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Page 1: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017Sustainability

Report

EDITION10

th

By Florim Ceramiche spaFinancial Department - supervisionCommunications Department - editorial coordinationOur thanks to all contributing staff members

Fiorano Modenese (Modena Italy) May 2018

Contents

Letter to stakeholders

Our Sustainability Report

MADE IN FLORIM

Our history

Our locations

Our brands

Our design service

Our 2017

GOVERNANCE

Code of Ethics

Management System Policy

Corporate bodies

Corporate structure

Stakeholders

Materiality approach

REPORTING

In brief

Economic Responsibility

Comments on the economic data

Value generated

Environmental Responsibility

Certifications

Environmental management

Energy management

Social Responsibility

Employees amp corporate welfare

Local community amp culture

Product responsibility

Quality System

OUR COMMITMENTS

The promises we kept

The targets we set ourselves

FLORIM USA

Profile and Economic Responsibility

Environmental Responsibility

Social Responsibility

Quality System

Other activities

GRI international sustainability indicatorsSDGs

5

6

8

9

9

9

10

13

13

14

14

15

16

17

18

18

19

21

22

22

24

27

27

30

32

33

35

36

37

38

40

43

43

44

2017 Sustainability Report4

Casa dolce casa ndash Casamood | Artwork Collection

2017 Sustainability Report 5

This is now the tenth edition of our Sustainability Report a milestone marking a period of huge changes within the Group which began just as the dramatic crisis which hit the world economy was starting to wreak havoc terrorizing the markets It is with great satisfaction that I read the economic and financial figures covering the years from 2008 mired in uncertainty to the present day reflecting a curve of constant improvement in all fundamental variables I have even greater praise for the ethical approach adopted throughout all Group companies demonstrated in their many charitable environmental sustainability and community projects We are reaping the returns on the huge investments made in the past and continued in 2017 which apart from the major improvements at all locations was dominated by the ambitious Industry 40 project for the manufacture of large slabs in a new building at Mordano (Bologna) These investments the ever-increasing number of public events the meticulous research and development of innovative products and the dedicated hard work of all employees have given us the brand image and recognition which accredited sources tell us has earned the Florim Group its rightful place amongst Italys design elite There is no doubt that the constantly shifting market equilibriums continue to present serious challenges and we must never take our eye off the ball if we are to achieve the targets we set ourselves which you will find stated in this Report I would like to extend my thanks to everyone who takes the time to read this document and in particular to all Florim Group personnel in whose ceaseless commitment sense of belonging and loyalty to the companys values I take great pride

My sisters join me in saying a final loving farewell to my mother who passed away on 11 February 2018 and whose patience humanity and determination remain in the hearts of all who knew her

Enjoy the Report and thank youClaudio Lucchese

Letter to stakeholders

2017 Sustainability Report6

Our Sustainability Report

Methodological framework and reporting perimeter

Writing and distributing its Sustainability Report enables Florim to communicate with its stakeholders with transparency describe the results achieved and set out future goals in an approach based on engagement and continual improvement It is in this spirit that we have always sought year-on-year - for 10 years - to improve this document and ensure that it is concise and easy to read

As in previous years the report (also issued in English) is based on the Global Reporting Initiative GRI-G4 (G4 edition) guidelines The reporting process with ldquoin accordance-corerdquo compliance level is co-ordinated by Florims communications department and supervised by the finance department with the invaluable assistance of many colleagues The Report refers to all Florim companies on the same principle as the Groups consolidated financial statements The figures provided in the reporting section refer to our Italian location while the fourth section contains a brief Sustainability Report for Florim USA

This final edition is also published in a shortened version for an even more immediate understanding of its contents Moreover the GRI indicator table also includes the corresponding reference to the SDGs (the 17 sustainable development goals set by the UNs 193 member states)

In December 2017 Florims Sustainability Report won the company the IV EDITION of the Premio Biblioteca Bilancio Sociale [Social Reporting Award] for its ldquopolicy of almost total self-sufficiency in energy a particularly significant factor since it operates in an industry (ceramics) where energy consumption is highrdquo The BBS award is sponsored by the Italian Ministry of the Environment Unioncamere Confindustria Luiss Business School Federdistribuzione and Fondazione Symbola

Premio Biblioteca Bilancio Sociale Florim Wins Top Prize

2017 Sustainability Report 7

Rex | Prexious of Rex Collection

2017 Sustainability Report8

Giovanni Lucchese pioneers the production of extruded clinker tiles and Floor Gres is founded in the heart of the Sassuolo production district

Floor Gres is the first Italian manufacturer to produce single-fired white body tiles

The Swimming Pool Division is established within Floor Gres

Floor Gres is one of the first companies in the world to start the manufacture of porcelain stoneware tiles

Claudio Lucchese son of the founder takes over the reins at Floor Gres after his fathers untimely death

Floor Gres acquires Cerim Ceramiche

Floor Gres and Cerim merge to create Florim

Florim acquires Rex Ceramiche Artistiche

The Project Division forerunner of todays Florim Solutions is created

Incorporation of Florim USA a production and distribution company destined to become a leader on the American market

Florim acquires Casa dolce casa and Casamood

The first Florim Flagship store opens in the Brera district in the heart of Milan

The Florim Gallery multi-functional center and Florim Logistics are built in FioranoThe Fondazione Ing Giovanni Lucchese foundation is established

The first Flagship Store in Moscow is opened and the healthamptraining center is inaugurated

The Flagship Store opens in the center of New York

Florim relaunches CEDIT ndash Ceramiche dItalia and opens the brands first Spazio in MilanPresentation of FLORIM stone the Groups first worktop and countertop brand

Production starts in the new industry 40 factory at Mordano which manufactures slabs for Casa dolce casa and Casamood which are now a single brand

MADE IN FLORIM

Over 50 years of history

Over 1400 employees

425 million Euro of turnover

1161 tons of CO2 not emitted in 2017 thanks to the photovoltaic system

It takes more than figures to define a company Today passion innovation a constant commitment to improvement and corporate social responsibility are the guidelines of a new way of doing business the MADE IN FLORIM way

Our history 1962

1967

1976

1981

1984

1990

1992

1994

1995

2000

2005

2009

2013

2014

2015

2016

2017

Watch the institutional video

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 2: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

By Florim Ceramiche spaFinancial Department - supervisionCommunications Department - editorial coordinationOur thanks to all contributing staff members

Fiorano Modenese (Modena Italy) May 2018

Contents

Letter to stakeholders

Our Sustainability Report

MADE IN FLORIM

Our history

Our locations

Our brands

Our design service

Our 2017

GOVERNANCE

Code of Ethics

Management System Policy

Corporate bodies

Corporate structure

Stakeholders

Materiality approach

REPORTING

In brief

Economic Responsibility

Comments on the economic data

Value generated

Environmental Responsibility

Certifications

Environmental management

Energy management

Social Responsibility

Employees amp corporate welfare

Local community amp culture

Product responsibility

Quality System

OUR COMMITMENTS

The promises we kept

The targets we set ourselves

FLORIM USA

Profile and Economic Responsibility

Environmental Responsibility

Social Responsibility

Quality System

Other activities

GRI international sustainability indicatorsSDGs

5

6

8

9

9

9

10

13

13

14

14

15

16

17

18

18

19

21

22

22

24

27

27

30

32

33

35

36

37

38

40

43

43

44

2017 Sustainability Report4

Casa dolce casa ndash Casamood | Artwork Collection

2017 Sustainability Report 5

This is now the tenth edition of our Sustainability Report a milestone marking a period of huge changes within the Group which began just as the dramatic crisis which hit the world economy was starting to wreak havoc terrorizing the markets It is with great satisfaction that I read the economic and financial figures covering the years from 2008 mired in uncertainty to the present day reflecting a curve of constant improvement in all fundamental variables I have even greater praise for the ethical approach adopted throughout all Group companies demonstrated in their many charitable environmental sustainability and community projects We are reaping the returns on the huge investments made in the past and continued in 2017 which apart from the major improvements at all locations was dominated by the ambitious Industry 40 project for the manufacture of large slabs in a new building at Mordano (Bologna) These investments the ever-increasing number of public events the meticulous research and development of innovative products and the dedicated hard work of all employees have given us the brand image and recognition which accredited sources tell us has earned the Florim Group its rightful place amongst Italys design elite There is no doubt that the constantly shifting market equilibriums continue to present serious challenges and we must never take our eye off the ball if we are to achieve the targets we set ourselves which you will find stated in this Report I would like to extend my thanks to everyone who takes the time to read this document and in particular to all Florim Group personnel in whose ceaseless commitment sense of belonging and loyalty to the companys values I take great pride

My sisters join me in saying a final loving farewell to my mother who passed away on 11 February 2018 and whose patience humanity and determination remain in the hearts of all who knew her

Enjoy the Report and thank youClaudio Lucchese

Letter to stakeholders

2017 Sustainability Report6

Our Sustainability Report

Methodological framework and reporting perimeter

Writing and distributing its Sustainability Report enables Florim to communicate with its stakeholders with transparency describe the results achieved and set out future goals in an approach based on engagement and continual improvement It is in this spirit that we have always sought year-on-year - for 10 years - to improve this document and ensure that it is concise and easy to read

As in previous years the report (also issued in English) is based on the Global Reporting Initiative GRI-G4 (G4 edition) guidelines The reporting process with ldquoin accordance-corerdquo compliance level is co-ordinated by Florims communications department and supervised by the finance department with the invaluable assistance of many colleagues The Report refers to all Florim companies on the same principle as the Groups consolidated financial statements The figures provided in the reporting section refer to our Italian location while the fourth section contains a brief Sustainability Report for Florim USA

This final edition is also published in a shortened version for an even more immediate understanding of its contents Moreover the GRI indicator table also includes the corresponding reference to the SDGs (the 17 sustainable development goals set by the UNs 193 member states)

In December 2017 Florims Sustainability Report won the company the IV EDITION of the Premio Biblioteca Bilancio Sociale [Social Reporting Award] for its ldquopolicy of almost total self-sufficiency in energy a particularly significant factor since it operates in an industry (ceramics) where energy consumption is highrdquo The BBS award is sponsored by the Italian Ministry of the Environment Unioncamere Confindustria Luiss Business School Federdistribuzione and Fondazione Symbola

Premio Biblioteca Bilancio Sociale Florim Wins Top Prize

2017 Sustainability Report 7

Rex | Prexious of Rex Collection

2017 Sustainability Report8

Giovanni Lucchese pioneers the production of extruded clinker tiles and Floor Gres is founded in the heart of the Sassuolo production district

Floor Gres is the first Italian manufacturer to produce single-fired white body tiles

The Swimming Pool Division is established within Floor Gres

Floor Gres is one of the first companies in the world to start the manufacture of porcelain stoneware tiles

Claudio Lucchese son of the founder takes over the reins at Floor Gres after his fathers untimely death

Floor Gres acquires Cerim Ceramiche

Floor Gres and Cerim merge to create Florim

Florim acquires Rex Ceramiche Artistiche

The Project Division forerunner of todays Florim Solutions is created

Incorporation of Florim USA a production and distribution company destined to become a leader on the American market

Florim acquires Casa dolce casa and Casamood

The first Florim Flagship store opens in the Brera district in the heart of Milan

The Florim Gallery multi-functional center and Florim Logistics are built in FioranoThe Fondazione Ing Giovanni Lucchese foundation is established

The first Flagship Store in Moscow is opened and the healthamptraining center is inaugurated

The Flagship Store opens in the center of New York

Florim relaunches CEDIT ndash Ceramiche dItalia and opens the brands first Spazio in MilanPresentation of FLORIM stone the Groups first worktop and countertop brand

Production starts in the new industry 40 factory at Mordano which manufactures slabs for Casa dolce casa and Casamood which are now a single brand

MADE IN FLORIM

Over 50 years of history

Over 1400 employees

425 million Euro of turnover

1161 tons of CO2 not emitted in 2017 thanks to the photovoltaic system

It takes more than figures to define a company Today passion innovation a constant commitment to improvement and corporate social responsibility are the guidelines of a new way of doing business the MADE IN FLORIM way

Our history 1962

1967

1976

1981

1984

1990

1992

1994

1995

2000

2005

2009

2013

2014

2015

2016

2017

Watch the institutional video

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 3: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

