Max Stock Ltd.

Investor Presentation • Nov 29, 2020

The Value Leader of Israeli Retail

Company Overview

• ^◼ A leading extreme value retailer of everyday essential items in Israel.
  • ─ Up to 50% lower prices than conventional retailers.
• ^◼ Broad selection of merchandise across six major categories.
  • ─ Known for exciting entry aisle of constantly rotating seasonal favorites.
• ^◼ Operate 50 stores(1) across all market segments via dual format strategy
  • ─ Max: Large format (average ~1,800 SqM / ~19,500 SqFt(2) ) mostly company operated store in suburban markets.
  • ─ Max 20: Smaller format (average ~200 SqM / ~2,150 SqFt) mostly franchised store in city centers; all products priced under NIS 20 (~\$6).
• ^◼ "Partner" manager model drives superior store level execution.
• ^◼ Attractive new store model supports compelling whitespace opportunity with ability to more than double store count in Israel(3)
• ^◼ Deep and developed management team with collaborative culture.

50 Locations Across Israel(1) Toys & Baby 13% Office / School Supplies 11% Consumables 10% Apparel Basics 8% Arts & Crafts 7% Other 23% Housewares 28% (5)

⁴⁾ Product mix representative of January- September 2020 figures.

Broad Selection of Quality Products(4)

⁵⁾ Other comprised of over 25 subcategories with the largest being OTC Pharmaceutical, Candy, Tools/Hardware, Electronics, Winter Goods, Phone Accessories and Outdoors.

¹⁾ Operates 50 stores as of September 30, 2020.

²⁾ Represents company owned stores.

³⁾ Whitespace study per Geocartography Group and Company estimates.

²

Our Mission is to Help Customers "Dream Big, Pay Small" for Everyday Essentials

Q3 2020 Vs Q3 2019

• ^◼ Total revenue growth: 25%
• ^◼ Same store sales growth: 17%
• ^◼ Gross profit growth: 25%
• ^◼ EBITDA growth (post IFRS16): 45%
• ^◼ Net income growth: 31%

First 9 Months of 2020 Vs First 9 Months of 2019

• ^◼ Total revenue growth: 31% (8% excluding onetime bulk operation)
• ^◼ Same store sales growth: 2% (excluding period that the stores were closed: 19%)*
• ^◼ Gross profit growth: 14% (8% excluding onetime bulk operation)
• ^◼ EBITDA growth (post IFRS16): 34% (21% excluding onetime bulk operation)
• ^◼ Net income growth: 16% (14% excluding onetime bulk operation)
• ^◼ 2 stores opened in 2020
• ^◼ Converted 1 store from company owned to a franchise model

(NIS / USD Millions)

• ^◼ Total revenue growth of 25% in 3Q 2020 vs. the same period last year
• ^◼ Comparable store sales increased 17% in 3Q 2020 driven by a larger basket size vs. the same period last year
• ^◼ Adjusted EBITDA and Net Income in 3Q 2020 grew by 55% and 31%, respectively, vs. the same period last year

Strong Q3 2020 Financial Performance

Note: Financials presented on a post-IFRS 16 basis; see appendix for a reconciliation to post-IFRS 16. Israeli Shekels converted to U.S. Dollars by the average exchange rate: 1-9/2020 – 0.29,. 1-9/2019 – 0.28

(1) Adjusted EBITDA defined as Net Income + Net Interest Expenses + D&A + Other Expenses - the impact of IFRS 16; see appendix for a reconciliation.

1-9/2020 Financial Update

(NIS / USD Millions)

• ^◼ Due to COVID-19, on March 15th , 2020, the Israeli government began to restrict travel and retail operations, resulting in business disruptions and store closures for Max until May 1 st , 2020.
• ^◼ Despite temporary store closures due to COVID-19, Max saw 31% year-over-year sales growth in 1-9/2020 including sales of COVID-19 related goods to businesses and government entities. These bulk operations were one time in nature
• ^◼ Comparable store sales increased 2% in 1-9/2020 driven by growth in volume activity (excluding the period during which stores were closed due to government restrictions, same store sales growth was 19% during 1-9/2020).
• ^◼ Despite store closures in March and April and excluding one-time COVID-19 related goods sales, Max grew Adjusted EBITDA and Net Income in 1-9/2020 by 25% and 14%, respectively, vs. the same period last year.

