Imperial

Our material issues

Defining materiality

Imperial Logistics defines material issues as those factors most likely to influence the conclusions of our stakeholders in assessing our ability to create, sustain and enhance value over time. In determining if an issue is material, its potential to impact strategy (including opportunity and risk), performance (financial and non-financial), prospects (in the short, medium and longer term) and ultimately value creation is considered. Material issues are primarily forward looking and incorporate factors within and beyond leadership's control.

Linking materiality to stakeholders and capitals

More specifically, material issues are the factors most likely to influence the decisions of a respective stakeholder in relation to the capital inputs they provide to the group and the outcomes they derive in return. The group's legitimacy as a well-governed multinational group and ethical corporate citizen, in our industries and markets, is fundamental to our ability to secure the capitals we require and to manage our impacts on these capitals.

These capitals and related stakeholders, include:

Determining material issues

The following inputs informed the determination of the material issues for the group for the year:

• Imperial Logistics' renewed vision and strategy.
• Interviews with key executives to distil the concerns, priorities and action plans of group leadership.
• Material matters raised by key stakeholder groups, including clients, business partners, employees, investment community and the media, elicited directly through engagement or indirectly from the relationship owners in each case.
• Top business risks.

The group's executive committee and board approved the material issues, which informed the preparation of and are discussed throughout this report and supplementary sustainable development information.

Material issues structure

The diagram below provides an overview of the material issues grouped by theme and demonstrates how they relate to one another. The table that follows shows the sub-issues and related leadership priorities, which indicate how each material issue is being managed.