Contents

Letter to stakeholders

Our Sustainability Report

MADE IN FLORIM

Our history

Our locations

Our brands

Our design service

Our 2017

GOVERNANCE

Code of Ethics

Management System Policy

Corporate bodies

Corporate structure

Stakeholders

Materiality approach

REPORTING

In brief

Economic Responsibility

Comments on the economic data

Value generated

Environmental Responsibility

Certifications

Environmental management

Energy management

Social Responsibility

Employees amp corporate welfare

Local community amp culture

Product responsibility

Quality System

OUR COMMITMENTS

The promises we kept

The targets we set ourselves

FLORIM USA

Profile and Economic Responsibility

Environmental Responsibility

Social Responsibility

Quality System

Other activities

GRI international sustainability indicatorsSDGs

5

6

8

9

9

9

10

13

13

14

14

15

16

17

18

18

19

21

22

22

24

27

27

30

32

33

35

36

37

38

40

43

43

44

2017 Sustainability Report4

Casa dolce casa ndash Casamood | Artwork Collection

2017 Sustainability Report 5

This is now the tenth edition of our Sustainability Report a milestone marking a period of huge changes within the Group which began just as the dramatic crisis which hit the world economy was starting to wreak havoc terrorizing the markets It is with great satisfaction that I read the economic and financial figures covering the years from 2008 mired in uncertainty to the present day reflecting a curve of constant improvement in all fundamental variables I have even greater praise for the ethical approach adopted throughout all Group companies demonstrated in their many charitable environmental sustainability and community projects We are reaping the returns on the huge investments made in the past and continued in 2017 which apart from the major improvements at all locations was dominated by the ambitious Industry 40 project for the manufacture of large slabs in a new building at Mordano (Bologna) These investments the ever-increasing number of public events the meticulous research and development of innovative products and the dedicated hard work of all employees have given us the brand image and recognition which accredited sources tell us has earned the Florim Group its rightful place amongst Italys design elite There is no doubt that the constantly shifting market equilibriums continue to present serious challenges and we must never take our eye off the ball if we are to achieve the targets we set ourselves which you will find stated in this Report I would like to extend my thanks to everyone who takes the time to read this document and in particular to all Florim Group personnel in whose ceaseless commitment sense of belonging and loyalty to the companys values I take great pride

My sisters join me in saying a final loving farewell to my mother who passed away on 11 February 2018 and whose patience humanity and determination remain in the hearts of all who knew her

Enjoy the Report and thank youClaudio Lucchese

Letter to stakeholders

2017 Sustainability Report6

Our Sustainability Report

Methodological framework and reporting perimeter

Writing and distributing its Sustainability Report enables Florim to communicate with its stakeholders with transparency describe the results achieved and set out future goals in an approach based on engagement and continual improvement It is in this spirit that we have always sought year-on-year - for 10 years - to improve this document and ensure that it is concise and easy to read

As in previous years the report (also issued in English) is based on the Global Reporting Initiative GRI-G4 (G4 edition) guidelines The reporting process with ldquoin accordance-corerdquo compliance level is co-ordinated by Florims communications department and supervised by the finance department with the invaluable assistance of many colleagues The Report refers to all Florim companies on the same principle as the Groups consolidated financial statements The figures provided in the reporting section refer to our Italian location while the fourth section contains a brief Sustainability Report for Florim USA

This final edition is also published in a shortened version for an even more immediate understanding of its contents Moreover the GRI indicator table also includes the corresponding reference to the SDGs (the 17 sustainable development goals set by the UNs 193 member states)

In December 2017 Florims Sustainability Report won the company the IV EDITION of the Premio Biblioteca Bilancio Sociale [Social Reporting Award] for its ldquopolicy of almost total self-sufficiency in energy a particularly significant factor since it operates in an industry (ceramics) where energy consumption is highrdquo The BBS award is sponsored by the Italian Ministry of the Environment Unioncamere Confindustria Luiss Business School Federdistribuzione and Fondazione Symbola

Premio Biblioteca Bilancio Sociale Florim Wins Top Prize

2017 Sustainability Report 7

Rex | Prexious of Rex Collection

2017 Sustainability Report8

Giovanni Lucchese pioneers the production of extruded clinker tiles and Floor Gres is founded in the heart of the Sassuolo production district

Floor Gres is the first Italian manufacturer to produce single-fired white body tiles

The Swimming Pool Division is established within Floor Gres

Floor Gres is one of the first companies in the world to start the manufacture of porcelain stoneware tiles

Claudio Lucchese son of the founder takes over the reins at Floor Gres after his fathers untimely death

Floor Gres acquires Cerim Ceramiche

Floor Gres and Cerim merge to create Florim

Florim acquires Rex Ceramiche Artistiche

The Project Division forerunner of todays Florim Solutions is created

Incorporation of Florim USA a production and distribution company destined to become a leader on the American market

Florim acquires Casa dolce casa and Casamood

The first Florim Flagship store opens in the Brera district in the heart of Milan

The Florim Gallery multi-functional center and Florim Logistics are built in FioranoThe Fondazione Ing Giovanni Lucchese foundation is established

The first Flagship Store in Moscow is opened and the healthamptraining center is inaugurated

The Flagship Store opens in the center of New York

Florim relaunches CEDIT ndash Ceramiche dItalia and opens the brands first Spazio in MilanPresentation of FLORIM stone the Groups first worktop and countertop brand

Production starts in the new industry 40 factory at Mordano which manufactures slabs for Casa dolce casa and Casamood which are now a single brand

MADE IN FLORIM

Over 50 years of history

Over 1400 employees

425 million Euro of turnover

1161 tons of CO2 not emitted in 2017 thanks to the photovoltaic system

It takes more than figures to define a company Today passion innovation a constant commitment to improvement and corporate social responsibility are the guidelines of a new way of doing business the MADE IN FLORIM way

Our history 1962

1967

1976

1981

1984

1990

1992

1994

1995

2000

2005

2009

2013

2014

2015

2016

2017

Watch the institutional video

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 4: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report4

Casa dolce casa ndash Casamood | Artwork Collection

2017 Sustainability Report 5

This is now the tenth edition of our Sustainability Report a milestone marking a period of huge changes within the Group which began just as the dramatic crisis which hit the world economy was starting to wreak havoc terrorizing the markets It is with great satisfaction that I read the economic and financial figures covering the years from 2008 mired in uncertainty to the present day reflecting a curve of constant improvement in all fundamental variables I have even greater praise for the ethical approach adopted throughout all Group companies demonstrated in their many charitable environmental sustainability and community projects We are reaping the returns on the huge investments made in the past and continued in 2017 which apart from the major improvements at all locations was dominated by the ambitious Industry 40 project for the manufacture of large slabs in a new building at Mordano (Bologna) These investments the ever-increasing number of public events the meticulous research and development of innovative products and the dedicated hard work of all employees have given us the brand image and recognition which accredited sources tell us has earned the Florim Group its rightful place amongst Italys design elite There is no doubt that the constantly shifting market equilibriums continue to present serious challenges and we must never take our eye off the ball if we are to achieve the targets we set ourselves which you will find stated in this Report I would like to extend my thanks to everyone who takes the time to read this document and in particular to all Florim Group personnel in whose ceaseless commitment sense of belonging and loyalty to the companys values I take great pride

My sisters join me in saying a final loving farewell to my mother who passed away on 11 February 2018 and whose patience humanity and determination remain in the hearts of all who knew her

Enjoy the Report and thank youClaudio Lucchese

Letter to stakeholders

2017 Sustainability Report6

Our Sustainability Report

Methodological framework and reporting perimeter

Writing and distributing its Sustainability Report enables Florim to communicate with its stakeholders with transparency describe the results achieved and set out future goals in an approach based on engagement and continual improvement It is in this spirit that we have always sought year-on-year - for 10 years - to improve this document and ensure that it is concise and easy to read

As in previous years the report (also issued in English) is based on the Global Reporting Initiative GRI-G4 (G4 edition) guidelines The reporting process with ldquoin accordance-corerdquo compliance level is co-ordinated by Florims communications department and supervised by the finance department with the invaluable assistance of many colleagues The Report refers to all Florim companies on the same principle as the Groups consolidated financial statements The figures provided in the reporting section refer to our Italian location while the fourth section contains a brief Sustainability Report for Florim USA

This final edition is also published in a shortened version for an even more immediate understanding of its contents Moreover the GRI indicator table also includes the corresponding reference to the SDGs (the 17 sustainable development goals set by the UNs 193 member states)

In December 2017 Florims Sustainability Report won the company the IV EDITION of the Premio Biblioteca Bilancio Sociale [Social Reporting Award] for its ldquopolicy of almost total self-sufficiency in energy a particularly significant factor since it operates in an industry (ceramics) where energy consumption is highrdquo The BBS award is sponsored by the Italian Ministry of the Environment Unioncamere Confindustria Luiss Business School Federdistribuzione and Fondazione Symbola

Premio Biblioteca Bilancio Sociale Florim Wins Top Prize

2017 Sustainability Report 7

Rex | Prexious of Rex Collection

2017 Sustainability Report8

Giovanni Lucchese pioneers the production of extruded clinker tiles and Floor Gres is founded in the heart of the Sassuolo production district

Floor Gres is the first Italian manufacturer to produce single-fired white body tiles

The Swimming Pool Division is established within Floor Gres

Floor Gres is one of the first companies in the world to start the manufacture of porcelain stoneware tiles

Claudio Lucchese son of the founder takes over the reins at Floor Gres after his fathers untimely death

Floor Gres acquires Cerim Ceramiche

Floor Gres and Cerim merge to create Florim

Florim acquires Rex Ceramiche Artistiche

The Project Division forerunner of todays Florim Solutions is created

Incorporation of Florim USA a production and distribution company destined to become a leader on the American market

Florim acquires Casa dolce casa and Casamood

The first Florim Flagship store opens in the Brera district in the heart of Milan

The Florim Gallery multi-functional center and Florim Logistics are built in FioranoThe Fondazione Ing Giovanni Lucchese foundation is established

The first Flagship Store in Moscow is opened and the healthamptraining center is inaugurated

The Flagship Store opens in the center of New York

Florim relaunches CEDIT ndash Ceramiche dItalia and opens the brands first Spazio in MilanPresentation of FLORIM stone the Groups first worktop and countertop brand

Production starts in the new industry 40 factory at Mordano which manufactures slabs for Casa dolce casa and Casamood which are now a single brand

MADE IN FLORIM

Over 50 years of history

Over 1400 employees

425 million Euro of turnover

1161 tons of CO2 not emitted in 2017 thanks to the photovoltaic system

It takes more than figures to define a company Today passion innovation a constant commitment to improvement and corporate social responsibility are the guidelines of a new way of doing business the MADE IN FLORIM way

Our history 1962

1967

1976

1981

1984

1990

1992

1994

1995

2000

2005

2009

2013

2014

2015

2016

2017

Watch the institutional video

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 5: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 5

This is now the tenth edition of our Sustainability Report a milestone marking a period of huge changes within the Group which began just as the dramatic crisis which hit the world economy was starting to wreak havoc terrorizing the markets It is with great satisfaction that I read the economic and financial figures covering the years from 2008 mired in uncertainty to the present day reflecting a curve of constant improvement in all fundamental variables I have even greater praise for the ethical approach adopted throughout all Group companies demonstrated in their many charitable environmental sustainability and community projects We are reaping the returns on the huge investments made in the past and continued in 2017 which apart from the major improvements at all locations was dominated by the ambitious Industry 40 project for the manufacture of large slabs in a new building at Mordano (Bologna) These investments the ever-increasing number of public events the meticulous research and development of innovative products and the dedicated hard work of all employees have given us the brand image and recognition which accredited sources tell us has earned the Florim Group its rightful place amongst Italys design elite There is no doubt that the constantly shifting market equilibriums continue to present serious challenges and we must never take our eye off the ball if we are to achieve the targets we set ourselves which you will find stated in this Report I would like to extend my thanks to everyone who takes the time to read this document and in particular to all Florim Group personnel in whose ceaseless commitment sense of belonging and loyalty to the companys values I take great pride

My sisters join me in saying a final loving farewell to my mother who passed away on 11 February 2018 and whose patience humanity and determination remain in the hearts of all who knew her

Enjoy the Report and thank youClaudio Lucchese

Letter to stakeholders

2017 Sustainability Report6

Our Sustainability Report

Methodological framework and reporting perimeter

Writing and distributing its Sustainability Report enables Florim to communicate with its stakeholders with transparency describe the results achieved and set out future goals in an approach based on engagement and continual improvement It is in this spirit that we have always sought year-on-year - for 10 years - to improve this document and ensure that it is concise and easy to read

