the right calibre of individuals, our strategy is to drive the culture and activities of the business through our core values and beliefs. These principles include: partnership, hands-on approach, performance driven, entrepreneurial flair, high work ethic, transparency in communication, dignity, empowerment, integrity and putting the customer first.

The HR and Training report details our numerous initiatives to develop and upskill our workforce. These include partnerships with academic institutions to further our employees' education and internships and learnerships for both qualified students and inexperienced jobseekers, potentially culminating in employment within the Group. We operate accredited training academies and offer local and international courses and e-learning tuition across our brands for our employees, our franchisees and their employees.

During the period, we introduced a new HR forum to focus on Group and brand-specific human capital requirements in order to improve the suitability of the people pipeline, and an HR specialist has been appointed per brand. We have also added people pipeline development as a management objective in new contracts with franchisees and joint venture partners.

Increasingly, our business is recognised as a fashion retailer and not a building materials supplier; in line with this, and the growing number of female customers making the purchasing decisions in our stores, we will be paying attention to opportunities to enhance our pool of female store operators.

Our consistent view is that we will attract the best calibre of people by being the employer of choice in our industry, and we will achieve this through ensuring our employees are appropriately remunerated, incentivised through profit share and partnerships, and equipped to perform their jobs.

Build depth of management, while simplifying the business model and limiting costs



Improving engagement and encouraging a culture of positivity in the current negative climate is a key management priority. Throughout the year, a wide range of brand specific interactions took place aimed at connecting with and inspiring our leadership and staff. Activities ranged from regional meetings, excos, franchise meetings, conferences, roadshows and agent meetings, and resulted in a significantly improved engagement score – our best yet, despite the challenging external environment.

Developing leadership capability and capacity is a key imperative. During the period, we conducted 360-feedback assessments for the Executive Committee and senior management and introduced diversity training, which will be rolled out further in the Group.

A new Group reporting structure, approved by the Nominations Committee, and implemented with effect from 1 May 2019, has been designed to ensure a renewed focus in the respective business units and to re-energise individuals to drive growth. In this regard, the following developments have taken place to strengthen the management capacity in the business:

  • an equity partner has been identified at CTM; and
  • two new equity partners have been appointed at Cedar Point.

With these appointments, all of the Group's business units across the brands and supply chain are now partnerships with equity stakeholders.

We also made good progress with our strategy to build depth of management while simplifying the business model and limiting costs, by evolving the franchise model to enable top-achieving CTM franchisees to become multistore operators. This model has worked extremely well in TopT and we anticipate good results. We will continue to convert more company-owned stores to joint venture and franchise stores in all regions other than Gauteng to promote longer-term continuity and depth of management and sustainability of the business model.

Make better use of analytics to inform targeted customer marketing and rewards campaigns



Understanding our customers' behaviour is key to delivering an unrivalled shopping experience. Our strategy to improve our targeted customer marketing is to combine our e-commerce, IT and marketing capabilities in a three-year programme, aimed at gaining in-depth knowledge about our customer; developing targeted tactics and solutions tailored to specific customer profiles; and optimally executing the solutions to meet our goals. We are currently in the first phase and have made good progress in gaining insight into our various customer profiles. CTM's Sithi Wena advertising campaign has illustrated the benefits of targeted marketing, reflected by an improved customer response in terms of key metrics including brand awareness, usage and consideration.

Progress the supply chain journey



To support future growth, continuous improvement is required in our end-to-end supply chain.

Our supply chain journey is a complex and comprehensive one, which we estimate will take five years to achieve all our objectives including improved cost management, load planning, and in the longer term, importing and shipping. The three-phase programme commenced with the set-up of sites and will proceed to better visibility of cost drivers, related negotiations and integration of the entire supply chain.