Detailed material issues and related management priorities

Material issue			Management priorities
ACCELERATE STRATEGIC DELIVERY
Deliver on short-term operational and financial targets, while advancing longer-term strategic initiatives			Maintain the strong performance in African Regions and improve performances in South Africa and International. Continue to drive initiatives to enhance competitiveness and improve margins. Manage the impact of change on our people and clients, and therefore on operational performance and strategic delivery.
Systematically align our portfolio of businesses to the refocused group strategy			Exit unsustainable business model in CPG business in South Africa. Ensure operations are sufficiently aligned to the primary strategic focus on Africa and selected emerging and developed markets, and align the international portfolio accordingly. Consider sale or closure of non-core businesses to release capital and improve return on effort.
Invest consistently in core strategic enablers notwithstanding short-term constraints			Drive fit-for-purpose digitalisation according to regional IT strategies. Implement new innovation strategy and funding model to enhance competitiveness and differentiation, and take advantage of disruptive trends.
Ensure agility in relation to structural market changes			Continually assess longer-term risks and opportunities and adapt accordingly, despite short-term operational constraints. Understand and anticipate the potential impact of technological advances on business models in targeted industries.
Maintain capital management discipline for financial flexibility			Ensure operational efficiency and cost control to improve operational resilience and cost competitiveness. Maintain optimal asset mix in line with client requirements, revenue commitments and targeted operating margins. Maintain disciplined working capital management. Maintain leverage ratio of net debt to EBITDA of <2,5 times through the cycle. Proactively monitor and mitigate liquidity and currency risk across the group. Apply strict criteria to assess potential acquisitions and capital investments, to ensure they are strategically aligned, value accretive and meet investment hurdles.
ALIGN STRUCTURE TO SUPPORT STRATEGY
Simplify and align organisational structures to deliver our strategy			Bed down new commercial and operational operating model to support organic growth, competitiveness and efficiency. Leverage new management structure to drive cross-regional growth opportunities in targeted industry verticals. Achieve the appropriate balance between centralised and decentralised functions, for example in human resources, IT and procurement. Enable knowledge sharing, skills transfer and best practice implementation across geographies, industries and capabilities.
Entrench group standards (for ethics, governance, social and environmental management)			Further embed group-wide standards and oversight of local operating procedures, ensuring compliance with highest minimum international requirements and internal accountability frameworks. Roll out training to build local awareness of and adherence to group requirements.
INVEST IN PEOPLE, PARTNERSHIPS AND CULTURE
Establish the foundations to drive the "ONE Imperial" approach			Drive the overarching people strategy, enabling alignment and integration across the group. Provide the framework and tools to achieve the desired culture and the ONE Imperial – "one business, one brand" approach, as well as an empowering working environment based on trust and mutual respect. Improve communication at all levels of the organisation to promote inclusivity and support collaboration, knowledge sharing and encourage employee feedback. Develop a clear employee value proposition incorporating the outcomes of an employee culture survey.
Attract, develop and retain employees with the right management and technical skills to drive strategic delivery and propel future growth			Deliver training interventions that support business needs and customised client solutions, drive innovation and assist career progression. Drive intra-group talent mobility to provide development and succession opportunities across the group. Implement best people practices across the group.
Develop current and future leaders to drive the group's strategy, the desired culture and the "ONE Imperial" approach			Ensure appropriate board structure and membership to reflect an appropriate mix of skills and experience, including ongoing succession planning to fill any identified gaps. Implement effective talent identification and retention practices which enable informed succession planning for the CEO, direct reports and other levels of management for the immediate and longer term. Effectively manage succession to support the need for change and at the same time retain an intrinsic entrepreneurial flair. Deliver leadership development programmes across the group to drive strategic objectives, enhance leadership and behavioural skills and model the desired shift to an ethical, collaborative, innovative and client and delivery-driven culture. Develop appropriate integration and development plans for founder/owner/managers in acquired businesses.
Enhance transformation and diversity across the organisation			Drive transformation and diversity in line with local requirements and across operations. Support sensitivity to diversity through the promotion of an inclusive culture.
Embed best people management practices across the group to underpin a competitive employee value proposition and position the group as an employer of choice			Ensure effective human capital practices for leadership development, employee engagement, talent management, performance management and succession planning across all levels of the organisation and in line with the "ONE Imperial" approach. Limit the impact of rationalisation on our people to the greatest extent possible. Monitor and respond appropriately to global and local workforce trends.
Leverage partnerships to deliver growth			Combine longstanding client relationships, specialised capabilities and geographical reach to strengthen our competitive positions in selected industries. Leverage partnerships with technology developers and clients to support operational excellence and innovation. Ensure business partners, specifically sub-contractors, align to operational, transformation and ethical performance requirements.
OPTIMISE AND INTEGRATE PROCESSES
Continually improve process efficiency			Formalise businesses processes across functions and regions. Pursue pragmatic and cost-effective approach to continuous improvement and internal efficiencies, supported by digitalisation. Deliver the appropriate mix of standardised and customised system solutions that are fit-for-purpose.
Demonstrate defensible safety practices, socioeconomic value creation and environmental stewardship			Embed safety practices and mindsets in appropriate areas, such as driver safety and product responsibility. Broaden alignment to global safety and environmental standards across operations. Support relevant socioeconomic development and environmental imperatives within each country of operation.
Ensure adherence to governance processes and other internal controls			Ensure compliance to local regulation and governance standards. Continue to provide specialised workforce training and management, including health, safety and environment (HSE) training and management. Manage the complexity and cost impact of regulations and local policy. Maintain and enhance robust control systems through regular audits conducted by risk teams.
FAIR AND RESPONSIBLE REMUNERATION AND REWARD PRACTICES ALIGNED TO PERFORMANCE
Implement standardised KPIs to drive strategic execution within individual businesses			Consistently deliver on financial KPIs underpinning sustainable revenue growth, enhanced profitability, cash flow and a stable dividend. Prioritise client satisfaction and commercial measures to drive increased competitiveness and sustainable revenue growth in all operations. Systematically implement relevant and robust KPIs, aligning management scorecards and incentives with strategic objectives.
Ensure fair and responsible remuneration practices			Ensure fair remuneration at all levels. Incentivise performance by aligning reward structures with strategic delivery. Adjust executive remuneration policy to conform to best practice including material non-financial KPIs over time. Report accurately and transparently to ensure responsiveness to legitimate concerns of all stakeholders. Continue active board engagement with shareholders on remuneration policy, and amend accordingly to align interests. Ensure quality of service and performance through defined KPIs, managed and measured, for both employees and business partners.
DEEPEN LEGITIMACY
Maintain credibility and reputation for ethical, effective and independent leadership at board level			Demonstrate board independence and effectiveness. Ensure board composition and succession is in line with strategically relevant skills and experience, race and gender diversity. Continue to inculcate and monitor ethical practices and governance standards. Maintain high standards of accountability, transparency and integrity in running the business and reporting to regulators, equity and debt investors, and other key stakeholders.
Maintain good governance standards at corporate and operational levels			Continue to meet stringent industry requirements to enhance reputation among multinational client base. Continue to monitor and ensure ethical conduct in all local operations to minimise group reputational risk.
Maintain corporate citizenship credentials			Continue to improve B-BBEE performance in South Africa, as a moral and a commercial imperative. Comply with laws and regulations across multiple jurisdictions, demonstrating consistently ethical business conduct. Monitor and engage with regulators on implementation of upcoming legislation. Maintain constructive relationships with organised labour, regulators and governments. Promote an ethical and non-discriminatory culture, supported by the anti-bribery and corruption policy and related training initiatives. In collaboration with selected partners, implement new community investment strategies capable of making a demonstrable difference in people's lives.
Maintain and enhance industry leadership credentials			Maintain our complex solution delivery credibility that commands the attention of global clients, originating from proven industry expertise and the ability to consistently add value. Maintain our status in South Africa as a leading logistics provider across the entire supply chain. Maintain our reputation as a leading distributor of pharmaceuticals and consumer goods in Southern, East and West Africa. Internationally, maintain leading positions in exacting industries such as chemical and automotive.