Shufersal Ltd.

Investor Presentation • Jan 18, 2021

Company Presentation

January 2021

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 2019, 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:

• Retail (includes online, private label, B2B and finance) 94% of sales(1)
• Be (Pharma) 5% of sales(1)
• Real Estate (commercial properties incl. Shufersal stores) 1% of sales(1)

100% free float Stable and experienced management team

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

Israel Food Retail Sector Overview

(1) Company's estimates based on CBS (Central Bureau of Statistics) data on household consumption. Excluding VAT.

(2) Company's estimates for total market and private companies' market share; public companies' filings.

Shufersal – Key Metrics

10% LTM EBITDA Margin

12.4% YoY Increase in Same Store Sales

20% Food Retail Market Share(1)

20.1% Online Share(2)(3)

25.6% Private Label Share(2)

300 Shufersal Stores 85 Be Stores

623k Cardholders

NIS 2.6B Property Owned Value

c.18,000 Employees

ilAA-S&P Maalot Rating

Favorable Macro-Economic Environment

50% of Population Below Age 30

12%

Storenext Food Retail Market Index(2)

Robust Economic Growth (change in real GDP, % per annum) (3)

Leading the Way in Vaccine Rollout

Cumulative COVID-19 vaccination doses administered per 100 people(4)

0.1%

Stable Macro Environment with Controlled Inflation

• One of the youngest and fastest growing population amongst developed countries

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

Growth Strategy

Shufersal B2B

Catering to largely untapped customer base

Retail

Food Retail – Overview

• Wide range of formats catering to all segments of the population
• Leveraging Israeli innovation through best-in-class technologies such as grab-and-go and mobile self checkout

			No. of Stores (3Q20)	9M20 Stores Opening	% of Retail Sales (2019)
Discount	 Low prices  Wide range of products   via website or app	Caters to all segments of population incl. to growing ultra-orthodox Online available across the country	138	+2	80%
Urban & Proximity	 Smaller store space   and availability	Range of products adapted to targeted population and store size Focus on convenience, fresh, service	160	+6	20%

Strong and Steady Performance Across All Retail KPIs

10

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

Shufersal Online Overview

• Pioneered retail shift to online in Israel with 1 st version of Shufersal Online website and application in 2013
  • Comprehensive website overhaul in 2019
• 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
  • Catering to the growing ultra-Orthodox market
• Customized marketing outreach through loyalty programme of over 2mn households
• Leveraging the Shufersal online platform to generate additional traffic and revenue through marketplace business model

#1 Market Share Outpacing Competitors…

…with Rapidly Increasing Online Sales

Most Advanced Automated Shipping Infrastructure

Strategic goal to double online profitability and free up existing branch real estate

• Started to invest in automated order fulfillment centers and in 2018, well ahead of competition
  • Strategic initiative to complement 8 existing manual online shipping facilities of 27k sqm
• c. NIS650mn investment in the establishment of two fully automated shipping centers
  • Kadima Expected Operation in early 2Q21 (8k sqm)
  • Modiin Expected Operation 2022 (40k sqm)
• Future planning of 2-4 additional automated shipping centers

1 st generation Pickup at the store

2 nd generation Dark store

3 rd generation Semi automatic

4 th generation Fully automatic / robotic

Consistent Expansion of Private Label

Shufersal Private Label: the 4 th Largest Food Brand in Israel

• Shufersal private label is synonymous with high quality and attractive prices for consumers
• Only grocery retail player in Israel with private label brand

Israel's Largest Retailer Club

Retailer Club Overview

• #1 Loyalty programme with over 2mn households
• Retailer club offers unique discounts and benefits to members
• Gather granular data on each member and provide dedicated targeted offering, including via e-mail, text message and the application
• Most loyal customers convert into the credit card retailer club, which is Israel's leading credit card club
  • High and steady average spend per card
• Revenue share model with credit card operator based on issuance and credit income
• Cards issued by leading credit card company CAL, leveraging Shufersal distribution network

Evolution of Active Cards Over Time (k)

Growth Levers

• Leverage Shufersal's retail footprint in order to recruit new members
• Provide attractive non-bank credit offering
• Continue to recruit "Be" customers through retail club
• Boost private label through consistent discounts

Shufersal B2B – Tapping into Fragmented Wholesale Market

Opened 1st store in 2018 targeting urban mini-markets and kiosks (respectively c. 6,500 and c. 2,500 points of sales)

Attractive value proposition to merchants: one stop shop solution with lower prices

Currently 2 stores, with another one in construction; online site launched in early 2019

Cash & Carry "Rural Region"

Providing solutions for groceries in rural communities and "kibbutzim"