Several key developments were implemented during the review period, including:

  • establishing our three Distribution Centres ("DCs") as combined hubs for both imported stock and Cedar Point operations. We converted the Cape Town facility to a regional DC; outsourced the DC in Vereeniging to a specialist third-party operator, and relocated to a new Group-owned premises in Durban;
  • appointed a dedicated BMO specialist per two to four stores to manage execution and drive cost leadership. Business critical items have been reviewed with improved results, and we anticipate better execution across the supply chain;
  • range rationalisation and improvement in operating efficiencies in our import businesses;
  • expansion of lights as a merchandise category in TopT, and launch of new separate lighting brand, U-Light;
  • commissioning of our PVC panels manufacturing plant;
  • exploring areas to improve integration with Ceramic Industries; and
  • investigating a logistics control tower solution which will integrate planning with real-time execution of logistics activities, resulting in improved efficiencies and service levels and reduced costs.

Upweight our marketing and brand building initiatives and broaden our capability in the digital and social media environment



Key to better understanding our customer and aligning our marketing efforts is the enhanced use of analytics. We continue to make good progress in introducing retail science into the business by improved analysis of financial information, marketing intelligence and operational anecdotal evidence and experience. Increasingly, we will explore artificial intelligence to better target and encourage sales of our goods and services online.

Our focus in the year ahead is to understand and leverage connectivity, and prioritise the social shopping process.

Increase open-market business for all integrated suppliers


Under achieve

Our integrated supply chain comprises both importers and manufacturing businesses.

During the period, our supply chain manufacturing businesses continued to target open-market customers in new and existing markets, with good success. However, following extensive investigation, management took the deliberate decision to curtail the strategy to expand our import business (ITD and Cedar Point) offering into the open market. This decision was based on several factors, including the volatility in the brassware market, exchange rate fluctuations and our conviction that an inward focus in the present economic climate and time in the business would be more beneficial. The strategy will be revisited in due course and in the interim, we will continue to explore opportunities to supply select open-market customers when conditions are more conducive.

Progress BBBEE across the business and improve the Group's status from non-compliant to compliant


Superior achieve

Transformation across the business has been a major management focus during the review period and I am delighted to report that the Group has advanced from being non-compliant in 2016 to compliant, at level 6, in 2018. This progress equates to an improvement in the Group's score from 24 in 2016, 59 in 2017, to 77 in 2018. Improvements were achieved across three of the five criteria namely, equity ownership, enterprise and supplier development and socio-economic development. There was a marginal decline in the skills development score, but we are confident that the interventions underway in the business will remedy this and result in a higher score in the 2019/2020 assessment. Subsequent to the year end we concluded a BBBEE ownership transaction with Yard, in order to improve the Group's black ownership credentials, and to establish a medium to long-term relationship with a BEE partner with international commercial experience relevant to the Group's business.

A BBBEE Committee comprising senior management has been constituted, and is tasked with driving transformation in the Group. The Committee is targeting a status level 5 in the year ahead and level 3 by 2022. Specific attention will be paid to increasing black female management and store operators.

Transformation report.

Results overview

The Group's results are discussed in comprehensive detail in the Financial Director's report.

Briefly, from a trading perspective, the Group's total system-wide turnover for the review period was R10,0 billion, 15,2% higher than the prior corresponding period (2018: R8,7 billion).

Total retail store turnover grew 6,1% for the review period compared to the previous corresponding period, with average selling price inflation estimated at 2,7%. Like-on-like retail store turnover (excluding sales of stores opened and closed during the period), increased by 4,2% compared to the prior corresponding period.

Manufacturing sales for the review period rose by 1,4% compared to the previous corresponding period, with average selling price inflation estimated at 3,0%.

The Group's basic earnings per share increased by 8,0% to 102,6 cents (2018: 95,0 cents), while headline earnings per share improved by 7,2% to 101,8 cents (2018: 95,0 cents). The disparity between basic earnings and headline earnings growth is attributable to net profits of R12 million realised on the disposal of local properties during the review period.

A final ordinary gross dividend of 41,0 cents per share was declared for the year (2018: 38,0 cents). In addition, a special dividend of 50,0 cents per share was declared in commemoration of the Group's 50th anniversary.

Group performance

Most of the key metrics, which include sales, average basket and selling price, margins, profit, and stockholding and turn, improved across the retail brands and the integrated supply chain importers, although the supply chain manufacturers did not fare as well.

