GARETH ACKERMAN, CHAIRMAN, PICK N PAY

AGM 2023

Good morning everyone and welcome to our AGM.

We are surrounded by change. It is a fundamental part of our development. Sustainable change

often requires a step change. The Pick n Pay Group has been embarking on step change for a
number of years to ensure the business adapts to technological and societal changes which impact
on all sections of our society and the difficult space in which we all find ourselves.

When you’ve been hammered relentlessly by setbacks on every front over a long period, there’s a
temptation to give in, either to fatalism, or a misplaced faith in imminent redemption.

It’s been hard to stay positive about the future of SA for a long time now.

Rolling blackouts, surging crime and criminal cartels, the breakdown of the country’s logistics
capacity, the burning of trucks, and a diplomatic stand-off with our biggest trading partners have
quelled any thoughts of an early economic revival.

To add to this, there have been recent government policy and legislative changes which are
particularly concerning. I am clearly not alone in finding these developments disturbing.

The Employment Equity Amendment Act, for example, threatens private employers if they fail to
employ a workforce mirroring racial demographics.

This would have the effect of making large numbers of qualified people unemployed and substituting
them with unqualified people. It is very probably unconstitutional, and could ruin many productive
companies and foreign investments on which the economy depends.

I cannot understand why our government has not caught up with the times. The Act tries to force on
business by decree an outcome that most large corporates are already doing their best to achieve.
Not because they’ve been instructed to do so, but because of the growing recognition that a diverse
workforce and leadership is a strategic asset. This is the very foundation of ESG principles that most
companies are following with vigour and energy.

Just by way of example, Pick n Pay spent over R50-billion on BEE businesses during the last financial
year – a factor of 8 ahead of any other retailer. Commitment and transparency should be favoured
over punitive legislation. I am proud of PnP once again achieving level 5 BEE Status.

In yet another very worrying development, the new provision for race-based water rights has huge
potential to impact food security. There is no line of would-be black shareholders with the necessary
capital to purchase this required equity in farms. This could ruin or close many of our farms and
undermine the value of all existing farms, thus also creating a banking crisis.

At a time of high food inflation and unemployment, I can’t believe the government would propose
policies that would close down productive farms and businesses, and in doing so increase food
shortages and food prices.

Yet we have to guard against those two temptations – fatalism on the one hand, and false hope on
the other.
Fatalism will not help us because it amounts to an acceptance of the way things are. And if we
accept the current state of affairs, then the downward spiral we’ve been on can only accelerate.

Blind optimism is no good either. It may cause us to overlook the difficulties that must be confronted
if we are to get the country and the economy back on track.

At times like this it’s important to keep an eye on underlying factors that are most likely to influence
the trajectory over a longer period than what is reflected in daily headlines.

A ray of hope

With that in mind, I want to outline why, in spite of everything, I am somewhat more positive about
the prospects for the country than I was a few months back when we presented our financial results.

The first reason is the apparent recognition by government that it needs help to get the economy
moving again. If this is a genuine shift in attitude towards the private sector and a move away from
the heavy hand of the State, then there is reason to believe that some of the most urgent challenges
in energy, logistics and safety and security can be more rapidly turned around.

The second positive development has been the strong growth in the pipeline of independent power
projects since the lifting of the 100MW licensing cap. More than 4,300MW, equivalent to four stages
of load shedding, is set to come onto the grid in the next two years. That is not even counting the
impact of accelerated domestic and private investments in small-scale solar generation, supported
by tax incentives, and local government initiatives to procure energy independent of Eskom.

The consequences of this will ripple through the economy for years to come.

Similar progress is beginning to seem possible in freight transport and logistics, and we’ve also seen
the unblocking of the broadband spectrum impasse at long last. We saw this week the partnership
with Transnet on our ports.

Together, these issues have been persistent constraints on economic growth for many years, and
their resolution would open a path to faster rates of growth and renewed confidence in the future.

That said, there is still a lot of work to be done and we must ensure we keep up this momentum.

The need for sensible policy

If there is a shift to a more pragmatic approach to policy making, it remains very uneven. Evidence of
this can be found in recent Acts coming before Parliament, which have not been properly thought
through and are almost certainly unconstitutional, including the examples I mentioned earlier. We
hope the unintended consequences of policy shifts have been thought through!

