Shufersal Ltd. — Investor Presentation 2021

Nov 29, 2021

Company Presentation Q3 2021

November 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 2020, 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-94% 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-Economic Environment

Young and Growing Population(1) (mn)

IMF – GDP Forecast for 2021-2022

Resilient Recovery of Covid-19 in Israel (3)

Stable Macro Environment with Controlled Inflation

BOI - GDP, Rate of Change, Real Terms (4)

• 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
• 6 (1) Central Bureau of Statistics (CBS). (2) Storenext. (3) International Monetary Fund as of Oct., 2021. (4) BOI Estimates as of Oct 7, 2021. CBS figures as of October 18, 2021.

Change in sales and CPI (StoreNext Food Market)

FMCG, Jan.- Sep. 2021 compared to Jan. - Sep. 2020

Growth Strategy

Growing online penetration; and a developing marketplace offering

Establishment of two automatic online shipping centers- the first (Kadima) started a running process during Q3.2021

Shufersal 1-9.2021 – Key Metrics

NIS 2.6B

Property Owned Value

ilAA-/Positive

S&P Maalot Rating

302Shufersal Stores 91 Be Stores(3)

9

(1) Based on Company's estimates as of 2020. (2) As of % of sales in Shufersal's stores. (3) Including Bela store. (4) As of November 8, 2021.

(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

(6)

Shufersal has shown growth in profitability in Q3-2021

QoQ growth

(1) Before other income & expenses.

10

(2) The decrease is mainly due to other income in the amount of NIS 10 million in the corresponding period last year and an increase in financing expenses.

Shufersal has shown tremendous growth and profitability in 1-9.2021

Jan.- Sep. 2021 compared to Jan. - Sep. 2020

(1) Before other income & expenses.

11

(2) The decrease is mainly due to other income in the amount of NIS 10 million in the corresponding period last year and an increase in financing expenses.

Same store sales – Retail

-4.0%

Increase in same store sales

Increase in same store sales vs. 1-9.2019 w/o covid-19 impact - estimates

Increase in same store sales vs. 1-9.2019 with covid-19 impact

Strong and Steady Performance Across All Retail KPIs

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

14 (2) Shufersal stores, excluding shipping centers

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

1. Shufersal Online Overview

• 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
  • 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

2. Strategy

Investment of NIS 650 million in the construction of two automatic online shipping centers: (1)

Kadima - Running process Q3 / 2021

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

#1 Market Share Outpacing Competitors…

…with Rapidly Increasing Online Sales Online Sales as % of Sales in Shufersal Stores

Consistent Expansion of Private Label

16 Note: not including Be and Gidron (baked goods).

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, growing at 5+% historically(1)

Israel's Largest Retailer Club

Retailer Club Overview

• #1 Loyalty programme with over 2mn members
• Retailer club offers unique discounts and benefits to members
• Gather granular data on each member and provide dedicated targeted offering, including via e-mail, SMS and the application
• 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 (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
• The employment of a joint venture with Discount Bank for the establishment of a digital wallet for customers of all banks based on the " paybox " platform, has been completed in June 2021
• The joint venture will operate using the PayBox platform, offering an advanced digital wallet, including a "financial supermarket" offering innovative banking products and services

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

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)

Operating Profit (NISmn)

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

21

REAL ESTATE

Shufersal Real Estate

Segment Overview

Owns 94 income-producing assets: mainly commercial and offices

• Consistently improving KPIs with 197K sqm with 95% occupancy rate as of Q3 2021

Properties are acquired, developed, renovated and leased out

c.70% of GLA are Shufersal stores,

c. 30% are leased to third parties

Segment income derived from rental fees and management fees

GAV: NIS 2.6bn (fair value not impacted from COVID-19)

• Not including logistic assets

Select Tenants

Over 150 tenants including some of the largest retailers, corporates and HMOs in Israel

Key Financials (NISmn)

Consistent revenue and profit stream

FINANCIALS

Robust Financial Performance

Net Income (NISmn)

EBITDA (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 NIS422mn in 2019 and an impact of NIS433mn in 2020.

25

Consistently Improving Profitability Across Segments

Cash Flow Evolution

Free Cash Flow(1) and Cash Conversion(2) (NISmn) 390 199 730 1,040 761 831 50.6% 25.3% 57.7% 68.7% 69.0% 70.2% (3)

Commentary

• Disciplined capex policy
• c. NIS650mn 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.

27

(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 30 09 2021
Linked Bonds Non CPI	1 883 ,
Linked Bonds CPI	142 1 ,
Total Debt	3 025 ,
Cash & ST Investments	(1 598) ,
Debt Net	427 1 ,
Lease(1) LTM Net Leverage IFRS-16 exc.	1 3x
Liability Lease	4 261 ,
inc IFRS-16 LTM Net Leverage Lease	3 6x
Undrawn RCF	300
Total Liquidity	898 1 ,

Future Bond Repayments(2)

(NISmn)

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

Debt Levels(1) that support the company's strategy (NISbn)

Note: excluding IFRS-16 liability

(1) Liabilities to banking corporations, debentures, including interest payable

29 (2) Excluding cash and cash equivalents, short term deposits and marketable securities.

Appendix

Consolidated Income Statement

(NISmn)	1-9 2018	(1) 1-9 2019	1-9 2020	1-9 2021
Revenues (%) growth	9 620 , 7 8%	10 021 , 4 2%	11 362 , 13 4%	11 152 , -1 8%
Profit Gross (%) margin	2 578 , 26 8%	2 711 , 27 1%	2 996 , 26 4%	3 047 , 27 3%
Operating expenses	(2 227) ,	(2 306) ,	(2 480) ,	(2 480) ,
Operating Profit	350	405	516	567
(%) margin	3 6%	4 0%	4 5%	5 1%
Other Income (Expenses) Net ,	15	(1)	13	1
Financing net expenses ,	(83)	(202)	(170)	(173)
Net Income	216	151	267	293
margin (%)	2 2%	5% 1	2 4%	2 6%
EBITDA	587	944	1 103 ,	1 184 ,
margin (%)	1% 6	4% 9	7% 9	6% 10

Balance sheet (assets)

(NISmn)	30 09 2020	30 09 2021
Cash cash equivalents Short and deposits -term ,	1 114 ,	1 598 ,
Trade receivables	1 738 ,	1 566 ,
Other receivables Other & investments	186	179
Inventory	1 018 ,	913
Total Current Assets	056 4 ,	256 4 ,
deposits Long-term		350
Investments in associate	87	210
Other investments	92	80
, plant and Property equipment	3 165 ,	3 273 ,
Intangible and deferred assets expenses, Receivables and debit balances Deferred & taxes	1 545 ,	1 580 ,
Investment property	724	802
Right -of assets -use	3 836 ,	4 193 ,
Total Assets	13 505 ,	14 744 ,

Balance sheet (liabilities and equity)

(NISmn)	30 09 2020	30 09 2021
liabilities Current
of from maturities in bonds & Credit Current respect banks	338	347
of lease liabilities Current maturities	353	387
Trade payables	2 495 ,	2 426 ,
Other payables and Provisions	338 1 ,	377 1 ,
Total liabilities Current	4 524 ,	4 537 ,
liabilities Non - current
Bonds	2 920 ,	2 678 ,
liabilities Lease	3 521 ,	3 874 ,
benefits Employee & Other liabilities , net	309	421
Deferred taxes	133	140
Total liabilities non-current	6 883 ,	113 7 ,
Equity	2 098 ,	3 094 ,
Total liabilities and equity	13 505 ,	14 744 ,

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