Integrated Annual Report
2025
CUSTOMERS HAVE REWARDED OUR FOCUS ON
DELIVERING AN EXCEPTIONAL CUSTOMER EXPERIENCE
across many touchpoints
ENSURING VOLUME GROWTH ON TILE SALES AND
INCREASED MARKET SHARE DESPITE THE
CHALLENGING TRADING CONDITIONS
Lance Foxcroft
Chief Executive Officer
Customers remain loyal to our trusted brands, searching out the value of big savings, reliable quality, leading fashion and customer service when choosing where to spend their hard-earned savings.
Our resilient, skilled and motivated teams remain our competitive advantage and ensure we are well placed to capitalise on opportunities when the building sector recovers and trading conditions improve.
Structural excess capacity in both manufacturing and retail is fuelling an increasingly competitive market with deflation in tile prices and aggressive competition for market share. In this challenging environment, our primary focus was on improving the Group's competitive position to retain our industry leadership through our trusted retail brands and quality retail and manufacturing assets. Customer satisfaction at every touchpoint remains our retail focus and we will continue to extract value through an unrelenting drive for efficiencies and cost leadership. It is essential we strive to be the lowest cost producer of tiles, sanware and adhesive products through improved operational efficiencies and investment in development of our teams and technology.
In the changing global environment, over-capacity and subdued demand have exerted pressure on tile manufacturers worldwide. As many seek to find alternative markets, tariffs have been applied in local markets and dumping has increased in those without tariffs, resulting in increased competition in domestic markets. Reduced shipping and freight costs, mainly from India, and a stable exchange rate has improved the viability of imports.
In the context of South Africa's subdued economy, consumer confidence and spend in the building and construction sector remained muted. This was tempered in the first half of the financial year, when consumer sentiment and confidence turned more positive mainly due to a stable political environment following elections and increased disposable income as a result of the two-pot pension fund reforms.
Growth achieved toward the end of 2024 stalled as global and South African macro-economic conditions deteriorated in 2025. Almost no GDP growth, low construction industry confidence index levels and worsening sentiment in the residential sector meant weak demand and low activity levels in the sector.
The local political environment and consumer confidence deteriorated as a result of instability in the GNU, uncertainty around VAT increases and the delayed release of the South African budget. Deteriorating global macro-economic conditions arising from trade uncertainty, changed tariffs and geopolitical conflict further weighed on the local economy. Concerns expressed by management regarding sustainability of the improvement in the last quarter of 2024 were well-founded as consumer confidence dipped resulting in only 0,1% growth in GDP for Q1 2025. Weak consumption resulted in consumer price inflation remaining low at 3% year-on-year for June 2025. Manufacturing production has fallen significantly, with six consecutive months of contraction. Significant progress seems to have been made in reducing load shedding.
The value of building plans approved in South Africa dropped by 20,8% year-on-year in April 2025. Permits for non-residential buildings declined a significant 42,5% year-on-year in April 2025, the sharpest decline of the year (permits issued declined 17,3% in March) while, similarly, permits for residential buildings declined 19,5% year-on-year in April 2025. While approvals for additions and alterations rose by 2%, these movements have been volatile.
Intense competition in the tile manufacturing and retail segments has continued unabated during the financial year. Newly commissioned capacity in Zambia, Zimbabwe and Mozambique has led to excess capacity and production, which now far exceeds consumer demand within the Southern African Development Community ("SADC") region. Product dumping and over‑stocking by most retailers, wholesalers and manufacturers continued to drive price deflation, with resulting margin pressure. This over-capacity has resulted in some consolidation and, in June 2025, Johnson Tiles South Africa ceased operations. As a result of the closure of this 110-year old business, regional tile manufacturing capacity reduced by five million square metres per annum, leaving only two local producers. The adhesive industry, which has no regulated standards on its products, has seen a proliferation of adhesive producers offering inferior, low-priced products.
The introduction of tariffs on imports by Zambia and Zimbabwe to protect their local production has affected the ability of local producers to export product into these countries, resulting in loss of market share in these export markets. The establishment of major new manufacturing facilities in neighbouring countries due to their investor-friendly environments, highlights South Africa's difficult and relatively unsupportive investment climate for manufacturers.
