Pick n Pay Stores Limited (PIK) Earnings Call Transcript & Summary

[Audio Gap] Representing the strongest reported sales growth for all listed companies in this period. There was a considerable strength underpinning the results with a normalized PBT of 2.1%. The team worked hard and invested behind lower prices for our customers. This resulted in an internal price inflation of 3.8% below CPI food inflation of 4.8%. We also focused on doing better deals and meeting customer needs using smart price, multi-buys and daily deals. We have seen positive volume growth as a consequence. As a result of COVID restrictions, we experienced over 200 days in which we were prevented from selling liquor and 140 days in which we were not permitted to trade tobacco. We were also restricted at the start of the lockdown from selling clothing, general merchandise and some other products. Restrictions resulted in a decline in liquor and tobacco sales of 31%, directly as a result of the measures taken by the government in response to the pandemic. However, our underlying performance was very strong. South African operations core food and grocery increased by 10%, accelerating from 9.9% in the first half of the year to 10.1% in the second half of the year and led the market. The margin impact of trade restrictions and other disruptions were partly mitigated by cost reductions and efficiency improvements through the Project Future, which we initiated throughout the financial year. One of the constant themes underpinning these numbers has been the pandemic. When we formulated our initial response to the pandemic, we said that we aimed to do 4 things: stay open, stay safe, stay full and stay working. We have managed to plan effectively and have adapted operating our stores in the pandemic. Saying safe is the key and unlocks all the other objectives, and so is our #1 priority for our staff and our customers. I would like to take this opportunity to thank all our staff for their hard work and dedication in ensuring that we have continued to serve customers consistently throughout the pandemic. The pandemic introduced some considerable headwinds and a few tailwinds. As I've already said, we had to face restrictions on liquor, tobacco, clothing and nonessential goods. We are trading our restrictions driven by the curfew. Customers were undergoing significant economic distress across [Audio Gap]. So far, we have less affected in the third wave than the national numbers might suggest. But we remain very vigilant and focused on the necessary safety measures across the country. My predecessor, Richard Brasher, outlines these 6 pillars that were central to our growth strategy. I want to assure you that we are not crumbling up the plans and starting from scratch. Rather, the 5 cornerstones that I laid out at the results presentation incorporate in them these 6 pillars. The 5 cornerstones are: Making Pick n Pay the customers' first choice, growing the best discounter in Africa, building our omnichannel proposition, look for sustainable growth in the rest of Africa and winning with people. Our plans and priorities are evolving as all successful businesses must in order to continue to meet customer needs. So how can we make Pick n Pay and Boxer the first choice for even more customers. We must be focused on what customers want and need. That means concentrating the business on strategic growth areas and avoiding distractions and noncore activities. With the customers under such huge pressure at the present, we are focused on investing in all our customer offer and providing even better value. You will see this back in our campaigns and our Smart Shopper initiatives. We are increasing our focus on our omnichannel proposition, and we'll have more exciting initiatives to share on this with you in the coming months. We are focused on accelerating the growth of Boxer, the best discounted retailer in Africa. We are investing in the future. For example, we are developing a new logistic capacity through a new inlet distribution center in the greater Johannesburg area. We will continue to strive to be more -- a more efficient organization. We call this Project Future. We are on track to deliver the first ZAR 1 billion of savings, and I'm committed and determined that we must now expand this project. We will continue to make business leaner, simpler, more decisive, more entrepreneurial in the years to come. On Feed the Nation, we are incredibly proud for the great work that we are doing as part of the Feed the Nation campaign, now a public benefit organization. I'm sure that Suzanne will highlight this more in detail during her presentation. Doing good is good business remains a core principle. Last but not least, our business is people business. And I would like to take this opportunity once morning to thank our staff and colleagues for the amazing work that all of you have put into last year's results and the results that we are currently building toward. Nothing is possible in our industry without the amazing talent that we have in our stores and in our support offices. I would like to thank you for your time and hand back to the Chairman. Thank you.

Thank you, Pieter, for that really good overview of the business. And we really would like to wish you a lot of luck in your tenure as CEO. You've had a daunting start, and you've had some big shoes to fill and all that you are following. And I know that you're the right person to take the business into the future. So thank you. If we can now move on to the Social and Ethics Committee report, the Chairman -- the Chair of the Social and Ethics Committee, Suzanne Ackerman-Berman, will now give it to us. Thank you.

