Transformation

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 B-BBEE Codes and we employ an integrated approach to accelerate transformation across the Code's five criteria.

B-BBEE CODES

Our B-BBEE verification certificate is published below.

B-BBEE SCORE ANALYSIS

Italtile Ltd
B-BBEE 2023

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 35 employees (2022: 11);
• 78 employees were sponsored with bursaries (2022: 63);
• a total of 31 bursaries (2022: 22) were sponsored for children of our employees studying at higher educational institutions;
• 128 bursaries (2022: 177) were awarded to external students studying at higher educational institutions;
• in total we provided eight internships (2022: 23) and 247 learnerships (2022: 175) for both qualified students and inexperienced job seekers, with 27 of those learners (2022: 32) ultimately being employed in the Group; 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 3 397 Group employees and franchisees (2022: 3 750) during the year.

Enterprise and supplier development

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

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 partners in the TopT franchise network, suppliers of finished goods, service providers, and funds focused on investing and growing black-owned businesses.

Recognised weighted B-BBEE procurement spend on our B-BBEE scorecard was as follows:

Category	2023 Rm		2022 Rm	2021 Rm	2020 Rm	2019 Rm
Qualifying small enterprises	759		733	709	389	198
Exempted micro-enterprises	121		732	467	301	258
51%+ black-owned suppliers	1 476		1 533	1 202	894	535
30% black female-owned suppliers	902		898	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 2023 totalled R62 million (2022: R67 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 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 R33 million for 2023 (2022: R35 million) was allocated to the following categories:

• Education: 40% (2022: 40%)
• Sport: 40% (2022: 40%)
• Conservation: 10% (2022: 10%)
• Other: 10% (2022: 10%)

Refer to the Italtile and Ceramic Foundation Trust report.

PEOPLE PROFILE

Through our employment equity initiatives, we strive to align to the national economically active population statistics where possible. 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 B-BBEE status level in the year ahead, through the following key initiatives:

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 individuals from under-represented demographic groups;
• invest in learning programmes for disabled individuals from under-represented demographic groups;
• place previously unemployed individuals from under-represented demographic groups in learnerships (both internally and in hosted external programmes); and
• retain individuals from under-represented demographic groups on a permanent basis post-learnerships.

Enterprise and supplier development:

• where possible, divert spend to exempt micro-enterprises ("EMEs") or qualifying small enterprises ("QSEs"), with a particular focus on 51%+ black-owned and/or 31%+ black women-owned businesses;
• continue to encourage and support suppliers with their own transformation and empowerment initiatives (there has been pleasing progress in this regard in the 2022 financial year);
• fund qualifying EME and QSE suppliers;
• fund a majority black-owned property company (in which the Group will have a minority stake);
• contribute to incubator or similar initiatives; and
• extend favourable settlement trading terms for empowered suppliers.