Strong 1-9/2020 Financial Performance Despite Store Closures for ~1.5 months

• Note: Financials presented on a post-IFRS 16 basis; see appendix for a reconciliation to post-IFRS 16. Israeli Shekels converted to U.S. Dollars by the average exchange rate: 1-9/2020 0.29,. 1-9/2019 0.28
• (1) 1-9/2020 margins exclude impact of sales from personal protection equipment.
• (2) Adjusted EBITDA defined as Net Income + Net Interest Expenses + D&A + Other Expenses the impact of IFRS 16; see appendix for a reconciliation.

Summary P&L

	Q3	2020 Vs last	year	9 Month	2020	vs last Year
	Q3 2019	Q3 2020	Change %	1-9/2019	1-9/2020	Change %
Total ongoing revenue	208,373	260,012	24.8%	557,786	605,241	8.5%
Royalties	1,759	1,958	11.3%	4,422	4,370	-1.2%
Onetime bulk operation revenue	-	-		-	124,800
Total revenue	210,132	261,970	24.7%	562,208	734,411	30.6%
Gross profit ongoing revenue	82,088	102,451	24.8%	222,065	239,363	7.8%
Gross Margin ongoing	39.1%	39.1%		39.5%	39.5%
Gross profit onetime bulk operation	-	-	-	-	14,344 11.5%	100.0%
SG&A	51,836	56,413	8.8%	141,133	138,246	-2.0%
of Sales %	24.7%	21.5%		25.1%	18.8%
Other income	-89	-596		-469	-1,098
Other expenses	1,191	5,280		1,191	5,280
EBIT	29,150	41,354	41.9%	80,210	111,279	38.7%
of Sales %	13.9%	15.8%		14.3%	15.2%
Interest expenses, net	3,032	3,812	25.7%	7,936	11,738	47.9%
Interest expenses onetime bulk operation	-	1,446		-	13,276
EBT	26,118	36,096	38.2%	72,274	86,265	19.4%
Taxes	6,140	9,932	61.8%	16,915	22,114	30.7%
Net Income	19,978 9.5%	26,164 10.0%	31.0%	55,359 9.8%	64,151 8.7%	15.9%
EBITDA Post IFRS 16	39,769	57,810	45.4%	109,614	147,164	34.3%
% of Sales	18.9%	22.1%		19.5%	20.0%
IFRS EBITDA Pre 16	29,595	45,824	54.8%	79,895	114,074	42.8%
of Sales %	14.1%	17.5%		14.2%	15.5%

Revenue Bridge Multiple drivers of growth

EBITDA Bridge Multiple driver of growth (Pre IFRS16)

LTM in context of historical Financial Performance

Adjusted EBITDA(6)

Represents opportunistic sales from personal protective equipment

Note: Financials presented are on a pre-IFRS 16 basis; see appendix for a reconciliation to post-IFRS 16. Comparable store sales figures reflective of company-owned stores. Israeli Shekels converted to U.S. Dollars by the average exchange rate: 10/2019-9/2020 – 0.29.

1) 2019 "Max" store decline due to conversion of two stores to a "Max 20" format; Max has never closed a company-owned store.

2) Operates 50 stores as of September 30, 2020.

3) Company saw increased margin pressure from rapid company expansion

4) LTM Q3'20 margins exclude the impact of sales from personal protection equipment. 5) Represents 1-9/2020 comparable store sales.

6) Adjusted EBITDA defined as Net Income + Net Interest Expenses + D&A + Other Expenses - the impact of IFRS 16; see appendix for a reconciliation.

Balance Sheet Update

• ^◼ Max has ample liquidity and strong free cash flow generation to support future growth
• ^◼ Conservative debt on the balance sheet to ensure financial flexibility
• ^◼ Modest capital expenditures and working capital needs

Key Points Summary Balance Sheet

(NIS Thousands)

Balance Sheet of as	9/30/2020	9/30/2019	12/31/2019
Current Assets	344 696 ,	230 686 ,	217 777 ,
of Right Use Assets	370 334 ,	318 768 ,	370 165 ,
Other	53	44	44
Non-Current	291	348	955
Assets	,	,	,
Total Assets	768 321 ,	593 802 ,	632 897 ,
Short-Term	49	42	47
Lease	758	566	216
Liabilities	,	,	,
Other	177	122	100
Current	183	236	204
Liabilities	,	,	,
Long-Term	347	297	344
Lease	416	636	162
Liabilities	,	,	,
Other	24	24	21
Non-Current	013	674	259
Liabilities	,	,	,
Liabilities Total	598 370 ,	487 112 ,	512 841 ,
Equity	169	106	120
	951	690	056
	,	,	,
Liabilities Equity Total and	768 321 ,	593 802 ,	632 897 ,

