Analyst Presentation 2002 Welcome

Programme Strategic Review Financial Results Healthcare New Clicks Australia (NCA) Review New Clicks South Africa (NCSA) Review Questions

Strategic Review Vision Mission Positioning Statement

Our Vision We wish to be a world-class trans-national player, specialised and highly networked with local market responsiveness and accountability, rapid distribution capability, adding value to the quality of life through the convenient supply of health, home and beauty products and services with a preferential interactive relationship with our customers

Our Mission To be a major multi-brand retailer of Health, Lifestyle and Beauty products in the Asia Pacific Region by 2005, without limiting our activities and dominance in southern Africa

Our Positioning Statement We are world-class originators and distributors of a range of compelling and differentiated health, lifestyle and beauty retail products and services to multiple brand formats in a variety of ownership models.

GSF Trevor Honneysett….. David Nurek…………. Allen Zimbler………… Errol Gray……………. Jeff Sher…………….. Peter Green…………. Raymond Godfrey….. Simon Burrow………. Simon Kilner………… George Meiliunas…… Group Leader Non-Executive Chairman Non-Executive Director NCSA Country Leader NCA Country Leader Group Finance Group Merchandise Group Marketing Group IT/Supply Chain Group OD

Agenda High-level financial overview Purchase Milton & Associates Healthcare update - South Africa

Financial Results for year ending 31 August 2002

Income Statement TurnoverR5.5bn+25.7% Operating ProfitR318m+21.3% Operating Margin 5.8% Excluding Discom Operating Profit+31.9% Operating Margin 7.04%

Goodwill Balance Sheet Income Statement Rm Rm Link House Price Attack Total

Accounts Receivable Increases due to: –acquisitions –franchisees Rm Rm SA Aus Total

Accounts Payable Increases due to extending terms

Cash Flow Big Improvement –Improving Working Capital Cash Flow from Operating Rm Rm

Future Focus Continue to focus on: –Asset turnover (stock turn goal 7x over 3 years) –Cash generation –Improving margins (goal still 8%) - (UPD will lower margin but has high asset turnover) Resulting in improving: –Returns and EVA (ROE goal still 30%)

Strengthened Financial structure as we go forward Appointment of CFO in each geography Focus on efficiency improvements Trans-national project: –cost centres to profit centres - franchising –process innovation to reduce overall costs –strict financial regime

Loan to Pharmacy (PM&A) Rm Rm Loan Interest charge Cost recovery Interest turn Fees income Link Loan impairment & recoverability

PM&A They are budgeting high profit growth as they consolidate Some of the largest stores were acquired Acquisitions stopped - consolidation phase - convert to largest and most profitable chain of Pharmacies in SA Operating profit could exceed 10% if we could integrate (7% otherwise) Cash generating

Healthcare SA

New Clicks Holdings South Africa NCH Funding & Suspensive Sale PM&A 100% Ownership R1 Billion 76 Stores 56% LIT R2 Billion 248 Stores Franchise Stores

New Clicks Holdings South Africa NCH 56% LIT Funding PM&A Franchise Stores 100% Ownership Interest Franchise Fees, LOB, Rebates Wholesale Margin & Rebates Fees for Services

Different store ownership models There will always be franchise (LINK) –income from fees, rebates, wholesale profits but if law allows there will also be: pharmacies in Clicks & Discom 100% ownership (PM&A) JV (80%:20% for any of the brands)

Merchandising OD / HR Marketing Fin & Admin Logistics IT Store Design Store Develop Supply Chain Distribution Buying Store Services Franchise Stores (0%:100%) Joint Venture Stores (80%:20%) Owned Stores (100%:0%) Centralised services model

56% LIT Funding PM&A R2 Billion 248 Stores Franchise Stores R1 Billion 76 Stores 100% now; JV in future CLICKS R2,7 Billion 261 Stores DISCOM R721 Million 182 Stores New Clicks South Africa PRESENT PHARMACY NETWORK DESIRED FUTURE PHARMACY NETWORK

A nationwide network of +/- 800 efficient, compliant, professional and profitable pharmacies within various ownership models The Objective

The Integrated Healthcare Model Pharmacy Clinical Care Retail consumer health Back Shop Front Shop

Intercare A close relationship with the doctors who prescribe Objective is to improve pharmacy turnover Pilot project

