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1 Investor Presentation October 2014

2 Disclaimer 2 The materials set out in this presentation have been provided to you by Choppies Enterprises Limited ( Choppies ) and may not be disclosed or referred to (in whole or in part) or used or relied upon for any other purpose other than as specifically agreed by written agreement with Choppies. While Choppies has taken reasonable care in preparing these materials, Choppies has not independently verified the information contained in these materials. Choppies, its affiliates and their respective directors, officers or employees (the Choppies Group ) assume no responsibility for and do not represent or warrant the completeness or accuracy of the information (whether written or oral) including estimates, projections or forecasts (of future financial performance or otherwise) referred to in these materials or that may be supplied in connection with these materials ( Information ). Choppies is under no obligation to inform you or anyone about any change (whether or not known or apparent to Choppies) to the Information. You must make your own independent judgment with respect to any matter contained in these materials. The Choppies Group will not be responsible for any losses or damages which any person suffers or incurs as a result of relying upon or using these materials or as a result of any information being omitted from these materials. These materials do not constitute an offer to enter into any transaction, and do not create any legally binding obligations on the Choppies Group. The Choppies Group does not owe any fiduciary or other duties to you or any other person. If you do not accept any of the conditions above, you must immediately return these materials and any copies of it, otherwise, the retention of these materials by you shall evidence your acceptance of such conditions.

3 A year of profitable growth 3 FY year ended June 14 was a significant year of growth for Choppies Added 36 stores to our footprint Expanded into Zimbabwe Choppies now has 110 stores 69 stores in Botswana, 28 in South Africa and 13 in Zimbabwe Retail space increased by 50% to 157,555sqm Excellent financial performance Top line growth of 24% Same stores sales up 1.13% Gross profit margin up 112 bps to 22% South Africa delivered a cash profit despite the platinum strike that impacted 17 of the stores Strong growth potential in FY15 Store growth in existing expansion markets (SA and Zimbabwe) Entry into new markets to be announced shortly

4 Consistent growth delivered since IPO 4 Financials in Pula m At Listing FY June 2013 FY June 2014 Δ Revenues % Gross Margin % EBITDA % PAT % Total stores (47%) Botswana (24%) South Africa (44%) Zimbabwe Retail floor space % Warehouse space % Employees % Total vehicles %

5 Choppies today a snapshot 5 Summary Founded in 1986 #1 grocery retailer in Botswana Listed on the Botswana Stock Exchange in 2012; now the largest non-bank counter Market cap of c. BWP4,900m / US$550m 110 stores: 69 in Botswana, 28 in South Africa, and 13 in Zimbabwe Employees 6500 in Botswana,3000 in South Africa, 1000 in Zimbabwe. Total retail space of 157,555 sqm Total warehouse space of 41,350 sqm 45,000 SKUs, including leading international brands and an extensive array of house brands (c. 16% of Botswana revenues) FY14A contribution by country Choppies Enterprises Limited Botswana South Africa Zimbabwe Rev % 64% 25% 11% GP % 73% 19% 8% Regional footprint Botswana 69 Stores 3 DCs 2 DCs South Africa 28 Stores 2 DCs 2 DCs Zimbabwe 13 Stores 1 DC

Choppies history 6 Opening of second store in Botswana Acquisition

restructuring ahead of IPO Megasave and Supersave acquisition in

network opened in Rail Park Mall, Gaborone Opening of SA DC in

stores 48 50 56 SA stores 9 13 17 Zim stores - - - 68 26 13 69 28

Opened first superstore in Gaborone Opened first hyperstore in

6 Choppies history 6 Opening of second store in Botswana Acquisition of Chathley Acquisition of Food Mart / Multisave 2011 Group restructuring ahead of IPO Megasave and Supersave acquisition in Botswana Acquisition of 10 Zimbabwe stores Largest hyperstore in network opened in Rail Park Mall, Gaborone Opening of SA DC in Rustenburg Bots stores SA stores Zim stores Opened 6 new stores in Botswana Choppies established in Lobatse Opened first superstore in Gaborone Opened first hyperstore in Gaborone Openings of first store in Zeerust, South Africa Appointment of Hon. Festus Mogae as Chairman Listed on the Botswana Stock Exchange Opened 9 new stores in SA Opened 3 new stores in Zimbabwe Opened DC in Zimbabwe