Still, I really hope what we’re seeing in the collaboration between business representatives and
government to address the electricity, transport logistics and crime challenges is a fundamental
change for the better in the relationship between public and private sectors.

I hope it leads to a more considered, evidence-based approach to managing the economy and
making policy across the whole of government. It is, in any case, a start.

For our part, and speaking as a f the BUSA Board, we have agreed a strong pledge to making a real
difference.
Consumer sovereignty

From a business and consumer point of view, it’s too early to say the inflation beast has been tamed,
but the end of the upward cycle is coming into view. That should mean interest rate hikes will peak,
and consumers will finally get some relief from what has been a brutal period.

For our part, I am immensely proud of the contribution Pick n Pay has made to shielding consumers
from the worst, keeping internal inflation below CPI, and at less than half the current 14-year food
inflation high of 14%. Our commitment to private and confined label rollout has made an enormous
difference to the consumer. Our no-name Brand, a feature of Pick n Pay since 1976, continues to
help the consumer make ends meet. We did this while having to spend around R60-million per
month on diesel during the worst blackout periods.

Progress on Ekuseni

Coming back to step change, I take a lot of confidence – in spite of the global and domestic
uncertainties – from the excellent progress we’ve made in the delivery of our Ekuseni strategic plan.

It has been quite a challenging first quarter of the new financial year, particularly as a result of high
loadshedding costs about which I have spoken previously. However, I encourage all our stakeholders
to look beyond the short term and draw confidence from the progress we are making.

We launched Pick n Pay QualiSave last August to serve lower-to-middle-income customers. This
means the Group now covers the whole market effectively with three tailored banners of Pick n Pay,
QualiSave, and Boxer.

We are in the process of fully revamping a large number of Pick n Pay and QualiSave stores to their
new customer value propositions to differentiate the banners and give customers and even better
shopping experience. We have experienced good sales acceleration in these refurbished stores.

In Boxer, we’ve achieved pleasing sales growth of 15.4% during the first four months of the trading
year. Online sales growth for the period was 75.3%, sustaining the strong online sales growth
momentum reported last year.

Clothing sales in stand-alone stores have grown 10.9% and Group liquor sales for the period grew
9.8%.

I am also delighted that for the four months, our internal selling price inflation was 9.5%, well below
CPI Food of 13.2% for the period. This shows our strong commitment to delivering low prices to
consumers.

We have opened a state-of-the-art DC at Eastport and closed our Longmeadow DC. We are well on
the way to completing the reorganisation of our office and store structures, and have completed the
transition of our systems into the cloud. These are all strategic step changes to our operating model
which have been virtually seamless in their implementation.

Governance

At Pick n Pay we take ethical and effective leadership that forms the basis of good governance very
seriously.  We note a number of comments from research and voting advisory agencies and some
shareholders on particular elements of our governance structures. 
While we endeavour to comply with all the JSE requirements and adopt the appropriate King IV
recommendations, this has to be done within the context of Pick n Pay.   We are a company with a
controlling shareholder whose rights are clearly explained in our constitutional and corporate
governance documents. The company has been listed for over 50 years on the JSE and has had the
same controlling shareholder. Investors are aware of this when they make the decision whether or
not to invest.

We fully support the principle-based and 'application of mind' approach taken by King IV. We
therefore urge the voting agencies to do the same and to revisit their processes to take into account
global best practices on the position of a controlling shareholder in their important guidance to the
market.

Closing

Pick n Pay was built during a period of enormous uncertainty in our country, at a time when it may
have seemed foolhardy to keep believing in the possibility of a better future. Now, as then, we have
continued to invest – putting R4bn into the business over the past year – as a demonstration of our
commitment to build for the future.

These difficult times compel us to do what we can to help those with less and we are constantly
delighted by the investments our teams make in the various communities in which we trade. I
would like to thank them all for all they do in helping to feed the nation.

Confidence requires a corresponding determination to succeed, and Pick n Pay will continue to serve
our customers in the way we know best, by being the most efficient business possible. We will also
continue our strategic transformation to deliver a strong longer-term performance.

My thanks again to Pieter and the Pick n Pay teams, and to the board, for their performance and
contribution through what has been an extremely trying period.

Thank you.