Continued proliferation of new tile retailers, including regional retail chains extending their footprint, continues to place margins under pressure and will influence sustainable retail. Shifts in the local economy mirror what we have seen in the US and Europe, where retailers are downsizing their footprint to boost efficiency. Quality space in rural areas remains difficult to source. We will continue to strive for the right stores in the right locations rather than just for more stores.
The profusion of informal retailers being supplied by the new manufacturing competitors, especially in the rural areas, has increased competition for our TopT brand. Our strategy has been to continue to build on our established strengths in this market and continue to expand the TopT footprint. TopT has a strong reputation as a conveniently located community‑centred brand, offering a wide range of complementary home-finishing products and a high level of quality assurance and customer service in the entry-level market. The Group's strong buying power affords customers bigger ranges at better prices with guaranteed quality and after-sales service.
Our strategy has been to continue to build on our established strengths in this market and continue to expand the TopT footprint.
Our response to defend market share has been to leverage our world-class technology to enhance quality and product innovation, to drive operational efficiencies to offset the impact of deflationary pricing, to bolster the Company as a selling organisation and to focus on exceptional customer experience. We have prioritised being more efficient at every customer satisfaction touchpoint: fashion, presentation, range, value, service and quality.
In our experience, consumers have continued to be price-conscious and constrained by tight budgets while searching for trusted quality and good value. Customers are increasingly using digital platforms and social media channels to research products and prices, followed by visits to stores to personally view and handle our products. Social media has played a part in influencing shoppers to expect a quality shopping experience. Our aim is to ensure that shoppers have a range of convenient options – from conducting their entire transaction online, to a blend of online and in-store interactions. Our market-leading webstore offers an incomparable, seamless sales experience. The improvement in our unique visitor and transaction statistics is a pleasing endorsement of our investment in this trading platform with its innovative user interface. As industry leaders, our significantly improved online content continues to inspire purchasing decisions as we provide guidance, insights and advice to DIY customers. Our online store enables service to new locations while still delivering with our omnichannel from existing brick-and-mortar stores.
Another consumer trend is the transparency and affordability of delivery solutions for the "last mile" to customer homes or building sites. We have seen continued innovation in both mobile solutions and transport management systems, both at retailers and third-party logistics solution providers. While a new "last mile" solution was launched this year, we aim to use synergies in Group logistics to reduce the cost of delivery to customers and improve the delivery experience. In response, we have leveraged our vertically integrated business model through which our Manufacturing division directly services Group stores and third-party customers, taking advantage of our transport and vendor-managed inventory and logistics systems and processes.
New developments continue in response to demographic shifts as retailers push deeper into rural towns and townships. Price-sensitive customers often weigh transport costs as a significant factor alongside product quality and price. While some of these areas remain underserved, trading densities are lower and sustainability of specialist retail more difficult. We continue to push to deliver the same quality and shopping experience in these areas, and customers are supporting us. Retailers are shifting expansion from large malls to towns outside the main cities and to strip malls, with continued demand for convenience retail. We may see more stores overall, but these stores will be smaller. We will continue to invest in research to identify opportunities for new stores closer to customers. In TopT's market, this is relevant for customers in the entry-level market seeking a convenient, affordable shopping experience in their local community, obviating unnecessary transport costs.
Consumer preferences continue to trend to larger format tiles. We continue to import a leading range of larger format and specialised finished product for customers who prefer a unique and different product. Our investment in rectification technology at Vitro and Gryphon was complemented by our product development team creating a range of larger format rectified products, as well as the launch of polished porcelain tiles to compete with growing imports from competitors. Customer preference has shifted from gloss tiles to polished tiles and we have responded to this trend by investing in extending polishing capability at the Gryphon factory, which is expected to be commissioned by calendar year-end.
The trend in payment options is towards increasing variety, with a strong emphasis on digital and mobile solutions, convenience, and security. Consumers are actively seeking more choices and are driving the adoption of alternative payment methods such as Buy Now Pay Later ("BNPL") digital wallets and real-time payments. We have increased the payment solutions we offer across the Group and are continually researching new offerings.
