Shufersal Ltd.

Investor Presentation • Mar 23, 2022

Company Presentation

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-93% of sales
  • Retail stores
  • Online
  • Private label
  • Finance
  • B2B
• Be (Pharma) c-6% of sales
• Real Estate (commercial properties incl. Shufersal stores) c-1% of sales

100% free float

Stable and experienced

management team

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 highest worldwide

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

0-14 28%

14-29 22%

Young and Growing Population(3) (mn)

• Standard of living has consistently improved in recent years, fueling the growth of the retail market
• One of the youngest and fastest growing population amongst developed countries

6 (1) International Monetary Fund as of January 2022 update estimate, CBS for Israel GDP (2) BOI ,CBS for Israel GDP forecast (3) Central Bureau of Statistics (CBS).

Favorable Macro-Economic Environment

Inflation 2021 Stable Macro Environment (2) with Controlled Inflation

Storenext Food Retail Market Index(1)

4.6%

Israel Food Retail Sector Overview

Food Retail Market(1)

Shufersal maintains its market share and increases sales volume over time

Change in sales and CPI (StoreNext Food Market)

Israel FMCG, 2021 compared to 2020

Growth Strategy

Growing online penetration; and a developing marketplace offering

Shufersal 2021 – Key Metrics

-4.8% YoY Decrease in Same Store Sales

NIS 2.7B

26.6% Private Label Share(2)

Property Owned Value

ilAA-/Positive S&P Maalot Rating (6)

(1) Based on Company's estimates as of 2021. (2) As of % of sales in Shufersal's stores & shipping centers . (3) Including Bela store. (4) As of March 12, 2022. (5) On March 7, 2021, the Company issued to the public 27 million ordinary company shares of NIS 0.1 par value each, for a total (gross) of approx. NIS 702 million (6) On October 3, 2021 the company's rating was updated to ilAA-/ Positive

Shufersal has shown tremendous growth and profitability in 2021

2021 compared to 2020

+1.6% Growth of

NIS 6 million

(1) Before other income & expenses.

+1% Growth of

NIS 8 million

RETAIL

Same store sales – Retail

Shufersal has grown in same store sales

Strong and Steady Performance Across All Retail KPIs

15 (2) Shufersal stores, excluding shipping centers

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

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
• 1 st mover advantage allows to maintain clear leadership
• Nationwide footprint, backed by robust logistic infrastructure covering 100% of the population
• More diversified offering than physical stores
  • Additional non-food items (e.g. furniture, appliances, travel)
  • "Be" pharma and cosmetic products

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

Shufersal Online –

automatic shipping center(CFC)

• Improving shopping experience and level of service
• Operational excellence
• Increasing capacity More then 1B NIS
• Reducing dependence on human resources
• High availability
• Improving operating margins
• The online sales rate through the automatic delivery centers is expected to reach 25% -30% in a representative year.

The total investments in respect of the establishment of the CFC in Modi'in and Kadima are estimated, at approximately NIS 700 million

Kadima - Running process 2021

Modi'in - Expected to be in running process at the end of 2022

Consistent Expansion of Private Label

Sku's of Private Label

Shufersal's private label strategy is to increase customer value through varied quality and price

• Penetration of new categories
• Expanding the product range
• Increasing sales of existing products

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)

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

(1) Comparison with 2020 data based on Discount Bank data prior to the establishment of the partnership

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

• Acquisition of New Pharm chain
• Provider of pharma (prescription and OTC drugs) and toiletry products
• Opening of 63 branches
• Rebranding to Be
• Conception of strategic plan
• Operational combination with Shufersal (e.g. IT, HQ)
• Consolidating growth in samestore sales
• Opening of innovative concept stores
• Leveraging synergies with Shufersal group
• Continued growth in same-store sales
• Momentum in online channel – food + pharma
• Break-even reached in the 4 th quarter of 2020
• Add thousands of items to the "Be" online range using "Be Long shipping center"
• Transition to profit

STRATEGIC TARGET

• Margins in line with Retail

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

Rapidly Growing Segment

Transition to operating profit in 2021

-70

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
• Quick corona tests in BE stores
• Cross-buy on Shufersal shopping floors
• Be private label

25

(1) Including Bela store (2) Before other income & expenses

REAL ESTATE

About Shufersal Real Estate Ltd. is a wholly owned subsidiary of Shufersal Ltd. The Company was established in April 2013.

NIS 2.7 billion

Value of investment property

231,000 sq m.

Yielding areas (of which, 38,000 sq m. are parking lots)

NIS 184 million

The Company's annual income

140 Customers

(Excluding Shufersal branches)

NIS 155 million

NIS 113 million

EBITDA

FFO

160,000 sq m.

