Outline of presentation

• Introduction & Strategy Trevor Honneysett

• Healthcare Trevor Honneysett

• Financial Results Peter Green

• New Clicks South Africa Errol Gray

• New Clicks Australia Jeff Sher

• Conclusion Trevor Honneysett

Review of New Clicks Strategy

Healthcare

Growth

Value

Results

Efficiency

Opportunity

Today’s Focus

Tomorrow’s Vision

New Clicks Strategy

Strengthen/rejuvenate• SA retail brands• Australian retail brandsDrive efficiency & productivity

through Shared ServicesBoost profitability through

improved turnover & margins

Create value for stakeholders

World class

Trans-national• Dominate Southern Africa• Australasia

Specialised• Health• Beauty• Lifestyle

Multiple brands

Variety of ownership models

Today’s Focus

Tomorrow’s Vision

Multibrand StrategyLifestyleBeautyHealth

Consolidated Retail

Pharmacy

Specialist

Wholesale

Merchandising

OD / HR

Marketing

Fin & Admin

LogisticsIT

Store DesignStore Develop

Supply ChainDistribution& Wholesale

Buying

Store Services

Franchise Stores

(0%:100%)

Joint Venture Stores

(e.g. 80%:20%)

Owned Stores

(100%:0%)

Shared Services & Multiple Ownership

Why Healthcare?

• Paradigm shift occurring

• Positioned to lead change

• Affordable healthcare

• Growth of business

• South Africa

– PM&A + Link + UPD

• Australia

– Priceline Pharmacy franchise model

• Integrated channel to market

The Healthcare Opportunity

• Industry facing tough challenges

• Pharmacists seeking alliances to improve efficiency & productivity

• Corporate ownership/partnership models thriving in many markets

• New Clicks can add significant value

– funding

– bulk buying

– retail services & experience

New Clicks Holdings Limited

New Clicks South Africa

Clicks /

Discom

100% nowJV in future

445 stores

(267 Clicks +178 Discom)

Today’sStructure

Purchase Milton &

Associates

Funding

76 stores

Interest 56%

Link Investment

Trust

250 stores

Franchise Stores

Fees for services

UPD

Multicare

Independents

Distribution

5 200 customers

New Clicks Holdings Limited

New Clicks South Africa

Discom

100%

178 stores

Post Deregulation

Structure

Clicks + Pharmacy

100% / JV

343 stores

Distribution

UPD

Multicare

Independents

Migration of pharmacy licencesSelected stores to convert

56%

Link Investment

Trust

250 stores

Franchise Stores

Fees for services

Australian Healthcare Strategy

• Measured approach

• Sustaining pharmacists’ goodwill

• Compliant franchise format

• Implement three scenarios:

– Convert existing pharmacies to Priceline Pharmacy

– Convert Pricelines to Priceline Pharmacy

– Secure new locations

• Alliance - wholesale distribution

Our Healthcare Strategy

• Extend New Clicks retail presence & expertise into pharmacy

• Establish (within five years) national networks of efficient, compliant & profitable low-cost drugstores in South Africa & Australia

• Promote co-ownership model in South Africa• Roll out franchise model in Australia• Improve front to back shop ratio• Synergies from combining pharmacy with current

offering - lower overheads & increase footfall• Increase net margin

Financial Results

Peter Green

PerformanceFeb 2003 Feb 2002 %

Turnover (R’m) 3 436.7 2 792.4 23.1

Turnover growth excluding UPD & Price Attack 11.2

Headline earnings (R’m) 123.7 106.4 16.3

Headline EPS (Cents) 38.5 35.4 8.8

Diluted headline EPS (Cents)

37.0 33.5 10.4

Gross margin (%) 26.8 29.0 (7.6)

Operating margin (%) 6.2 6.3 (1.5)

Net tangible asset value per share (Cents) 371 354 4.8

Undiluted headline earnings per share

At 28 February 2002 previously reported 39.8

Provision for PM&A interest (4.4)

Restated 28 February 2002 35.4

Increased by:

Acquisitions 3.3

Organic growth 3.4

Decreased by:

Cost of acquisitions (3.6)

Impact of exchange rate movement -

At 28 February 2003 38.5

Operating profitR’000 Feb 2003 Feb 2002 %

Clicks 139 294 140 131 (0.6)

