Social and Ethics Committee report

The Social and Ethics Committee ("the Committee") is pleased to present its report for the financial year ended 30 June 2022.

The Board, together with the executive management team, remains committed to retaining and upholding Italtile's ethical practices and culture across the retail and manufacturing divisions. Improvements are shared internally as the Company strives for overall excellence while  creating  a  high-performance  culture.  The incorporation of the retail and manufacturing businesses has created many synergies that will continue beyond the coming financial year. The executive management team has been bolstered by the knowledge of our incumbent CEO who has a vast understanding of the manufacturing environment and has had the benefit of working closely with our former CEO.

Compliance remains top of mind and this year has seen a full review of all areas of compliance across the Group with a specific emphasis on legal compliance where concurrence with the Protection of Personal Information Act ("PoPIA") was fundamental. The team has worked hard  at  combining  our  Group-level  compliance reporting as far as possible across all divisions.

The Committee is a sub-committee of the Board and is constituted of two non-executive directors and the relevant executive management representatives. The Committee has met three times this year and has ensured that our deliverables are in line with our charter as required by the Companies Act. The CEO, CFO, Group Company Secretary and Citizenship Manager continue to ensure that the Group remains compliant on all fronts and that our reporting is accurate and systematic.

ROLES AND RESPONSIBILITIES

The Committee's role and responsibilities cover all statutory duties under the Companies Act and King IV spearheading ongoing oversight, maintenance and monitoring of the Group's:

• ethical standards, ensuring that the Group takes measures to achieve adherence to these in all aspects of the business, thus achieving a sustainable ethical corporate culture within the Group;
• environmental  compliance,  ensuring  that the Group's carbon footprint is contained within the required legislated levels;
• employee relations, with a specific focus on our employment equity statistics, labour and industrial relations and employee wellness;
• corporate   citizenship   and socio-economic development, ensuring the Group's promotion of equality,  prevention  of  unfair discrimination, reduction  of  corruption,  contribution  to the development of the communities in which our activities are predominantly conducted or within which our products are predominantly marketed, and record sponsorship, donations and charitable giving;
• commitment and adherence to statutory health and public safety standards;
• stakeholder relations and interaction, ensuring that our interactions are guided by sound principles as encapsulated in the Constitution, Bill of Rights, UN Global Compact Principles and UN SDGs;
• consumer  relationships,  including  the Group's advertising, public relations and compliance with consumer protection laws; and
• effective leadership, ensuring a solid and ethical corporate foundation and responsible corporate citizenship.



SUSTAINABLE DEVELOPMENT STRATEGY AND UN GLOBAL COMPACT COMPLIANCE

The combined sustainable development principles have been rolled out within both the retail and manufacturing divisions where the UN SDGs are being aligned for optimal ESG practices. The ethos of the Company has always been to act with sensitivity and awareness around employee remuneration while being cognisant to responding and contributing meaningfully to environmental matters. Other corporate responsibility projects link to supporting community and school projects within the communities in which we operate.

The manufacturing business has continued to comply with  greenhouse  gas  reporting  and  carbon  tax requirements. The Group is ensuring that the use of solar power continues to be rolled out at store and factory levels. Optimal water use and management is an  imperative,  and  water  saving  and  recycling technologies are being adopted at both retail and manufacturing levels. A multi-year roll-out strategy is being followed. A reduction in the total Group-wide carbon emissions in 2022 has been noted.

STAFF DEVELOPMENT, WELLNESS, SAFETY AND TRAINING

Despite the easing of Covid-19 regulations, the business continues to focus on the required training of staff around safety and health standards. Our manufacturing business is pleased with its safety record, reducing the Disabling Injury Frequency Rate to less than 1, as we drive the business toward a zero injury-on-duty record. All safety checks are measured stringently and our representatives in each area are trained regularly including legal liability training. A full Health and Safety audit was completed in 2022 and recommendations are being actioned and implemented. All mandatory safety training on first aid, fire fighting, forklift driving, racking and stacking is planned and recorded within a safety management system. Electronic record-keeping and monitoring of the safety and health compliance is now in place and updated daily, weekly and monthly where relevant.