Thank you, Mr. Chairman. Good morning, everybody. Good morning, Pieter. In accordance with what the Chairman has stated earlier that our motto is to use less and share more. And we, as a Social and Ethics Committee, constantly look at how we can take responsibility for monitoring all the group's activities and having regard to any relevant legislation, legal requirements or prevailing codes of best practice with regards to all ESG targets in the company at every level. Could someone help me click? Thank you very much. Thank you. As a committee, we meet quarterly, and we are constantly looking at every aspect of the business, both Pick n Pay and Boxer, to ensure compliance, target, monitoring and measuring of the -- all the ESG targets, as I said. Could we possibly move to the next slide? The guidelines for the committee are very clear, and we are very privileged to have an added expertise of Annamarie van der Merwe on the committee with us. Annemarie, thank you for helping track us and ensuring that we keep within the compliance codes of the Employment Equity Act, the JSE Socially Responsible Index criteria, the Broad-based Black Economic Empowerment Act, and of course, the guidelines also include the anticorruption principles for -- of the organization for economic cooperation and development. In the past financial year, as one can imagine, we have been extremely focused on the COVID practices and implementation within the business. And there have been no material issues identified during the period. Next slide, please. Briefly, we have a very complex committee as with the requirements laid out for us. We have nonexecutive directors, three nonexecutive directors, the Company Secretary. We have the Director for Strategy, Mr. David North. And David has been absolutely superb in helping us maintain awareness within the company across all levels of the COVID principles, practices and security measures we've needed to take as a company to ensure safety, security of our staff, our customers and all the communities we serve. At any different meeting, we invite members of all aspects of the business where there are relevant issues to discuss to come and present to the business. Whether this is about issues of animal practices, ethical practices regarding animals, consumer safety, employee welfare and relations, ethical business practices, legislative compliance and a very key area that we, as a company, are deeply focused on, which is responsible sourcing at every level of the business. Thank you. The next slide. As I've mentioned before, the COVID-19 impact has been quite severe. And our previous speakers have both mentioned that. And we, as a committee, have had to ensure that we look at all levels, very sensitively to assist the operations team on the measures and monitoring of all levels of safety and security. Being a business on the front line, the safety of our staff is absolutely paramount. And at this point, we, as a committee, would like to salute the exemplary manner in which the teams have consistently focused on COVID prevention and protective practices for themselves, their families, their colleagues, our customers and the entire communities we serve. Under such extraordinary conditions and circumstances, both the Chairman and CEO have mentioned, we have managed to consistently feed the nations of the communities around us. The Feed the Nation campaign was set up during COVID a year ago. And to date, we will see in a short video following this, that we have managed to secure funding from all sources of the community, starting with ourselves as Pick n Pay staff, executives and -- sorry, I just got a disturbance there. Can you hear me, Mr. Chairman? Yes. Okay.

Yes, we can. Thank you.

Thank you. Thank you. Sorry. So the funding we have managed to raise is in excess of ZAR 142 million, and it's very key to point out at this point that the starting funding came not only from the Ackerman family, but from colleagues, executives within Pick n Pay, who felt deeply committed to assisting and helping those who are going to be fundamentally out of food and not able to feed themselves during the pandemic. With the added restrictions upon us as of last night, our teams are already well versed and extremely well prepared to assist many, many more people and the communities around the country with access to basic food. Could we have the next slide, please? Amongst other issues that the committee has dealt with is the impact of reduction of packaging and constantly adhering to the program that ensures that all Pick n Pay packaging will be 100% recyclable by 2025. We constantly monitor and measure this, food waste reduction, looking at the POPI Act and all policies within the group's activities. I'd just like to highlight this extraordinary individual in the photograph here. Her name is [indiscernible], retiree in the Khayelitsha area, that we have brought on board to feed one of our projects, the Velokhaya Cycling Academy and have set this up to feed over 150 children on a daily basis. And a very exciting advance on this, and it's with and why I mentioned it in here is because part of the committee's role is to oversee the group CSI activities to ensure that they are within the fundamental role and goal of what we, as a company, wish to achieve. And one young man from this Khayelitsha Academy, Mr. Nicholas Dlamini is currently a member of the leading team in the Tour de France and has been chosen as an Olympic cyclist. We are extremely proud that Pick n Pay had been part of this Velokhaya Academy for many, many years. The next slide, please. Carrying on in 2022, our focus areas will continue to be to assist our Schools Club program in feeding the schools who have not got access to schools feeding programs, particularly now that the schools are going to be closed again. We have identified a major crisis in this country of child-headed households. And we will see in the forthcoming video how many child-headed households that we, as a company, over the last year have managed to feed. It's over 16,000 households, and each household has an average of between 5 and 7 members. So we are feeding in 9 provinces. And in order to make this sustainable, we are looking at developing food garden projects with larger communities to ensure that they, themselves, will be able to feed and provide sustainable, healthy food options for the children and the communities going forward. Next slide, please. Thank you very much. I think we can just click to the video. And if there are any additions, my fellow committee members would like to make or if there are any questions. So I think we should maybe just play the video.

