Shufersal Ltd.

Investor Presentation • Aug 17, 2022

Company Presentation Q2 2022

August 2022

Disclaimer

This Presentation was prepared by Shufersal Ltd. (the "Company"). This presentation does not constitute an offering for the purchase or sale of the Company's securities nor an invitation to receive said proposals, rather is solely intended for the provision of information. The information used when presenting the presentation ( the "Information") is provided therein for convenience purposes only and does not constitute grounds for making investments decisions, nor does it constitute a recommendation or an opinion and by no means does it substitute the investor's discretion. The presentation may include information published by third parties, the content thereof was not independently reviewed by the Company; consequently, the Company shall not be liable for its correctness. In addition, the presentation may include information based on assessments of the Company's market, data and statistical and public publications released by various authorities and third parties, the contents of which have not been independently verified by the Company, and therefore the Company is not responsible for its correctness. What has been set forth in the presentation with respect to the analysis of the Company's operations is solely summative and in order to obtain a more comprehensive review of the Company's operations and the risks it faces, one should refer to the Company's Annual Report for 2021, its Quarterly Financial Statements and its Immediate Reports as reported in the Magna System website.

The terms set forth in this presentation may be presented at a segmentation or level of detail different than those set forth in the Company's Reports or may include information that was not yet included in the Company's Reports or that was not presented as it was presented in said presentation, which to the best of the Company's knowledge are correct as of the date of their presentation.

The presentation includes Forward Looking Information, as is defined in the Securities Law, 1968 ("Forward Looking Information") even if it was not explicitly stated in its regard, which includes, inter alia, the Company's forecasts, objectives, assessments and estimations with respect to future events the materialization of which is not certain and is beyond the Company's control; which are based, inter alia, on information held by the Company as of this date, on the Company's internal assessments and expectations. The Company has no certainty that its forecasts, objectives and/or assessments shall be materialized, in whole or in part; this, inter alia, due to factors beyond the Company's control, such as changes in the market terms and environment, regulatory changes and/or the materialization of any of the Company's risk factors. In view of the foregoing, the Forward Looking Information may not be materialized or may materialize in a materially differently manner than what has been forecasted; therefore, inter alia, the Company's de facto results and accomplishments may materially differ from those presented in the Forward Looking Information. The Company does not undertake to update the information included in the presentation, in whole or in part, for it to reflect events and/or circumstances occurring after the preparation of the presentation.

Shufersal At a Glance

Founded in 1957

as Israel's 1 st modern supermarket, Shufersal is the leading and largest food retailer in the country

Wide range of retails formats catering to all segments of the population, with nationwide footprint

Three main segments(1) :

• Retail c-92% of sales
  • Retail stores
  • Online
  • Private label
  • Finance
  • B2B
• Be (Pharma) c-7% of sales
• Real Estate (commercial properties incl. Shufersal stores) c-1% of sales

100% free float

Pioneered online retail in Israel with largest e-commerce website in the country

Developing marketplace offering

Shufersal – Major Anchors

Shufersal Group

Favorable Macro-Growth rates in Israel are among the best in the world

BOI - GDP, Rate of Change, Real Terms (2)

Inflation(2) Inflation- Food Retail Market (3)

• Standard of living has consistently improved in recent years, fueling the growth of the retail market

Change in sales and CPI (StoreNext Food Market)

Israel FMCG, H1.2022 compared to H1.2021

COVID-19

Growth Strategy

Growing online penetration; and a developing marketplace offering

Shufersal H1 2022 – Key Metrics

HoH Decrease in Same Store Sales

27.0% Private Label Share(2)

9

NIS 2.8B Property Owned Value

RETAIL

Same store sales – Retail

Strong and Steady Performance Across All Retail KPIs

(1) Shufersal stores, including online sales, excluding Online Be and "Rural region"

12 (2) Shufersal stores, excluding shipping centers

Shufersal Online: Israel's #1 E-commerce Website

Shufersal's growth strategy and Shufersal Online's investment policy contributed to increased sales

Pioneered retail shift to online in Israel with 1 st version of Shufersal Online website and application in 2013

Nationwide footprint, backed by robust logistic infrastructure covering 100% of the population

1 st mover advantage allows to maintain clear leadership

More diversified offering than physical stores

• Additional non-food items (e.g. furniture, appliances, outdoor)
• "Be" pharma and cosmetic products

Online Sales as % of Sales in Shufersal Stores & shipping stores

Shufersal Online –

Automatic shipping center(CFC)

The online sales rate through the automatic delivery centers is expected to reach 25% -30% in a representative year.

