Integrated Annual Report
2019

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Support Services
OVERVIEW AND PERFORMANCE MATRIX

Nature of business

To provide our customers with a seamless, omni-channel shopping experience, enabling them to easily view and purchase our products and services online and smoothly transition between online shopping and our brick-and-mortar stores.

Strategic positioning Target market
The Group’s retail operations and its customers. The Group’s online shopping stores are:
Italtile Retail – www.italtile.co.za; CTM South Africa – www.ctm.co.za
CTM Kenya – www.ctm.co.ke; CTM Tanzania – www.ctm.co.tz; TopT – www.topt.co.za
Key performance indicators Trends 2019 Trends 2018 % increase 2019 % increase 2018
Online sales (Rand)        
CTM SA Up Up 17 30
Italtile Retail Up Up 37 39
CTM Kenya Up Up 146 89
CTM Tanzania Up # 182 #
TopT # # # #
Quotes generated for all stores (Rand)        
CTM SA Up Up 24 21
Italtile Retail Up Up 43 54
CTM Kenya Up Up 40 9
CTM Tanzania # # # #
TopT # # # #
Visitor sessions        
CTM SA Up Up 18 27
Italtile Retail Up Up 26 15
CTM Kenya Up Up 41 48
CTM Tanzania Up Up 53 #
TopT # # # #

# No full-year prior comparable data available.

2018/19 priorities Scorecard  
  • Launch the TopT webstore.
  
  • Migrate all webstores to a new e-commerce solution (Magento 2)
 Italtile Retail’s migration underway  
  • Implement Smart Sales 2 (a CRM, order processing and logistics solution to support omni-channel shopping).
  
2018/2019 major achievements
  • The goal to expand our offering to include online credit and other new payment options was achieved through the successful launch of our new Magento 2 platform.
  • Our strategy to target new segments traditionally not serviced by online retail was pursued and signifi cant growth was achieved particularly in our export markets as well as with customers using mobile phones to shop.
2019/20 priorities   2019/20 prospects
  • Launch the webstore to support the newly established U-Light
    brand.
  
  • Develop an offering for the CTM SA webstore platform to retail the U-Light product range specifi cally as an online-only purchase option.
  • Enhance the shopping experience across all the newly established
    Magento 2 e-commerce platforms.
  
  • Understand and appropriately market and retail to the lower LSM TopT market, which is traditionally not a digital market.
  • Launch an online retail concept and shopping tools for Italtile Retail, centred on driving the shopping experience via inspiration.
  
  • Explore artifi cial intelligence to better target and encourage sales of our goods and services online.

Nature of business

The Information Technology department generates value for the organisation through implementing incremental innovation that enables the Group to remain relevant while improving the customer experience, thereby increasing loyalty to the brands and supporting revenue growth.

We leverage the Group’s culture of agility and continuous improvement to deliver tangible applications to our customers. Our primary objective is to provide a seamless experience between the online and offl ine shopping experience to ensure the Group remains a trailblazer in this digital era.

Strategic positioning Target market
Stability at the core – innovation at the edge. The Group’s retail operations, their customers, and the Support Services businesses.
Key performance indicators Scorecard
  • The revitalisation of the SAP ERP environment to leverage advances in analytics and optimised business processes. Migrating to SAP HANNA will ready the organisation for a full cloud solution.
  • Management of potential downtime and system failure risk by revisiting the business continuity strategy and disaster recovery process.
  • Proactively pursuing emerging technologies such as artifi cial intelligence and social platforms to enhance current revenue streams.
2018/19 priorities Scorecard

A major priority has been to ensure the organisation remains a pioneer in the digital era by building on the momentum of the prior year’s investment in the following projects:

  • Analytics – real-time actionable insights for store operators and business stakeholders.
  • Automation – integration of systems and processes to streamline operations.
  • Mobility – untether back-office and sales processes to increase productivity
  • E-commerce – supplement growth by leveraging the existing brand and supply chain footprint.
The maturing of our technology platforms also provides the organisation with significant competitive advantage.
2018/2019 major achievements
  • The successful migration of the e-commerce platform to Magento 2.
  • The development of our purpose-built CRM solution (Smart Sales 2) for our e-commerce platform.
  • The launch of Captain’s Log, an operating programme which provides stores with valuable, actionable data in real-time.
2019/20 priorities   2019/20 prospects
  • Tighten cybersecurity policies and implement robust preventative measures.
  