The Group's results are reviewed in detail in the CFO's report.
In my commentary, I have highlighted the key numbers that provide context for my discussion on performance and our strategic response.
System-wide turnover for the year decreased 2% driven by a small increase in retail revenue but a decline in revenue in supply chain businesses and Ceramics.
Retail sales improved by 1% and we retained our market share despite the challenging trading environment. The number of sales transactions increased by 1,3% while basket size decreased by 0,7% as price-sensitive customers bought down. Retail margins continued to be under pressure and declined by 0,7%, with an 0,2% increase in selling price inflation. Retail profits for the period increased by 1%.
Our East African operations delivered a good performance due to the stronger regional economy, strategic trading enhancements and an improved product range, after being negatively impacted last year by difficult trading conditions and socio-political unrest in the region. We continue to bed down relatively new stores and assess opportunities to open new stores in Kenya. Botswana's margins have been impacted by independents dumping products from Zambia. A new CTM franchise will open in Eswatini after closure of the financial year following a period of over a year with no store in this country.
Our webstore continued its strong performance and increased traffic and sales, underpinned by improved digital content offering an innovative online experience and personalised sales expertise.
Our goal in our stores is to ensure that every customer has an exceptional shopping experience. In offering high-quality and affordable products, we hope to inspire our customers with fashion that elevates their home or business to a place that delights and excites them. We provide an unrivalled shopping experience, together with valuable after-sales support as we strive to add value through various points of differentiation, low prices, trusted quality, meaningful warranties and product service experts.
In the Manufacturing division, sales declined by 5% while improvement of margin at Ezee Tile supported a profit increase of 2%. Trading conditions in Ceramics' market continued to deteriorate mainly due to the excess manufacturing capacity in the Southern African region. Despite pressure from inferior quality entry-level imports in the sanware division, strong sales growth supported double-digit improvement in profit from Betta Sanitaryware.
Reduced margins weighed heavily on the performance of the tile division, with a 5% reduction in tile volume sold and, despite moving to larger formats, a decline of 2,1% in average selling prices per square metres for tiles. Export sales decreased significantly as tariffs were imposed in our two biggest export markets, Zambia and Zimbabwe. As the Zimbabwe tariffs only took effect late in the year, they are expected to negatively impact year-on-year sales in FY2026.
The Ceramic team responded to the reduced volumes by lowering costs and improving efficiencies with assistance from our supply partners. Despite these efforts to control costs, like-for-like margin value decreased. The rejection by NERSA of a historic price increase by Sasol Gas allowed a once-off release of a R45 million provision, positively affected Ceramic's results.
Group operating costs reduced 2,8% year-on-year. Cost leadership is a core discipline, driven hard by management in all our operations.
Ezee Tile achieved a small increase in revenue but significant improvement in margins, following the further efficiencies in the Vulcania factory and regional factory upgrades. Performance of the Silica Quartz sand mining and processing businesses was disappointing and an Ezee Tile management priority will be to improve efficiencies and unlock value from this acquisition.
In the integrated supply chain, revenue from our import businesses, Cedar Point, International Tap Distributors ("ITD") and Distribution Centre ("DC") decreased 2,9% due to substitution of imported tiles with product from SADC suppliers. DC unlocked efficiencies through in-sourcing warehouse operations in Durban, better stock turn and improved freight, and successfully completed the operational integration of Cedar Point Durban into the DC warehouse resulting in cost savings. Cedar Point grew sales through improved product availability and rationalised ranges, enabling faster introduction of new, fashionable products. ITD grew sales volumes from retail stores and maintained margin despite a decrease in average selling price and ongoing exchange rate volatility. Late in the financial year, we implemented a change in the Tivoli brand's strategic direction to ensure that the brand remains relevant.
Group operating costs reduced 2,8% year-on-year. Cost leadership is a core discipline, driven hard by management in all our operations. The priority focus was on containing logistics and property costs. Net finance costs improved as a result of targeted management of our credit facility.