Discom (2 214) (13 447) n/a

Music Division 18 625 15 532 19.9

Body Shop 3 357 1 004 234.4

Link Investment Trust 987 (1 812) n/a

Intercare (362) (759) n/a

Priceline 35 840 32 145 11.5

House 4 053 4 240 (4.4)

199 580 177 034 12.7

Price Attack 4 885 - -

UPD 10 095 - -

Total group 214 560 177 034 21.2

2002

45%

55%

2003

42%

58%

Lifestyle

Health &Beauty

Clicks turnover growth

R’000 Feb 2003 Feb 2002 %

Lifestyle 643 866 611 727 5.3

Health & Beauty 878 527 742 497 18.3

1 522 393 1 354 224 12.4

79%

21%

SA

Australia

Segmental contribution – Operating profit

Group operating margin

4

4.5

5

5.5

6

6.5

7

FY98 HY99 FY99 HY00 FY00 HY01 FY01 HY02 FY02 HY03

Operating profit margin

InterestFeb 2003

R’000

Feb 2002

R’000

%

Change

Interest received (excluding loan to PM&A) 2 367 1 462 61.9

Interest paid 45 121 30 423 48.3

Net interest paid 42 754 28 961 47.6

Increase due to:

• Increase in rates

• Funding for PM&A

• Funding for acquisition of Price Attack

PM&A

R’m Feb 2003 Aug 2002

Loan to PM&A 283.1 276.6

Interest charge 28.8 45.5

Cost recovery 5.0 11.4

• Loss for the period R8.2m before interest to New Clicks

• Budgeting an operating profit for the full year

• Cash generating towards end of the financial year

PM&A

R’m Feb 2003

Shareholder deficit at Aug 2002 78.3

Post year-end adjustments 14.6

Adjusted deficit 92.9

Loss for period 8.2

Interest 28.8

Goodwill 10.9

Shareholder deficit at Feb 2003 140.8

Tax rate

20%

22%

24%

26%

28%

30%

32%

34%

FY99 FY00 FY01 FY02 HY03

Effective tax rate

Balance sheet

R’000 Feb 2003 incl. UPD

Feb 2003 excl. UPD

Feb 2002 adjusted

% change excl. UPD

Fixed assets 691 885 623 412 566 238 10.1

Inventories 1 288 652 1 122 124 1 054 288 6.4

Accounts receivable 466 406 215 556 156 210 38.0

Accounts payable 1 163 406 792 244 726 110 9.1

Note - The Feb 2002 figures for Australia included above have been adjusted to the current exchange rate to allow comparison

Goodwill

R’000 Balance Sheet Income Statement

Link 15 683 447

UPD 97 322 1 650

House 62 214 4 333

Price Attack 70 705 4 089

Total 245 924 10 519

Forex revaluation adjustment R 25 030 k

UPD goodwill acquired R 98 972 k

Asset turn

2.052.1

2.15

2.22.252.3

2.352.4

2.452.5

2.55

FY98 FY99 FY00 FY01 FY02 HY03

Asset turn

Loans to third parties

R’m Feb 2003 Aug 2002

PM&A 283.1 276.6

Share trust 61.3 54.8

Intercare professionals 2.9 0.4

Franchise set-up (Aus) 9.2 -

Other 1.5 -

Total 358.0 331.8

Cash flow

R’000 Feb 2003 Feb 2002

Operating activities 76 529 (25 224)

Investing activities (104 667) (132 506)

Fixed assets (79 793) (68 207)

Cash flow - UPD 3 572 -

Loans (28 446) (64 299)

Financing activities (7 186) (8 576)

Net decrease (35 324) (166 306)

Note - UPD acquisition through share issue

Future focus

• Continue to focus on:

– Asset turnover

– Cash generation

– Improving margins

– UPD will lower margin, but has high asset turnover

• Resulting in improving:

– Returns & EVA

New Clicks South Africa

Errol Gray

New Clicks South Africa

• Revitalisation of Clicks

• Profitability of PM&A

• Turnaround of Discom

• Supply chain & efficiency

of stock management

• Integrated healthcare offering

• Established Discom African beauty & haircare offering

• Revitalised Lifestyle category

• High sales growth, low stock levels

• Variety of multi-ownership models & formats

Today’s Focus

Tomorrow’s Vision

Clicks - Snapshot

Feb 2003 Feb 2002

Sales R’000 1 522 393 1 354 224

Sales growth % 12.4 12.8

Comparable store sales growth % 8.6 6.1

Operating profit before interest & after allocation of net costs of support structures R’000 139 294 140 131

