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COST OF NEW LOGO: R110 000 000
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TOTAL COST: UNKNOWN
New 'Pick n Pay' Logo designed by Landor (UK)
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Pick n Pay Shop Stewards’ Alliance
2012 Company Update
June 2012
Labour Research Service
www.lrs.org.za
2
COMPANY REPORT

Company report
◦
◦
◦
◦
◦
◦
Performance
Growth
Ownership
Employees
Directors’ Fees
Outlook & strategies
– Pick n Pay to February
2012
…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?
OPPORTUNITIES FOR ORGANISING, CAMPAIGNING,
EDUCATING, SOLIDARITY in 2012 and beyond
3
We are not chasing
growth in Africa for
growth's sake - we're
chasing growth for
profit's sake
– Deputy CEO van
Rensburg 2012
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
4
Growth in store numbers
Stores in June 2010 – June 2011
5
EMPLOYEES / STAFF / WORKERS
60,000
1000
900
800
700
40,000
42 400 employees
30,000
600
500
400
20,000
300
Number of stores
Number of employees
50,000
200
10,000
100
0
0
2002
2003
2004
2005
2006
2007
Employees
2008
2009
2010
2011
2012
Total stores
6
Overview year – February 2012:
‘We have not been as good as we could
have been’







Sales improveWith
but nono
profit
recovery
captain
and– analysts
a
sceptical demotivated crew, it’s hard to
Sold Franklins
–
R1.2
bn
see this ship sailing any time
Launched Smartshopper
soon.
Accelerated store roll out – 88 stores in SA, 3 in Africa
– Analysts on 2012 results
Improved distribution capability – DCs up and running
Negotiated flexible working conditions – labour cost
containment
Marked improvement in second half performance
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Sales rising slowly
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%)

