Luc Merven — Financial Manager Offshore 1 IFA

Luc Merven - Financial Manager Offshore 1 IFA Mauritius – May 2012

Overview • Shoprite operations • Strategy • Challenges of doing business in Non-RSA 2

Operations

Size of Operation December 2011 Turnover Owned Outlets Franchise Outlets Countries Employees Market Capitalisation 4 R 41 bn (USD 5. 5 bn) 1, 303 427 16 >99, 000 >R 65 bn (USD 8. 5 bn)

Store Portfolio Dec 2010 Opened Dec 2011 Closed Supermarkets RSA 683 51 (5) 729 Supermarkets Non RSA 112 12 (1) 123 Hungry Lion 132 15 (4) 143 Furniture 298 16 (6) 308 1, 225 94 (16) 1, 303 280 170 (23) 427 Total Stores 1, 505 264 (39) 1, 730 Pharmacies 113 17 - 130 Liquor Stores 102 51 - 153 Owned Stores Franchise 5

Africa Presence

Forex Exchange rate differences • Dec 2010: • Dec 2011: USD 1. 7 million loss USD 3. 5 million gain Rand to US Dollar exchange rates (R: $) • Dec 2008: R 9. 66 • Dec 2009: R 7. 60 • Dec 2010: R 6. 63 • Dec 2011: 7 R 8. 23

Operations • 21. 2% Sales growth (16. 9% constant currency) • 10 new stores • Close to reaching 100 000 customers for a 12 month cycle • 8. 7% customer growth in the 6 month period • Mauritius Freeport being used more extensively 8

Strategy

Strategy • Corporations structure their group companies • Shoprite started in 1995 in Zambia • Considered: – Guernsey – United Arab Emirates – Malta – Luxembourg – Mauritius – Others 10

Strategy • Principle features when deciding on a beneficial intermediate holding company jurisdiction: Favorable network of tax treaties / DTA’s Nil or low tax on dividend & other income Nil or low withholding tax on dividends declared Absence of capital gains taxes on profit arising on disposal / deemed disposal of an investment – Nil or reduced tax on share capital introduction – Absence of a controlled foreign company regime – Absence of exchange controls – – 11

Strategy • Other – Proximity to core business: • Mauritius / Africa • Board meetings • Personnel, know-how & effective management – Ease of doing business in offshore jurisdiction • Banking sector – Reliable banks & banking system – Availability of foreign exchange 12

Strategy • South Africa could not offer the above & Shoprite chose Mauritius as its offshore base • SARS investigations on FBE’s in Mauritius has resulted in confidence • Sound business environment and working relationship between countries • Mauritius is gaining as an established & transparent offshore platform • Independence of Offshore entity – SARS scrutiny since 1998, we have proven track record 13

Challenges

Trends & Challenges • Need to consider the home country impact on all transactions • Good for the group? • Africa or SA tax consequences • Need closer working relations between Mauritian and African Banks • Need more DTA’s – • < ½ of Shoprite’s operating divisions have established DTA with Mauritius 15

Trends & Challenges • Political unrest : • Madagascar – coup • Zimbabwe – hyper inflation • Uganda – strikes • Administrative challenges : • Processes to register agreements • Embassy’s • Translators 16

Trends & Challenges • Repatriation of funds to Mauritius: • Paper work requirements very onerous • Shortage of foreign currency – banks are not moving away from risk & additional capital requirements have put banks under pressure • Rating of banks – tendency of banks not being rated • Low returns on local currency funds • Strict enforcement of foreign exchange regulations making it sometimes impossible to trade 17

Trends & Challenges “It’s easier for Africa to trade with the rest of the world than with itself” – 14/02/12 18 Times of Zambia

Examples 19

Luanda Port Congestion Vessels waiting to berth Off-loading 20 Find your container

Nigeria Port Congestion Trucks waiting to enter Appa Port 21

Road Conditions 22

Traffic 23

Questions… 24