Opportunity in RETAILMENT ARTEE Industries Limited March 2013

Head points  Nigeria – Africa’s burgeoning economy  RETAILMENT – The future  The Opportunity  The Challenges  ARTEE Industries Limited – One of Nigeria’s leading conglomerates ARTEE Industries Limited - Proprietary & Confidential2

NIGERIA – Africa’s burgeoning economy A brief overview ARTEE Industries Limited - Proprietary & Confidential3

Nigeria – GDP & GDP Growth ARTEE Industries Limited - Proprietary & Confidential Data Source: / WORLD BANKwww.tradingeconomics.com 4

Nigeria’s Global Competitiveness Ranked 115 amongst 144 countries (improved from 127 / 142) Market size ranking – 33 Improved rankings: – Macro Economic environment :: 39 from 121 – Labour market efficiency :: 55 from 70 ARTEE Industries Limited - Proprietary & Confidential Data Source: WEF – GCR :: 2009 – 10, 2010 – 11, 2011 – 12; NESG Research 5

Global Competitiveness :: Nigeria v/s Emerging Economies Amongst the ‘Next – Eleven’ Nigeria ranks 9 th., ahead of Bangladesh & Pakistan Amongst the BRINCS, Nigeria ranks 6 th. ARTEE Industries Limited - Proprietary & Confidential Data Source: WEF – GCR :: 2009 – 10, 2010 – 11, 2011 – 12; NESG Research 6

Sectoral contribution to GDP (2010 – 2011) Agriculture, Wholesale & Retail, Crude account for more than 70% of the GDP ARTEE Industries Limited - Proprietary & Confidential Data Source: NBS Outlook – 2010 :: 2015 Non-oil sectors like Telecommunication & Post (34%); Wholesale & Retail (11%), Hotels & Restaurants (12 %+), Real Estate (12%+), building & Construction (12%+) recorded double digit growth 7

The future :: 2013 – 2015 The slow down in growth in 2012 is a resultant effect of external shocks (slow down in US & Europe, China); lower output of crude production, subsidy removal on PMS and its effect on household incomes Projected Real GDP growth are: – 2013 :: 8.04 % – 2014 :: 7.43 % – 2015 :: 7.25 % Nominal GDP for 2012 – NGN 43, bn, a 15.63% growth over 2011 Projected Nominal GDP growth rates are: – 2013 :: % – 2014 :: % – 2015 :: % ARTEE Industries Limited - Proprietary & Confidential Data Source: NBS Outlook – 2010 ::

RETAILMENT – The future The BIG Impact ARTEE Industries Limited - Proprietary & Confidential9

The Evolution of RETAIL ARTEE Industries Limited - Proprietary & Confidential SHOPPING MALLS / HYPER MARKETS RETAILMENT SUPER MARKETS DEPARTMENT STORES STANDALONE STORES MOM & POP STORES STREET VENDORS WEEKLY MARKETS 10

The Organised Retail Industry – A macro overview In developed economies; the composition of organised retail is much larger than the unorganised retail. Therefore; it would be safe to presume that... Economic growth has a direct correlation to Increase in organised retail Percentage of Organized Retail: United States of America: 80% United Kingdom: 80% Japan: 66% Australia: 78% India: 10% Nigeria: 3% ARTEE Industries Limited - Proprietary & Confidential11

 27% of the Global GDP is contributed by organised retail; 20% of the US economy is supported by retail  Across the globe; retail employs 17.1% of the workable population and in the US it accounts for 14%  Organised retail supports the development of various sectors across the economic environs of the country  Organised retail conserves foreign exchange ARTEE Industries Limited - Proprietary & Confidential The Organised Retail Industry – A macro overview Source: Retail Trends and Economic Dependencies – 12

ARTEE Industries Limited - Proprietary & Confidential The BIG IMPACT of Retail 13

 Current estimated yield loss is around 39% - primarily due to an inefficient value chain & cold chain  Effecting a loss in earning and increase in cost ARTEE Industries Limited - Proprietary & Confidential RETAIL & AGRICULTURE  Organised retail would help improve the efficiencies of the value chain -Reduces wastage -Increase revenue -Effectively lowering down inflation rates 14

 Organised retail helps increase the presence of brands in all categories  Launching of new products & concepts to test markets leading to eventually setting up local manufacturing facilities ARTEE Industries Limited - Proprietary & Confidential RETAIL & MANUFACTURING  Manufacturing infrastructure improves as technology transfer is facilitated  Creates an improved platform for direct interaction with the consumers 15

Organsied retail is the major impetus of realty developments – India case study: 2001 – 142,000 m² of modern retail 2006 – 2.7 million m² From 30 malls in 2003 to 230 malls in 2007 Organised retail has moved from mere shopping to ‘RETAILMENT’ ARTEE Industries Limited - Proprietary & Confidential RETAIL & REAL ESTATE 16

ARTEE Industries Limited - Proprietary & Confidential RETAIL & BANKING Case Point 1 Increase in organised retail Increase in consumer spend Increase in consumer finance Case Point 2 Increase in organised retail Increase in capital investment Increase in project finance SME Finance through a Supply Chain Contract with major Retailers 17

