Transformation

The Group regards transformation as a social, moral and strategic business imperative. Management recognises that as a responsible corporate citizen, the Group has an obligation to contribute to bringing about a more equal and inclusive society – starting within our own business. Our transformation strategy is closely aligned to the objective of the BBBEE Codes and we employ an integrated approach to accelerate transformation across the Code’s five criteria.

In 2017, a BBBEE Committee comprising senior management was constituted, and is tasked with driving transformation in the Group. The Committee meets quarterly to gauge and manage progress against set targets.

As a consequence of implementing a range of meaningful interventions and sustained management focus on transforming the business over recent years, the Group is extremely proud to have improved its BBBEE status from non-compliant in 2016 to compliant at level 2 in 2021.

This continued and consistent progress in the Group’s score is depicted below.

Our BBBEE verification certificate is provided below.

BBBEE SCORE ANALYSIS

At the end of the 2020 financial year, we committed to striving to maintain our level 4 BBBEE rating. We noted that the impact of the pandemic on the share price as well as constraints on the budget available to implement strategic imperatives to improve this rating may adversely affect the rating in the short-term.

We are pleased therefore to report, that notwithstanding these challenges, we achieved our target of maintaining a level 4 rating for 2020, and improved to a level 2 rating in the 2021 financial year.

During the year under review, the Group recorded improvements related to the following elements of the scorecard: Ownership, Management and Control, Skills Development and Preferential Procurement. We also enhanced our administration and reporting of BBBEE credentials.

Skills development

The Group continued to invest in a range of skills development programmes focused on employees from previously disadvantaged groups. These included:

• sponsored partnerships with academic institutions to further the education and develop the leadership competencies of 27 employees;
• 73 employees were sponsored with bursaries;
• a total of 25 bursaries were sponsored for our employees with children studying at higher educational institutions;
• 373 bursaries were awarded to external students studying at higher educational institutions;
• in total we provided 336 internships and learnerships for both qualified students and inexperienced job seekers, with five of those learners ultimately being employed in the Group (2019/20: 109 learners of which 10 were absorbed into the Group). The lower absorption rate of interns is reflective of the Group’s intensified per-person productivity drive during the pandemic, and the fact that a tranche of the current intake will only complete their learnerships in the second quarter of the new financial year; and
• 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. These training interventions reached 2 853 Group employees and franchisees during the year.

Enterprise and supplier development

In addition to increasing spend with suppliers with improved BBBEE credentials (including black ownership), the Group recognises the importance of meaningful Enterprise Development and Supplier Development initiatives to grow a sustainable resource of successful black-owned businesses and create jobs.

In this regard the Group supports a number of black-owned businesses with grants and/or preferential rate funding. Beneficiaries of such include the black-owned partners in the TopT franchise network, suppliers of finished goods, service providers and funds focused on investing and growing black-owned businesses.

Recognised weighted BBBEE procurement spend on our BBBEE scorecard has improved as following:

CATEGORY	2021 Rm		2020 Rm	2019 Rm
Qualifying small enterprises	709		389	198
Exempted micro enterprises	467		301	258
51%+ black-owned suppliers	1 202		894	535
30% black female-owned suppliers	580		417	339

The qualifying and recognised annual value of contributions (made up predominantly of grants and loans) for Supplier Development and Enterprise Development for 2021 totalled R58 million (2020: R36 million).

Socio-economic development

The Group’s spend on socio-economic development exceeded 1% of net profit after tax. Contributions of product and/or cash were also made to eligible schools and charities, with the largest donation made to the Italtile and Ceramic Foundation (“Foundation”). The Foundation is the Group’s broad-based black ownership scheme, whose goal is the transformation and upliftment of previously disadvantaged communities through distributions made to public benefit activities related to education, sport and conservation.

The Foundation’s spend of R21 million for 2021 was allocated to the following categories:

• Education: 40% (2020: 40%)
• Sport: 40% (2020: 39%)
• Conservation: 10% (2020: 11%)
• Other: 10% (2020: 10%)

Refer to the Italtile and Ceramic Foundation report.

PEOPLE PROFILE

Through our employment equity initiatives, we strive to align where possible to the national economically active population statistics. Equal gender representation is a focus in recruitment and appointments across the Group, especially at management level. Maternity benefits were also recently revised in order to attract more females into the business.

The Group’s employment demographic is as follows:

OUTLOOK

The Group will strive to maintain its current BBBEE status level in the year ahead; the following key initiatives will be continued in order to further improve our score:

Management control

• advance and/or appoint black females for management positions at all levels; and
• employ black disabled individuals.

Skills development

• invest in learning programmes and bursaries for black individuals;
• invest in learning programmes for disabled black individuals;
• place previously unemployed black individuals on learnerships; and
• retain black individuals on a permanent basis post-learnerships.

Enterprise and supplier development

• divert spend to EMEs or QSEs;
• divert spend to 51%+ black owned and/or 31%+ black women-owned businesses;
• impose minimum empowerment ratings requirements for suppliers with spend in excess of a pre-determined amount;
• fund qualifying EME and QSE suppliers;
• fund TopT BEE partners;
• fund a majority black-owned property company;
• contribute to incubator or similar initiatives; and
• extend favourable settlement trading terms for empowered suppliers.