REPORT TO STAKEHOLDERS |
Report to stakeholdersChairman's reportcorporAtE GovErnAncEPick n Pay has always recognised that sound governance will enhance stakeholder value. This has been ingrained in our Group’s identity and value system. Governance processes in the Group are consistently monitored and improved. The past year was the first full annual period that our social and ethics committee has been in operation. I need to, however, draw attention to the increasing complexity and cost of corporate governance in the South African business environment. While recognising the need for the highest possible standards of probity governance and accountability in both the public and private sectors, and while acknowledging the considerable value of the various codes of conduct and regulatory regimes that govern our affairs, I believe we are approaching a moment where these need to be consolidated and simplified if they are to retain their ethical and normative value and not become mere checklists demanding the appearance of compliance but only a semblance of commitment. We need to work on making sure that these values and standards are appropriately applied by all stakeholders. Among matters that require attention is the independence of non-executive directors, particularly the criterion that governs length of service. The definition of such independence is a contentious issue in corporate governance, but institutional memory and corporate experience are essential to the effective operation of any company board. As Chairman of the Group, I value the wisdom and contribution of our long-standing directors and am satisfied that their length of tenure has in no sense diminished their independence. However, we will continue to monitor the independence of directors. We are currently reviewing our Board's composition. There is an increasing need to align and consolidate the expectations, demands and benchmarks of the King code, the rules of JSE Limited and the South African Companies Act 2008. In recent years there has been a proliferation of benchmarks, toolkits, dashboards and checklists used by analysts, research firms and compliance consultants. We fully support the intention of these regulations, but there is a pressing need for the simplification and rationalisation of the myriad demands if we are to reduce the cost of doing business, while ensuring focus on the appropriate implementation of the important corporate governance issues and producing results. prospEctsThe trading environment in the year ahead unfortunately shows little sign of improving: food inflation and increases in the price of petrol and municipal services will continue to burden consumers’ disposable income, while economic growth and household spending is likely to remain sluggish. At the same time, any deterioration in the violent nature of industrial action across multiple sectors will impact fixed investment and job creation, further suppressing the consumer confidence on which we depend. There is still too wide a range of matters where government’s policy agenda remains opaque. We need, for example, a clearer picture of where land reform is heading, how the need for restitution in the agricultural sector is to be aligned to food security and reconciled with the urgent need to contain food inflation and bring down the cost of basic foodstuffs to the poor. Against this background, we were, as mentioned previously, delighted to secure the appointment of Richard Brasher as our new Chief Executive Officer. He has lost no time in immersing himself thoroughly in the culture and operation of the Group and already his enthusiasm and outstanding experience have brought a new energy and drive to the Group. With Richard’s appointment, my period as Executive Chairman since February 2012 came to an end and I have reverted to the Non-executive Chairmanship of Pick n Pay Stores Limited. I would particularly like to thank our deputy CEO, Richard van Rensburg, and the executive team for their support and hard work over the past year. Alex Mathole has resigned as an independent non-executive director, with effect from 28 February 2013. Alex has taken up an executive position at Tiger Brands Limited, a major supplier to Pick n Pay, and her resignation from the Board prevents the creation of a possible conflict of interests. Alex was a valuable member of the Board with her professional experience in sustainability and corporate social responsibility, as well as corporate governance issues. We thank her for her contribution and wish her all of the best in her future career. As always, I am also pleased to have this opportunity to express thanks to my colleagues on the Board and the executive management team for their support. I would like to acknowledge the loyalty and commitment of the thousands of Pick n Pay employees who are the very heartbeat of the Group. I also acknowledge our shareholders and thank them for their support and patience over this period of systemic and fundamental change that we are undertaking Finally, I would like to thank our customers for their ongoing support and interactions.
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