R 55,634,400,000
R 50,135,800,000
R 49,323,800,000
R 60,000,000,000
R 51,455,900,000
R 50,000,000,000
R 42,677,100,000
R 41,128,100,000
R 40,000,000,000
R 36,664,900,000
R 30,000,000,000
R 20,000,000,000
R 10,000,000,000
R-
2006
2007
2008
2009
2010
2011
2012
8
Company Profits
Profits down for a second year – drop 25% in 2011,
another 14% in 2012.
R 2,000,000,000
R 1,812,000,000
R 1,734,800,000
R 1,521,000,000
R 1,600,000,000
R 1,356,100,000
R 1,205,300,000
R 1,087,600,000
R 1,170,000,000
R 1,200,000,000
Our labour cost has been well controlled and with our new
R 800,000,000
flexible labour agreement, there is significant potential for
R 400,000,000
improvement.
R-
2006
2007
2008
2009
2010
2011
2012
9
Performance comparison – bottom of the list
2009
2010
2011
Shoprite
Revenue
59,318,600,000
67,402,440,000
72,297,777,000
Massmart
Revenue
43,128,700,000
47,451,000,000
53,089,500,000
50,135,800,000
49,323,800,000
52,216,700,000
Pick n Pay Revenue
Massmart
Changes in Revenue
10%
12%
Shoprite
Changes in Revenue
14%
7%
Pick n Pay
Changes in Revenue
-2%
6%
Shoprite
Profit
3,018,100,000
3,399,088,000
3,876,368,000
Massmart
Profit
1,902,000,000
1,820,000,000
1,504,100,000
1,734,480,000
1,812,000,000
1,356,100,000
Pick n Pay Profit
Shoprite
Changes in Profit
13%
14%
Massmart
Changes in Profit
-4%
-17%
Pick n Pay
Changes in Profit
4%
-25%
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•
Directors’
fees
–
up
up
up…
•
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.
R 2,424,956
For 4.5 Directors Guaranteed pay
R 2,148,750
R 2,107,800
percentage
R 2,500,000
R 2,000,000
Salary
+ Benefits
R 1,766,100
R 1,692,460
Total including bonus
40%
35%
R12,249,900
30%
R14,454,900 84%
25%
R 1,500,000
20%
15%
R 1,000,000
10%
5%
R 500,000
0%
R-
-5%
2008
2009
Average Salary
2010
2011
2012
Change in average salary
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CEO - Nick Badminton
– Golden Handshake
R10 100 000 on leaving the
Chief
Executive
fees of2011
company at the end of 2012 year
Year
Salary
Per month
Per Week
Increase
2008
R
2 672 000
R 20,000,000
R
222, 667
R
51, 424
2009
R
3 031 500
R 18,000,000
R
252, 625
R
58, 343
13%
2010
R 16,000,000
R
3 310 500
R 14,000,000
R
275, 875
R
63, 712
9%
R
295, 375
R
68, 216
7%
R
326, 758
R
75, 464
11%
2011
2012
R 12,000,000
R
3 544 500
R 10,000,000
R
3 921 100
R 8,000,000
R 6,000,000
R 4,000,000
R 2,000,000
R-
2008
2009
2010
2011
2012
R-
R-
R-
R-
R 10,100,000
Total Annual Remuneration
R 3,822,800
R 6,822,400
R 4,468,300
R 4,405,400
R 4,857,700
Salary
R 2,672,000
R 3,031,500
R 3,310,500
R 3,544,500
R 3,921,100
Golden handshake
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 Work out your wage gap:
1. Take CEO Annual Rem: _ R14, 959,700
2. Take your monthly wage: _______________
3. Convert to ZAR using the exchange rate at year
end:
In South Africa, this means a wage gap of 416 years – it
would take
minimum wage full-time worker 416 years
4. Multiply
bya12:___________________
to earn what
Nick
Badminton
home
in histo
final
5. Calculate
CEO
Annual
Remtook
÷ the
answer
3. year
at Pick n Pay.
6. The answer is how many years it would take you to
earn what the CEO tool home in 2011
Wage Gap – CEO: Worker
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Increases – Fees: Performance
2009
2010
2011
Change in revenue
Change in profit
Change in CEO salary
Change in Average ED salary
2012
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Dividends – Shareholders Smile
70%
R 900,000,000
R 814,600,000 R 808,000,000
60%
50%
40%
60%
R 717,800,000
43%
42% R 523,800,000
R 605,400,000R 700,000,000
52%
R 614,900,000
R 600,000,000
45%
Pick n Pay’s dividend
41% policy has been
40%
unhealthy to the point where the
company has struggled to fund normal
growth – Senior analyst 2012
R 452,000,000
30%
R 800,000,000
R 500,000,000
R 400,000,000
R 300,000,000
20%
R 200,000,000
10%
R 100,000,000
0%
R2006
2007
2008
2009
2010
2011
2012
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Shareholders
OWNERS - SHAREHOLDERS
Shareholder - Pick n Pay Stores
Percentage Owned at year-end 2011
Pick n Pay Holdings Limited
53.6
Government Employees Pension Fund
Liberty Life Assurance of Africa Ltd
Sanlam
10.2
1.7
1.0
Ackerman Family – Shares worth – around R5, 418, 429, 240 on 6 June 2012
GEPF - Shares worth around R 444, 720,000
Shareholder – Pick n Pay Holdings
Ackerman Family Trust
Investec Opportunity Fund
Pick n Pay Employee Share Trust
Nedgroup Investments Value Fund
Liberty Group
Symmetry Inflation Plus Fund No.
The Mistral Trust (Ackerman family)
Percentage Owned at year-end 2011
48.3
2.2
1.7
1.1
1.0
1.0
1.0
‘There is no plan at this stage to change this structure’ – Ackerman 2012
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Context going forward for the company – pressures on customers
Higher electricity prices – for company and consumers
 Impact
European slump on SA economy
Annual
Report of
2012:
 Little growth in consumer disposable income due to
Unlike labour, business is not in alliance with the governing party, and often
unemployment increases, industrial action
struggles to have its voice heard above those with more privileged

access to national policy debates.



…however, management claims :
Encouraging signs Momentum continuing into FY 2013
Lots to be done but tremendous energy in the business
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Outlook and strategy update…
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
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THE COMING OF WALMART …
“the competition is not in our core business”
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

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Key challenges for workers / unions / the
Alliance…
1)Walmart – increasing loss of market share – pressure
on workers to compensate for this.
2)Take over target – impact on working conditions
3)Staff numbers continue to drop to store openings increased use of outsourcing, labour brokers.
4)Labour flexibility seen as a vital life line to profits –
while they rake in millions in salaries and dividends.
5)Further centralisation of power in the hands of the
family
6)The franchise challenge continues and is exacerbated
by BP deal
7)Failing strategy – workers will bear the brunt,
management will harden further
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Clarity / Questions / Comments
/ Corrections
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Is this your experience of working for Pick n
Pay?
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.
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