As in previous years the report (also issued in English) is based on the Global Reporting Initiative GRI-G4 (G4 edition) guidelines The reporting process with ldquoin accordance-corerdquo compliance level is co-ordinated by Florims communications department and supervised by the finance department with the invaluable assistance of many colleagues The Report refers to all Florim companies on the same principle as the Groups consolidated financial statements The figures provided in the reporting section refer to our Italian location while the fourth section contains a brief Sustainability Report for Florim USA

This final edition is also published in a shortened version for an even more immediate understanding of its contents Moreover the GRI indicator table also includes the corresponding reference to the SDGs (the 17 sustainable development goals set by the UNs 193 member states)

In December 2017 Florims Sustainability Report won the company the IV EDITION of the Premio Biblioteca Bilancio Sociale [Social Reporting Award] for its ldquopolicy of almost total self-sufficiency in energy a particularly significant factor since it operates in an industry (ceramics) where energy consumption is highrdquo The BBS award is sponsored by the Italian Ministry of the Environment Unioncamere Confindustria Luiss Business School Federdistribuzione and Fondazione Symbola

Premio Biblioteca Bilancio Sociale Florim Wins Top Prize

2017 Sustainability Report 7

Rex | Prexious of Rex Collection

2017 Sustainability Report8

Giovanni Lucchese pioneers the production of extruded clinker tiles and Floor Gres is founded in the heart of the Sassuolo production district

Floor Gres is the first Italian manufacturer to produce single-fired white body tiles

The Swimming Pool Division is established within Floor Gres

Floor Gres is one of the first companies in the world to start the manufacture of porcelain stoneware tiles

Claudio Lucchese son of the founder takes over the reins at Floor Gres after his fathers untimely death

Floor Gres acquires Cerim Ceramiche

Floor Gres and Cerim merge to create Florim

Florim acquires Rex Ceramiche Artistiche

The Project Division forerunner of todays Florim Solutions is created

Incorporation of Florim USA a production and distribution company destined to become a leader on the American market

Florim acquires Casa dolce casa and Casamood

The first Florim Flagship store opens in the Brera district in the heart of Milan

The Florim Gallery multi-functional center and Florim Logistics are built in FioranoThe Fondazione Ing Giovanni Lucchese foundation is established

The first Flagship Store in Moscow is opened and the healthamptraining center is inaugurated

The Flagship Store opens in the center of New York

Florim relaunches CEDIT ndash Ceramiche dItalia and opens the brands first Spazio in MilanPresentation of FLORIM stone the Groups first worktop and countertop brand

Production starts in the new industry 40 factory at Mordano which manufactures slabs for Casa dolce casa and Casamood which are now a single brand

MADE IN FLORIM

Over 50 years of history

Over 1400 employees

425 million Euro of turnover

1161 tons of CO2 not emitted in 2017 thanks to the photovoltaic system

It takes more than figures to define a company Today passion innovation a constant commitment to improvement and corporate social responsibility are the guidelines of a new way of doing business the MADE IN FLORIM way

Our history 1962

1967

1976

1981

1984

1990

1992

1994

1995

2000

2005

2009

2013

2014

2015

2016

2017

Watch the institutional video

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 6: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report6

Our Sustainability Report

Methodological framework and reporting perimeter

Writing and distributing its Sustainability Report enables Florim to communicate with its stakeholders with transparency describe the results achieved and set out future goals in an approach based on engagement and continual improvement It is in this spirit that we have always sought year-on-year - for 10 years - to improve this document and ensure that it is concise and easy to read

As in previous years the report (also issued in English) is based on the Global Reporting Initiative GRI-G4 (G4 edition) guidelines The reporting process with ldquoin accordance-corerdquo compliance level is co-ordinated by Florims communications department and supervised by the finance department with the invaluable assistance of many colleagues The Report refers to all Florim companies on the same principle as the Groups consolidated financial statements The figures provided in the reporting section refer to our Italian location while the fourth section contains a brief Sustainability Report for Florim USA

This final edition is also published in a shortened version for an even more immediate understanding of its contents Moreover the GRI indicator table also includes the corresponding reference to the SDGs (the 17 sustainable development goals set by the UNs 193 member states)

In December 2017 Florims Sustainability Report won the company the IV EDITION of the Premio Biblioteca Bilancio Sociale [Social Reporting Award] for its ldquopolicy of almost total self-sufficiency in energy a particularly significant factor since it operates in an industry (ceramics) where energy consumption is highrdquo The BBS award is sponsored by the Italian Ministry of the Environment Unioncamere Confindustria Luiss Business School Federdistribuzione and Fondazione Symbola

Premio Biblioteca Bilancio Sociale Florim Wins Top Prize

2017 Sustainability Report 7

Rex | Prexious of Rex Collection

2017 Sustainability Report8

Giovanni Lucchese pioneers the production of extruded clinker tiles and Floor Gres is founded in the heart of the Sassuolo production district

Floor Gres is the first Italian manufacturer to produce single-fired white body tiles

The Swimming Pool Division is established within Floor Gres

Floor Gres is one of the first companies in the world to start the manufacture of porcelain stoneware tiles

Claudio Lucchese son of the founder takes over the reins at Floor Gres after his fathers untimely death

Floor Gres acquires Cerim Ceramiche

Floor Gres and Cerim merge to create Florim

Florim acquires Rex Ceramiche Artistiche

The Project Division forerunner of todays Florim Solutions is created

Incorporation of Florim USA a production and distribution company destined to become a leader on the American market

Florim acquires Casa dolce casa and Casamood

The first Florim Flagship store opens in the Brera district in the heart of Milan

The Florim Gallery multi-functional center and Florim Logistics are built in FioranoThe Fondazione Ing Giovanni Lucchese foundation is established

The first Flagship Store in Moscow is opened and the healthamptraining center is inaugurated

The Flagship Store opens in the center of New York

Florim relaunches CEDIT ndash Ceramiche dItalia and opens the brands first Spazio in MilanPresentation of FLORIM stone the Groups first worktop and countertop brand

Production starts in the new industry 40 factory at Mordano which manufactures slabs for Casa dolce casa and Casamood which are now a single brand

MADE IN FLORIM

Over 50 years of history

Over 1400 employees

425 million Euro of turnover

1161 tons of CO2 not emitted in 2017 thanks to the photovoltaic system

It takes more than figures to define a company Today passion innovation a constant commitment to improvement and corporate social responsibility are the guidelines of a new way of doing business the MADE IN FLORIM way

Our history 1962

1967

1976

1981

1984

1990

1992

1994

1995

2000

2005

2009

2013

2014

2015

2016

2017

Watch the institutional video

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 7: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 7

Rex | Prexious of Rex Collection

2017 Sustainability Report8

Giovanni Lucchese pioneers the production of extruded clinker tiles and Floor Gres is founded in the heart of the Sassuolo production district

Floor Gres is the first Italian manufacturer to produce single-fired white body tiles

The Swimming Pool Division is established within Floor Gres

Floor Gres is one of the first companies in the world to start the manufacture of porcelain stoneware tiles

Claudio Lucchese son of the founder takes over the reins at Floor Gres after his fathers untimely death

Floor Gres acquires Cerim Ceramiche

Floor Gres and Cerim merge to create Florim

Florim acquires Rex Ceramiche Artistiche

The Project Division forerunner of todays Florim Solutions is created

Incorporation of Florim USA a production and distribution company destined to become a leader on the American market

Florim acquires Casa dolce casa and Casamood

The first Florim Flagship store opens in the Brera district in the heart of Milan

The Florim Gallery multi-functional center and Florim Logistics are built in FioranoThe Fondazione Ing Giovanni Lucchese foundation is established

The first Flagship Store in Moscow is opened and the healthamptraining center is inaugurated

The Flagship Store opens in the center of New York

Florim relaunches CEDIT ndash Ceramiche dItalia and opens the brands first Spazio in MilanPresentation of FLORIM stone the Groups first worktop and countertop brand

Production starts in the new industry 40 factory at Mordano which manufactures slabs for Casa dolce casa and Casamood which are now a single brand

MADE IN FLORIM

Over 50 years of history

Over 1400 employees

425 million Euro of turnover

1161 tons of CO2 not emitted in 2017 thanks to the photovoltaic system

It takes more than figures to define a company Today passion innovation a constant commitment to improvement and corporate social responsibility are the guidelines of a new way of doing business the MADE IN FLORIM way

Our history 1962

1967

1976

1981

1984

1990

1992

1994

1995

2000

2005

2009

2013

2014

2015

2016

2017

Watch the institutional video

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 8: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report8

Giovanni Lucchese pioneers the production of extruded clinker tiles and Floor Gres is founded in the heart of the Sassuolo production district

Floor Gres is the first Italian manufacturer to produce single-fired white body tiles

The Swimming Pool Division is established within Floor Gres

Floor Gres is one of the first companies in the world to start the manufacture of porcelain stoneware tiles

Claudio Lucchese son of the founder takes over the reins at Floor Gres after his fathers untimely death

Floor Gres acquires Cerim Ceramiche

Floor Gres and Cerim merge to create Florim

Florim acquires Rex Ceramiche Artistiche

The Project Division forerunner of todays Florim Solutions is created

Incorporation of Florim USA a production and distribution company destined to become a leader on the American market

Florim acquires Casa dolce casa and Casamood

The first Florim Flagship store opens in the Brera district in the heart of Milan

The Florim Gallery multi-functional center and Florim Logistics are built in FioranoThe Fondazione Ing Giovanni Lucchese foundation is established

The first Flagship Store in Moscow is opened and the healthamptraining center is inaugurated

The Flagship Store opens in the center of New York

Florim relaunches CEDIT ndash Ceramiche dItalia and opens the brands first Spazio in MilanPresentation of FLORIM stone the Groups first worktop and countertop brand

Production starts in the new industry 40 factory at Mordano which manufactures slabs for Casa dolce casa and Casamood which are now a single brand

MADE IN FLORIM

Over 50 years of history

Over 1400 employees

425 million Euro of turnover

1161 tons of CO2 not emitted in 2017 thanks to the photovoltaic system

It takes more than figures to define a company Today passion innovation a constant commitment to improvement and corporate social responsibility are the guidelines of a new way of doing business the MADE IN FLORIM way

Our history 1962

1967

1976

1981

1984

1990

1992

1994

1995

2000

2005

2009

2013

2014

2015

2016

2017

Watch the institutional video

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 9: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 9

Our locations The map shows the headquarters showrooms production plants and logistic hubs Florim Group products are sold in Italy (20) and abroad (80) by top retailers and international importers

FLORIM USASite

production plantand logistics hub

Clarksville TN (USA)

Flagship StoreNew York NY (USA)

Logistics hubParanagrave (BRAZIL)

Flagship StoreSpazio CEDITMilan (ITALY)

Flagship StoreMoscow (RUSSIA)

HeadquartersFiorano Modenese (Modena ITALY)Production plantMordano (Bologna ITALY)

OfficeSingapore (SINGAPORE)

The brand which serves architectural projects with materials that combine outstanding performances and aesthetic appeal

Through genuine designer slabs this brand renews the idea of architectural space to express the style and art of Italian interior design

It presents a range with a contemporary look to suit the tastes of a wide market band

Inspired by an innate passion for beauty and design Florim produces ceramic surfaces to meet all the needs of the construction architecture and interior design sectors It markets them through its seven commercial brands united by a clear declaration of intent ldquoDesign is our passionrdquo which is the corporate pay-off

Our design serviceAs well as the product itself Florim offers technical support throughout the various design phases From the feasibility study to the final installation Florim Solutions works side by side with the architect providing expertise and experience when the style and performance of porcelain tiles become fundamental to the project

Its mission is luxury with surfaces inspired by the most exquisite natural materials with strong decorative content

The brand for interior designers constantly looking for eclectic inspirations and creative harmony

The brand that brings together technical performances convenience and good looks for the perfect customized worktops

The Made in USA brand that aims to satisfy the taste of the North American market with a typically Italian style

Our brands

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 10: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report10

Our 2017

Industrial innovation | 40 evolution

At Mordano (Bologna) it took the company just six months to construct a building of 56000 m2 and launch production in an Industry 40 factory (confirmed as such by a formal technical report) which sets the new benchmark for the global industry in porcelain stoneware slab production High technology and integrated machines are installed in a clean modern building attractive in appearance and as a working environment with its glazed wall 5 meters high and 130 meters long Whats more at the end of the year a large construction site went into operation at the headquarters in Fiorano Modenese (Modena) for the realization of another Industry 40 facility to be completed by the end of 2018