Within our retail business, a strong emphasis on coaching and mentoring is being sustained with a marked focus on retention and succession planning. Female store operator training remains a focal area. Our employment equity statistics remain top of mind and our human capital efforts are geared toward improving our standing. We continue to engage with the Department of Labour and Employment around our  compliance  with  our  three-year  employment equity ("EE") plan specifically around the manufacturing part of the business.

The increased use of online platforms during the Covid-19 pandemic has meant that our IT systems and platforms  are  being  continuously  reviewed  and enhanced around security and access controls. A noted increase in online training and e-learning is evident and will continue even as the business resumes face-to-face training.

Our Employee Wellness Programme has been integrated and  publicised  across  the  Group.  Management is continuing with awareness campaigns around the programme and encouraging staff to make use of the facility.

COVID-19 STATUS

The Group has reviewed and aligned its Covid-19 policy in line with government gazetted Disaster Management and Health Regulations. The Group has been compliant with a zero-tolerance approach to any transgressions across the Group. Vaccination has been encouraged. The rate of vaccinations is low but in line with the general population trend of around 33%. The Covid-19 infection rate has had a negligible impact on productivity and capacity. The Group sadly confirms that we lost three valued members of staff as a direct result of the pandemic, with one being during the current reporting period.

B-BBEE STATUS

The Group has in the current reporting period retained a level 2 rating in line with the current Company strategy and will continue paying particular attention to skills development and preferential procurement. This has been given the necessary impetus with regard to the continued development of female store operators within the retail and manufacturing space. Targets are being pursued and regular reporting to the Department of Labour as per labour legislation is ongoing.

LEGISLATIVE COMPLIANCE

A full high-level Group risk compliance review has been completed by our legal advisory team and no material findings were noted. There was a particular focus on compliance with the PoPIA and our compliance to environmental laws was reviewed and re-enforced. The Group's compliance imperatives are being continuously and rigorously monitored and managed by our CFO.

ENGAGEMENT WITH STAKEHOLDERS

In line with the Listings Requirements of the JSE, all our shareholders were engaged around the Company's performance, governance, compliance and ethical standards and conduct during the past financial year. Our newly appointed CEO has been consistent in  maintaining  our  sustained  engagement  with shareholders, investors, media, analysts and the general public utilising a hybrid of online and in-person engagements as the pandemic regulations were still in place during the year. Our CEO has ensured that the Company's performance is communicated effectively.

Our customer complaints-handling process persists and all complaints received were responded to comprehensively.  Systems  to  streamline  these processes and improve responsiveness to customers are continuously reviewed and improved.

Marketing and public relations are ongoing throughout the year. All content is updated and available via our websites. A comprehensive marketing communication strategy is in place, including emphasis and enhancement of our digital marketing strategy.

ACCOUNTABILITY OF THE COMMITTEE

The Committee is accountable to the Board and provides feedback to the Board of its meetings. The Committee makes the recommendations to the Board that it deems appropriate on any area within the ambit of its terms of reference where action or improvement is required.

AUTHORITY

The Committee conducts its affairs in compliance with its charter and has reasonable access to the Company's records, facilities and any other resources necessary to discharge its duties and responsibilities. The Committee is authorised to take such independent professional advice as it considers necessary, the costs of which shall be for the account of the Company. Save for its duties provided for in the Companies Act, the Committee shall have no executive powers with regard to its findings and recommendations.

CONCLUSION

The Committee believes the Group has continued to maintain an acceptable balance between its financial performance and its social, economic, governance, employment and environmental responsibilities.

Based on all available detailed reporting and registers, the Committee is satisfied that it has, in all material respects, achieved its objectives for the financial year ended 30 June 2022.


N P Khoza
Social and Ethics Committee Chairman

23 September 2022