Given the weak sales environment, our retail brands performed well, although tile sales failed to live up to our expectations. This generally softer retail demand and the overstock position of tile retailers and wholesalers in the industry had a negative impact on Ceramic's factories, which resorted to reducing capacity at four of the plants in the latter half of the review period.

Retail brands

Across the brands, retail excellence disciplines improved, reflected by better in-stock levels, enhanced store and merchandise presentation, technological innovation and better analytical reporting, resulting in an improved customer experience.

From a regional perspective, good performances were delivered by our stores in Limpopo, Mpumalanga and Eastern and Southern Cape, which gained market share. Gauteng, North West and the Free State delivered weaker performances, the latter two largely a function of the declining mining and agricultural sectors which impacted negatively on the local economy.

CTM maintained its market share, while Italtile Retail and TopT continued to make gains in a competitive environment.

Supply chain: importers

Cedar Point

Improved sales and profit growth were reported for the year. Key focus areas were range rationalisation, reducing stock levels and improving stock turn. In the year ahead, better implementation of BOP will assist in establishing optimal stockholding and facilitating sell-through. Having successfully outsourced the warehouse function, management's primary focus will henceforth be on improved buying and operational coordination.

International Tap Distributors ("ITD")

Competition intensified in the brassware category as an increasing number of opportunistic importers entered the market. Aggressive pricing and margin pressure were a constant feature in the review period, and in order to support cash-strapped customers, ITD reduced average selling prices, which further impacted profits. Some opportunity exists to recover margins should the exchange rate stabilise favourably.

Progress was achieved in rationalising the range and enhancing the in-stock position while simultaneously reducing overall stockholding. However, there is further room for improvement in terms of balancing business critical and supplementary stock.

In light of the SA Bureau of Standards' ("SABS") dysfunctionality and expiration of certificates, an alternative accreditation for brassware products has been introduced to the industry, approved by the South African National Accreditation System. ITD's products have been certified accordingly, and the business's sales agents will be capitalising on this development.

Durban DC

In the weak sales environment and given the overstocked position of numerous wholesalers, sales declined marginally although profits improved, based on intensified cost management. Good progress was made on rationalising ranges and reducing stockholding. In light of currency volatility and general margin pressure experienced in the industry, the business continues to investigate new suppliers in new markets.

Supply chain: manufacturers

Ceramic Industries

Our rationale to acquire the Ceramic business some 20 months ago, continues to deliver the benefits envisaged. Our business model has been substantially strengthened by the combined cash generation and balance sheet, while the increased depth of management and career development opportunities have enhanced our leadership capabilities and management pipeline. The primary strategy to formalise our biggest-customer-biggest-supplier relationship continues to produce rewarding results in terms of improved planning and production efficiencies, benefiting both the stores and the factories.

Additional unplanned synergies have also been leveraged in terms of cost savings and efficiencies related to combined corporate services.


In the South African operations, solid results reported in the first half of the review period were eroded by a weaker performance in the second six months. While market share was gained by Gryphon's large format range, generally demand across the market was sluggish, with many wholesalers and retailers overstocked. In light of slow demand, kilns were shut off at four of Ceramic's factories in the third and fourth quarter of the year. This underutilisation of capacity impacted negatively on margins and profit for the period and will continue to remain a challenge in the short term.

The Australian operation reported improved profitability for the review period, and the investment to increase capacity and product range was completed.

Focus will remain on reducing costs and improving yields across the operations.

Bathroomware and Baths

Both Betta Sanitaryware and Betta Baths reported an improved second six months after a difficult first half. The new warehouse facility should be completed during the new financial year which will improve capacity management and service to customers. As with the tile factories, focus will remain on reducing costs and improving yields.

Ezee Tile

In the first half of the year, the business underperformed management's expectations, delivering disappointing margins and profits. While the remedial actions implemented in the second half have addressed operational inefficiencies and resulted in an improved performance in the latter six months, the business's results for the year are not in line with targets.

Good progress was achieved in upgrading the plant in Mombasa and developing new production facilities in Lusaka and Harare.

