Outline of presentation

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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

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Review of New Clicks Strategy

• Healthcare
• Growth
• Value

• Results
• Efficiency
• Opportunity

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New Clicks Strategy

• Strengthen/rejuvenate
• SA retail brands
• Australian retail brands
• Drive efficiency productivity through Shared
  Services
• Boost 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

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Multibrand Strategy
Lifestyle
Beauty
Health
Consolidated Retail
Pharmacy
Specialist
Wholesale
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Shared Services Multiple Ownership
Owned Stores (1000)
Merchandising
OD / HR
Marketing
Logistics
Joint Venture Stores (e.g. 8020)
IT
Fin Admin
Store Design
Store Develop
Supply Chain
Franchise Stores (0100)
Distribution Wholesale
Buying
Store Services
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Why Healthcare?

• Paradigm shift occurring
• Positioned to lead change
• Affordable healthcare
• Growth of business
• South Africa
• PMA Link UPD
• Australia
• Priceline Pharmacy franchise model
• Integrated channel to market

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The Healthcare Opportunity
Booklet only

• 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

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TodaysStructure
New Clicks Holdings Limited
New Clicks South Africa
100 nowJV in future
Clicks / Discom
445 stores (267 Clicks 178 Discom)
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Post Deregulation Structure
New Clicks Holdings Limited
New Clicks South Africa
100
100 / JV
Clicks Pharmacy
Discom
178 stores
343 stores
Selected stores to convert
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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

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Our Healthcare Strategy
Booklet only

• 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

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Financial Results

• Peter Green

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Performance
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Undiluted headline earnings per share
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Operating profit
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Clicks turnover growth
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Segmental contribution Operating profit
Booklet only
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Group operating margin
Booklet only
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Interest

• Increase due to
• Increase in rates
• Funding for PMA
• Funding for acquisition of Price Attack

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PMA

• 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

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PMA
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Tax rate
Booklet only
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Balance sheet
Note - The Feb 2002 figures for Australia
included above have been adjusted to the current
exchange rate to allow comparison
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Goodwill
Booklet only
Forex revaluation adjustment R 25 030 k UPD
goodwill acquired R 98 972 k
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Asset turn
Booklet only
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Loans to third parties
Booklet only
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Cash flow
Note - UPD acquisition through share issue
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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

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New Clicks South Africa

• Errol Gray

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New Clicks South Africa

• Revitalisation of Clicks
• Profitability of PMA
• 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

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Clicks - Snapshot
Booklet only
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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

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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

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Healthcare

• HIGHLIGHTS
• PMA more effective efficient
• Turnover of UPD maintained
• UPD allows group to buy at better prices
• Interface between Clicks, UPD, PMA Link
  clearer stronger
• Opportunity made available for pharmacies to buy
  at Clicks prices
• Success of Intercare pilot

• CHALLENGES
• Further improvement of PMA performance
• Integration of pharmacy systems
• Integration of distribution systems
• Adding value to franchisees

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Healthcare

• KEY ACTION PLANS
• Integration of IT platform
• Buying compliance systems
• Focused implementation team

• Preparing for legislation
• Building on turnaround in PMA

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Discom - Snapshot
Booklet only
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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

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Discom

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

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Music Division - Snapshot
Booklet only
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Music Division

• HIGHLIGHTS
• 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

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The Body Shop - Snapshot
Booklet only
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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

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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

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New Clicks South Africa

• Stock
• Brands
• Profitability

• Healthcare
• Lifestyle
• African beauty haircare

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New Clicks Australia

• Jeff Sher

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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

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Priceline - Snapshot
Booklet only
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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

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Priceline

• KEY ACTION PLANS
• New category team established
• Inventory management programme established to
  enhancestock turns
• Focus on improving high-margin categories
• Promotional programme for thesecond 6 months
  enhanced

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Priceline Pharmacy

• HIGHLIGHTS
• Significant work completed developing the model
• Amanda Brook dedicatedrole 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

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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

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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

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House

• KEY ACTION PLANS
• Roll out new store image positioning
• Drive product differentiation
• Private labels
• Direct imports
• Develop franchisee education

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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

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Price Attack

• KEY ACTION PLANS
• Image upgrade of stores
• Feasibility - New Zealand
• Strategic alliance Women's basketball
• New format of store to be opened

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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

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New Clicks Australia

• Deliver performance
• Pharmacy capability
• Efficiency

• Enhancing value
• Organic growth
• Pharmacy - franchise

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Conclusion

• Trevor Honneysett

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Review of New Clicks Strategy

• Healthcare
• Growth
• Value

• Results
• Efficiency
• Opportunity

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Questions ?