Florim large slabs | Magnum Oversize Project

Thanks to the Industry 40 factory and the substantial boost to production capacity Cersaie 2017 saw the launch of new sizes (120x280 and 60x240 cm) and new finishes (for technicalcommercial applications) to complete the Florim Magnum Oversize range a collection of large-size porcelain stoneware slabs (up to 160x320 cm) Presented in 2014 through the application of massive production financial and creative resources today Magnum Oversize is the markets most complete offering of ldquolarge slabsrdquo The ranges introduction and its outstanding aesthetic values have won large slabs a place in the worlds most prestigious projects while also establishing them as a normal part of residential interior design and a convenient material for finishing furniture (dining and coffee tables worktops and ornamental features) The projects innovative importance has also won recognition from the international design critics gaining it entry to the permanent Historic Collection of the Italian Industrial Design Association Compasso dOro (the worlds oldest most coveted industrial design award)

Digital development | florimcom

Launched in 2017 a new website - wwwflorimcom - now contains all the companys brands and corporate information Months of hard work have created a digital platform in six languages effectively expressing the Made in Florim identity A labor of love in the structural planning and design phase has combined the information formerly available on 19 different sites into a simple user-friendly portal 2017 also saw the launch of a major internal project involving various departments in the development of Florim HUB a virtual working environment which will impact the entire organization with a new suite of applications for easier sharing a new intranet and an integrated marketing automation and CRM system

Events and community | Florim spaces

In 2013 the Florim Gallery a large location of 9000 m2 at the Fiorano Modenese headquarters was completed Conceived from the outset as a showcase for the Groups products and an events location it has now become the ldquocultural meeting placerdquo for the whole district This is how it was defined in the local press after hosting more than 80 events attended by about 30000 people since it was opened Florim Gallery is a location with an identity reaching far beyond mere business functions involving the community at a variety of health and socio-cultural events often organized with the support of the Fondazione Ing Giovanni Lucchese These activities are run alongside a busy schedule of events for Group customers from showroom and plant visits to practical exercises in large slab cutting and installation In 2017 the internal hospitality department hosted 4456 business partners and architecture professionalsFurthermore during the last year the Groups three other showrooms each location in the worlds design fashion districts (Milan ndash New York - Moscow) welcomed more than 1800 people at events run for architecture professionals and customers

Find out more

Find out more

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 11: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 11

Florim was an award-winner in the Randstad Employer Brand 2018 A survey of nearly 6000 Italians between 18 and 65 years of age examined 150 firms (with more than 1000 employees) operating in Italy

When asked ldquoWhere would you like to workrdquo interviewees chose ldquoFlorimrdquo for its work-life balance projects

The study independently conducted by Kantar TNS (no company can voluntarily sign up to take part) revealed that work-life balance is viewed as the most important factor when job-seeking (selected by 55 of respondents) This is followed by a pleasant working atmosphere (51) salary and benefits (48) occupational health and safety (stable at 46) and career path visibility (38) The other winners alongside Florim were Automobili Lamborghini Coca Cola and Ikea The award ceremony took place in the elegant interior of Palazzo Mezzanotte on Piazza Affari in Milan

Randstad Employer Brand

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 12: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report12

Casa dolce casa ndash Casamood | Stones amp More Collection

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 13: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 13

GOVERNANCE

Code of EthicsThe Groups governance plays a central role in the responsible development of its business ensuring ethical transparent management of its operations with its stakeholders interests always in mind

After approving the Governance Model compliant with the provisions of Italian Legislative Decree 2312001 the Florim Board of Directors signed and promoted the corporate Code of Ethics (revised in June 2016) which has become an integral part of Florims operations and is accepted by every new employee supplier and business partnerTo guarantee the application of and compliance with its contents a Supervisory Board was established to detect any breaches of its provisions All stakeholders can also contact the Supervisory Board (organismodivigilanzaflorimcom) for further explanations regarding the interpretation and application of the corporate Code of Ethics as described on the corporate websiteThe following is an extract from the rules of conduct which govern the way we do business

Download the Code of Ethics

Our mission

To manufacture ceramic tiles and materials for multiple uses and offer the most appropriate solutions for both interior design and architecture To constantly prioritize environmental sustainability attempting to satisfy the needs of customers and to create value for shareholders employees and the local community in compliance with the ethical principles and rules of conduct set out in the Code of Ethics

Our vision

To be at the cutting edge of technical and design innovation in ceramics by developing materials and production methods that position us as a constant benchmark for customers architects and competitors

Our values

Honesty and Respect all internal and external relationships must be based on honesty and respect for rules and dignity of the individual

Corporate Social Responsibility corporate social responsibility must be promoted through measures and practices adopted to support the local environment and community

Individual Responsibility everyone must be aware of the worth and consequences of their own actions

Quality and Innovation excellence must be pursued by improving products processes and skills to promote corporate success

Transparency intentions and positions must be expressed openly and clearly without misunderstandings or misrepresentation to build lasting relationships based on trust both inside and outside the company

Courage a moral strength which enables us to undertake and deal with changes difficulties and challenges to benefit from all the opportunities they offer

Feeling of Belonging feeling proud to be a part of one big team made up of the company associates customers and suppliers

Management System Policy

To achieve greater and greater transparency in its reporting the company has drawn up guidelines for its quality environment safety and energy management system Read more

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 14: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report14

Corporate bodiesFlorim Ceramiche spa is a family-owned business with fully subscribed paid-up share capital consisting of 50000000 ordinary shares with a face value of 1 Euro each The capital is 100 owned by the holding company FinFloor spa with registered office in Fiorano Modenese which is in turn indirectly owned by the Lucchese family through FinTwin spa

The Board of Directors has 11 members

CLAUDIO LUCCHESE Chairman

DONATO BRUNI Deputy Chairman

MARIADELE LUCCHESE Director

ANNA LUCCHESE Director

FRANCESCA LUCCHESE Director

GIOVANNI LUCCHESE Director

The Board of Directors has a mandate of one year and new elections will coincide with the approval of the financial statements The Board of Statutory Auditors is composed of three members whose term of office is three years from their appointment on 1252016 until approval of the 2018 financial statements The Supervisory Board has been in office for three years and its term expires in December 2018 The financial statements of Florim spa and the consolidated financial statements of FinFloor spa and FinTwin spa are audited and certified by Deloitte amp Touche spa

Corporate structureA new development from the previous year is the acquisition of ldquoImmobiliare San Biagio srlrdquo with share capital of Euro 100000

KRONOS 2 CERAMICHE spaShare capital euro 2500000

Fondazione Ing G LuccheseEndowment euro 60000

FABBRICA delle MATERIE srlShare capital euro 10000

EDILFLOOR surlShare capital euro 9812681

ISABELLA srlShare capital euro 100000

FI HOLDING IncShare capital USD 50000

100

10

100

30

9667

100

1

1

99

99

100

FIN TWIN spaShare capital euro 540800

FINFLOOR spaShare capital euro 10500000

542810

FLORIM CERAMICHE spasingle shareholder companyShare capital euro 50000000

100

FLORIM BRASIL LtdaDISTRIBUICcedilAtildeO DE CERAcircMICAS

Share capital R$ 46100000

000 FLORIM RUSShare capital 100000

Roubles

FLORIM USA incShare capital USD 51865541

FLORIM SOLUTION IncShare capital USD 845943

100

MORDANO 4 srlShare capital euro 100000

85

FLORIM FAR EAST PTE LtdShare capital S$ 10000

100

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

IMMOBILIARE SAN BIAGIO surlShare capital euro 100000

100

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 15: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 15

ERMES GIUSEPPE FERRARI Managing Director

GIOVANNI GROSSI Managing Director

OSCAR ISEPPI Managing Director

DORVAN SAZZI Managing Director

STEFANO TORRENTI Managing Director

StakeholdersStakeholders are all individuals and groups who may influence or be influenced by a companys operations in terms of policies products and working processes shareholders employees customers and consumers suppliers local government the local community banks and trade unions

Employees and Trade Unions

Florim makes the following commitments to its employees

bull to guarantee equal opportunities fair pay and professional growth

bull to reward its human resources on the basis of transparent meritocratic criteria

bull to create safe working environments and processes

bull to guarantee transparency and clarity in contract conditions

bull to encourage dialogue and internal communications

Customers and Consumers

In dealing with its (retail) customers Florim is committed to

bull creating a relationship of trust as a stable basis for business

bull guaranteeing clarity in contracts and prices

bull guaranteeing the reliability of its products and developing customer service

bull offering innovative safe environmentally sustainable products

bull providing a diversified offering with services with high value added

The overall aim is also to satisfy the expectations and demands of the final consumer

Developers architects and interior designers

To meet the needs of developers Florim is committed to

bull offering environmentally sustainable solutions constantly at the technological and design state of the art

bull establishing and fostering relationships with partner professionals

bull providing consulting and technical experience from the project concept through to installation

bull supplying turnkey solutions on request where feasible

Local Communities and Local Government

In its relationships with local communities and local institutions Florim is committed to

bull guaranteeing dialogue cooperation and transparency

bull giving value back to the local communities in the areas where it operates

bull continually improving the environmental performances of processes

bull researching developing and using the most sustainable technologies

bull making an economic contribution to local sporting and social projects for children and young people

Suppliers

When selecting its suppliers Florim pays close attention to companies CSR practices Florims relationships with its suppliers are based on compliance with the values of its code of ethics otherwise contracts are automatically terminated Florim also guarantees certainty in payment times and compliance with contract terms provided the goods and services contracted are delivered as agreed

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 16: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report16

Materiality approachIn 2015 the company began an internal analysis process based on the materiality principle in order to identify the sustainability issues of relevance both for the Group (including Florim USA) and for all stakeholdersMateriality is the threshold above which a topic becomes sufficiently important to be included in the report Relevant topics and indicators are those which impact economic environmental and social issues or influence stakeholders decision-making In line with the GRI ndash G4 Guidelines Florim has analyzed and identified ldquorelevantrdquo topics which were assessed by the working team which drafted the Sustainability Report on the basis of discussion with the main stakeholdersThe findings which emerged were supported by a qualitative survey external to the companys context examining an analysis of the press gallery competitors Sustainability Reports the Emas Study of the Fiorano and Sassuolo Ceramics District and the GRI document ndash ldquoSustainability Topics for Sector What do Stakeholders want to Knowrdquo

The topics in the bottom left-hand corner (biodiversity prevention of corruption absence of discrimination and the protection of human rights) are ldquoless relevantrdquo because they are easy for both the organization and stakeholders to manage and no problems have ever been reported over the years With regard to the protection of human rights Florim complies strictly with all the provisions of the National Employment Contract

Imp

ort

ance

fo

r st

akeh

old

ers

Importance for Florim

re

leva

nt

ver

y re

leva

nt

relevant very relevant

Biodiversity

Indirect economic impacts

Absenceof discrimination

Sustainable transport

management

Environment and safety

Water saving

Energy efficiencyRaw materials

Diversity and equal opportunities

Ethical supplier management

Investmentsin the local community

and social welfare

Direct and indirect environmental

impacts

Green products and services

Economic performance

Quality of products offered to customers

Regulatory compliance

Development of human resources

and training

ENVIRONMENT

COMMUNITY

EMPLOYEESASSOCIATES

ECONOMIC PERFORMANCE

PRODUCT RESPONSIBILITY

HUMAN RIGHTS

Market share

Transparencyof financial

and other information

Preventionof corruption

Protection of Human

Rights

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 17: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 17

FinFloor consolidated (in thousands of euro) 2013 2014 2015 2016 2017

Net earnings 325853 329533 374094 406759 424826

EBIDTA 72986 84395 98115 107186 123081

Operating result 50996 58508 66255 71028 79590

Gross cash flow 68312 83274 97268 109148 121788

Net profit 35732 36433 43324 49347 57808

(Negative)positive net financial position (96500) (54524) (27326) (12508) 19155

Final inventory 84432 90283 92795 96721 106557

Net shareholders equity 218847 276916 332721 369937 393600

Total investments 48780 41584 34215 53531 103015

2013 2014 2015 2016 2017

Waste produced (t) 20170 22300 30862 34423 40118

Recycled third-party waste (t) 4190 1721 2570 5627 11607

Total water consumption (m3) Finished product (t)