Serving about 430 points of sale nationwide

An online site for business customers only – over 3,000 customers

Cash & Carry and "Rural Region" represent a compelling growth opportunity, catering to an overall fragmented market of NIS11.5bn composed of mini-markets, on-the-go stores and groceries, growing at 5 ⁺% historically(1)

Shufersal B2B – Tremendous Potential in Institutional Market

'Singles'	'Chains'	'Institutions'
Restaurants, Cafes, Hotels and Event Venues	Hotels, Cafes and Restaurants	Large Organizations Providing Catering Services to Employees
Market Size	Market Size	Market Size
NIS8bn	NIS4bn	NIS5bn
2012-2018	2012-2018	2012-2018
6%	6%	1.5%
CAGR	CAGR	CAGR
No. of	No. of	No. of
9,000	150	4,500
Customers	Customers	Customers

Amiga acquisition in Oct-20 of Amiga Food Marketing will help providing dedicated offering to the sizeable and currently underserved institutional market

Be – Expansion into Pharma, Cosmetic and Toiletry

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

Sales (NISmn)

9M20 same store sales growth of 14.9%

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

Cross-buy on Shufersal shopping floors

Be private label

Real Estate

Shufersal Real Estate

Financials

COVID-19 Update

Retail:

• Initial consumer stockpiling and sustained increased at-home consumption led to a strong surge in demand for food and toiletries products
• Compelling rise in online sales, reaching 20% of total sales in Oct-20 (vs. 15% in 2019)
  • Converted some stores into shipping centers
• The contribution of COVID-19 to 9M20 revenue amounted to c. NIS1bn

Be:

• Robust increase in demand for Be products mainly answered through the online platform
• Operationally break-even by 4Q20

Real Estate:

• The Group granted immaterial rent breaks to tenants during the months of March-April and October 2020
  • No rent renegotiation has been experienced
• Fair value of real estate was not affected

Human Resources:

Temporarily recruited workers to meet increasing demand, leading to a NIS123mn increase in salary expenses in 9M20

Robust Financial Performance

Operating Profit(1) (NISmn)

(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 NIS424mn in 2019.

Consistently Improving Profitability Across Segments

Cash Flow Evolution

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

Commentary

Capex

• Disciplined capex policy
• c. NIS650mn total investment in new automated logistic centers spread over 4 years from 2018

(195)

205

405

605

805

5

• 2018 investment in Be (e.g. stores, IT, rebranding) post acquisition in 2017
• Conservative capex in 2020 due to COVID-19 outbreak
  • Some renovation work put on hold

(1) EBITDA – Capex. (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 NIS424mn in 2019. -1.0%

19.0%

39.0%

59.0%

79.0%

Exceptional Liquidity and Balanced Debt Profile

Cap Table

(NIS in millions)	Q3 2020
Non CPI Linked Bonds CPI Linked Bonds	2,005 1,253
Total Debt	3,258
Cash & ST Investments	(1,114)
Net Debt	2,144
LTM Net Leverage exc. IFRS 16 Lease(1)	2.2x
Lease Liability	3,874
LTM Net Leverage inc. IFRS 16 Lease	4.2x
Undrawn RCF	800
Total Liquidity	1,914

Future Bond Repayments

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

Appendix

Shufersal's History – Pioneering Israel's Retail

Experienced Leadership Team with Strong Vision and Values

Yacov Vadmani Chairman

Tali Huber CFO

David Laron VP Operations & Supply Chain

Zvika Fishheimer VP HR & IT

Itzik Abercohen CEO

Aaran Meiri General Counsel

Zvi Baida VP Customers & Service

Sharon Gambasho VP Properties & Development

Fairness Quality

Service and professionalism

Commitment to Innovation Employees

Israeliness

Consolidated Income Statement

(NISmn)	2017	2018	(1) 2019	9M 2019	9M 2020
Revenue	11,852	12,847	13,360	10,021	11,362
growth (%)	0.1%	8.4%	4.0%	4.2%	13.4%
Gross Profit	3,059	3,441	3,609	2,711	2,996
margin (%)	25.8%	26.8%	27.0%	27.1%	26.4%
Operating expenses	(2,596)	(2,988)	(3,088)	(2,306)	(2,480)
Operating Profit	463	453	521	405	516
margin (%)	3.9%	3.5%	3.9%	4.0%	4.5%
Other Income (Expenses), Net	1 6	1 6	3 6	(1)	1 3
Financing expenses, net	(124)	(116)	(259)	(202)	(170)
Net Income	275	265	268	151	267
margin (%)	2.3%	2.1%	2.0%	1.5%	2.3%
EBITDA	770	786	1,266	944	1,103
margin (%)	6.5%	6.1%	9.5%	9.4%	9.7%