Suzanne, could you just talk about the reaction to the fires at Charlotte Maxeke Hospital and in Cape Town?

Sure. So recently, in February, there were devastating fires across Cape Town, which destroyed the University of Cape Town Library. And within 24 hours, we, as a company, were able to provide very, very vital assistance. With our -- from our distribution network, from fellow producers, farmers and suppliers, we provided over 50,000 crates to be used to transport the very valuable material that was threatened to be damaged by the water after the fires had been destroyed. Currently, our teams are still working with the university to ensure the safe restoration of these very vital materials. And they're not only that. The teams were on hand immediately within an hour of the fire reaching uncontrollable levels, assisting and facilitating moving students, feeding students, moving and assisting residents and helping all the firemen. This is something that Pick n Pay teams are -- we're extremely proud of, as this is part of the DNA. We no longer have to make the phone call, Mr. Chairman, to say, have you help the firemen. Our regional teams are already on top of it before we wake up in the morning and are already helping and facilitating wherever needed. In Johannesburg, a major fire happened at Charlotte Maxeke Hospital, and our teams there very proudly assisted and facilitated moving whatever they needed to do to help the safety and security of the nursing, the medical teams and the patients. So right across the nation, our care concern for the communities we serve is something that we are deeply proud of and makes us very proud to be part of this family. So thank you, Mr. Chairman.

Thank you very much, Suzanne. Can we have the video please? [Presentation]