Number of stores

Company owned

Franchised

253

14

238

13

Number of full-time permanent employees 3 400 2 697

Trading area m² 138 960 132 124

Net increase in trading area for the period % 5.2 4.9

Weighted annual sales per m² R 20 450 19 133

Clicks

HIGHLIGHTS

• Health & Beauty continue to

do well

• Positive impact of new

leadership

• ClubCard loyalty programme

generating results

• Datamining initiatives

CHALLENGES

• Revitalisation of brand & stores

• Focus on Lifestyle category

• Lifting staff morale

• Operational efficiencies

• Customer service

• Increase size of ClubCard basket

• Integration of healthcare

Clicks

KEY ACTION PLANS

• Store refurbishment

• You pay less at Clicks - used with other value propositions

• Overhaul & repositioning lifestyle

• Restructure operations & upgrade capability

• Preparing to integrate healthcare

• Improving value proposition

• Stock availability

• Leveraging ClubCard database

• Injecting spirit into the team

Healthcare

HIGHLIGHTS• PM&A – more effective &

efficient• Turnover of UPD maintained• UPD allows group to buy at

better prices• Interface between Clicks,

UPD, PM&A & Link clearer & stronger

• Opportunity made available for pharmacies to buy at Clicks prices

• Success of Intercare pilot

CHALLENGES

• Further improvement of PM&A

performance

• Integration of pharmacy

systems

• Integration of distribution

systems

• Adding value to franchisees

HealthcareKEY ACTION PLANS

• Integration of IT platform• Buying compliance systems• Focused implementation team

• Preparing for legislation• Building on turnaround in

PM&A

Discom - Snapshot

Feb 2003 Feb 2002

Sales R’000 391 732 368 063

Sales growth % 6.4 12.1

Comparable store sales growth % 9.5 4.0

Operating profit/(loss) before interest & after allocation of net costs of support structures R’000 (2 214) (13 447)

Number of stores

Company owned

Franchised

178

2

193

7

Number of full-time permanent employees 1 232 1 362

Trading area m² 49 339 52 800

Net increase/(decrease) in trading area % (6.6) 2.3

Weighted annual sales per m² R 14 821 13 012

Discom

HIGHLIGHTS

• Improvement in efficiencies

& cutting of costs

• Turned-on team

• Success of hair salon pilot

CHALLENGES

• Big steps in repositioning of

African beauty brand

• Need to improve basket size

• Need to improve sales &

margin

• Sales in Lifestyle category

Discom

KEY ACTION PLANS• Move into malls• Additional professional haircare opportunities• Focused Lifestyle buyers

Music Division - Snapshot

Feb 2003 Feb 2002

Sales R’000 268 041 242 278

Sales growth % 10.6 26.6

Comparable store sales growth % 8.9 13.4

Operating profit before interest & after allocation of net costs of support structures R’000 18 625 15 532

Number of company owned stores 137 137

Number of full-time permanent employees 558 506

Trading area m² 17 185 16 310

Net increase in trading area for the period % 5.4 8.6

Weighted annual sales per m² R 29 115 27 729

Music DivisionHIGHLIGHTS

• Strong local music industry• Increasing market share• Supplier partnering

CHALLENGES• Drive to improve on last year• Impact of worldwide music

trends

KEY ACTION PLANS• Strong promotional programme• Broaden focus into entertainment

The Body Shop - Snapshot

Feb 2003 Feb 2002

Sales R’000 24 903 12 056

Sales growth % 106.6 n/a

Operating profit before interest & after allocation of net costs of support structures R’000 3 357 1 004