075 078 069 071 078

Recycled water percentage 100 100 100 100 100

Self-generated energy in relation to consumption

68 62 65 75 73

Investments in environmental management (euro000)

2493 1995 465 6400 9259

2013 2014 2015 2016 2017

Number of employees at 3112 992 984 982 987 1100

Total number of training hours 9124 9056 7176 10606 11220

Number of training hours on environment and safety

4514 4200 3008 2489 2111

Number of workplace injuries 62 74 56 43 67

Environmental and social profile figures refer to Florim Italy for Florim USA please see the relevant section (from page 37)

REPORTING

In brief

Economic profile

Environmental profile

Social profile

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 18: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report18

Economic Responsibility

Comments on 2017 economic data

For the tenth consecutive year there was improvement and growth in all the Groups fundamental indicators

Consolidated turnover increased to 425 million Euro with growth of 45 compared to 2016 while EBITDA for the year was 1231 million Euro a 149 rise and with an incidence of 29 on turnover

In terms of equity in spite of the highest ever investments of more than 103 million Euro there was a reversal in the trend in net financial position which after a negative of 125 million Euro at the end of 2016 ended 2017 with a liquidity surplus of 20 million Euro

The challenge of the large slab market is the basic factor underlying investments and is also the driver of the growth in volumes and profitability recorded by the Group

Investments

Of the over 103 million Euro invested in 2017 more than 25 million was spent on the construction in record time of a new building of 56000 m2 which since last October has housed plant and machinery worth more than 40 million Euro for the Industry 40 production of large slabs

There were additional investments of 16 million Euro in a new rectification and polishing line at the Florim USA plant as well as 2 new sorting and packaging lines and other smaller upgrades

On 12 October 2017 the Group opened a new corporate showcase of reference for the Russian marketAfter operating in Moscow since 2014 the company decided to transfer its flagship store to an exclusive residential district (Stanislavskogo Street) in the heart of the Russian capital The open space location is designed to display all the best-selling products of the companys brands and to provide the opportunity for cooperation with architecture professionals and a platform for events meetings and training The concept of the interior ndash which adopts the same stylistic language as the other corporate offices and showroom ndash was created by the companys in-house design department The stores external design is by the Florim Solutions division which specializes in complex architectural solutions The Moscow investment once again confirms the importance the Group places on establishing closer and closer links with architecture professionals to promote Made in Florim design and style worldwide

Florim Flagship Store in Moscow View the inauguration

video

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 19: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 19

Economic Value Generated and Distributed

The figures for the economic value generated and distributed provide a simple clear explanation of how Florim has created wealth and redistributed it to its stakeholders The table below contains the data from Florims 2017 financial statements approved by the Board of Directors on 29 March 2018 and certified by external auditorsThe economic value directly generated is represented by the total earnings for 2017 while the economic value distributed includes the costs incurred for suppliers and employees payments to the state (taxes) and the donations which had positive repercussions for the community to which Florim spa belongs

Heading 2015 2016 2017

Revenues 269855 302521 345960

Direct economic value generated 269855 302521 345960

Operating costs 150951 168809 187536

Employee wages and benefits 58149 62418 66364

Payments to providers of capital 6399 11903 15175

Payments to government 13162 15382 16569

Community investments 212 240 320

Economic value distributed 228873 258752 285964

Economic value retained 40982 43769 59996

KeyRevenues net sales plus revenues from financial investments and sale of assetsOperating Costs payments to suppliers non-strategic investments royalties payment facilitationsEmployee wages and benefits employee wages and benefits per employees (current payments)Payments to providers of capital all payments to the organizations providers of capitalPayments to government gross taxes and dutiesCommunity investments voluntary donations and investments in the communityEconomic value retained calculated as economic value generated less economic value distributed

The data in the table are in thousands of Euro and refer to the consolidated financial statements of the Italian companies only

Florim headquarters | New Industry 40 factory (Fiorano Modenese - Modena)

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 20: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report20

Floor Gres | Flowtech Collection

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 21: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 21

Environmental ResponsibilityEffective environmental policy management energy saving and emissions reduction are amongst Florims strategic sustainability objectives

Our ldquogreenrdquo projects in figures

2 highly-regarded

process certificationsISO 14001 (ENVIRONMENT)

and ISO 50001 (ENERGY) EPD

2 departments

(marketing and communications) engaged on digitizing

advertising tools

9623 tons of CO2 not emitted

CO2

100is the percentage

of wastewater recycled

16000 m2

of photovoltaic panels covering an area of 30000 m2

73is the proportion of theelectricity consumed

which is produced in-house

5latest-generation

industrial kilns installedin the last 4 years

2 cogeneration plants

1 laboratory for the developmentof contemporary design projects

with a specific focus on thematerials green content

100is the percentage recycling

of industrial greenware wastein the production process

871463MWh is the amount of electricity

the company succeededin producing in-house during 2017

4different types of

environmental product certification

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 22: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report22

Certifications

System and process certifications

EN ISO 14001TUumlV has awarded Florim the highly-regarded EN ISO 14001 voluntary certification which confirms its compliance with a series of internally certified procedures intended to improve the internal environmental management system The decision to seek this certification springs from the desire to reconcile quality with efficiency and productivity while protecting the environment and community in which the company operates

EN ISO 50001Thanks to a careful energy management policy and aided by the latest investments in the production area also intended to improve energy efficiency Florim was the worlds first ceramics manufacturer to obtain ISO 50001 certification of its Energy Management System

Environmental management

Waste 2015 2016 2017

Total waste produced (t) 30862 34423 40118

Non-dangerous recyclable waste (such as paper cardboard fired scraps plastic glass and wood)

991 989 988

Non-dangerous disposed-of waste (such as waste from yard sweeping) 02 02 04

Dangerous recyclable waste (such as spent oil batteries and monitors) 01 00 00

Dangerous disposed-of waste (such as spent lime) 07 09 08

Third-party waste recycled within the production process (t) () 2570 5627 11607

Besides recycling greenware waste from the production process (not included in the table because the amount cannot be calculated) Florim also recycles third party waste

Florims operations have always been oriented towards optimization of the impact on the local community and the environment Thanks to the work of its research laboratories the support of all staff and continuous investment tangible results have been achieved More than 9 million Euro was invested in environmental projects in 2017 Major items include a new cogeneration plant and a new ldquoenvironment-friendlyrdquo kiln as well as the many measures adopted to reduce the environmental and energy impact of the new Mordano production plantThe data provided below reveal that in spite of an increase in production of 84 (Italian plants) compared to the previous year consumption remains low As in previous years Florim was not fined for any breaches of environmental regulations or laws during 2017

Florim recycles and optimizes within the production process all greenware scraps dust residues from filters and sludge from the process and rectification wastewater treatment system The waste produced is detailed in the table the significant differences between years are due mainly to the major construction projects such as the plant built at Mordano in 2017

Waste

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 23: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 23

Water resources

No environmental impact of wastewater discharges is specified since all the water from the production cycle is completely reused (100) All other effluents comply with legal requirements

The figure states the total cubic meters of water used per ton of finished product The water used in the Fiorano production process is drawn from private company-owned wells with water from the public main only used for non-industrial purposes The Mordano plant is supplied by an industrial water main Water use is measured by means of meter readings A new dry rectifying plant went into production at Mordano in 2017 (alongside the four plants already in operation) enabling the company to eliminate the physicalchemical treatment of the water used in the rectification process Also in 2017 a rainwater collection tank was built at Fiorano to collect and optimize use of this water resource in the production process

WATER USE

2015

07

2016

07Total water consumption (m3) finished product (t)

08

2017

All packaging used for Florim materials is made from recycled paper and parts of the coverings used to protect pallets of finished products consist of recycled plastic Whats more all the packaging used (boxes cardboard shrink wraps pallets etc) can be completely recycled by the end user The latest investments made include a total of 16 eco-packaging machines which completely eliminate waste due to leftover inventory saving significant amounts of cardboard

Packaging and coverings

As the materiality assessment states Florim has no significant impacts on the biodiversity of its local area since the company is located inside the Fiorano Modenese ceramics manufacturing district at least 5 Km from the nearest nature reserve at Salse di Nirano Great care is taken over the choice of the suppliers of the raw materials used for tile body mixes each of which is required to provide documentation guaranteeing compliance with the European Directives protecting wild birds (EU Dir 79409EEC) and habitats (EU Dir 9243EEC) and the United Nations Convention on the protection of biodiversity It has also introduced a software program - used at the three production plants (Italy and the USA) - for the management of data on the origin of raw materials such as quarry location distance from the factory recycled content declaration technical safety and radioactive content data sheets and the expiry of the quarrying permit issued by the government

Raw Materials and Biodiversity

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 24: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report24

Energy management

There is no disputing that large amounts of energy are required to power the production processes of ceramic tile plants with consequent direct and indirect impacts on the local area and the environmentThe main indicator used to measure plants energy performance is the mean specific total energy consumption (TEJ - Total Energy joules) measured in GJt of product transferred to stock As the table below shows this figure is obtained by adding together the consumption of heat (NGJ - Natural Gas joules) and electricity (EEJ - Electrical Energy joules)

Parameter ndash Definition Unit of measurement

2015 2016 2017

NGJ Mean specific natural gas consumption in relation to the unit of weight of finished product transferred to stock

GJt 578 598 578

EEJ Mean specific energy consumption in relation to the unit of weight of product in stock

GJt 108 107 105

TEJ Mean total specific energy consumption in relation to the unit of weight of product transferred to stock

GJt 685 705 682

Self-generated electricity as a proportion of consumption 65 75 73

With two cogeneration plants and 16000 m2 of photovoltaic panels the company certainly sets a new benchmark for the entire ceramic tile industry In 2017 a new cogeneration plant went on-stream at the Mordano plant replacing the existing turbine At full capacity it will produce 9 MW of power to optimize energy use by generating electricity and also exploiting the heat energy produced within the production cycle The cogeneration system was out of operation during replacement of the turbine (about a month and a half) and this explains the slight fall-off in internal energy generation compared to 2016 (together with the increase in production) In 2017 the company was able to self-generate 8715 Gigawatt hours With this amount of electricity Florim alone would be able to cover the annual energy needs of about 37900 households Apart from the cogeneration plant the new Mordano factory is equipped with state-of-the-art plants with low energy impact Whats more all the vehicles used are electric including the forklifts and the vehicle which transfers slabs for subsequent finishing and shaping

Photovoltaic plant

kWp kWh produced kg of CO2 not emitted

270021 19381860 9623860

The 16000 square meter photovoltaic plant received recognition from GSE (Energy Management Services) as one of the most innovative installations of its type and from its commissioning (October 2011) up to December 2017 it produced the following results

(The values used for the 2017 calculation refer to ISPRA publication no 2572017)

Good practice

In addition to issuing and distributing the energy saving handbook for its offices the company is also trying to maximize savings on the raw materials which it uses and specifically the use of paper Internally the company only purchases reams of paper which carry environmental certification and used paper is collected separately

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 25: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 25

Atmospheric emissions

The industrial facility emits greenhouse gases basically carbon dioxide (CO2) from the following main sources- combustion from the burning of fossil fuels (such as natural gas)- processes from the minerals in the raw materials any organic matter in the clays used and any organic additives in tile body mixes

In order to comply with Directive 200387EC (ETS - Emission Trading Scheme) Florim has been reporting and certifying its CO2 emissions since 2013

CO2 emissions 2015 2016 2017

CO2 emissions (t) 111862 132960 138994

CO2 emissions (t) Finished product (t) 033 035 034

Emissions from the production cycle 2015 2016 2017

Particulate material (gm2 finished product) 098 118 128

Lead (gm2 finished product) 000 000 000

Fluorine (gm2 finished product) 013 012 004

The increase in CO2 emissions is due mainly to the increase in the square meters produced (+84) The companys efforts to reduce emissions are reflected by the percentage decrease in CO2 emitted in proportion to the finished product producedIn a change from previous years the new GRI-G4 guidelines also require reporting of nitrogen oxide and sulphur oxide emissions Nitrogen oxide (NOx) emissions are within the limits set by the integrated environmental authorization Sulphur oxide (SOx) emissions are not reported here since this figure is not required by the IEA