Suzanne, thank you to you and your team. I think there's some extremely good work being done there. And I think what this shows is a huge amount of work and commitment that Pick n Pay has gone to, particularly in these difficult times to making sure that we feed the nation and to make sure that as few people are left behind as possible. So thank you for that. And as we've said, this is very much part of the Pick n Pay core values. We have 3 core values: our customer is queen, business efficiency and doing good is good business. And this very much shows how we deal with that one particular value. So thank you to all involved. Now if we can move on to the formalities of the proceedings, which obviously is the reason why we are all here. The quorum for this meeting is 3 members personally present and entitled to vote, who between them hold in excess of 25% of the issued shares. I declare that the necessary quorum is present, and I declare that the meeting is duly constituted. Because this meeting is being held in the virtual environment, I've arranged for a Director who is also a shareholder to second all the resolutions. Aboubakar Jakoet has agreed to second all the motions at today's meeting. In light of this, with your agreement, I will dispense with the usual formalities for asking for a seconder for all resolutions. I nominate Computershare to act as scrutineers for the purpose of the poll. In accordance with good governance practice, the voting on all resolutions at this meeting will be conducted by poll. This is to ensure that the respective shareholdings of shareholders are fairly and accurately reflected in the voting. Shareholders or their proxies or representatives present would have registered on this Lumi electronic platform to be able to vote on the resolutions. Please submit your questions on the matters being voted on in this meeting. We will respond once the resolutions have been read out and before the voting is closed. The voting is now open and will only be closed once all your questions have been answered. Until voting has been closed at the end of the question-and-answer session, voting can be changed on the Lumi site. Each shareholder or its proxy or representative will be able to cast its vote for each of the resolutions on the electronic platform. I will announce the results of the voting immediately after the voting is closed and the results are being determined. Results will be posted on SENS after the conclusion of the meeting. The notice convening this Annual General Meeting has been in your hands for the prescribed period, having been posted by registered post to shareholders on the 28th of May 2021. The notice contains full details of the resolutions to be considered at this meeting. There being no changes to the proposed resolutions, I propose that notice be taken as read. The minutes of the last Annual General Meeting held on Tuesday, the 4th of August 2020, were approved by the Board at a meeting held in October 2020. The minutes were then posted on our website. Once the minutes of the 2021 AGM have been approved by the Board in October 2021, they will also be posted on the website for your review. We shall now proceed with the business of the meeting. I confirm that the electronic system is now open for voting. I now propose the following special and ordinary resolutions as set out in the notice convening the meeting. Given the length of the resolutions, I will take them as read and summarize them. Please would you follow the resolutions in the notice as they will be proposed in the order set out in the notice? Number one, to present the audited annual financial statements, the Director's report and the Audit, Risk and Compliance Committee's report for the company for the 2021 annual financial period. In terms of the 2008 Companies Act, a summary of the audited financial statements has been presented to shareholders. The full audited financial results were posted on the Pick n Pay website in May and are in the integrated annual report. The Audit, Risk and Compliance Committee report is set out in the corporate governance report. The reports were posted on the Pick n Pay website on the 28th of May. Number two, ordinary resolution number one, the appointment of external auditors. The Audit Committee recommended to the Board, which accepted the recommendation, that the company proposed Ernst & Young, Inc. to be reappointed as external audits of the company with Tina Rookledge as the designated partner. Number three, ordinary resolution number two, reappointment and appointment of directors. The directors who retire by rotation are Hugh Herman, Jeff van Rooyen, Audrey Mothupi and David Robins. In addition, Pieter Boone, our new CEO, offers himself for election as executive director. Ordinary Resolution number 2.1, Hugh Herman as a Director for a one-year term. I propose the election of Hugh Herman as a Director. I remind the shareholders that all directors who've been a director for longer than 9 years are reelected annually. 3.2, ordinary resolution number 2.2, appointment of Jeff van Rooyen as a Director for a one-year term. I propose the election of Jeff van Rooyen as Director. 3.3, ordinary resolution number 2.3, the appointment of Audrey Mothupi as Director for a 3-year term. I propose the election of Audrey Mothupi as a Director. 3.4, ordinary resolution number 2.2, appointment of David Robins as director for a 3-year term. I propose the appointment of David Robins as a Director. 3.5, ordinary resolution number 2.5, appointment of Pieter Boone as Executive Director. I propose the election of Pieter Boone as a Director. Ordinary resolution number 3, appointment of Audit, Risk and Compliance Committee members for the annual -- for the 2021 annual financial period. As recommended by the Board, I propose the election of Jeff van Rooyen as Chairman; Audrey Mothupi, David Friedland, Mariam Cassim and Haroon Bhorat as members of the Audit, Risk and Compliance Committee for the ensuing year. 4.1, ordinary resolution number 3.1, the appointment of Jeff van Rooyen as a member of the Audit, Risk and Compliance Committee. I propose the election of Jeff van Rooyen as a member of the Audit, Risk and Compliance Committee. Ordinary resolution number 3.2, appointment of Audrey Mothupi as a member of the Audit, Risk and Compliance Committee. I propose the election of Audrey Mothupi as a member of the Audit, Risk and Compliance Committee. 4.3, ordinary resolution number 3.3, appointment of David Friedland as a member of the Audit, Risk and Compliance Committee. I propose the election of David Friedland as a member of the Audit, Risk and Compliance Committee. 4.4, ordinary resolution number 3.4, the appointment of Mariam Cassim as a member of the Audit, Risk and Compliance Committee. I propose the election of Mariam Cassim as a member of the Audit, Risk and Compliance Committee. 4.5, ordinary resolution number 3.5, appointment of Haroon Bhorat as a member of the Audit, Risk and Compliance Committee. I propose the election of Haroon Bhorat as a member of the Audit, Risk and Compliance Committee. On agenda Item #5, advisory vote, the remuneration report for the 2021 annual financial period. The directors table the remuneration report for the 2021 annual financial period. The full remuneration policy and report is set out in the integrated annual report published on our website on the 28th of May 2021. In terms of King IV, we have split the advisory vote on remuneration into two votes: one for our remuneration policy and the other for our report on the implementation of our remuneration policy during the financial period. In the event that 25% or more of the voting rates exercised are cast against these resolutions, the Board will invite dissenting shareholders to engage with the Remuneration Committee on their concerns in line with the provisions of the JSE listing requirements. 5.1, ordinary resolution number 4.1, endorsement of the remuneration policy. I propose the endorsement of the company's remuneration policy for the 2021 annual financial period. 5.2, ordinary resolution number 4.2, endorsement of the remuneration implementation report. I propose the endorsement of the remuneration implementation report for 2021 annual financial period. Item number 6, special resolution number 1, directors' fees. I propose that the directors' fees for the 2022 and 2023 annual financial periods be approved. Directors' fees for the 2022 annual financial period have been increased by CPI as resolved by shareholders at the 2020 AGM. It is proposed that the directors' fees be increased by CPI in the 2023 annual financial period. Special resolution number 2, provision of financial assistance to related or interrelated companies. I propose that the company approves financial assistance to related or interrelated companies. 7.2, special resolution number 2.2, provision of annual -- of financial assistance to persons. I propose that the company approves financial assistance to qualified employees of the company in the Pick n Pay group in terms of the company's existing housing policy. Special resolution number 3, approval to repurchase the company shares. I propose that the company approves the general approval to repurchase the company shares. Ordinary resolution number 4, the company directors' authority to implement special and ordinary resolutions. I propose that each and every director of the company be authorized to implement the resolutions passed at this meeting. Item 10. Item 10 of the notice offers to transact other businesses may be transacted at an annual general meetings. Are there any matters not already covered that members wish to raise? Doesn't seem to be any questions or discussion around that point. We will now move to the question-and-answer session of the meeting and all the questions on all the resolutions will be dealt with at this point. I will answer some and various Board members will answer others of the questions.