Group trading profit for the full year was similar to prior year at R2 061 million. With a 1% decrease in weighted number of shares, EPS increased 3% on the prior year.
Total inventory holdings decreased 3% to R1 228 million as a result of focus on improving system-wide stock turns. Projects to further improve logistics to reduce lead times and improve stock turn are expected to deliver further inventory reduction despite plans to open additional stores. The Group continues to benefit from its integrated supply chain with 86% of total procurement sourced from local manufacturers and suppliers. Optimal product mix and range were supported by business optimisation.
Capital expenditure ("capex") of R234 million (2024: R597 million) was incurred during the year on the retail property portfolio and factory upgrade projects, comprising investment in expanding production capabilities in our tile manufacturing business and ongoing capex to enhance the retail property portfolio.
At 30 June 2025, the Group's cash balance increased by 18% to R2,2 billion (2024: R1,8 billion). Material cash outflows for the year include:
The outflows were partially offset by cash proceeds of R64 million from the sale of property, plant and equipment (2024: R76 million). The Group's net asset value per share at 30 June 2025 was 705,0 cents (2024: 707,5 cents).
At the end of FY2024, strategic objectives were identified that required the execution of operational excellence across our retail and manufacturing assets to drive improvement in the business. These objectives are linked to the executive directors' performance and remuneration targets, as discussed in the Remuneration report. The progress against these objectives is outlined below.
During the year, trading conditions in Ceramic's market continued to deteriorate mainly due to the excess manufacturing capacity in the industry.
Utilisation of Ceramic's installed tile capacity reduced to 66% for the year (56% for the last quarter). Production on one kiln at each of the Samca Wall, Pegasus and Vitro factories was mothballed to right-size capacity until market conditions and demand improves. Short stoppages of a kiln at each of Gryphon, Samca Plus and Pegasus were required to manage inventory.
Progress has been made in strengthening and developing the management team and senior factory operators.
Quality improved as our product development team introduced a new product offering and launched additional fashionable products. We continued our investment into rectification technology at Vitro and Gryphon and will launch a range of polished porcelain tiles to compete with the growing imports from competitors in the surrounding countries. We continually update our technology to ensure that we remain relevant and have quality products to compete. However, market share continued to decline due to predatory pricing and dumping in the local tile market.
While the immediate threat to natural gas supply has been delayed following Sasol's announcement to extend supply to June 2028, we continue to monitor the situation and will review the trial project using a coal-fired HAG in 2026. We have planned one pilot project for the next financial year to convert spray driers with the aim of bedding down the technology.
We will continue to monitor developments in supply and pricing of piped natural gas, liquid natural gas, trucked natural gas, methane rich gas, biogas and synthetic gas from coal to assess options for affordable gas supply.
We are disappointed that sales, profit and margins at CTM decreased, reflecting constrained consumer disposable income. Tile sales remained flat year-on-year. We undertook a number of interventions as part of our turnaround strategy. Strengthening our operators and operations teams is an ongoing process, which has involved substantial focus on recruitment and training.
CTM's pivotal customer satisfaction programme, CTM Xperience, aims to enable and inspire our employees to deliver exceptional service to delight and satisfy our customers. The programme is in its early stages but has already resulted in a higher net promoter score and improved Google ratings. This is a continuous process to entrench our customer service culture and we believe there is more value to be extracted.
It is management's conviction that by becoming a better selling organisation, we will grow sales when consumer discretionary spend and sentiment improve. A programme was designed with an initial six-week sales skills clinic focused on strengthening our teams' interaction with customers and enhancing their ability to provide support in the customer experience. This project continues into FY2026 as we bed down transfer and practice of selling skills as part of our retail culture.
Pleasing growth in online sales was supported by development of our omnichannel model and leading webstore experiences. Significant progress was achieved in increasing the quantity and quality of content to enhance customer experience, and adapt the digital experience specifically for mobile device users, incorporating AI to improve imaging quality, content and search options. Our highly trained online sales team provides a differentiated shopping experience and personalised service that consistently receives exceptional customer reviews. Adoption of the BNPL payment option surprised on the upside and we will continue to explore effective and affordable payment alternatives.
