Ifa mauritius may 2012
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IFA Mauritius – May 2012. Luc Merven - Financial Manager Offshore. 1. Overview. Shoprite operations Strategy Challenges of doing business in Non-RSA. 2. Operations. Size of Operation. December 2011. 4. Store Portfolio. 5. Africa Presence. Forex. Exchange rate differences

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IFA Mauritius – May 2012

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IFA Mauritius – May 2012

Luc Merven - Financial Manager Offshore

1


Overview

  • Shoprite operations

  • Strategy

  • Challenges of doing business in Non-RSA

2


Operations


Size of Operation

December 2011

4


Store Portfolio

5


Africa Presence


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

7


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

8


Strategy


Strategy

  • Corporations structure their group companies

  • Shoprite started in 1995 in Zambia

  • Considered:

    • Guernsey

    • United Arab Emirates

    • Malta

    • Luxembourg

    • Mauritius

    • Others

10


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

11


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

12


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

13


Challenges


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

  • 15


    Trends & Challenges

    • Political unrest :

      • Madagascar – coup

      • Zimbabwe – hyper inflation

      • Uganda – strikes

    • Administrative challenges :

      • Processes to register agreements

      • Embassy’s

      • Translators

    16


    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

    17


    Trends & Challenges

    • “It’s easier for Africa to trade with the rest of the world than with itself”

    • Times of Zambia – 14/02/12

    18


    Examples

    19


    Luanda Port Congestion

    Vessels waiting to berth

    Find your container

    Off-loading

    20


    Nigeria Port Congestion

    Trucks waiting to enter Appa Port

    21


    Road Conditions

    22


    Traffic

    23


    Questions…

    24


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