So the first question we have is from Stephen Beaty. I'm concerned about the pay gap between the highest and lowest paid worker. Is Pick n Pay concerned about this? And has the ratio between the highest and lowest paid worker being measured? So I'm going to ask the chair of our Remuneration Committee to answer this question. Audrey?

Thanks, Gareth. Good morning, everyone, and thank you, Stephen. Stephen, we do measure our pay at all levels. There's clearly [indiscernible] well, between the highest and the lowest pay, but we can assure our shareholders that our salaries for our shop floor staff, including new entrants in our stores are well within the benchmark in the market and in some cases leading in terms of the benefits that we provide. We remain committed to ensure that the retail is a great opportunity to enter the world of work and grow and develop for the company. And particularly during difficult times of the pandemic, we're maintaining our close watch on this. As you would have seen globally, that continues to be a challenge. So thanks for the question. We're aware of it. We continue to monitor it. And we do believe that it's something that's top of our mind on an ongoing basis. Thank you.

Thanks, Audrey. Next question is from Stephen Beaty again. In your report, you mentioned you gained market share. I find this interesting and I've heard no retailers saying they have lost market share. How is this gain measured and by whom, as I wonder who is losing market share? Can I ask our CEO, Pieter Boone, to answer this question?

Thank you, Stephen. The reference to growing market share over the last financial year is especially focused on the share in core food and groceries. Other areas, like example, liquor and other products were impacted by trading and other restrictions. So core food and groceries are a very good measure for the underlying performance of the business. And we are confident that we grew market share by servicing customers in a more effective and efficient way throughout the entire financial year. Thank you.

Thank you, Pieter. Next question is from [ Melody Taronga ] from Just Share. According to your 2021 integrated report Pick n Pay has a Board diversity targets of 25% female and 25% African, colored or Indian. Firstly, given the demographics of our country, approximately 50% female, 92% African, colored or Indian, why has the company set its Board diversity targets so low? Secondly, given that these targets have been achieved, when will they be updated? And thirdly, why is Pick n Pay's diversity policy not publicly available? Melody, thank you. I will answer it. Firstly, we have looked at it very closely. Our current figure is sitting at 36% and way, way above the 25% targets. And we have committed this year to review the targets, and that is coming to the Nominations and Governance Committee at our next meeting, which is being held in October. We way exceed our targets. And I think there are not many companies in South Africa that are at the same sort of level. Just as an interesting aside, I think we are the only company or very few companies in South Africa have a female as Chairman of our Rem Com. And I'm quite sure that with Audrey sitting there, we're going to make sure that we were going to be held to task on these particular areas and we'll be looking at them on a regular basis. Your third question is why is Pick n Pay's diversity policy not publicly available. I'm going to ask maybe our CFO, Lerena, to answer this question. Lerena Olivier. Thanks.