Despite more independent and informal wholesalers opening during the year, TopT posted a good performance as volumes sold increased 3%, bolstered by the record sales month in December 2024 driven by cash withdrawals from the two‑pot pension fund changes. The business continued to improve its home-finishing offering, particularly in bathroom and vinyl wall products. During the period, we opened four new stores in Umzimkhulu, Manguzi, Sekororo and Schoemansdal.
After a period of financial and operational mentorship, we are proud that one of our empowered partners has become a master franchisee in Southern KZN.
Ezee Tile's products are not only well priced but are recognised in the market for their superior performance and consistent quality. During the year, the business targeted increased market share in the specifications and projects segment. With the new factory at Vulcania maturing in production systems, improved best practice was extended into the smaller regional factories. Logistics and stock management across the Ezee Tile operations were improved to reduce inventory and decrease lead times.
As part of achieving optimal performance, we recruited employees with critical skills and continued upskilling staff through training and development. We have also made good strides in entrenching the Group culture across all branches, leading to improved disciplines and housekeeping standards.
Ezee Tile's products are not only well priced but are recognised in the market for their superior performance and consistent quality.
Reducing inventory and improving end-to-end logistics were key priorities for the year and involved planning, co-ordination, further integration of drop off points, and "last mile" delivery.
Vendor managed inventory ("VMI") benefits include reducing stockholding at stores and moving the right product once, to the right place, just-in-time. Ceramics has implemented VMI and now uses it to supply all sanware and fast-moving tile products into the Group's stores. Ezee Tile implemented a warehouse management system ("WMS") in Vulcania and VMI driven from Vulcania to improve stock turn and stockholding in branches. The consolidation of the DC and Cedar Point into one facility in Durban has improved efficiencies and our logistics competency, leading to reduced stockholdings, lower costs and better forecasting.
Developing our teams, building competencies, securing talent, strengthening the leadership pipeline and embedding the culture of accountability, ownership and results-focus remained a priority during the year. Continued investment resulted in good progress in improving the competence and strength of our human capital support function to facilitate our growth targets. Our culture centres on small, effective and highly motivated close-knit teams that operate with shared goals within the vertically integrated business.
Consolidation of payroll, communication and administrative processes has been reviewed and several projects to ensure long-term efficiencies across the Group will be completed in the new financial year. We continue to embed our culture of productivity, efficiency and customer focus. An employee communication platform will be launched to ensure transparent and effective communication while providing access to the platform to internal services and information.
Our store operator programmes for each brand continue to evolve to improve their effectiveness in developing future leaders. Retail excellence and sales training are core disciplines with our sales staff being comprehensively coached, providing a succession pipeline for store operators.
The detailed performance of our business units is discussed in the Review of Operations report.
The Group holds a 30% stake in ELK, which is a leading manufacturer of kitchen, bathroom, vanity, built-in cupboards, bar and storage design, in line with our intention to provide customers with complete specialist home-finishing solutions. ELK reported improved sales and profits for the year and continued to grow its footprint, including on some of our multi‑node retail sites, which affords synergies for both parties.
We expect continued headwinds to subdue growth, margins and profitability in the year ahead. We believe that a rigid focus on the controllable aspects of our business will position us to capitalise on opportunities when the trading environment improves. Our priorities will be to strengthen leadership through personal development frameworks, invest in our brands and product development, optimise operational efficiencies, improve productivity, control costs, reinforce the Group as a selling organisation, reduce inventory and grow market share. As part of our continual review of our asset base, we may consider disposals of assets that do not meet our risk, return and growth criteria.
Organic growth will continue to be driven by capitalising on our leading brand positions in South Africa and our growing brand strength in East Africa. Our strategic initiatives will ensure we invest in our new product development programmes, excellent customer service and our brand portfolio. Group synergy will be leveraged within our portfolio of complementary businesses.