Cash position

(NIS / USD Thousands)

Capitalization as of 9/30/2020	\$) (NIS / Balance
Cash and Cash Equivalents	\$ NIS / 155 443 45 174 , ,
Line of Credit	\$ NIS 40 000 / 11 625 , ,
Short-Term Debt	\$ NIS 16 250 / 4 722 , ,
Long-Term Debt	NIS / \$ 22 049 6 408 , ,
Total Debt	\$ NIS / 78 299 22 ,755 ,
Net Cash (Debt)	\$ NIS 77,144 / 22 419 ,

Bottom line: delivering on our growth strategy

Execute on Operating Margin Enhancements

Summary Cash Flow
	1-9/2019	1-9/2020
Cash flows from operations	92,644	114,106
Cash flows used for investment activities	)22,825(	)72,912(
Cash flows deriving from (used for) financing activities	)56,137(	7,692
Increase in cash and cash equivalents	13,682	48,886

Long-Term Financial Targets

Appendix

Reconciliation of Net Income to Adjusted EBITDA

(NIS Thousands)

	2017	2018	2019	(2) LTM Q3'20
Net Income	53 621 ,	58 814 ,	70 274 ,	79 066 ,
(+) Interest Expense Net ,	1 728 ,	1 676 ,	10 397 ,	27 475 ,
(+) Income Tax Expense	17 836 ,	19 414 ,	20 861 ,	26 060 ,
(+) Depreciation and Amortization (1)	2 667 ,	4 554 ,	38 891 ,	41 912 ,
(+) Other Expenses	1 573 ,	1 682 ,	766	4 226 ,
(-) IFRS 16 Adjustment	NA	NA	-40 662 ,	-44 033 ,
Adjusted EBITDA (Pre-IFRS 16)	425 77 ,	86 140 ,	527 100 ,	134 706 ,
(+) IFRS 16 Adjustment	NA	NA	40 662 ,	44 033 ,
(Post-IFRS 16) Adjusted EBITDA	NA	NA	141 189 ,	178 739 ,

(2) LTM Q2'20 financials include impact of sales from personal protection equipment.

Impact of IFRS 16 on the 2019 Income Statement

(NIS Thousands) Section	Before Application of IFRS 16	Effect of IFRS 16	After Application of IFRS 16	After Application of IFRS (Excl PPE) 16
Gross Profit	292 669 ,	878	293 547 ,	293 547 ,
Adjusted EBITDA	100 527 ,	40 662 ,	141 189 ,	141 189 ,
Operating Profit	93 933 ,	7 599 ,	101 532 ,	101 532 ,
Profit Before Tax	93 246 ,	-2 111 ,	91 135 ,	91 135 ,
Net Income	71 898 ,	-1 624 ,	70 274 ,	70 274 ,

Impact of IFRS 16 on the 1-9/2019 Income Statement

(NIS Thousands)

Section	Before Application of IFRS 16	Effect of IFRS 16	After Application of IFRS 16	After Application of IFRS 16 (Excl PPE)
Gross Profit	221 520 ,	545	222 065 ,	222 065 ,
Adjusted EBITDA	79 895 ,	29 719 ,	109 614 ,	109 614 ,
Operating Profit	74 922 ,	288 5 ,	80 210 ,	80 210 ,
Profit Before Tax	74 604 ,	-2 330 ,	72 274 ,	72 274 ,
Net Income	57 153 ,	-1 ,794	55 359 ,	55 359 ,

Impact of IFRS 16 on the 1-9/2020 Income Statement

(NIS Thousands)

Section	Before Application of IFRS 16	Effect of IFRS 16	After Application of IFRS 16	After Application of IFRS (Excl PPE) 16
Gross Profit	252 209 ,	1 498 ,	253 707 ,	239 363 ,
Adjusted EBITDA	114 074 ,	33 090 ,	147 164 ,	132 820 ,
Operating Profit	104 167 ,	7 112 ,	111 279 ,	96 935 ,
Profit Before Tax	91 892 ,	-5 627 ,	86 265 ,	85 197 ,
Net Income	68 484 ,	-4 333 ,	64 151 ,	63 329 ,