Transport

The materiality study reveals that transport is a significant factor for both stakeholders and Florim itself The company is not able to measure the impact of transportation of finished product on the local area since all shipments are Ex Works However Florim which has been introducing electric vehicles to replace its oldest most obsolete unleaded petrol forklifts for years now has further optimized the handling of materials thanks to the new highly-automated logistics hub created at the via Canaletto location In 2017 about 54 of the vehicles used on the companys premises were electric with no direct greenhouse gas emissions

for proper disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization All catalogues are available in digital format on the wwwflorimcom website and distributors are also provided with an innovative digital touch screen tool with the PDF versions of the catalogues and other tools for the final consumerSince 2016 Florim has introduced a new payslip distribution procedure introducing an online processing system This tool provides employees with new functions and greater operating flexibility and means that the company no longer prints out the monthly payslips saving paper ink and energy In 2017 the system initially involving all office workers was extended to factory employees 27 of whom opted to take part

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

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To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

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Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 26: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report26

Premio Lucchese | Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 27: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 27

Florim lsquos Employees

The number also includes contractor staff

In 2017 the workforce included 29 people with disabilities 5 women and 24 men Bearing in mind the job descriptions arising from the specific industrial sector the breakdown between men and women is in line with the industry average The company had a total of 41 foreign employees 32 at Fiorano and 9 at Mordano

Managers ExecutivesOffice

workers and apprentices

Office ancillaries

Factory workers and apprentices

Contractor staffInterns

Totals

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017Men 18 20 28 27 132 136 64 68 377 408 8 44 627 703Women 3 3 1 1 149 162 19 14 196 205 3 12 371 397

Total 21 23 29 28 281 298 83 82 573 613 11 56 998 1100

Social Responsibility

Employees amp corporate welfare

Its employees are the heart and soul of Florim they provide its character and its DNA Since 2009 when the major economic crisis began Florim has undertaken a number of support programs for its workforceBelow we summarize some of the ongoing programs and initiatives undertaken in 2017bull agreement with Sassuolo Hospital enabling Florim employees and their family members to enjoy discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basisbull special agreements with local health facilitiesbull tax advice at special ratesbull discounts on the purchase of Florim products for employees homesbull free entry to the Peggy Guggenheim Collection in Venice for employees and concessions for family membersbull free provision of water and mineral salts in the plants during the summerbull distribution of fuel vouchers to employees for the Christmas holidays

Summer play schemes

In 2017 the summer play program for the children of employees at Fiorano and Mordano were continued for the sixth consecutive year Six different centers across the area between Modena and Bologna hosted 124 children (compared to 85 the previous year) the company paid the fee for two weeks attendance

In 2017 there were 1486 Florim people worldwide This number includes the employees of Florim Italia Florim USA (more details in specific section) and the other international locationsIn 2017 1100 people were employed at the Italian locations (+102 compared to 2016) subdivided as follows

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 28: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report28

Human resources management policies

The focus on the needs of human resources remained very high in 2017 and a large number of projects were run in this areaAs well as confirming the previous ldquopeople managementrdquo policies already in use for some time both classroom and on-the-job training were reinforced incentive payment schemes were introduced for the sales area in-house communication tools (ldquoon boardingrdquo ldquoFlorim HUBrdquo) were introduced to promote both knowledge of the company and value sharing and last but not least attention was given to ldquoemployer brandingrdquo intended to attract the best talents during recruitment activities

Training

Florim believes that in-house training plays a key role in the companys development and provides a tool for stimulating and fulfilling the potential of its employees More than 11200 training hours were provided in 2017 to 445 people with an average of more than 25 hours of training per employeeAmong the new projects launched in 2017 were included ldquoSafety at Florimrdquo a specific course on safety and the environment and meetings on ldquoOffice 365rdquo - for headquarters departments - to launch the processes for change towards the new Florim HUB digital project

Health and safety

Florim was the first Italian ceramics manufacturer to receive BS OHSAS 18001 (Occupational Health amp Safety Assessment Series) certification from TUumlV this international standard certifies the implementation of an internal management system oriented towards occupational health and safetyThis award confirms the companys constant focus on and commitment to the well-being of its employees Every year in addition to plant inspections and maintenance hours of safety and environment training (more than 2100 in 2017) are organized to raise awareness among workers and supervisors

With support from Sassuolo Hospital the company also organizes free events open to the local community for the promotion of a healthy lifestyle BLSD refresher courses are ongoing for the team of Florim employees trained in first-aid operations and the use of the defibrillators available on site

2017 saw a slight rise in the number of workplace injuries most of them behavior-related and minor (64 of injuries involved fewer than eight days off work) This figure includes accidents during the daily commute

2015 2016 2017

Number of workplace injuries 56 43 67

Workplace injury rate (frequency) 39 297 446

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 29: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 29

The Master in Florim is a vocational training project which aims to bridge the gap between education (high school or university) and the world of work The program sets out to help young people to get to know the company through a well-structured work experience plan It offers a distinctively northern European approach with a method which alternates classroom teaching with internships in the various areas of the company Participants new university or high school graduates specializing in various subjects are therefore able to gain hands-on experience of all Florim departments from RampD to the production process and product distribution for an all-inclusive vision The aim of the MASTER course which lasts six months is to match the individual participants talents with the companys real needs At the end of each edition the company hires the best candidates selected enabling it to acquire new skills new experiences and new energy

The Master course in figures

4 editions52 participants42 people hired in the various departments

bull Human Resourcesbull RampD Laboratorybull Accounting and Financebull Technical Departmentbull Project Divisionbull Business Developmentbull Salesforce Training Hospitality and Eventsbull Salesbull Logisticsbull Information Technologybull Management accounting

The projects prestige is enhanced by its economic context since Florim pays the young participants for the entire period and its aim is to deal with the thorny problem of youth unemployment The Master has won approval from faculties at major Italian universities The project was also a winner in the Emilia-Romagna Regions 2016 awards for Corporate Social Responsibility projects run in the local community

Master in Florim

2017 Sustainability Report

Watch the video of the 4th edition

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 30: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report30

Local community amp culture

This chapter describes a number of programs Florim runs for the local community in the area where it originated and where its headquarters have been located for more than 50 years

Fondazione Ing Giovanni Lucchese

More than 30 years after the untimely death of Giovanni Lucchese ndash founder of what was then Floor Gres currently Florim ndash in 2013 his family established a Foundation in his name which since then has funded organizations and associations that support families in need in the ceramics district The Foundation also supports a variety of projects such as the summer play scheme for employees children the Premio Lucchese the community projects run in the Florim Gallery and the Florim HealthampTraining Center described in more detail belowOne of the most important projects organized during 2017 was the funding of a digital angiography device for Baggiovara Hospital for the treatment of urgent complex cases

Aziende modenesi per la RSI

ldquoAziende Modenesi per la RSIrdquo an independent open inclusive association of companies in the Modena area which believe in the principles and values of Corporate Social Responsibility was established on 30 September 2014 with Florim as a founder member

Premio Lucchese

The Premio Lucchese celebrated its thirtieth edition in 2017 The award established in memory of Giovanni Lucchese consists of scholarships awarded to students at the ldquoAlessandro Voltardquo Technical High School in Sassuolo who graduate with full marks During the award ceremony held every year at the Florim Gallery in association with Societagrave Ceramica Italiana of Bologna topics of current interest are discussed before an audience of eager young listeners

Politecnico di Milano

Since the 20052006 academic year Florim has been a partner sponsor of a large number of Postgraduate Courses run by POLIDesign the Politecnico di Milano consortium which organizes its master degree courses In 2018 the Politecnico came fifth in the ArtampDesign section of the QS World University RankingsAlso in association with POLIDesign since 2012 Florims Milan Flagship Store has hosted design events for architects and designers of every nationality

Intrapresaelig Collezione Guggenheim

As befits a company that combines the values of its local community and historic and artistic heritage with a flair for research and innovation Florim recently launched a partnership with the Peggy Guggenheim Collection in Venice Since its foundation Florim has always had a unique ability to incorporate the true cultural significance of its industry in its business model and by this project once again confirms its commitment to promoting art by supporting a collection of extraordinary beauty

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 31: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

The project run jointly by Florim and Sassuolo Hospital adopts a completely new model combining industrial culture and healthcare in an original way to benefit the local and community in which the promoters operate The Florim Health amp Training Center is the synthesis of this idea an innovative center which promotes local training health education and information advanced medical simulation and research The Santa Maria Nuova Hospital in Reggio Emilia joined the project in 2017

The Center

On the main Florim site and opened on 16 April 2014 the Center is 550 square meters in area and contains a modular lecture theatre able to seat over 100 people and a number of classrooms for seminars and lessons At its heart is a state-of-the-art control room crammed with technology that operates dummies capable of reproducing human functions of all kinds Advanced simulation is a major aid to maintaining the skills of emergency healthcare workers with a particular focus on pediatric and neonatal resuscitation

Health meetings

Designed as a space for community use the Center also aims to become a place where all sections of the population - workers schoolchildren parents teachers volunteers and even just members of the public - can learn about preventive health care and acquire first aid skills After the distribution to Florim employees of a questionnaire surveying their training needs and preferences a Center Scientific Committee of Sassuolo Hospital medical personnel was appointed and drew up a plan of quarterly Health meetings All meetings are led by doctors with expertise in the various topics who answer the many questions from the audience at the end of their talks Between its opening and the end of December 2017 the Center hosted 17 meetings on a variety of topics

Healthcare discounts for Florim employees

The project also includes a major welfare program for all Florim employees and their family members entitling them to discounts and shorter waiting times for specialist examinations and outpatient diagnostic tests performed on a private basis

American Heart Association

The world-famous American Heart Association (AHA) is the oldest and most respected American voluntary organization dedicated to the fight against cardiovascular diseases and strokes In 2015 the AHA via the Simaid International Training Center named the Florim Health amp Training Center as an Authorized Training Center for basic and advanced cardiopulmonary resuscitation

Florim Health amp Training Center

2017 Sustainability Report

Carabinieri Athletics Team attending a BLS course

Watch the HeathampTraining

Center video

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 32: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report32

Product responsibilityHere we summarize the concept of ldquoMade in Florimrdquo denoting a product that encapsulates the companys core values passion innovation a constant commitment to improvement and corporate social responsibility

Florim product certifications

CE Marking guarantees the user that the materials purchased meet the requirements of the relevant regulations and that the characteristics concerned are virtually unchanged for all production lots It is a declaration of conformity which safeguards the consumers safety and the presence of the CE Marking on packaging guarantees that Florim products comply with the relevant regulatory requirements

Ecolabel (EC Regulation 662010) is a certification granted to products which comply with ecological and performance criteria set at a European level concerning raw material extraction supplier selection manufacturing processes packaging distribution use and disposal The certified Florim collections are Ecotech Reverse Walks 10 by Floor Gres and Pietro del Nord under the Rex brand

Several ceramic tile collections bearing the Florim brands have earned certification from Bureau Veritas for their pre-consumer recycled material content These articles are therefore fully eco-compatible and can meet the environmental sustainability requirements imposed by many international certifications

Florim is a member of the US Green Building Council (USGBC) the most important association which promotes the reduction of buildings negative impact on the environment To allow the effective monitoring a projects level of sustainability the USGBC has developed a certification procedure for the development of sustainable buildings which assess and certifies the sustainability of a building in its entirety Florim materials are able to help to gain ldquoLEEDrdquo points in a number of areas (data available on the Florim brand websites)

Florim has achieved the prestigious Greenguard certification for all its products Issued by the American body UL Environment this certification aims to reduce indoor pollution caused by interior design systems and materials UL Environment thus aims to protect health by improving air quality and reducing peoples exposure to chemicals and other pollutants Florim has also achieved Greenguard Gold Certification which imposes even stricter limits to confirm that a given product is suitable for use even in locations such as schools and health care facilities

The EPD or Environmental Product Declaration is a document which defines the environmental impacts arising from production In 2016 Florim participated in the study - certified by the German organization IBU - performed on the ceramics industry average data which aims to raise international awareness of the excellence of the environmental standards achieved

Beyond the standardsMade in Florim products are a guarantee of safety high innovative content and eco-friendliness The people who produce them work in a safe place and in ethically sustainable conditions Due to their nature all Florim products are guaranteed free from pollutant emissions do not accumulate electrostatic charges are frostproof and completely inert and are undamaged by contact with flames The Groups internet sites and collection catalogues contain the technical data sheets which detail the product information (resistance to abrasion stains frost etc) for every collection as well as its recycled material content with the relative certificatesDuring the period under consideration no banned products were placed on the market and the company was not found guilty of any breaches of the law with regard to data protection or its marketing and communication activities

EU Ecolabel nr IT2104

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 33: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 33

