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

IFA Mauritius – May 2012

Luc Merven - Financial Manager Offshore

1


Ifa mauritius may 2012

Overview

  • Shoprite operations

  • Strategy

  • Challenges of doing business in Non-RSA

2


Ifa mauritius may 2012

Operations


Ifa mauritius may 2012

Size of Operation

December 2011

4


Ifa mauritius may 2012

Store Portfolio

5


Ifa mauritius may 2012

Africa Presence


Ifa mauritius may 2012

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

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


Ifa mauritius may 2012

Strategy


Strategy

Strategy

  • Corporations structure their group companies

  • Shoprite started in 1995 in Zambia

  • Considered:

    • Guernsey

    • United Arab Emirates

    • Malta

    • Luxembourg

    • Mauritius

    • Others

10


Strategy1

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


Strategy2

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


Strategy3

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


Ifa mauritius may 2012

Challenges


Ifa mauritius may 2012

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


    Ifa mauritius may 2012

    Trends & Challenges

    • Political unrest :

      • Madagascar – coup

      • Zimbabwe – hyper inflation

      • Uganda – strikes

    • Administrative challenges :

      • Processes to register agreements

      • Embassy’s

      • Translators

    16


    Ifa mauritius may 2012

    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


    Ifa mauritius may 2012

    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


    Ifa mauritius may 2012

    Examples

    19


    Ifa mauritius may 2012

    Luanda Port Congestion

    Vessels waiting to berth

    Find your container

    Off-loading

    20


    Ifa mauritius may 2012

    Nigeria Port Congestion

    Trucks waiting to enter Appa Port

    21


    Ifa mauritius may 2012

    Road Conditions

    22


    Ifa mauritius may 2012

    Traffic

    23


    Ifa mauritius may 2012

    Questions…

    24


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