 Technology is the backbone of organised retail  The boom in retail will give an impetus to the IT industry in sphere of both hardware and software development  Increase in telecom and IT infrastructure facilitates a cashless economy ARTEE Industries Limited - Proprietary & Confidential RETAIL & TECHNOLOGY 18

ARTEE Industries Limited - Proprietary & Confidential RETAIL & SME  Organsied retail helps develop the value chain in the system  Value Chain entities are SME drivers  Development of ancillary units 19

 Organised retail is by far one of the single largest employers in any economy  In developed economies, 30sqm is managed by one person ARTEE Industries Limited - Proprietary & Confidential RETAIL & HUMAN CAPITAL  Organised retail generates 17% of total employment globally  Organised retail develops entrepreneurship Franchise model employees become employers 20

 DUBAI ::  2010 – 10 million tourist  2015 – Estimated 15 million  25% - 40% visitors to Mega malls are tourists  Average spend is 2 – 3 times higher than residents ARTEE Industries Limited - Proprietary & Confidential RETAIL & TOURISM  Organised retail and tourism are interdependent  In Nigeria organised retail will develop domestic tourism 21

 Organsied retail increases the revenue base for the government ARTEE Industries Limited - Proprietary & Confidential RETAIL & FEDERAL REVENUE TAX - Agriculture Sector TAX - SME TAX - Manufacturing TAX - Real Estate TAX - Technology TAX- Banking GOVT. TAX INCOM E 22

RETAIL Industry Broad Market Sizing ARTEE Industries Limited - Proprietary & Confidential23

Nigeria – Consumption pattern ARTEE Industries Limited - Proprietary & Confidential ZoneFood Exp% age of Food Exp Non-Food Exp. % age of Non-Food TOTAL% age of TOTAL North – Central 2, , , North – East 1, , North – West 3, , , South – East 1, , South – South 1, , South – West 3, , , TOTAL15, , , Figures in NGN billion Source: NBS 2009/2010 Consumption Report 24

Nigeria – FX Spend ARTEE Industries Limited - Proprietary & Confidential 2012 – Total no. of International Travellers :: 2.90 million Average spend per traveller – USD 4000 TOTAL Outflow of FX – USD 11.6 billion 25 Estimated figures based on secondary research – Source - FDCL

South Africa – A retail comparison - I ARTEE Industries Limited - Proprietary & Confidential In South Africa, a leading grocery chain (world’s largest) closed 2011 with a turnover of USD 6.00 billion This chain constituted 850 shops, and amassed a market share of 25% The TOTAL GROCERY RETAIL SALE in SA for 2011 – USD 24 billion; comprising 3800 outlets TOTAL South African Population – 65 million TOTAL SHOPPER Population – 45 million 26 SPAR SA – Handbook 2011

South Africa – A retail comparison - II ARTEE Industries Limited - Proprietary & Confidential Grocery Sales – USD 24 billion Fashion / Electronics etc (ratio presumed 1:1) – USD 24 billion Entertainment (avg spend ratio to grocery 1:4) – USD 6 billion Food / Restaurants' etc (1 : 4 ratio) – USD 6 billion AN ESTIMATED TURNOVER OF USD 60 billion only from RETAILMENT THE RETAILMENT FIGURE for SOUTH AFRICA 27

The Challenges ARTEE Industries Limited - Proprietary & Confidential28

 RETAIL … recognition as a ECONOMIC SECTOR  Infrastructure  Consistency  Human resource ARTEE Industries Limited - Proprietary & Confidential The Challenges 29

ARTEE Industries Limited Credentials ARTEE Industries Limited - Proprietary & Confidential30

Genesis & Evolution - RETCO Started in 1988 … one of the first organised supermarket in Nigeria … 250 m²... branded as 2011 – Nigeria’s largest Supermarket & Department Store with presence in Pan – Nigeria and in excess of 20,000 m² of retail space Evolved as the most comprehensive supermarket and department stores in Nigeria ARTEE Industries Limited - Proprietary & Confidential31

Evolution – RETCO 2010 – SPAR Nigeria introduced ARTEE Industries Limited - Proprietary & Confidential32

Business interests ARTEE Industries Limited - Proprietary & Confidential ARTEE Group PROPCO ResidencesCommercial RETCO SPAR PARK – n - SHOP MANCOFurniture Table Water & PET & Preforms 33

MANCO Started in 1999; with over 6,000 m², CASCADE is one of the leading brands of Table Water in Nigeria ARTEE Industries Limited - Proprietary & Confidential 2006 – the largest & the most comprehensive furniture manufacturing facility in Nigeria spanning over 10,000 m² and over 85 CNC machines. This facility was commissioned within 11 months of starting the project from scratch 34

PROPCO Developing one of the largest community type living residential complexes spanning over 23 hectares – 50 houses built within 12 months of start of work ARTEE Industries Limited - Proprietary & Confidential 2010 – Ultra modern shopping complex measuring over 6,000 m² completed with 14 months of start 35

ARTEE Industries Limited - Proprietary & Confidential36 The opportunity is there for the taking But will only happen if we make it happen

Thank you ARTEE Industries Limited - Proprietary & Confidential37