Thank you, Mr. Chairman. And I do agree with your comments on the actual statement. The policy is available under the governance section of our website. We are happy to guide the shareholder once the meeting is finalized.

Thank you. Next question. I believe Pick n Pay is venturing into the Nigerian market. I know of no South African company that has truly succeeded in this market. These risks to me outweigh any potential benefits. One such risk as MTM knows [indiscernible] is a struggle to obtain ForEx to repatriate funds. How are you mitigating against this risk? And how confident are you of success in Nigeria and Zimbabwe? I'm going to ask Pieter Boone to answer. And if necessary, I'm going to ask Lerena Olivier to come in with any additional information if it's required. Pieter?

Stephen Beaty. Thanks again for the question. It's correct. We have a sustainable business outside South Africa, including our joint venture in Zimbabwe. I would like to assure shareholders that the rest of the Africa division is profitable, although it has faced headwinds that everyone is familiar with. I think we always have taken an approach whereby we stay steady and slow and more cautious approach compared to our competitors. And as a consequence of that has also faced fewer problems as they have. Furthermore, we can assure shareholders that we're taking a similar cautious approach when it comes to the Nigerian operations, where we have just opened our first store. And of course, Nigeria has a very large consumer market, provides significant growth for opportunities in a market that is highly fragmented as such. The first store, we only opened in the month of March. We are taking the lessons and the learnings out of that. We're working with a very rapid joint venture partner in that market. And again, it is step-by-step for the Nigerian market. So a very conservative and a very, I would say, professional approach when it comes to exploring how that market works and the learnings that we take out of that market before we make next steps. Maybe, Lerena, anything to add from a financial perspective.

Thank you, Pieter. Our approach is one of slow and steady. Our investment into the economy is minimal. And I believe that our approach will lead to strong shareholder returns and no significant financial exposure.

Thanks, Lerena. Could you elaborate a little bit on the Zimbabwe because that was also in the question?

The challenges in Zimbabwe remains. We, however, have been successful in reducing all the trade debt exposure from that country to South Africa as well as ensuring that we are able to repatriate some dividends. We've got a very strong underlying business that is cash generative, and that has supported itself completely from a capital expenditure perspective. And although the economy remains under pressure, we do have positive returns from Zimbabwe.

Thank you, Pieter, and Lerena. From Robin Huger, shareholder of Just Share. She asks Pick n Pay is, for years, referred in public reports to its climate change strategy. In 2015, Pick n Pay indicated the strategy have been internationally recognized. In its 2020 CDP report, PnP indicates that the risks and opportunities of climate change are addressed in this climate change strategy. The CDP 2020 report also indicates that Pick n Pay has developed a low-carbon transition plan. We have, however, been unable to find either of these documents online. When will Pick n Pay make this climate change strategy and low-carbon transition plan publicly available? David North, our Director of Strategy and also working on our sustainability plan has given me the answer that we have just published our sustainable living report for 2021, which provides all the details of our work and strategy on climate change. So you should be able to find it there now. The next question is Stephen Beaty again. The balance sheet does not appear that strong to me with current liabilities exceeding current assets, also large current -- also large noncurrent liabilities compared to equity. Please comment on liquidity and gearing. Could we ask our CFO, Lerena Olivier, to comment on that, please?

Thank you, Chairman, and thank you, Stephen, for the question. We are very confident that we have a very strong balance sheet. In the retail environment, we turn our inventory a number of times before we pay our trade payables. Our balance sheet, as it stand, has got no structured debt. We do a significant review of our solvency and liquidity requirements before we pay out any dividends. To date, our free cash flow generation has ensured that we cover both all our capital expenditure within a year as well as our dividend payments. From a noncurrent liability perspective, the implementation of IFRS 16 has resulted in a significant increase in noncurrent liabilities, but that is also offset by right-of-use assets in the noncurrent assets. So all in all, our strong balance sheet has made sure that we could pay our dividend even and during a COVID year, and we believe that our gearing is some of the best in the industry.

