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Luc Merven - Financial Manager Offshore
IFA Mauritius – May 2012

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Overview
Shoprite operations
Strategy
• Challenges of doing business in
Non-RSA

Operations

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Turnover
Owned Outlets
Franchise Outlets
Countries
Employees
Market Capitalisation
Size of Operation
December 2011
R41 bn (USD 5.5bn)
1,303
427
16
>99,000
>R65 bn (USD 8.5bn)

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Supermarkets RSA
Supermarkets Non RSA
Hungry Lion
Furniture
Owned Stores
Franchise
Total Stores
Pharmacies
Liquor Stores
Store Portfolio
Dec
2010
683
112
132
298
1,225
280
1,505
113
102
Opened Closed
51
12
15
16
94
170
264
17
51
(5)
(1)
(4)
(6)
(16)
(23)
(39)
-
-
Dec
2011
729
123
143
308
1,303
427
1,730
130
153

Africa Presence

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Forex
Exchange rate differences
•
Dec 2010: USD 1.7 million loss
•
Dec 2011: USD 3.5 million gain
•
Rand to US Dollar exchange rates (R:$)
Dec 2008: R 9.66
•
Dec 2009: R 7.60
•
Dec 2010: R 6.63
•
Dec 2011: R 8.23

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Operations
• 21.2% Sales growth (16.9% constant currency)
• 10 new stores
• Close to reaching 100 000 000 customers for a 12 month cycle
• 8.7% customer growth in the 6 month period
• Mauritius Freeport being used more extensively

Strategy

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Strategy
• Corporations structure their group companies
• Shoprite started in 1995 in Zambia
• Considered:
– Guernsey
– United Arab Emirates
– Malta
– Luxembourg
– Mauritius
– Others

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Strategy
• Principle features when deciding on a beneficial intermediate holding company jurisdiction:
– Favorable network of tax treaties / DTA’s
– Nil or low tax on dividend & other income
– Nil or low withholding tax on dividends declared
– Absence of capital gains taxes on profit arising on disposal
/ deemed disposal of an investment
– Nil or reduced tax on share capital introduction
– Absence of a controlled foreign company regime
– Absence of exchange controls

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Strategy
• Other
– Proximity to core business:
• Mauritius / Africa
• Board meetings
• Personnel, know-how & effective management
– Ease of doing business in offshore jurisdiction
• Banking sector
– Reliable banks & banking system
– Availability of foreign exchange

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Strategy
• South Africa could not offer the above & Shoprite chose
Mauritius as its offshore base
• SARS investigations on FBE’s in Mauritius has resulted in confidence
• Sound business environment and working relationship between countries
• Mauritius is gaining as an established & transparent offshore platform
• Independence of Offshore entity – SARS scrutiny since
1998, we have proven track record

Challenges

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Trends & Challenges
• Need to consider the home country impact on all transactions
• Good for the group?
• Africa or SA tax consequences
• Need closer working relations between Mauritian and African Banks
• Need more DTA’s –
• < ½ of Shoprite’s operating divisions have established DTA with Mauritius

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Trends & Challenges
• Political unrest :
• Madagascar – coup
• Zimbabwe – hyper inflation
• Uganda – strikes
• Administrative challenges :
• Processes to register agreements
• Embassy’s
• Translators

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Trends & Challenges
• Repatriation of funds to Mauritius:
• Paper work requirements very onerous
• Shortage of foreign currency – banks are not moving away from risk & additional capital requirements have put banks under pressure
• Rating of banks – tendency of banks not being rated
• Low returns on local currency funds
• Strict enforcement of foreign exchange regulations making it sometimes impossible to trade

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Trends & Challenges
“It’s easier for Africa to trade with the rest of the world than with itself”
Times of Zambia
– 14/02/12

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Luanda Port Congestion
Vessels waiting to berth
Off-loading
Find your container

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Nigeria Port Congestion
Trucks waiting to enter Appa Port

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Road Conditions

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Traffic

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