Kadima – Completed ramp-up by the end of Q1.2022. Fully operational from April 2022. Modi'in - Expected to be in running process at the end of 2022

Consistent Expansion of Private Label

Note: Shufersal stores and shipping centers *H1.2022- 27.0% of sales

15

Israel's Largest Customers Club

Customers Club Overview

• #1 Loyalty program with over 2mn members
• Launch of a new Loyalty program "SUPREME" which offers an improvement in terms and benefits for customers and an easy and fast connection with the PayBox digital wallet
• Most loyal customers convert into the credit card retailer club, which is Israel's leading credit card club
• Cards issued by leading credit card company CAL, leveraging Shufersal distribution network

Evolution of Active Cards Over Time (1)

(1) Not including run-off of previous Leumi Card cards from 2018 onwards.

16

Finance

• Collaboration between Shufersal as the leading retail corporation in Israel and the third largest bank - Israel Discount Bank
• Entering the digital wallet market is part of Shufersal's growth strategy in the finance sector and implementation of the technological innovation strategy.
• The digital wallet contributes to Shufersal's positioning as a significant player in the finance sector in Israel
• Development and marketing of financial services to the general public, in collaboration with other service providers, on the basis of an open banking infrastructure
• In April 2022, PayBox expanded its digital wallet services by contracting with Cal to issue a digital credit card to widget users.

Shufersal B2B Tapping into Fragmented Wholesale Market

Cash & Carry

• Opened 1 st store in 2018, targeting urban minimarkets, kiosks and food service customer. Over 10K points of sale.
• Attractive value proposition to merchants: one stop shop solution with attractive prices.
• Currently 2 stores, with the 3 rd store in construction; online site launched in mid 2019.

"Rural & Urban Region"

• Providing solutions for groceries in rural communities, "kibbutzim" and urban groceries.
• Serving about 550 points of sale nationwide.

Institutional Market

• Shufersal Amiga" - sale, marketing and distribution of food products in the institutional market: cafes, restaurants, catering companies, nursing homes and more.

Cash & Carry and "Rural & Urban Region" represent a compelling growth opportunity, targeting an overall market of NIS11.5bn composed of mini-markets, groceries and food service

Be

Be – Expansion into Pharma, Cosmetic and Toiletry (Cont'd)

Rapidly Growing Segment

Strategic Initiatives

• Online pharmacy – delivery through Shufersal website or pick up in stores • Dedicated shipping center for online Be products
• Niche positioning
  • Vitamins/perfumes with attractive value proposition
  • Medical cannabis
  • Covid-19 antigen rapid tests at BE stores
• Cross-buy on Shufersal shopping floors
• Be private label

REAL ESTATE

Shufersal Real Estate

Improving group's financial profile

Real estate enhancement

Real estate value in NIS billion*

Key Financials (NISmn)

Consistent revenue and profit stream*

Property at Occupancy Stage | Curdani

Jerusalem Boulevard, Kiryat Motzkin

14,000 sq m. (including parking lot) of which 11,500 sq m. is built-up area

Joint venture
50.1% Company's share – of the
property

Properties Under Development | Ra'anana Zarhin

Zarhin Street, Ra'anana

Approximately 73,000 sq m. of which 40,500 sq m. is above ground

Combination transaction. A marketing process has started and these days agreements are being signed

Estimated date of completion Q3 2023

Income-producing assets | Kfar Saba junction plot 2004

The intersection of Derech HaSharon and Netiv HaAvot streets in Kfar Saba

Approximately 45,000 sq m of which 27,000 sq m. is above ground

Promotion of a city building plan for an additional about 8,000 sq. m. (on the way to the district)

In July 2022, Shufersal Real Estate signed an combination deal with the Rogovin Group. Company's share - 33%

Initiated Assets | Lev HaMifratz Mall "CineMall"

55-61 Histadrut Blvd., Haifa

Approximately 66,000 sq. m. is above ground (including parking lot); There are unused building rights.

Company's share – Shufersal Real Estate- 37% Menora- 37% Ram Bakara- 26%

In July 2022, Shufersal Real Estate signed an agreement to increase the holding rate from 37% to about 59% in Lev HaMifratz Mall

Choice Available Land

Mitzpe Sapir

OH

Bazelet Street, Tzur Yigal

25,000 sq m. of which 20,000 sq m. is above ground

Talpiot

Pierre Koenig Street, Jerusalem

45,000 sq m. of which 27,000 sq m. is above ground

Robust Financial Performance

29 (1) Before other income & expenses.

