Pick n Pay Stores Limited (JSE:PIK) News - Voluntary announcement: Impact of civil unrest on the Pick n Pay Group

Pick n Pay Stores Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1968/008034/06)
Share Code: PIK
ISIN code: ZAE000005443

VOLUNTARY ANNOUNCEMENT: IMPACT OF CIVIL UNREST ON THE PICK N PAY GROUP

Alongside all South Africans, the Pick n Pay Group was saddened by the civil unrest and
destruction last week in KwaZulu-Natal (KZN) and parts of Gauteng.

The safety and well-being of our staff and customers is always our first priority. At the
peak of the unrest, a significant number of Pick n Pay and Boxer stores in the affected
areas were closed as a precaution. As a result of this swift action, casualties were kept
to a minimum, and the small number of colleagues who were injured are now thankfully
well on the road to recovery.

As the situation began to improve from Wednesday 14 July, the Group was able to re-
open stores in KZN and Gauteng that were closed as a precaution, and a large majority
of all stores are now fully open and trading. We express our sincere thanks to our
colleagues, the many communities up and down the country, and law enforcement
authorities, who have worked with such determination to bring an end to the violence,
uphold the rule of law, and begin the task of rebuilding.

The civil unrest had a significant impact on the Group’s operations in the affected areas
– particularly in KZN – as a result of physical damage to property, looting of stock, and
an interruption to trade.

136 stores across the Group were looted and/or damaged by fire: 68 Pick n Pay stores
and 68 Boxer stores. Out of this total, 28 were Pick n Pay company-owned
supermarkets, 15 were Pick n Pay franchise stores, and 64 were Boxer supermarkets.
The remaining 29 stores comprised Pick n Pay Clothing stores (2), Express Convenience
stores (14), independent Market stores (9), and Boxer Build stores (4). In addition, 76
liquor stores across Pick n Pay and Boxer were looted and/or burned, but were not in
any event trading due to the government’s Covid-19 restrictions.

The Group moved rapidly to implement its formal disaster recovery plans to restore
affected operations in KwaZulu-Natal and Gauteng, and to replenish stock levels in the
affected regions. Pick n Pay and Boxer teams have worked tirelessly together in recent
days to achieve the following:

   •   of the 136 stores which were looted and/or burned, 32 have already been
       cleaned, repaired and have either been reopened or will reopen by the end of this
       week. A number of looted liquor stores are also ready to be reopened when
       Covid-19 regulations permit

   •   by the end of this week, we expect the proportion of the store network still closed
       to have reduced to 7%

   •   two Pick n Pay distribution centres in Pinetown, KZN were looted and damaged.
       Through tremendous teamwork, by the end of this week, both of these DCs will
       have been repaired and restocked, and will recommence operations

   •   in the meantime, Pick n Pay and Boxer stores in KZN have been serviced from the
       Group’s Boxer distribution centre in Lynnfield, KZN – an example of exceptional
       teamwork between our Boxer and Pick n Pay teams
   •   the process of restocking stores across the region has been greatly assisted by
       our national, centralised distribution capability. Well over 200 trucks have so far
       been routed into KZN from as far afield as the Western Cape and our
       Longmeadow DC in Gauteng to bring vital stocks to our stores in the affected
       areas

   •   the Group is using its Feed the Nation programme to provide emergency relief to
       communities in the affected areas who are suffering from the damage to essential
       infrastructure, and are finding it difficult to obtain essential food and groceries

Although the situation remains fragile in some areas, the Group is tremendously
encouraged by the progress it has achieved in recent days, and is confident of its ability
fully to restore its operations in the affected areas. The Group has managed its cash
resources and liquidity carefully over the course of the Covid-19 crisis, and as such is in
a strong position to direct capital to where it is needed most in rebuilding its Pick n Pay
and Boxer operations in KZN and Gauteng as quickly and effectively as possible.

It is not yet possible to give a full assessment of the financial cost of the damage and
disruption. The Group has South African Special Risk Insurance Association (SASRIA)
cover in place in respect of both material damage and loss of profits (business
interruption) associated with such events. The Group is working closely with its insurers
and loss adjustors to quantify the damage and losses in order to lodge the necessary
claims as soon as possible. The Group expects that its insurance will cover a substantial
majority of its losses, subject to deductibles, delays and any unforeseen impacts arising
from the number and extent of claims submitted by impacted businesses.

The Group will provide its stakeholders with further information once it has greater
clarity on the impact of the unrest and disruption.

Group CEO, Pieter Boone, commented:

  “On behalf of the Board and my team, I want to thank colleagues across Pick n Pay
  and Boxer – including our valued franchise partners – for your tremendous teamwork
  and unfailing morale during this very difficult period. You have been magnificient in
  supporting each other and our customers.

  “We ask for understanding from our customers for any remaining disruption as we
  work tirelessly to deliver an uninterrupted supply of food and groceries around the
  country. Pick n Pay and Boxer remain absolutely determined to serve customers in all
  the communities where our stores are located.

  We have seen good sales growth over the past week in areas unaffected by the
  disruption. We are working to restore a full service as rapidly as possible in the
  affected areas, and will not rest until every impacted store is repaired, restocked and
  reopened to customers.”

Chairman Gareth Ackerman commented:

  “Recent events underline the importance of food security in South Africa. Businesses
  like the Pick n Pay Group – alongside our valued partners, suppliers and producers –
  play a vital role in maintaining a sustainable and continuous food supply. In achieving
  this, businesses depend crucially on social, political and economic stability, effective
  security, and fully-functioning transport and other infrastructure.

  “In the wake of the Covid-19 pandemic and the recent civil unrest, all stakeholders
  must work together to achieve stability, security and growth. Pick n Pay has played
  an integral part in the lives of South Africans for the past 54 years, and will continue
  to do so.”

The information contained in this announcement has not been reviewed or reported on
by the Group’s external auditors.

By order of the Board
Cape Town
20 July 2021
Sponsor:
Investec Bank Limited

Date: 20-07-2021 02:25:00
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