7 Store evolution in our current markets 7 Store Growth E Zimbabwe South Africa Botswana

Botswana our core market 8 First store opened in 1986 in Lobatse Strong growth in the late 2000 s PicknPay s divestiture of Score gave Choppies an opportunity to take market share in late 2000 s IPO

8 Botswana our core market 8 First store opened in 1986 in Lobatse Strong growth in the late 2000 s PicknPay s divestiture of Score gave Choppies an opportunity to take market share in late 2000 s IPO on the Botswana Stock Exchange in early 2012 Acquisition of Supasave in 2013 Company All other retailers Stores in Botswana 69 34% Est. Market Share n/a 66% Store growth Total m 2 : 950 1,900 3,300 6,200 11,000 15,600 24,500 35,400 47,100 52,300 54,400 54,400 56,500 62,000 71,500 87,165 31% CAGR

9 (BWPmm) (% margin) (BWPmm) (% margin) Botswana strong growth and cash generation 9 4,000 3,500 3,000 2,500 2,000 1,500 1, Revenue & GP Margin 22.0% 20.7% 19.8% 18.3% 3,586 3,093 2,731 2, Revenue GP Margin EBITDA & Margin 8.9% 7.7% 7.7% 8.1% % 20.0% 15.0% 10.0% 5.0% 0.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% Botswana is Choppies core market Growth has been strong and consistent 14% CAGR since 2011 and 16% y-o-y Same-store sales growth of 4% Potential for 5 new stores by Dec bps increase in GP margin since 2011 Highly cash generative Operating cash flows of BWP 322m Free cash flows before Capex of BWP 204m Profitable growth driven by World-class product offering (45,000 SKUs) Convenience (longer store hours) New revenue lines (e.g. financial services, other agency collection, mobile money, etc.) EBITDA EBITDA Margin 2.0% 1.0% 0.0% Strong private label offering (16% of revenues) Focus on fresh Competitive pricing

South Africa our expansion thesis remains intact 10 First store opened in Zeerust in June 2008 Stable growth in 2009-11 followed by rapid ramp-up in FY2012-13 DC opened in Rustenburg in FY13 Capacity

10 South Africa our expansion thesis remains intact 10 First store opened in Zeerust in June 2008 Stable growth in followed by rapid ramp-up in FY DC opened in Rustenburg in FY13 Capacity to profitably serve up to 100 stores in a 500km radius of Rustenburg Expanded to 26 stores in FY14 Currently 28 stores, plans to add 50 other stores. Economies of scale will deliver profitability in FY15 Fruit & Veg DC operational before calendar year-end 2014 Store growth Total m 2 : FY08 FY09 FY10 FY11 FY12 FY13 FY14 YTD 1,350 8,000 13,100 16,600 25,000 33,600 47,878 81% CAGR

11 (BWPmm) (% margin) (BWPmm) (% margin) South Africa mining strike impacts operations 11 1,200 1, % Revenue & GP Margin 19.4% % 1, % 20.0% 15.0% Platinum strike had a strong, negative impact on our South African business Strike lasted from January to June 2014, the longest and most expensive in SA history % 5.0% 17 of 26 SA stores (as at FY14) are located in the strike- affected areas Revenue GP Margin 0.0% Revenues declined 40% on average in these stores 25 EBITDA & Margin 10.0% Despite this, our SA operations still made a cash profit % 8.0% GP margin improved 90 bps y-o-y to 20.3% % 6.0% 5.0% Financial performance and profitability has significantly recovered since the end of the strike % 2.5% 2.4% 3.0% 5-0.3% % 1.0% 0.0% EBITDA EBITDA Margin