Available building rights (gross area including parking lots)

*6.87%

Weighted rate of return

*Income in relation to Value of investment property and different from what is presented in the financial report **Excluding the value of assets under construction, the weighted rate of return is 7.1%. 27

Main areas of activity and national deployment

The Company's Customers

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 Company's share – 50.1% of the property

Properties Under Development | Ra'anana Zarhin

Zarhin Street, Ra'anana

sq m.72,600 of which 40,000 sq m. is above ground

Estimated date of completion Q3 2023

Choice Available Land

Mitzpe Sapir

Bazelet Street, Tzur Yigal

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

Pierre Koenig Street, Jerusalem

Talpiot

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

Kfar Saba Junction Plot 2004

Derech Hasharon and Netiv Ha'avot Junction, Kfar Saba

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

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

Robust Financial Performance

(NISmn)

Net Income (NISmn)

35(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

Consistently Improving Profitability Across Segments

Cash Flow Evolution

Free Cash Flow(1) and Cash Conversion(2) (NISmn)

Commentary

• Disciplined capex policy
• c. NIS 700 mn total investment in new automated logistic centers spread over 4 years from 2018 (4)
• 2018 investment in Be (e.g. stores, IT, rebranding) post acquisition in 2017
• Conservative capex in 2020 due to COVID-19 outbreak

(1) EBITDA – Capex.

37

(2) (EBITDA – Capex) / EBITDA.

(3) Adoption of IFRS-16 at the beginning of 2019 has had a positive impact on EBITDA in the amount of NIS422mn in 2019.

(4) Without capitalization of credit expenses

Exceptional Liquidity and Balanced Debt Profile

Cap Table
(NIS millions) in 2021
Linked Bonds Non CPI	1 749 ,
Linked Bonds CPI	975
Total Debt	2 724 ,
Cash & ST Investments	(1 286) ,
Debt Net	1 438 ,
Lease(1) LTM Net Leverage IFRS-16 exc.	(19 0x)
Liability Lease	4 396 ,
LTM Net Leverage inc IFRS-16 Lease	14 8x
Undrawn RCF	300
Total Liquidity	1 586 ,

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.

38 (2) Including interest.

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

Note: excluding IFRS-16 liability

39

Liabilities to banking corporations, debentures, including interest payable

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

Appendix

Consolidated Income Statement

(NISmn)	2018	)1( 2019	2020	2021
Revenues	12 847 ,	13 360 ,	15 233 ,	14 765 ,
(%) growth	8 4%	4 0%	14 0%	-3 1%
Profit Gross	3 441 ,	3 609 ,	4 043 ,	4 021 ,
(%) margin	26 8%	27 0%	26 5%	27 2%
Operating expenses	(2 988) ,	(3 088) ,	(3 325) ,	(3 295) ,
Operating Profit	453	521	718	726
margin (%)	3 5%	3 9%	7% 4	9% 4
Other (Expenses) Income Net ,	16	36	27	53
Financing net expenses,	(116)	(259)	(232)	(245)
Net Income	265	268	387	393
margin (%)	2 1%	2 0%	2 5%	2 7%
EBITDA	786	266 1 ,	1 514 ,	559 1 ,
margin (%)	1% 6	5% 9	9% 9	6% 10

Balance sheet (assets)

(NISmn)	31 12 2020	31 12 2021
Cash cash equivalents Short and deposits -term ,	880	1 286 ,
Trade receivables	494 1 ,	1 441 ,
Other receivables & Other investments	147	175
Inventory	939	914
Total Current Assets	3 460 ,	3 816 ,
Investments in associate	89	206
Other investments	87	66
plant and Property equipment ,	3 186 ,	3 397 ,
Intangible and deferred assets expenses , Receivables and debit balances Deferred & taxes	1 559 ,	1 605 ,
Investment property	792	878
Right -of assets -use	3 852 ,	4 313 ,
Total Assets	13 025 ,	281 14 ,

Balance sheet (liabilities and equity)

(NISmn)	31 12 2020	31 12 2021
liabilities Current
of from bonds & Credit Current maturities in respect banks	267	302
of lease liabilities Current maturities	360	392
Trade payables	2 333 ,	2 224 ,
Other payables and Provisions	1 148 ,	1 171 ,
Total liabilities Current	4 108 ,	4 089 ,
liabilities Non - current
Bonds	2 682 ,	2 422 ,
liabilities Lease	3 544 ,	4 004 ,
Employee benefits Other liabilities & net ,	320	423
Deferred taxes	136	153
Total liabilities non-current	6 682 ,	002 7 ,
Equity	2 235 ,	3 190 ,
Total liabilities and equity	13 025 ,	14 281 ,

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