Number of company owned stores 13 5

Number of full-time permanent employees 63 30

Trading area m² 802 227

Net increase in trading area for the period % 253.0 n/a

The Body Shop

HIGHLIGHTS• Successful niche market

format• Introduction of new Colour

range

CHALLENGES• Maturity of brand worldwide

KEY ACTION PLANS• Continued rollout of stores

Shared Services

HIGHLIGHTS

• Stock turn improvements continuing

• Restructuring categories starting to have impact

• Financial services restructure on track

CHALLENGES

• Optimisation of supply chain efficiencies in stores

• Reducing costs and continuing to add value

KEY ACTION PLANS

• Implementation of ERP system

• Implementation of merchandise planning system

New Clicks South Africa

• Stock• Brands• Profitability

• Healthcare

• Lifestyle

• African beauty & haircare

Today’s Focus

Tomorrow’s Vision

New Clicks Australia

Jeff Sher

New Clicks Australia

• Margin productivity –

Priceline• Building pharmacy

capability• New positioning – House• Store growth – Price Attack• Building franchisor skills• Cost efficiency

• Enhanced distribution –

Pharmacy

• Shared Services –

brought to life

• Increased stakeholder

value

Today’s Focus

Tomorrow’s Vision

Priceline - Snapshot

Feb 2003 Feb 2002

Sales A$’000

R’000

166 018

882 777

150 009

799 050

Sales growth % 10.5 49.3

Comparable store sales growth % 4.6 6.6

Operating profit before interest & after allocation of net costs of support structures

A$’000

R’000

6 739

35 840

6 034

32 145

Number of stores

Company owned

Franchised

132

2

122

-

Number of full-time permanent employees 811 743

Trading area m² 62 556 58 781

Net increase in trading area for the period % 6.4 9.6

Weighted annual sales per m² A$

R

4 954

26 340

4 764

25 370

Priceline

HIGHLIGHTS

• Leadership changes

• Selected as preferred retailer

by multi national supplier

• Lifestyle category expanded

• One millionth ClubCard

customer

• Satisfactory results in the face

of discounting

• Continue with organic growth

CHALLENGES

• Weak December sales due to

intensity of competition

• Margin productivity impacted

• underperformance of

Lifestyle category

• intense competition

• Inventory management

Priceline

KEY ACTION PLANS

• New category team established

• Inventory management programme established to enhance

stock turns

• Focus on improving high-

margin categories

• Promotional programme for the

second 6 months enhanced

Priceline Pharmacy

HIGHLIGHTS

• Significant work completed

developing the model

• Amanda Brook – dedicated

role in Pharmacy

• 2 stores now operating

• Interest in model remains high

• 2 Priceline stores ready to

convert to Pharmacy

CHALLENGES

• High degree of dependency

on distributors

• Regulatory process slows

down store opening

• Cost to build technology &

operational infrastructure

Priceline Pharmacy

KEY ACTION PLANS

• Developing strategic alliance

with wholesalers

• Establish a complete set of

operating procedures

• Investing in technology

• Incorporating ClubCard

• Leveraging data-base

• 8 stores planned before

August year end

House

HIGHLIGHTS

• Key leadership changes post

founders

• New positioning established

• POS system tested to enable

category data capture

• 8 new stores opened

CHALLENGES

• Growth in competitor

environment

• Results against two

company stores now

closed

• Build on import

programme

House

KEY ACTION PLANS• Roll out new store image & positioning• Drive product differentiation

• Private labels• Direct imports

• Develop franchisee education

Price Attack

HIGHLIGHTS

• Appointment of new Brand

Leader

• New promotional programme

delivering strong results

• Service delivery from NCA

shared service

• 100th store opened

CHALLENGES

• Two company owned stores

dragging performance

• Market convergence at

supplier level

• New competition

Price Attack

KEY ACTION PLANS

• Image upgrade of stores

• Feasibility - New Zealand

• Strategic alliance –

Women's basketball

• New format of store

to be opened

Shared Services

HIGHLIGHTS

• Review underway to ensure service delivery culture established

• Store development model sets trend for income generation

• New Office development signed - April 2004 occupancy

CHALLENGES

• Expense growth difficult to contain

• OD resources stretched

• Further develop franchisor mentality

KEY ACTION PLANS

• Installation of new ERP system

• Efficiency review

• Education

New Clicks Australia

• Deliver performance

• Pharmacy capability

• Efficiency

• Enhancing value

• Organic growth

• Pharmacy - franchise

Today’s Focus

Tomorrow’s Vision

Conclusion

Trevor Honneysett

Review of New Clicks Strategy

Healthcare

Growth

Value

Results

Efficiency

Opportunity

Today’s Focus

Tomorrow’s Vision

Questions ?