12 Zimbabwe excellent performance 12 P&L Summary in Pula m FY 2014 % group Revenues % Gross Margin % % margin 20.5% EBITDA % % margin 7.1% PAT % % margin 4.3% GP margin comparison 20.5% 19.2% 17.2% Acquired 10 Spar stores in Zimbabwe at the end of CY 2013 Most stores in/near Bulawayo (190km east of the Botswana border), easily serviced with Choppies existing supply chain (house brands, merchandise, etc.) All stores rebranded under the Choppies banner Three more stores opened since the acquisition, bringing the total to 13 stores Opened a new 6,850sqm Distribution Center in Bulawayo in May 2014 Opportunity for 60+ stores over the long-term across the country Excellent GP margin performance Choppies Zimbabwe Avg SA Listed Grocery Comps Avg ZIM Listed Grocery Comps

13 Strategy grow in existing and new markets 13 Botswana South Africa Zimbabwe New Markets TZ E Stores E Stores E Stores Current Markets High Potential Markets Other Potential Markets NAM ZM ZW BW SA Extensive logistics infrastructure enables focus on rural expansion Assuming lower levels of deflation due to the weakening rand, still a large opportunity to expand formal retail Strong store pipeline of over 30 high-probability locations Target small towns in Mpumalanga, Limpopo, NW and Northern Free State Zimbabwe significantly less penetrated by formal retail Expansion from Bulawayo hub to the north; potential for 30 stores in Harare alone Strong regional GDP and population growth of c. 5-9% and c. 2-4% respectively Strong grocery market growth of c. 8-9% High Potential Markets have a range of 3-6sqm of formal retail for every 1,000 people compared to 94sqm and 150sqm in BW and SA respectively Sources: McKinsey Institute, IMF

14 Strategy the regional growth opportunity 14 Existing Markets Potential Markets Botswana South Africa Zimbabwe Namibia Zambia Tanzania Kenya GDP growth ( ) GDP / capita (USD, nominal, 2013) Population Growth ( ) 4.1% 3.0% 4.3% 4.6% 6.6% 7.0% 6.4% 7,136 6, ,667 1, , % 0.6% 2.8% 1.8% 3.3% 3.0% 2.5% Urban Population % 57% 64% 33% 45% 40% 30% 25% Rate of Urbanization (Est. annual change ) 2.1% 1.2% 3.4% 3.1% 4.2% 4.8% 4.4% Formal retail channel 55% 70% 25% 50% 14% 13% n/a Formal retail penetration (sq meters / capita) n/a 5 6 n/a Sources: World Bank, IMF, McKinsey Institute, CIA World Fact Book

15 Strategy high potential markets 15 Zambia Tanzania Namibia Huge potential for formal retail; currently only 14% of the total retail market The grocery retail market is expected to grow at a CAGR of 9.1% by 2018 Economy is expected to expand at 6.6% through 2019 Choppies expects to commence retail operations in H1-FY15 Huge potential for formal retail; currently only 13% of the total retail market The grocery retail market is expected to grow at a CAGR of 8.9% by 2018 Economy is expected to expand at a real CAGR of 7.0% by 2019 Choppies is assessing opportunities, and may commence operations in H2- FY15 Similar market to our core Botswana base Formal retail channel makes up c. 50% of the retail market High GDP/capita and robust expected growth of 4.1% through 2019 Proximity to Botswana and SA operations allow us to leverage existing infrastructure, alongside outsourced distribution Choppies is assessing entry into the Namibian market

Strategy value-added services drive margins 16 Butchery Fruit and

to stores High margin business Constitutes 5.

sourced directly from SA and Botswana farmers Fruit & Veg DC unique

bread, cakes and patisserie Constitutes 4.

products in categories ranging from food and beverages to home

reach up to 25% in coming two years Takeaway Takeaway operations in

Choppies Fried Chicken (CFC) starting off well Constitutes 4.