Quality SystemThe current ISO 9001 standards define quality as the ability to satisfy explicit or implicit needs via a product or a service A Quality System implies constant improvement of company processes in order to realize products that satisfy the customers needs Further to the 2016 audit Florim obtained the renewal of its EN ISO 90012015 certification for the design manufacture and sale of all categories of ceramic tile

Objective Indicator 2015 2016 2017

Continual improvement of control of the production process

First Grade Product () 952 956 964

Quality rate () 905 909 922

Scrap rate () 42 49 43

Productivity (sq mhour) 190 200 202

Improvements in sales performance and customer satisfaction

Innovation rate () 455 364 295

Coverage () 813 816 751

Total portfolio available for shipment in 1 month ()

893 897 870

Optimization of range and stocks

Obsolete stock () 120 69 51

Stock turnover rate () 15 16 15

Gradual elimination of disputes complaints and claims concerning service

Square meters affected by complaints () 12 09 17

Complaintsorder items () 10 10 10

Gradual improvement in staff skill levels

Employee turnover () 04 12 06

KeyPercentage of first grade product percentage ratio between the square meters of first grade products and the total square meters transferred to stockQuality rate percentage ratio between the square meters of first grade product transferred to stock and the square meters leaving the pressesScrap rate percentage difference between square meters of material leaving the presses and square meters of product actually transferred to stockProductivity ratio between the square meters transferred to stock and the total hours worked in the plantInnovation rate ratio between square meters sold belonging to series designed in the last three years and total square meters sold Florim uses this indicator to assess the effectiveness of its design process in terms of salesCoverage percentage ratio between square meters available for immediate shipment and the square meters on orderTotal portfolio of orders shippable within one month percentage ratio between the square meters which can be shipped in 30 days and the square meters on orderObsolete stock percentage ratio between the square meters of substandard discontinued produce and the total square meters in stock Stock turnover rateratio between the square meters sold and the square meters in stockSquare meters affected by complaints percentage ratio between the square meters affected by complaints and the square meters soldComplaints by number of order items percentage ratio between the number of complaints and the number of items orderedEmployee turnover percentage ratio between the number of employees leaving the company and being replaced and the workforce at the start of the year

Florim also proudly holds the coveted AEO ndash Authorized Economic Operator - certificationFurther to a lengthy and demanding audit process by the Customs Authorities in 2016 Florim was awarded AEO certification the first company in the Province of Modena to receive this major form of approval Authorized Economic Operator status guarantees the companys absolute compliance with customs and security requirements in its foreign trade

In 2019 the European Commission is introducing the figure of the Certified Taxable Person (CTP) a taxpayer recognized as trustworthy by the fiscal authorities of all European Union Member States Organizations which already have AEO certification automatically meet the criteria for CTP status and will benefit from a number of simplified fiscal procedures Florim is also thinking of its next step the in-house performance of customs clearance procedures

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 34: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report34

CEDIT ndash Ceramiche dItalia | Cromatica collection by Formafantasma

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 35: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 35

OUR COMMITMENTS

The promises we keptIn our last Sustainability Report we committed to achieving a large number of objectives the following are the outcomes we attained

Construction of a new factory at Mordano to produce large slabs OBJECTIVE ACHIEVED

Launch of the project to unite the Florim SPA sales organizations OBJECTIVE ACHIEVED

Total restyling of the corporate and brand Internet sites OBJECTIVE ACHIEVED

Launch of the HUB project - Intranet CRM Marketing Automation OBJECTIVE ACHIEVED

New plants at Florim USA a press two sorting lines a polishing and rectifying line

OBJECTIVE ACHIEVED

New working spaces and cloakrooms for technical staff at the American plant OBJECTIVE ACHIEVED

Installation of a new spray dryer and raw material handling system at Florim USA

OBJECTIVE ACHIEVED

Economic Responsibility

Purchase of a new cogeneration plant for the Mordano location OBJECTIVE ACHIEVED

Introduction of a new rainwater collection system at Fiorano OBJECTIVE ACHIEVED

Land reclamation project involving covering of the Rio Spezzano stream at Fiorano

OBJECTIVE ACHIEVED

Implementation of new software for continual monitoring of energy impacts at Fiorano

OBJECTIVE ACHIEVED

Modernization of the compressor room to improve energy impacts at Mordano

OBJECTIVE ACHIEVED

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities

OBJECTIVE ACHIEVED

Continuation of replacement of the diesel forklift trucks for use on outdoor yards with electric vehicles

OBJECTIVE ACHIEVED

Environmental Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs

OBJECTIVE ACHIEVED

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo SPA

OBJECTIVE ACHIEVED

Organization of new community events at Florim Gallery OBJECTIVE ACHIEVED

Organization of a new event for Florim SPA employees OBJECTIVE ACHIEVED

New offices for hospitality and events staff at Fiorano OBJECTIVE ACHIEVED

Social Responsibility

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 36: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report36

The targets we set ourselvesWe aim to achieve the following objectives in 2018

Economic Responsibility

Construction of a new Industry 40 factory at Fiorano for large slab processing and logistics

Construction of two roundabouts to improve traffic flows in Fiorano

Installation of whole tile polishing machines and other surface treatment equipment in the Fiorano factory

Launch of the Florim HUB project also including a new CRM and Marketing Automation system for the Fiorano headquarters departments

Continuation of implementation of the ldquosupplier portalrdquo online project for the digital automated management of purchase orders

Unification of the sales organization for multibrand management of the sales order cycle

Start of refurbishment of the Mordano office and shipping department building

Installation of a new kiln in the Mordano Industry 40 factory

Modernization of the glaze grinding department at Mordano with energy-saving plants connected to innovative software

New finished product store in the American factory

Rebranding operation for the American brand

Environmental Responsibility

Construction of a new 4MWp photovoltaic system at Fiorano

Installation of an industrial sludge recovery and reuse plant at Mordano

Continuation of replacement of the diesel forklift trucks with electric vehicles for use in indoor and outdoor areas at Mordano and Fiorano

Extension of the use of software for the computerized logging of maintenance work in the production departments at Mordano and Fiorano

Continuation of in-house training in the environment and safety at Mordano and Fiorano

Increase of recycling targets through constant awareness-raising amongst all staff and optimization of recycling facilities at Mordano and Fiorano

Construction of an underground tank for the low energy storage of industrial wastewater at Mordano

Social Responsibility

Improvement of corporate welfare through the activation of new free services and discounts tailored to employees needs throughout the company

Adoption of the new European Personal Data Protection Regulation - GDPR (General Data Protection Regulation)

Continuation of the health meetings for the local community in association with Ospedale di Sassuolo Spa

Organization of new community events at Florim Gallery

Organization of a new event for Florim SPA employees

Installation of two new defibrillators at the new Industry 40 factories at Fiorano and Mordano

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 37: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 37

FLORIM USA

ProfileFlorim USA with headquarters in Clarksville - Tennessee and its subsidiary Florim Solution Inc have been part of the Florim Group since 2000 The Florim USA manufacturing plant one of the largest most technologically advanced in the United States produces porcelain tiles for the residential market and undertakes commercial projects in North America During the last few years Florim USA has implemented a growth and process optimization strategy which has generated significant technological progress with more innovations planned for the future This strategy will put Florim USA at the worldwide state of the art in porcelain tile manufactureIn December 2017 Florim USA announced its intention of undertaking a re-branding operation to be carried out during 2018

Economic ResponsibilityIn 2017 of the 20 million dollars invested 139 million were spent on the installation of a rectification and polishing line and two grade sorting and packaging lines as well as other smaller installations while 32 million dollars were invested in the construction of a new building to house the technical staff The new building uses the very latest energy-saving lighting heating and cooling techniques to minimize environmental impact

Florim USA headquarters | Clarksville Tennessee

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 38: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report38

Environmental ResponsibilityFlorim USA implements the same environmental policy as Florim and is committed to achieving the following objectivesbull reduction of the energy used in the production processbull improvement of the waste management process with a focus on recovery and reusebull introduction of new more eco-efficient technologiesbull adoption of integrated management systems

Florim USA has been pursuing a strategy of careful management of its operations and environmental impact for a number of years Here we summarize the main actions taken and the results achieved in 2017bull 100 recycling of wastewater within the processbull optimization of the management of water bottles with elimination of about 34200 of them per annumbull reuse of almost all production scrap (+99)bull 86300 kg of cardboard recycled in 2017bull 9300 kg of plastic recycledbull recycling of 23 complete trucks of pallets

In order to reduce its environmental impact Florim USA recently improved control of kiln emissions by modifying their gas scrubbing components The change resulted in a two thirds reduction of waste requiring landfill disposal along with two thirds reduction in treatment costs

Environmental Projects and Awards

Florim USA has received Clarksville Montgomery County Green Certification (CMCGC) CMCGC is a program designed to help companies learn and implement best practices in the area of environmental stewardship to sustain the local communitys resources through a series of free workshops taught by local environmental specialists Since 2014 Florim has allocated some of its environment managers time for the running of these workshopsFlorim USA earned this ldquogreenrdquo company certification thanks to a large number of projects first and foremost the one which eliminated the use of disposable water bottles replaced with individual reusable bottles provided by the company and a series of fill-up stations About 34200 bottles are removed from the waste cycle every year

Starting in 2017 Florim USA has decided to adopt a new digital storage system for customer and supplier invoices sales orders and shipping documents which will lead to the gradual phasing-out of paper files The company is also committed to only purchasing environmentally certified reams of paper and used paper is collected separately for correct disposal Externally most of the merchandising tools the company distributes are made from recycled paper and it is encouraging their gradual digitization by publishing all catalogues in digital form on the Internet site

During the latest phase of its plant optimization Florim USA has implemented a thorough construction material reuse policy In the various stages of demolition of the old production equipment including the old storage silos the concrete debris was recovered and reused in other construction worksThis project alone generated 11500 tons of recycled aggregate as well as several hundred tons of metal sold to a recycling firm

Environmental Management System and Eco-Compatible Products

Florim USAs products help builders and designers to meet the requirements for sustainable buildings as defined by the United States Green Building Council (USGBC) through the LEED Green Building Rating System This protocol evaluates and certifies the environmental sustainability of a building as a unit from its design to its day to day management In order to achieve this result many product series contain 40 or more recycled materialThis feature contributes to an increase in the LEED score in the projects where these products are installed In 2014 Florim USA together with a large number of other US tile manufacturers and the Tile Council of North America drew up a type III environmental product declaration (EPD) certified under the ISO 14025 standard This ceramic tile life-cycle analysis enables Florim USA products to gain also LEED points under the new LEED v4 protocol

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 39: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 39

Water use (gallons per million square feet of finished tile)

208137 216246 204962 195280 194268

Environmental Performance Indicators - Summary

The following are the main environmental indicators related to the impact and performance of Florim USA during 2017

Pre-consumer recycled materials

Its internal material recycling processes enable the company to minimize its environmental impact since most of the material which would otherwise be sent to landfills or other waste treatment centers is reusedbull Wastewater is entirely recycled within the production process without any discharge into the municipal drainsbull The material collected in the fabric filters from the body and glaze preparation areas the presses and glaze application is entirely recycled within the processbull All scrap fired tiles are entirely recycled within the processbull 86300 kg of cardboard was sold to an external recycled material dealerbull 23 trucks of unusable wooden pallets were sold to a pallet regeneration companybull About 5700 kg of waste shrink-wrap plastic film was recovered and recycled

Post-consumer recycled materials

Under an agreement with the local landfill Florim USA has recycled about 80000 kg of glass intended for landfill disposal in its production process

Water use disposal and reuse

The water used during the production process is recycled continually therefore no water is discharged into the municipal drains

Water use 2015 2016 2017

Water use(gallons per million square feet of finished tile) 194268 203928 186214

Energy use

2015 2016 2017

Cubic feet of natural gas per million square feet of finished tile 8390503 8380000 7988679

kWh per million square feet of finished tile 465976 490300 437619

Emissions

Particulate material lt 2315 tons per year

SO2 (sulphur dioxide) lt 1672 tons per year

VOC (volatile organic compounds) lt 1239 tons per year

NOx (oxides of nitrogen) lt 1348 tons per year

The 2017 emissions figures are in line with those for previous years and well below the regulatory standards

Florim USA has added the newest and most efficient spray dryers and kilns in recent years This investment in efficiency can be seen in the data which shows a decline in the natural gas requirement per square foot of tile

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 40: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report40