Link Investment Trust Budgeting for break-even Funding new initiatives Link - The best known pharmacy brand Income from –franchise fees - potential for new members, –rebates –own brands

UPD transaction reminder R 2 billion turnover, NPAT R43m Transaction to be funded through issue of k New Clicks shares at R7.20 P/E for valuation was 6.5x Earnings enhancing Awaiting approval from Competition Commission

Healthcare Legal Issues

Status of Law Ownership –still awaiting regulations –under-serviced areas - Discom –need urban stores as well (PM&A) Single Exit Pricing –schedule 3, some only –modelling difficult for total pharmacy –believe no impact on UPD Court Case

State of the Industry Healthcare in SA is in crisis Need for greater affordability & access Potential changes to Legislation – Lay ownership/deregulation – Professional Fee – Dispensing Doctors Fragmented Industry Opportunities for greater efficiencies We are the best suited to play a role

Jeff Sher Country Leader

Introduction - a perspective The year in review Our pharmacy model The year ahead Summary Agenda

August 2001

Australian Management Forum Shared Services

2001/02 Performance

Results – Aug 2002 Sales up 13.9% Operating Profit up 22.9%

Results – Aug 2002 Franchise Income up 99.2% Operating Profit up 117.5% Store Growth 10 NOTE! Pre-allocation of Support Office costs

House Key Issues Response to competitive environment through differentiation - Private label - Direct imports Government home loan scheme ends Competent team now in place NZ on hold due to supply chain complications

Results – Aug 2002 Sales Up 13.2% Operating Profit Up 10.34% Store Growth 9 NOTE! Pre-allocation of Support Office costs

Priceline Key Issues Why did we only open 9 stores Intense competition – our response –Lifestyle category repositioning –Differentiation through imports –Loyalty - a positive outcome Leverage to be gained with Price Attack Margin focus Loyalty - a positive outcome Stock levels - growth due to strategic opportunity Operating Profit % to sales

A Snapshot 94 stores Average turnover per store - $ Franchise fees - 5% on sales Advertising fee - 3% of sales Local area marketing - 1% of sales Master franchise arrangement - WA, SA - 1% franchise fee, 3% marketing fee

Opportunities Synergy with Sunday Group - access to 1800 formulations Private label Easily transported Monopolistic environment High margin

Make-up of the industry Regulatory environment Our offer How income is generated Store growth

Number of pharmacies in Australia: Approximately 4,900 Bannered pharmacies: Approximately 1,900 (39%)

Retail Pharmacy Sales Mix Retail Pharmacy $6.5b Non Pharm. $1.2b Prescriptions $4.1b OTC $2.4b Non Sched $639m S2/S3 $550m 72%

Amcal 395 Guardian 264 Chemworld 131 Pharm Adv. 91 Soul Patt 230 Med. Shoppe 7 Healthsense 110 Full Life 40 Terry White 105 Chemmart 255 SIGMAAPIMAYNE WHOLESALERS

Wholesaler & Pharmacist Relationship Wholesalers guarantee loans for pharmacists to acquire pharmacies. The pricing mechanism for pharmacists is artificially inflated, 1:1 ratio of turnover to goodwill Pharmacists align to a banner through loose agreement Distribution on a twice-a-day basis Banner groups offer marketing programmes and some operational support Private label products are key to the relationship

Regulatory environment Agreement between Government & Pharmacy Guild No corporation can have pecuniary interest Geographic restriction Usage clause restriction - landlord Limit to numbers in shopping centres Regulations applied by Pharmacy Board - layout of stores Approval numbers Pharmacy Act - differs in each state

Sales Pharmacy Paradox Prescriptions & medicines back of store Front of store 70%30% Costs 20%80% Margins 10%32%

Our Offer Category management - increased margin Rebalance front and back of shop - increase sales Common IT platform Marketing programme - including ClubCard Retail services (merchandising and space management) The Pharmacy Academy Operational focus - shopfloor productivity Brand equity

Benefits for Fees Annual franchise fee - a flat amount Distribution fee linked to purchases on front of shop IT annual maintenance fee Marketing fee linked to marketing programme costs Supplier rebates Significantly - no capital employed

Store Growth Three Opportunities Existing Pharmacies convert to Priceline model Convert Priceline stores to Pharmacies through a franchise arrangement Secure new locations and through a relationship with pharmacists acquire approval numbers Objective Stores secured by August by ??