16 Strategy value-added services drive margins 16 Butchery Fruit and Vegetables Bakery Wholly-owned meat supply business Daily deliveries to stores High margin business Constitutes 5.8% of BW and SA sales Highest quality fresh fruits and vegetables sourced directly from SA and Botswana farmers Fruit & Veg DC unique in Botswana Strong support from farming community leading to better pricing Constitutes 9.5% of BW and SA sales Wide range of bakery products, such as fresh bread, cakes and patisserie Constitutes 4.0% of BW and SA sales Private Label High quality, affordable products in categories ranging from food and beverages to home cleaning products Currently 16% of Botswana sales and aiming to reach up to 25% in coming two years Takeaway Takeaway operations in all stores Products such as fried chicken, chips, curries and combos Choppies Fried Chicken (CFC) starting off well Constitutes 4.4% of BW and SA sales New Initiatives Third party ATMs SIM cards/airtime Mobile money and money transfer Travel tickets / Local council payments Pensions and utility payments Imported non-food products

Strategy Best-in-class distribution and logistics 17 Choppies operates six Distribution Centers: Botswana: 10,000m² in Gaborone, 3,000m² in Lobatse and

100 stores (currently supporting 28 stores) within a 500 km radius of Rustenburg; implies North West, Mpumalanga, Limpopo, Northern Free State, and

17 Strategy Best-in-class distribution and logistics 17 Choppies operates six Distribution Centers: Botswana: 10,000m² in Gaborone, 3,000m² in Lobatse and 3,500m² in Francistown South Africa: 10,000m² and 8,000m² facilities in Rustenburg Zimbabwe: 6,850m² in Bulawayo SA DCs have the capacity to support 100 stores (currently supporting 28 stores) within a 500 km radius of Rustenburg; implies North West, Mpumalanga, Limpopo, Northern Free State, and Northern KZN Choppies logistics subsidiary supports the day-to-day operations of the stores with a fleet of c. 550 commercial vehicles, trailers and forklifts

18 (BWPmm) (EBITDA Margin) (BWPmm) (EBIT Margin) (BWPmm) (Growth Rate) (BWPmm) (GP Margin) Financial overview 18 6, % Revenue 40.0% 1,200 Gross Profit 21.5% 22.0% 5,000 4,000 3, % 3,302 4, % 5, % 35.0% 30.0% 25.0% 20.0% 1, % 19.4% % 822 1, % 20.0% 19.0% 2,000 1,000 2, % 10.0% 5.0% % 17.0% % % % 207 EBITDA 6.8% 6.8% % % 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% % 150 EBIT 5.1% 5.0% % 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% % %

19 Other operational and financial indicators 19 10,000 Employees 180,000 Store Space (sqm) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 3,702 5,267 7,209 9, , , , ,000 80,000 60,000 40,000 73,100 87, , ,955 1,000 20, % ROE 0.45x Debt to Equity 25.0% 20.0% 15.0% 28.3% 20.5% 20.8% 22.0% 0.40x 0.35x 0.30x 0.25x 0.20x 0.34x 0.41x 10.0% 0.15x 0.18x 5.0% 0.10x 0.05x 0.12x 0.0% x

20 FY 2015 expected capex 20 Botswana (BWP mm) South Africa (ZAR mm) Zimbabwe (USD mm) Number of Stores Capex PPE Capex for Vehicles Maintenance Capex Total Total (in BWP mm) (1) Botswana: plan to open 6 new stores by the end of FY 2015 with an anticipated total cost of BWP 68.0m South Africa: plan to open 10 new stores by the end of FY 2015 with an anticipated total cost of BWP 114.1m Zimbabwe: plan to open 9 new stores by the end of FY 2015 with an anticipated total cost of BWP 69.4m (1) converted at BWP/ZAR of 0.82 and BWP/USD of 9.26