Thank you. Next question from Tracy Davies. She's just commented that Pick n Pay released its 2021 sustainable living report sometime in the last 2 days or possibly even just this morning, making impossible for shareholders to review this report prior to the AGM. Why does Pick n Pay not release its report at the same time as all its other annual reports, especially when this report is only updated every 2 years? Tracy, I think, a very good point. And I think we obviously have to have a look at that for the next time we publish it. Apologies for making your life a little bit difficult. But if you do have any questions, you can table them to us separately once you've done it, and we will respond to it. Next question, Stephen Beaty. Does Pick n Pay follow the policy of audit rotation as this is best practice? How long has current auditor been in the role? Lerena?

Thank you, Gareth. Yes, we do follow the audit rotation process and our audit partner, Malcolm Rapson, rotated off after 5 years, and they've been replaced by Tina Rookledge. The audit firm that's currently servicing us is Ernst & Young, and the rotation period ends in 2026.

Yes. Robin Huger again from Just Share. She's on a very brief review of the sustainable living report, 2021, which appears to have been released over the weekend. For this morning, you're reporting related to the recommendations of the task force and climate-related finance disclosures is simply a table referring to your CDP submission. There are many South African companies and global food retailers, which have already released one stand-alone TCFD report. When will Pick n Pay do so? Can I ask David North, our Director of Strategy, to please answer the question. David?

Thank you. Thank you, Chairman. Sorry, I was just spending a moment there trying to unmute. I think the answer lies in the fact that we're very proud of our contribution to the CDP. So we think the CDP is the best or at least one of the best measures of a business' carbon strategy, disclosure and indeed performance. And therefore, we do refer to that submission in relation to the task force, as Robin has asked. I think it is true. I think it's fair again that Robin says that some companies, I mean, more outside South Africa than inside, publish a stand-alone report. And obviously, with the team, we will consider that request for more direct disclosure as it were in the coming months.

Thank you. And David, the next question is going to be for you as well. Robin also asks in Pick n Pay's 2015 sustainable living report, we've set a target to reduce CO2 emissions by 25% by 2020. In fact, by 2020, PnP's CO2 emissions appear to have increased by approximately 45%, although it's hard to calculate given the different figures in different reports. Your 2020 and 2021 integrated reports make no mention of the 2015 targets. Furthermore, Pick n Pay's integrated reports, sustainability reports and CDP reports give different figures for emissions in the same year. Metrics and baselines have changed repeatedly in the past 8 years, and I have 3 questions. Firstly, which report contains accurate emissions figures? Secondly, why does Scope 1 and 2 emissions for the same year differ so significantly in different reports? And thirdly, when will Pick n Pay set a science-based short, medium and long-term emission reduction targets aligned to the Paris Agreement goal of limiting temperature increases to well below 2 degrees Celsius. David?

Thank you, Chairman. Thank you, Robin. That's quite a fulsome list of questions. So Robin, you will have to forgive me if I don't answer all of them in huge detail in this session. Obviously, we are open and keen to have dialogue after this meeting, if that helps. Broadly speaking, we do have a robust approach to measuring our carbon and our CO2 impact. We do score, as I think I've said, among the best businesses in Africa. And in some years, among the best retail businesses in the world on the global CDP index. As Robin points out in her question, we disclosed Scope 1, 2 and 3 emissions. The changes -- the second question that Robin asked was, why the changes. Clearly, when you're measuring emissions outside your direct scope, that is subject to improvement over time. It is subject to clarification. And therefore, changes reflect the improvements in calculation method in each of those areas over time. We publish our commitments on energy use in our business and have a strong record of delivering against those targets. Now I think Robin's first question. I'm sorry, I'm taking these in the wrong order, well, is which one should I take as being the representative ones, it should be the ones that have just been published in the sustainable living report. The third question then is really one that gets to what is quite a difficult subject on climate change and climate change mitigation, which is the issue of relative versus absolute targets. As Robin will know, that is a complex area. We are and are proud of the fact that we are a growing business. And our determination is that we are greener than our competitors and therefore make a major contribution to the fight against climate change. I think when you look at our performance relative to others in terms of energy reduction, CO2 reduction, then we are confident that our growth will mean an absolute reduction in emissions, but it is complex to calculate and demonstrate an absolute reduction. And therefore, our published KPIs are simpler and focus on absolute reductions in energy, waste, et cetera. But again, it's a good question, and it's one where ongoing dialogue, I think, will benefit all of us.