  • Explore and optimise collaborative social shopping opportunities, by creating a new shopping experience on social platforms to complement our physical retail and online shopping experience.
  • Launch the enhanced mobile point-of-sale functionality.
  
  • Invest in artificial intelligence to increase productivity and introduce cost savings where possible.
  • Relaunch the Italtile Retail e-commerce site.
  
  • Launch the new U-Light webstore.
  

PROPERTY INVESTMENT PORTFOLIO

Retail properties

This portfolio affords strategic advantage to the retail brand operations by ensuring stores are easily accessible, well presented and maintained, and contribute to an aspirational shopping experience. The portfolio is continuously evaluated and enhanced to ensure optimal returns.

Manufacturing properties

The Group’s manufacturing operations comprise well-maintained state-of-the-art factories which are supplied with high-quality raw materials sourced from productive quarries in close proximity to the plants.

Environmental sustainability

The Group’s sustainability agenda is promoted through the use of cost-effective, energy effi cient practices in the construction of new buildings and the renovation of older buildings. Optimal use of natural light, solar technology, new-generation lighting, water-saving taps, rain water harvesting, and environmentally sensitive building materials is prioritised.

Our factories at Ceramic Industries use latest technology in their operations and rank among the most energy efficient in the world.

Target market
Italtile Retail, CTM and TopT store networks.

Key statistics 2019 2018
Retail portfolio market value R3,0 billion R2,9 billion
Manufacturing portfolio market value R0,8 billion R0,8 billion
Total number of stores 184* 173*
Italtile Retail 12* 11*
CTM 89* 85*
TopT 82* 77*
U-Light 1 –
Number of factories 8 8
Capex incurred (new and refurbishments) R312 million R355 million
Portfolio changes    
Properties acquired 5 5
Properties sold 3 –
New stores opened    
Italtile Retail 1 1
CTM 5 1
TopT 9 13
U-Light 1 –
Stores closed    
TopT 4 –

* Excluding webstores.

2018/19 priorities Scorecard
  • Conversion of land to trading stores (while endeavouring to reduce construction costs and improve property returns).
  • Maintaining and refurbishing older properties in the portfolio to ensure relevant market value.
  • Continue to source suitable new sites to facilitate the network expansion programme.
  • Sell non-profitable/non-viable sites to ensure the portfolio remains healthy and retains optimal value.
2018/2019 major achievements
  • 16 new stores were opened and we advanced the ongoing store upgrade programme.
  • We acquired two sites and finalised one lease agreement in East Africa for CTM expansion.
  • One site was acquired in Botswana for CTM and Italtile Retail.
  • Two high profile sites were acquired in South Africa for TopT.
  • Five sites were developed to support the Group’s new U-Light retail offering in Eastgate; Northriding; Southgate; Westgate and Bryanston.
2019/20 priorities   2019/20 prospects
  • Review opportunities to convert leased sites to owned properties for high-performing TopT stores in proven markets.
  
  • Continue to source suitable new sites in South Africa to facilitate the network expansion programme.
  • In the context of materially higher land and construction costs, improve returns through optimising store size and input costs.
  
  • Continue to support the Group’s expansion programme into East Africa.
  • Sell non-profitable/non-viable sites to ensure the portfolio remains healthy and retains optimal value.
  
  • Explore the option of developing a dedicated warehouse distribution facility for the
    U-Light business
  • Continue to maintain and refurbish older properties in the portfolio to ensure relevant market value.
  
  • Optimise returns through relocating non-performing stores and ensuring keen negotiations on rental expenses.

PROPERTY INVESTMENT PORTFOLIO