Social Responsibility

Employees

The Florim USA and Florim Solutions workforce is comprised of 369 employees at the production site the Clarksville and Nashville outlet stores the sales regions and the Flasghip Store in New York CityOf the 369 employees 288 are hourly workers and 81 professional staff Of these 19 employees are Italians on assignment to the United States Florim USA offers a number of benefits to full time employeesbull Health and dental care insurancebull Vision insurancebull Life insurance (supplemental life insurance for employees and families available optionally) bull Short-term and long-term disability supportbull Employee retirement plan

2015 2016 2017

Workplace injuries 29 27 23

The Employee Assistance Program (EAP) also offers support to employees and their families in the event of psychological difficulty or other problems that can have a negative impact on their quality of life Florim USA supports all the costs of the program

Equal opportunities

Florim USA provides equal opportunities in all employment practices to all qualified employees and applicants regardless of race color religion gender national origin age disability or membership of the armed forces or any other category protected by federal state or local laws

Health and safety

Florim USA is committed to ensuring a safe healthy workplace for all employees It therefore replaces old and obsolete equipment with new more technologically advanced machinery and updates safety plans as new information becomes available As well as an internal supervisor Florim USA has also appointed a health and safety committee which constantly monitors the plans effectiveness and makes any changes required

Process Improvements

In response to employee feedback the HRPayroll team at Florim USA began work in 2017 on a project to modernize its HRPayroll tools Effective January 1 2018 employees will be able to see all payroll vacation benefits and timeattendance information directly on their phone or computer This project puts more information in the hands of the employees so they can manage their work life better but also is anticipated to save the company thousands of hours in manual processes associated with the former payroll system

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 41: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 41

In 2017 Florim USA employees completed an average of about 28 hours of training This training included topics such asbull Operating procedures for the new equipment bull Department specific training on equipment and procedures bull Leadership (performance management communications coaching etc) bull Basic safety training specifically - safe correct use of forklift trucks - training on work in confined spaces - shutdownwarning procedures and safe electrical practices - safe lifting procedures

For employees wishing to continue their education Florim USA offers educational assistance to pay for tuition books and supplies and is available for any employee wishing to study for a technical qualification a secondary diploma or a collegeuniversity degreeThe Florim USA training plan also includes a component of international cross-training This involves bringing experts from Fiorano Modenese (Italy) to train local employees on new equipmentprocedures as well as sending key employees to visit Florim in Italy where employees are able to learn and share best practices with other plants

Throughout 2017 Florim Solutions continued to provide free courses toward AIA certification for architects engineers and contractors to improve their knowledge of sustainable porcelain stoneware tiles

Employee welfare activities

Florim USA employee picnic - In 2017 the company once again held an annual picnic for employees where a wide variety of foods games activities and live shows (along with a sudden rainstorm) provided an unforgettable days enjoyment At the picnic participants received many prizes including the grand prize trip to Italy for two people

Employee anniversary dinner - In honor of Florim USA employees with 5 10 15 20 or even 25 years of service a special evening event was held At the same dinner the employee of the year was announced It was a great evening with the President CEO and managers to celebrate the loyalty and hard work of these employees

Training

ldquoEmployee of the yearrdquo award | CEO Marco Fregni presents the prize to Joepet Garcia

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 42: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report42

Corporate and Social Responsibility

In 2017 Florim USA continued to provide support to a number of initiatives in its local area Some of the main initiatives include

Scholarships - Four scholarships to deserving students have been established at the Austin Peay State University in memory of Florim Group founder Giovanni Lucchese

Montgomery County Green Certification Program - Florim USA staff actively participate in the program which aims to help companies learn and implement best practices with regard to safeguarding the environment and environmental resources

Donations - Florim USA with the active support of the employees again made a large number of donations to

bull Operation Compassion 2017 was a record breaking year for natural disasters in the United States which saw $ 3062 billion in related damages Florim USA supported the rebuild efforts by donating 32 truckloads of tile (253664 sq ft) Operation Compassion is a charitable organization that coordinates the rebuilding efforts in the most damaged areas through a broad network of volunteers dedicated to serving people in needbull Austin Peay State University Employees donated many gently used books in good condition in the hope of further promoting the education of future generationsbull Community Cares the national organization that promotes the acceptance and social inclusion of individuals with Downs Syndromebull Disaster relief groups After the massive destruction of Puerto Rico following hurricanes Irma and Maria employees jointly offered their support donating critical supplies bull Habitat for Humanity Since 1992 Habitat for Humanity in Montgomery County Tennessee has worked with 93 low-income families with more than 210 children to revitalize various parts of Clarksville-Montgomery County by building new homes

Other activities - Florim USA continues to support the community by participating to the several other activities

bull The company again organized a canned food collection for Manna Cafeacute in Clarksville TN Manna Cafeacute is a local non-profit organization based in Middle Tennessee with the primary mission of meeting peoples fundamental need for food before encouraging them to permanently change their lives for the better bull Every year Florim USA participates in the United Way Drive initiative to support local non-profit organizations which provide economic assistance and psychological support to persons in difficultybull Employees rallied together to provide breast cancer awareness and support to the local YMCA organization

ldquoCollezione Breccia - Noir | Made in USArdquo

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 43: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 43

Quality SystemFlorim USA works under a Quality System certified to EN ISO 9001 standards The following are some of the figures in brief

Objective Indicator 2015 2016 2017

Optimization of control of the production process

First Grade Product () 949 9510 966

Quality rate () 906 909 916

Scrap rate () 45 45 5

KeyFirst grade product ratio between square feet of first grade material and total square feet transferred to stock Quality rate ratio between square feet of first grade material transferred to stock and square feet pressedScrap rate ratio between square feet pressed and square feet of product actually transferred to stock

Other activitiesFlorim USA and trade shows

In 2017 Florim USA participated at a number of shows and events including Surfaces Coverings Hardscape North America Total Solutions Plus and Neocon These events targeted at the various categories of industry professionals such as dealers and designers gave Florim USA the opportunity to present its new range of indoor and outdoor products

Design Center

Florim USAs Nashville Design Center celebrated its 2 year anniversary in December 2017 with a five-star rating from Houzz an online community for architecture interior design decorating landscaping and home improvement A five-star rating from Yelp and an A+ rating from the Better Business Bureau were also among the list of accolades for the stylish Nashville location Focused on continuing education and awareness for the porcelain tile community CEU courses are frequently offered along with hands on demonstrations

Coverings 2017 - Orlando | The Florim and Florim USA stand receives the ldquoOverall Best in Showrdquo award

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 44: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report44

GRI international sustainability indicators SDGsThe information below illustrates the correspondence between the Florim (Italian companies) 2017 Sustainability Report the GRI-G4 guidelines and the icons of the Sustainable Development Goals (SDGs) definitively adopted by the United NationsA description of the SDGs is available at wwwglobalcompactnetworkorg

GRI indicators

Description Page Reference to SDGs

1 Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the organization 5

2 Organization profile

G4-3 Name of the organization 2

G4-4 Primary brands products andor services 9

G4-5 Location of the organizations headquarters 9

G4-6 Number and names of the countries where the organization operates 9

G4-7 Nature of ownership and legal form 14

G4-8 Markets served 9

G4-9 Scale of the organization 8 8

G4-10 Significant changes regarding size structure or ownership 14 8

G4-11 Employees covered by National Collective Bargaining Agreement 27

G4-13Significant changes regarding the organizations size structure ownership or its supply chain

14

G4-14 Precautionary principle 3233

G4-15 List of external commitments in which the company is involved 22 32 33

G4-16 Associations or interest groups in which the company is involvedwwwflorimcom gt

company gt about us gt partnerships

3 Identified material aspects and boundaries

G4-18 Process used to define the report content 6

G4-19 Material aspects 16

G4-20 Boundaries of each material aspect 6

G4-21 Boundaries of each material aspect outside the organizationPartial reporting

(pages 6 16)

G4-22 Explanation of the effect of any restatements of information provided in previous reports 6

G4-23Significant changes from previous reporting periods in the scope boundaries or measurement methods

6

3 Stakeholder engagement

G4-24 List of stakeholders 15

G4-25 Identification of stakeholders 15

G4-26 Stakeholder engagement 6 16

G4-27 Key topics and concerns that have been raised through stakeholder engagement 16

4 Boundary of the Report

G4-28 Reporting period 6

G4-29 Date of publication 2

G4-30 Reporting cycle 6

G4-31 Contacts and addresses for additional information 46

5 GRI Content Index

G4-32 Reporting option chosen 6 7

G4-33 External assurance of ReportThe Report is not

externally assured

6 Governance

G4-34 Governance structure 14

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 45: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 45

GRI indicators

Description Page Reference to SDGs

7 Ethics and integrity

G4-56 Values principles standards and norms of behavior 13 16

Economic performance indicators

EC1 Direct economic value generated and distributed 19 25789

EC7 Development and impact of infrastructure investments and services supported 23 24 31 257911

Environmental performance indicators

G4-EN2 Percentage of materials used that are recycled input materials 17 22 23 32 812

G4-EN3 Energy consumption within the organization 24 781213

G4-EN6 Reduction of energy consumption 17 24 71213

G4-EN7 Reductions in energy requirements of products and services 24 32 3

G4-EN8 Total water withdrawal by source 17 23 6

G4-EN10 Percentage and total volume of water recycled and reused 17 21 23 612

G4-EN11 Biodiversity 23 615

G4-EN15 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN16 Total indirect greenhouse gas emissions by weight 25 3121315

G4-EN19 Reduction of greenhouse gas emissions 8 24 1315

G4-EN21 NOx SOx and other significant air emissions 25 31215

G4-EN22 Total water discharge by quality and destination 23 6

G4-EN23 Total weight of waste by type 17 22 3612

G4-EN27 Impact mitigation of environmental impacts of products and services 23 32 68121315

G4-EN29 Monetary value of significant fines 22 16

G4-EN30 Significant environmental impacts of transporting products and goodsmaterials 28 111213

Social performance indicators

G4-LA1 Total number and rates of new employee hires and employee turnoverPartial reporting

(pages 17 27)8

G4-LA6 Workplace injury ratesPartial reporting

(page 17)38

G4-LA9 Average hours of training per year per employee 28 48

G4-LA12Composition of governance bodies and breakdown of employees according to gender age group etc

27 58

Society

G4-SO1 Operations with local community engagement 12 31 16

G4-SO3 Operations assessed for risks related to corruptionPartial reporting

(page 13)

Product responsibility

G4-PR1 Assessment of health and safety impacts for improvement 23 32

G4-PR3 Type of information about products and services required by the procedures 32 12

G4-PR5 Proceedings relating to customer satisfaction including surveys conducted to measure it 33

G4-PR6 Sale of banned or disputed products 32

G4-PR8 Number of substantiated complaints regarding breaches of privacy 32 16

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 46: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report46

Your assessment

You are kindly requested to take a few minutes of your time to give us your assessment and any suggestions to enable us to improve future editions of our Sustainability Report

To keep up to date with our business

For any further information please contact our communications department comunicazioneflorimcom

CEDIT ndash Ceramiche dItalia | Rilievi collection by Zaven

wwwflorimusacom

MilestoneTiles

milestone_tiles

milestone_tiles

Milestone_tiles

Click here to send us your opinion

wwwflorimcom

Florim Ceramiche

Florim4Architects

Florim_ceramiche

Florim Ceramiche spa

Florim Ceramiche

Florim Ceramiche

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 47: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 47

Windows of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

Interior of Spazio CEDIT | Foro Buonaparte 14 ndash Milan

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 48: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report48 48

ldquoArte Design Industriardquo | Florim event at the Peggy Guggenheim Collection (Venice)

ArtampDesign | Florim event at the Opera House in Valencia (Spain)

ldquoIn cammino verso la bellezza tra etica ed esteticardquo | Social event at Florim Gallery (Fiorano Modenese - Modena Italy)

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 49: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report 4948

Cersaie | Nek at Florim Gallery (Fiorano Modenese - Modena Italy)

ldquoPremio ERrsirdquo | Emilia Romagna Region event hosted at Florim Gallery (Fiorano Modenese - Modena Italy)

Christmas Party | Event held for employees in the new Industry 40 factory at Mordano (Bologna)

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom

Page 50: 10 - Microsoft › ... · Industrial innovation | 4.0 evolution At Mordano (Bologna), it took the company just six months to construct a building of 2 56,000 mand launch production

2017 Sustainability Report50

Florim Ceramiche spaVia Canaletto 24 - 41042 Fiorano Modenese (Modena Italy) - Tel +39 0536 840111 - wwwflorimcom