Thank you, David. We note from Pick n Pay's reports that regards 6 of your 14 directors as having relevant climate change experience. However, none of the biographies of these directors in your reports refer to any climate-related experience, and a Google search does not bring up anything obvious for any of these directors. Climate change-related skills and experience are specialized and distinct. Please can you explain the -- what the relevant climate change of these 6 directors is? Tracy, I think, a very good point. And if we're going to make a claim like that, we should be able to justify it. We will add that in the future, if we're going to make claims like that. Good point. And I think we must deal -- we'll deal with it. Next question from Robin Huger. Chair, your 2021 sustainable living report does not, in fact, provide the climate change strategy nor the low carbon transition plan. Please direct us to these documents. David?

Thank you, Chairman. I think -- well, the sustainable living plan does produce -- does provide quite a lot of disclosure. I suggest the best way forward really is for Robin to talk to us directly, and then we can refer Robin to whatever additional material, I think, would provide confidence.

I think the point that David is making is that we take the issue of climate change and sustainability very, very seriously, and it is a key part of business. I think we were one of the first countries -- companies in South Africa in, right back in the '70s, to get involved in looking after the planet. And you obviously have some very good questions and some good insights at Just Share. And our team is very happy to engage with you to get some advice and to get some guidance as to how we can make it better. So I'm going to ask if the -- we have an open invitation for you to contact David and make sure that you meet with our team, that you can ask the questions, and we look forward to a positive interaction both sides -- from both sides in that particular space. I'm not trying to cut down question answering, but I think a lot of your questions are very specific. The point you do make is that we should have published that reported a little bit earlier, which will enable you to have prepared better and also to enable us to have less answers to your questions more on tap. So we are not saying that we're not going to engage or give you the answers. We absolutely are happy to do that to engage with you and any other shareholders on the climate change issues. Thanks. So we can now move on. Stephen Beaty asked a question. How long have the orders been in place? I think Lerena answered that. It's 5 years ago. Thanks, Lerena.

It is 5 years, if we weren't clear.

Next question from Stephen Beaty is has the ratio of the highest versus lowest paid being calculated and what is the ratio? I believe this ratio should be disclosed in the integrated report. I'm going to ask Audrey Mothupi, our Chairman of Rem Com, to answer this question.

Thanks, Stephen. Stephen, as I mentioned earlier, we do measure pay at all levels, and we know the measure. We will take your advice and consider publishing that in our integrated report in the future. But we do have -- that's an ongoing process. Thanks.

I just stress that we do measure pay at all levels in the business. It is absolutely a key part of the way we operate. Pick n Pay has always pride it selves on being a good payer in the industry, and we'll continue to do so. We know the measure, and we'll consider publishing it in the future. We'll also be required by law to publish when the changes to the Company Act become effective. But we understand it's coming, and we will look at doing it for the future. Thank you. Well, as far as I can see, there are no more questions that are forthcoming. We -- sorry. I don't think we have any more questions forthcoming. I would like to once again thank you all for attending. And while we're just calculating the voting results, there's just 1 or 2 of our shareholders as well, our very loyal shareholders have unfortunately passed away this past year, and we mourn their passing. So the voting is now closed, and I will ask Computershare to make the results available electronically when they're able to do so. As you will see now, they have been put forward on the screen. I'm just checking them, have a look at them. It would appear that looking at the resolutions, all the votes have been carried with the exception of the 2 advisory votes, advisory vote 1 and advisory vote 2. Endorsing a remuneration policy and the implementation of the remuneration report, which did not pass with the requisite 75% majority. The Board will invite dissenting shareholders to engage with the Remuneration Committee on their concerns in line with the provisions of the JSE listing requirement. We have had a number of discussions with many of our large shareholders prior to this. And if there are other shareholders who wish to engage with us, we will be putting out a note on that. I'd now like to thank everybody for attending. I'd like to thank everybody for the really deep insights for questions. I think the questions, particularly around the environment and which Just Share put forward I think were very valuable, and we'd like to go into them a little bit further. But thank you very much, everybody, for attending. And I don't know if -- I do not see any further business that anybody is raising. So as there's no further business, I now formally close the proceedings of this the 53rd Annual General Meeting of Pick n Pay Stores Limited and remind you that the minutes will be on our website after our October Board meeting. And the results of the voting will be posted probably today or tomorrow. So thank you very much, everybody, for attending. And thank you, Lumi, for hosting it very professionally. We do appreciate it. So thank you very much, and good bye, everybody.