The business also succeeded in gaining market share in the paint and construction chemicals segments.

An overview and performance matrix of the Group's individual business units follows in Review of operations.

Group outlook

The short to medium-term outlook for the country is concerning. While the President's commitment to growing the economy and enhancing governance is commendable, only meaningful actions and evidence of transformational reforms will lead to an improvement in business and consumer confidence and hopefully in time, increased investment by the public and private sectors.

In the interim, there is little to indicate that meaningful economic growth is imminent, and in that light, we anticipate discretionary spend to remain constrained. Unresolved socio-political issues and general uncertainty will also continue to impact negatively on consumer sentiment.

At the upper end of the LSM spectrum, where the flight of capital is an incontrovertible trend, there has been a marked decline in investment recently, evidenced by the slowdown in Italtile Retail's sales post-year end. However, owning a home is an ambition for most South Africans, and as a nation we are proud homeowners who invest significantly in this primary asset. It is our view, therefore, that while middle and lower LSM consumers are worse off than before, they will acclimatise to sustained financial hardship as the new norm. The likelihood, though, is that when they do shop, the frequency will be less and the spend value lower. It is therefore our challenge and goal to ensure that our offering is their first choice.

Despite the testing operating environment, we remain optimistic that those factors within our control – the opportunities within our business – provide prospects for growth. We derive significant confidence from the Group's strong 50-year track record and the business model which has proved to be resilient and robust over the past five decades. The Company has weathered difficult times in its history, and we are certain that the experience will stand us in good stead.

We anticipate that the Group will deliver growth for the ensuing year. Given the high-base effect, we expect that growth in the first half is likely to be lower than growth in the second half of the year.

Aligned to management's KPIs (strategic plan; financial performance; human capital; BBBEE; customer satisfaction; and cultural fit and values), we have identified our future focus areas which we will benchmark against in the 2020 integrated annual report.

They include the following imperatives:

  • focus on sales growth, particularly in the tile category. Opportunities exist in terms of price, service, presentation and fashion, and we are confident that there is potential to gain market share;
  • continue to prioritise the shopping experience through entrenching retail excellence principles with specific focus on sales execution;
  • advance the store roll out and revamp programme. Our target is to open another 15 stores across our retail brands in the new financial year;
  • continue to develop disruptive marketing campaigns;
  • roll out the U-Light offering, contingent on the success of the pilot venture and the brand's potential for scalability;
  • leverage improvements made in the HR function to develop and optimise a people pipeline which will support growth in the business;
  • improve the Group's BBBEE status to level 5;
  • entrench working capital and cash management as core disciplines;
  • prioritise better stockturn and product mix through better implementation of BOP and use of analytics;
  • focus on improving manufacturing efficiencies and reducing waste, in light of decreased capacity utilisation at the factories which will impact profitability;
  • bed down supply chain efficiencies and leverage opportunities in our logistics and distribution functions; and
  • drive overall productivity to become more competitive.

I am satisfied that we have the appropriate team and strategies in place to deliver on these imperatives and we will endeavour to meet the expectations of our broad range of stakeholders.


The Group's definition of victory, 'To be Africa's leading retailer and manufacturer of tiles, sanitaryware and ancillary products', is bold and spirited. We know that to achieve this vision requires the buy-in and commitment of every individual in the business on a daily basis. The determination and resourcefulness of our team is evident from the creditable results delivered this year in a very challenging market, and therefore, I am confident that with continued dedication and energy we will move ever closer to our desired success.

I am grateful to my fellow Board members for their continued encouragement and support as we advance our strategies to achieve inclusive and sustainable growth for all stakeholders.

As we commemorate the Group's 50th anniversary in October, special mention must be made of our Chairman and founder, Mr Giovanni Ravazzotti. At the outset of this report I spoke about the customer journey being defined by moments of truth. There are very few people in retail, either locally or internationally, who have a better understanding of this fundamental principle, or indeed the industry, than him. With five decades of experience, a proven legacy, and enduring ambitions for the business, Mr Ravazzotti is an inspiration to us all.

J N Potgieter

Chief Executive Officer