………….are you inspired?

1. ………….are you inspired? COST OF NEW LOGO: R110 000 000 COST OF NEW UNIFORMS: R28 000 000 TOTAL COST: UNKNOWN New 'Pickn Pay' Logo designed by Landor (UK)

2. Pick n Pay Shop Stewards’ Alliance 2012 Company Update June 2012 Labour Research Service www.lrs.org.za

3. Company report • Performance • Growth • Ownership • Employees • Directors’ Fees • Outlook & strategies …BE PREPARED • To engage with the company, understand the company • You know your experience of the company – but the Annual Report what is management telling shareholders and the public – how do they relate? • What is their strategy, how will the union respond? • Requesting / downloading copies of the annual report? • Response? COMPANY REPORT – Pick n Pay to February 2012 OPPORTUNITIES FOR ORGANISING, CAMPAIGNING, EDUCATING, SOLIDARITY in 2012 and beyond

4. For us to double the number of stores in the rest of Africa in the next five to 10 years is absolutely conceivable. We just don’t have plans for it yet. – Acting CEO Ackerman 2012 We are not chasing growth in Africa for growth's sake - we're chasing growth for profit's sake – Deputy CEO van Rensburg 2012

5. Growth in store numbers Stores in June 2010 – June 2011

6. EMPLOYEES / STAFF / WORKERS

7. Sales improve but no profit recovery – analysts sceptical • Sold Franklins – R1.2 bn • Launched Smartshopper • Accelerated store roll out – 88 stores in SA, 3 in Africa • Improved distribution capability – DCs up and running • Negotiated flexible working conditions – labour cost containment • Marked improvement in second half performance With no captain and a demotivated crew, it’s hard to see this ship sailing any time soon. – Analysts on 2012 results Overview year – February 2012: ‘We have not been as good as we couldhave been’

8. Sales increase of 8.1% on 2011 to R55,634,400,000 (2011 4%) • Total number of stores outside SA, both owned and franchised represent 7.7% of the group's till sales. (Shoprite is 11.3%) Sales rising slowly

9. Profits down for a second year – drop 25% in 2011, another 14% in 2012. Our labour cost has been well controlled and with our new flexible labour agreement, there is significant potential for improvement. Company Profits

10. Performance comparison – bottom of the list

11. Directors’ salaries up on average 15% on 2011 to average salary of R2,424,956. Average remuneration of R3,212,200 • The Annual report states that PAY FOR PERFORMANCE is key, but more than 84% of annual remuneration is guaranteed. Directors’ fees – up upup…

12. CEO - Nick Badminton – Golden Handshake of R10 100 000 on leaving the company at the end of 2012 year Chief Executive fees 2011

13. Work out your wage gap: • Take CEO Annual Rem: _R14, 959,700 • Take your monthly wage: _______________ • Convert to ZAR using the exchange rate at year end: • Multiply by 12:___________________ • Calculate CEO Annual Rem ÷ the answer to 3. • The answer is how many years it would take you to earn what the CEO tool home in 2011 In South Africa, this means a wage gap of 416 years – it would take a minimum wage full-time worker 416 years to earn what Nick Badminton took home in his final year at Pick n Pay. Wage Gap – CEO: Worker

14. Increases – Fees: Performance

15. Pick n Pay’s dividend policy has been unhealthy to the point where the company has struggled to fund normal growth – Senior analyst 2012 Dividends – Shareholders Smile

16. OWNERS - SHAREHOLDERS Ackerman Family – Shares worth – around R5, 418, 429, 240 on 6 June 2012 GEPF - Shares worth around R 444, 720,000 Shareholders ‘There is no plan at this stage to change this structure’ – Ackerman 2012

17. Context going forward for the company – pressures on customers • Higher electricity prices – for company and consumers • Impact of European slump on SA economy • Little growth in consumer disposable income due to unemployment increases, industrial action • …however, management claims : • Encouraging signs Momentum continuing into FY 2013 • Lots to be done but tremendous energy in the business Annual Report 2012: Unlike labour, business is not in alliance with the governing party, and often struggles to have its voice heard above those with more privileged access to national policy debates.

18. They also ignored the global trend towards centralised distribution, and as a result are now running a marathon at a sprinter’s pace in order to make up for lost time - 2012 "I don’t believe it will make much money from it.“ – senior analyst 2012 Outlook and strategy update…

19. Large mergers take time, the impact of this merger will not be all at once - PNP seems unprepared…but • Competition for sites • Increasing imports • Centralised distribution – unprepared …not just Walmart, but the impact on other sector strategies – Shoprite, Woolworths? • Take-over target THE COMING OF WALMART …“the competition is not in our core business”

20. Walmart – increasing loss of market share – pressure on workers to compensate for this. • Take over target – impact on working conditions • Staff numbers continue to drop to store openings - increased use of outsourcing, labour brokers. • Labour flexibility seen as a vital life line to profits – while they rake in millions in salaries and dividends. • Further centralisation of power in the hands of the family • The franchise challenge continues and is exacerbated by BP deal • Failing strategy – workers will bear the brunt, management will harden further Key challenges for workers / unions / the Alliance…

21. Clarity / Questions / Comments / Corrections

22. Our employees Our vision – our employees will work for the most sought-after employer in the retail industry, with access to recognition, opportunities, working conditions and competitive remuneration. Our engagement – we communicate actively and comprehensively with our people through initiatives which include management updates, employee surveys, monthly publications, in-house television and radio, employee conferences, skills development and training and ongoing engagement with our union. Is this your experience of working for Pick n Pay?