Management will continue to engage the authorities to gain the government's support for a level playing field in our market against product dumped from neighbouring countries. While the latest tariffs imposed by the USA do not directly impact our business, they could have wide-ranging and devastating consequences for South Africa, crippling the economy if billions of Rand are lost in export revenue. The impact on certain regions that are dependent on exports could indirectly affect demand for our products in those areas. We will continue to monitor the situation and ensure that we are agile and ready to respond if necessary.
We anticipate introducing AI projects, which have demonstrable return on investment, to enhance our competitive ability in customer service, logistics and inventory management.
The emphasis on strong human capital management will be continued in the new year as we prioritise strong leadership, effective training programmes and excellence in attracting, recruiting, developing and retaining talent in alignment with our high-performance culture.
Italtile Retail will continue to focus on trend-setting, market-leading product with exceptional display to inspire customers to create outstanding personalised homes. Italtile retail's staff expertise is renowned for its advice and flair when partnering with each customer to ensure the customer dream is understood and translated into a successful project.
Development of advanced selling skills for experienced retail consultants in conjunction with ongoing interior design training continue to differentiate the business on service, quality and product fashion, and to drive sales and profit growth. In conjunction with a focus on higher productivity, we aim to grow webstore volumes and contribution from bathroomware sales, and improve commercial market share.
CTM will continue to focus on growth in market share through improving the people pipeline, especially in the operations team, and strengthening the skills of our team members, to ensure that customer centricity is embedded in the retail experience. Logistics remains a key focus to improve customer experience, increase in-stocks to fulfil our promise to customers, improve system-wide stock turns, reduce costs and delight customers with improved last-mile delivery.
CTM launched a new brand campaign in July 2025 centred around the three dynamic CTM homemakers: Carla, Tito and Mario. They embody CTM's value proposition: Big Savings. More Style. The aim is to connect with customers in a real and memorable way. This campaign is designed to appeal to a wide audience using multiple marketing channels. Through the campaign, we aim to differentiate CTM from competitors by blending a powerful legacy with a bold, clear value proposition and services.
TopT will continue to grow its geographical footprint and open stores conveniently located close to its customers. Engagement with local communities is core to TopT's DNA and we are investigating a loyalty programme. Marketing campaigns continue to be important as TopT brand recognition improves. We will focus on growing tile sales by improving our range and offering, and increases in bathroomware's contribution to sales are expected given various initiatives underway. As "King of Combos", TopT continues to pioneer packaged solutions for its customers. A strategic review has led to a change in paint supply partner and growth is expected in this merchandise category.
We expect the highly competitive environment to continue to be a challenge to Ceramic's performance. Ceramic will install and commission a new polishing and rectification line at Gryphon and has commissioned a new rectification line at Centaurus (Australia), as well as launching two new large format rectified tile ranges from the new line at Vitro. A new body formulation will be developed at Pegasus to produce suitable substitute tiles no longer available after closure of Johnson Tiles South Africa.
We plan to develop and launch a new super white glaze for vitreous sanitaryware, and design, build and commission a new demoulding drier.
Ceramic will continue to drive improvements in yield, productivity and cost reduction with specific focus on waste reduction to mitigate high input cost inflation and continued selling price deflation. We plan to transform Ceramic into a better selling organisation, moving customer facing employees from being order takers to agile salespeople in the face of stiff competition to defend and grow market share. The business will remain under pressure while product continues to be dumped in the country.
Ezee Tile's priorities include the building of a new factory in Mokopane and the Durban property renovation. We will focus on operational efficiencies and profitability, turning around performance at the Silica Quartz sand quarry and performance in Ezee Tile Zambia. We intend to continue the entrenchment of Group culture, with the goal of cost savings and higher profitability. Benefits of the newly implemented warehouse management and logistics solutions should be realised in the year ahead. A further goal is to increase market share through growth in the independent retailers and launch of additional products for the construction market, as well as optimising sales in integrated Group stores.
ITD's imperative is retail sales volume growth through gains in market share. In line with our Tivoli brand strategic direction, we will drive the execution of the 24-hour after-sales service promise to become the benchmark in South Africa in customer care. While we intend to maintain pricing, we will continue to focus on margin improvement through enhanced procurement and improved product range. In pursuit of profit growth, the priority will be higher productivity, intensified cost containment, inventory management and range rationalisation.
