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

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

Operations

TurnoverR41 bn (USD 5.5bn) Owned Outlets1,303 Franchise Outlets427 Countries16 Employees>99,000 Market Capitalisation >R65 bn (USD 8.5bn) Size of Operation 4 December 2011

Store Portfolio Supermarkets RSA68351(5)729 Supermarkets Non RSA11212(1)123 Hungry Lion13215(4)143 Furniture29816(6)308 Owned Stores1,22594(16)1,303 Franchise280170(23)427 Total Stores1,505264(39)1,730 Pharmacies Liquor Stores Dec 2010 OpenedClosed Dec

Africa Presence

Forex Exchange rate differences Dec 2010:USD 1.7 million loss Dec 2011: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: R

Operations 21.2% Sales growth (16.9% constant currency) 10 new stores Close to reaching customers for a 12 month cycle 8.7% customer growth in the 6 month period Mauritius Freeport being used more extensively 8

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

15 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

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

17 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

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

19 Examples

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

21 Nigeria Port Congestion Trucks waiting to enter Appa Port

22 Road Conditions

23 Traffic

24 Questions…