The Year Ahead

The Year Ahead – Store Growth

AMF Jeff Sher……………… George Meiliunas…… Alan Wein……………. Amanda Brook………. Rob Ellis……………… Bradley Wein………… Andrew Grant……….. Simon Burrow……….. Trevor Harris………… Country Leader Organisational Development Brand Leader - House Brand Leader - Priceline Brand Leader - Price Attack Franchising Logistics/IT Marketing Finance A Committed Team - Going Places

Summary Price Attack, full year of profit Controlled growth of costs Loyalty to deliver Leverage gains in merchandise Roll-out of pharmacy A Positive Outlook

Errol Gray Country Leader

NCSA performance NCSA achievements NCSA year ahead Agenda

NCSA Performance Sales up 17.1% Operating Profit up 15.3%

Comparative without Discom Sales up 18.2% Operating profit up 27.2%

Clicks Performance Sales up 15.4% Operating Profit up 23.7% Store Growth 21

Clicks Existing Store Growth SeptemberOctoberNovemberDecemberJanuaryFebruaryMarchAprilMayJuneJulyAugust % increase 2001/2002 Cumulative 2000/2001 Cumulative

Clicks Key Issues Repositioned Clicks - Live Life Beautifully CRM loyalty programme - Data mining - ClubCard relaunch Aggressive store upgrade Stock reduction Service campaign New healthcare statement - 20 stores

Discom Performance Sales up 12.1% Operating Profit Down Stores Refurbished

Discom Existing Store Growth SeptemberOctoberNovemberDecemberJanuaryFebruaryMarchAprilMayJuneJulyAugust % increase 2001/2002 Cumulative 2000/2001 Cumulative

Discom Key Issues Focus on re-engineering the margin mix Exploring new primary health statement in store Test a hair salon in Mitchell’s Plain store Continue to develop private label Ongoing focus on expenses Ethnic haircare focus - R100m in sales Leadership

Music Division Performance Sales up 24.9% Operating Profit up 104% New Stores 7

Music Existing Store Growth September October NovemberDecember January February March April May June July August % increase 2001/2002 Cumulative 2000/2001 Cumulative

Music Division Key Issues Maintaining margins Increased stockturns CDW opening two new stores Market dominance - 35% Bucking international market trends Leadership

The Body Shop Performance Sales R27.1m Operating Profit R3.4m Store Growth 11

The Body Shop Key Issues Mature brand internationally New in SA - years of growth ahead Brand being revitalised internationally First corporate to be awarded a Master Franchise

NCSA Achievements Stock management Discom repositioning Data mining SAMF

Stock Management Next year goal R250m improvement Centralising imports, single item picking, algorithms Stock turn 5x, 6x, 7x, over next years to generate cash (JIT)

NCSA DC's Year on Year Stock R 0 R 25,000,000 R 50,000,000 R 75,000,000 R 100,000,000 R 125,000,000 R 150,000,000 R 175,000,000 R 200,000,000 R 225,000,000 R 250,000,000 R 275,000,000 R 300,000,000 R 325,000,000 R 350,000,000 R 375,000,000 SepOctNovDecJanFebMarAprMayJunJulAug Financial Months Selling Value (Rands) 1998/1999yr 1999/2000yr 2000/2001yr 2001/2002yr

NCSA Stocks SONDJFMAMJJA month value 2001/ /2001

The Year Ahead - Store Growth 24879

SAMF Errol Gray…………….. Andre Vermeulen……. Lara Bryant…………… Trevor Vroom………… Mike Harvey………….. Colin Robb…………… Monica Goertz……….. Simon Kilner…………. Byron Hofmeyr………. Country Leader Finance Marketing & Merchandise Brand Leader - Clicks Brand Leader - Discom Brand Leader - Music Division Brand Leader - Healthcare Supply Chain IT

Year Ahead Sustainable stockturn improvement Discom profitability Healthcare integration and performance Clicks revitalisation Focused brand performance

Our Positioning Statement We are world-class originators and distributors of a range of compelling and differentiated health, lifestyle and beauty retail products and services to multiple brand formats in a variety of ownership models.

Thank You