Opportunities exist to extract benefits from the vertically integrated supply chain and focus will be on improving stock turns, reducing transportation costs, extracting synergies between incoming and outgoing logistics of all business units, and improving productivity.
Our goal for the year was to reduce the Group's carbon footprint and the consumption of non-renewable resources. This was achieved by increasing the use of solar energy, harvesting rainwater, recycling water and waste management. Properties are constructed and renovated with energy-efficient and environmentally sensitive practices and materials.
We continue to improve our offering in products manufactured with lower carbon footprints and lower resource consumption.
Technology has helped operations to meet targets, cutting the consumption of non-renewable resources and re-using, recovering and recycling where possible. Ceramic factories continue to rank among the most energy efficient in the world. Rehabilitation of our raw material quarries is conducted concurrently during use.
Social impact is another important factor in our business. Our Proudly South African ethic is a key theme in our stores and communication campaigns as we further our support for the economy by selling high-quality products made by local people, creating employment, training and skills development.
We continued our CSI initiatives, contributing R25,5 million towards community programmes covering education, sport, health and conservation. A further R27 million was spent on skills development and bursaries. A key component of these initiatives is that they are consequential, measurable and sustainable.
The Group's commitment to transforming the business from within is based on management's continuous focus on a range of meaningful interventions to develop future talent.
We will continue to ensure high standards of corporate governance and responsibility.
The challenging global and South African macro-economic environment experienced in the first half of 2025 is expected to continue throughout the next financial year amid global uncertainty and geopolitical conflict. The trading environment is expected to remain challenging in the short to medium-term as intense competition persists due to the imbalance between excess supply and weak demand. South Africa has one of the least manufacturing-friendly economies, with an onerous regulatory environment, deteriorating infrastructure, uncertain energy supply and spiralling municipal costs. This unstable environment is detrimental to manufacturing growth and is leading to the acceleration of de-industrialisation. South Africa persists in allowing unequal playing fields due to uncontrolled dumping of product in the country, which, coupled with import tariffs imposed by neighbouring countries, worsens the trading environment and places margins under pressure.
In the longer term, it is our view that there will be further consolidation in our industry and rationalisation of capacity. As an industry leader, we are ready to take advantage of opportunities in the market.
We have sound assets, competent, engaged and motivated teams, robust iconic brands, industry-leading technology and products, and the competitive advantage of a vertically integrated supply chain. Productivity and efficiency are critical in an environment where sales and GDP growth are limited amid fierce and growing competition. It is our intention to remain a low-cost manufacturer and highly efficient in our supply and retail businesses.
We are confident that if we execute retail excellence disciplines better at every customer touchpoint and continue to reduce inefficiencies in our business, we will build further momentum to deliver increased sales, profit growth and gain market share. We will focus on improving customer experience, operating efficiencies and logistics and develop and grow our teams' core competencies in sales and operating excellence.
Ms Nkateko Khoza resigned as an independent non-executive director. I would like to thank Ms Khoza for her contributions and insights over the past seven years and wish her well in her future endeavours.
Ms Mamedupi Matsipa was appointed to the Board as an independent non-executive director on 22 August 2025. Ms Matsipa will be a valued addition to our Board and is warmly welcomed.
I would like to express my appreciation to our team for a resilient performance and their dedication to achieving an unparalleled shopping experience for our customers during a challenging year. Their loyalty and enthusiasm in ensuring our business remains relevant, competitive and sustainable is highly valued.
Our Chairperson, Luciana Ravazzotti Langenhoven, continued to support management and share her passion and flair for the business. We are inspired by her presence and insights. We continue to benefit from the wise counsel of our founder and former Chairman, Giovanni Ravazzotti, and are privileged to gain from his experience earned over more than 50 years in the industry. I would also like to convey my appreciation to our Board members for their wisdom, guidance and endorsement of our strategy.
My fellow executives, Brandon Wood, COO, and Lamar Booysen, CFO, provide valuable debate, collaboration and encouragement for which I am most grateful.
Lance Foxcroft
Chief Executive Officer