(2) Adoption of IFRS-16 at the beginning of 2019 has had a positive impact on EBITDA in the amount of NIS422mn in 2019 , an impact of NIS433mn in 2020 and an impact of NIS453mn in 2021

Robust Financial Performance Segments

Exceptional Liquidity and Balanced Debt Profile

(NIS in millions) H1.2022 Non CPI Linked Bonds 1,747 CPI Linked Bonds 1,026 Total Debt 2,773 Cash & ST Investments (1,170) Net Debt 1,603 LTM Net Leverage exc. IFRS-16 Lease(1) (7.7x) Lease Liability 4,675 LTM Net Leverage inc. IFRS-16 Lease 22.7x Undrawn RCF 300 Total Liquidity 1,470

Cap Table Future Bond Repayments(2)

(NISmn)

• Well staggered debt maturity profile
• ilAA-/ Positive credit rating by S&P Maalot
• 100% unencumbered real estate assets

(1) Net Debt / LTM EBITDA. EBITDA exc. IFRS-16 was calculated by subtracting leased asset amortization and leased liability interest from post IFRS-16 EBIDTA.

Debt Levels that support the company's strategy (NISbn)

Note: excluding IFRS-16 liability

32

Liabilities to banking corporations, debentures, including interest payable

Excluding cash and cash equivalents, short term deposits and marketable securities.

Appendix

Consolidated Income Statement

(NISmn)	H1 2019 )1(	H1 2020	H1 2021	H1 2022
Revenues	6 578 ,	7 420 ,	7 351 ,	7 203 ,
growth (%)	4 1%	12 8%	-0 9%	-2 0%
Gross Profit	1 780 ,	1 967 ,	2 022 ,	1 898 ,
margin (%)	27 1%	26 5%	27 5%	26 4%
Operating expenses	(1 513) ,	(1 631) ,	(1 641) ,	(1 689) ,
Operating Profit	267	336	381	209
margin (%)	1% 4	5% 4	2% 5	9% 2
Other Income (Expenses) Net ,	(1)	3	1	34
Financing net expenses,	(137)	(110)	(106)	(90)
Net Income	96	170	211	95
margin (%)	5% 1	3% 2	9% 2	3% 1
EBITDA	624	725	785	650
(%) margin	9 5%	9 8%	10 7%	9 0%

Balance sheet (assets)

(NISmn)	30 06 2019	30 06 2021	30 06 2022
Cash and cash equivalents Short deposits -term ,	551	1 117 ,	1 170 ,
Trade receivables	1 305 ,	1 449 ,	1 475 ,
Other receivables & Other investments	180	163	204
Inventory	903	945	960
Total Current Assets	2 939 ,	3 674 ,	3 809 ,
deposits Long -term	-	400	-
in associate Investments	91	196	208
Other investments	99	85	73
plant and equipment Property ,	3 040 ,	3 247 ,	3 524 ,
Intangible and deferred assets expenses , Receivables and debit balances Deferred & taxes	337 1 ,	566 1 ,	597 1 ,
Investment property	670	801	932
Right -of assets -use	3 587 ,	4 047 ,	4 291 ,
Total Assets	11 763 ,	14 016 ,	14 434 ,

Balance sheet (liabilities and equity)

(NISmn)	30 06 2019	30 06 2021	30 06 2022
liabilities Current
of bonds Credit from Current maturities in & respect banks	282	331	345
of maturities lease liabilities Current	348	375	402
Trade payables	971 1 ,	2 131 ,	2 300 ,
Liability of partnership in option acquire respect to	11	-	-
Other payables and Provisions	895	1 174 ,	1 210 ,
Total liabilities Current	3 507 ,	4 011 ,	4 257 ,
liabilities Non - current
Bonds	2 864 ,	2 673 ,	2 428 ,
liabilities Lease	3 239 ,	3 736 ,	3 988 ,
Employee benefits Other liabilities & , net	266	422	373
Deferred taxes	125	139	169
Total liabilities non-current	6 494 ,	6 970 ,	6 958 ,
Equity	1 762 ,	3 035 ,	3 219 ,
Total liabilities and equity	11 763 ,	14 016 ,	14 434 ,

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