21 (Thebe) (Percentage) Dividends sustained payout 21 Dividends per share grew 6.1% y-o-y in 2014, and 10.9% CAGR since IPO in 2012 Dividend payout ratio has consistently been above 30% since IPO Zimbabwe profits are being reinvested for expansion Over time, we are targeting a payout ratio of 50% 5.00 Dividends Per Share 35.0% Dividend Payout Ratio % 33.4% 32.5% 31.6% % % % %

22 How choppies achieved a dominant market share 22 Shift of sales from wholesale to Retail Extended Trading Hours Own Logistics ( Warehousing and Transport) Extending the business to rural areas. (Taking Business to people) Value added services(pay and Collect) Priced Right (Contract farming and Direct Procurement)

23 South African Market 23 Currently Operating 28 stores and plans to add another 50 stores Own Logistics ( Warehousing and Transport) Value added services(pension, Pay and Collect) Operating in the 2 nd and 3 rd tier towns.

24 Challenges 24 Infrastructure Issues Trade cost 1: Time costs: the distances and lack of density result in a time cost Getting the right solution to remote areas Trade cost 2: Transport costs No railway network, only water, and there too, there are no ports for large tankers Transport costs can add 30% above and beyond cost of goods The last mile is a significant challenge, particularly in delivery to rural areas. To manage this, Choppies has invested heavily in our own fleet of trucks and trailers. Tendering and other process are not transparent so good companies keep away Technology is a big challenge, e.g. bandwidth connectivity

25 Challenges 25 Supply Chain Issues Trade cost 3: Transaction costs Lack of local mid-level manufacturers who can supply; therefore need to go crossborder T3.1: Transactional paperwork and operational costs around information gathering, international contract drafting, and contract enforcement T3.2: Exchange rate fluctuation costs Trade cost 4: Tariff costs Lack of local mid-level manufacturers who can supply; therefore need to go crossborder This implies import duties

26 Challenges 26 Oligopoly Situation in the high end manufacturing sector, e.g.: High-quality pasta, convenient/ready to eat meals, etc. Washing powder In equality This implies a local manufacturing monopoly and potentially limited buying power with local manufacturers Choppies may therefore need to approach overseas manufacturers, thereby competing on a global scale with international mass retailers, a class wherein Choppies may have relatively limited buying power Labour Issues- Mainly in South Africa Recession mainly in Zimbabwe and South Africa

27 Challenges 27 Bureaucracy There s a cost of political capital to doing business in Africa like cost of local partnership in certain countries. Transactional paperwork and bureaucratic red tape add to costs Cultural & Socioeconomic challenges Traditional media (television and print) does not always reach all market segments. Companies need to be efficient in using their marketing budgets, keeping in mind that traditional media may not have the same impact as in developed markets. Still the most popular mode of media is radio amongst the masses. It really causes a challenge to gain penetration Strong traditions always difficult to change and bring new styles Slow progression of educational systems also contributes to the challenge Social integration-foreign skilled labour moving to Africa with a long-term view Africa is a not a homogeneous market different countries have different cultural aspects. As Choppies expands across Africa, we will need to customise our offering to local requirements.

28 Key factors for sustainable growth 28 Build a Brand Building a consistent and reliable brand is important. Consumers are brand-conscious and seek value. Value is not purely in price terms, but in terms of the actual product or service experience. Once you establish a brand and are successful make sure you have a share of mind almost every day in the consumer s life Understand cultural nuances Broadening product line to be Africa-specific while having cost excellence This would require a Lean or Six-Sigma-based operational methodology to pervade the company This in turn would require extensive human capital development/training Building a stable, cost effective supply chain is critical Data is most critical asset in Africa No proper data is available there

29 The Choppies brand as a strategic asset 29 We have focussed on building the Choppies brand and ensuring it stands for quality, value and customer satisfaction. We constantly strive to be relevant to the local communities we are present in through providing employment, local sourcing or CSR activities Our staff are our brand ambassadors we ensure employees at all levels are engaged, motivated and feel successful

30 Corporate Social Responsibility 30 Botswana South Africa Zimbabwe PMR Awards Outstanding 1 st Overall: in 4 categories Excellent 2 nd Overall: in 1 category 2 nd African Youth Games Platinum Sponsor ($1,000,000) Lady Khama Charitable Trust Fund My Star Talent Show (Main Sponsor) Kabelano Charity Cup (Associate Sponsor) University of Botswana (Sans Research Centre) Student Tuition Sponsor Presidential Housing Appeal (Biggest Sponsor) and others Meridian Primary refurbishment TC Esterhuizen hygiene day Vision of hope Race4Rhino research & kits Lephalale flooding Kindermusik sport exposure Rustenburg cash assistance during strike Boshoek School refurbishment Flunkey Monkey school fees Sponsored displaced children and others Enthembeni old age home Mpilo hospital Tsholotsho flood victims Bulawayo Public Library 3 clean-up campaigns Nkulumane shopping complex Sekusile Nkulumane J.M.N street in the CBD

31 SADC Statistics Particulars Measure Botswana Malawi Mozambique Namibia South Africa Zambia Zimbabwe Tanzania Coverage Area SADC Average Mid Year Population in '000's 2,102 15,317 24,366 2,172 52,980 14,580 13,192 45, , ,475 GDP at Current Market Prices in Million USD 14,788 5,080 15,764 12, ,007 26,835 13,490 33, , ,202 Real GDP Growth Rate at Market Price % Per Capita GDP (Per Head) USD 7, ,795 6,588 1,841 1, ,988 2,277 Annual Inflation Rate (period average) % Imports of Goods and Services in Million USD 8,856 2,984 6,349 7, ,509 10,639 7,704 13, , ,801 Exports of Goods and Services in Million USD 8,149 1,503 4,747 5, ,696 10,982 3,507 8, , ,481 Trade Balance in Million USD (706) (1,481) (1,601) (1,871) (9,813) 343 (4,197) (5,001) (24,327) (9,320) Imports of Goods and Services % of GDP 59.89% 58.74% 40.28% 58.79% 33.96% 39.65% 57.11% 41.20% 49.77% 37.98% Exports of Goods and Services % of GDP 55.11% 29.59% 30.11% 43.92% 31.14% 40.92% 26.00% 26.20% 36.68% 36.59% Total External Debt Stock in Million USD 3,223 1,496 5,798 1, ,095 3,513 8,934 12, , ,040 Debt to GDP ratio % of GDP 21.80% 29.40% 36.80% 8.90% 39.30% 13.10% 66.20% 38.40% 36.90% 32.50% Official Currency Name of Currency Pula Kwacha Meticias Dollar SA Rand Kwacha Dollar Shillings Official Exchange Rate Per 1 USD International reserves Stock in Million USD 7, ,996 1,619 49,587 2, ,676 70, ,242 Life Expectancy at Birth Number of years NA 58.5 Total Fertility Rate Per woman NA NA NA Net Enrollment Ratio in Secondary Schools Total NA NA 20.9 NA NA NA NA 32.2 Total Labour Force in '000's 900 6,982 12, ,444 5,845 5,121 NA 50,784

CHOPPIES ENTERPRISES LIMITED. Tel:

CHOPPIES ENTERPRISES LIMITED. Tel: CHOPPIES ENTERPRISES LIMITED Analyst: Email: Aobakwe Mokgethi aobakwe@capital.bw Tel: +267 318886 EQUITY RESEARCH BOTSWANA DECEMBER 2011 CHOPPIES ENTERPRISES Ltd Choppies Enterprises Limited, Choppies,