Merrill Lynch Consumer Focus Day November 2003

Healthcare Strategy in South Africa Strategy UPD Clicks Clicks Pharmacy The realisation of a dream

Multibrand Strategy – South Africa Lifestyle BeautyHealth Consolidated Retail Pharmacy Specialist Wholesale

Healthcare Strategy Leverage benefits of integrated channel to market Extend retail presence & expertise into pharmacy Establish efficient, compliant & profitable low-cost drugstores Promote co-ownership model Improve front to back shop ratio Synergies from combining pharmacy with current offering - lower overheads & increased footfall Franchise model retained – using compliant format Explore black empowerment opportunities

Wholesale & distribution - UPD model Profitable well run business Efficient working capital management Largest national wholesaler in SA Expertise in fine distribution UPD provides distribution for integrated channel to market UPD 43% of other wholesale business

Integrated channel to market Pharmacies carry less stock Act as warehouse for pharmacies Distribution & service levels key

UPD – in short Growth in turnover from PM&A & independent pharmacies Retained most independent pharmacy customers Standardised terms on FMCG suppliers Clicks pricing on top FMCG lines available to customer base Two franchise models in the group – Link + Multicare Develop Link offering as premium banner Develop programmes to enhance Link pharmacy loyalty to UPD – new franchise agreement

Impact of legislation on UPD Original source procurement Levelling of the playing field – ethical standards + transparency Small impact on current wholesale customers Service levels will be the differentiator Generic substitution Single channel distribution - lower market share of branded ethicals - better placed to benefit Currently, margins better Single exit pricing Timing – early 2004 Lack of clarity Generally positive for UPD

The realisation of a dream

Clicks - The Vision To create an experience of pharmacy that has never been seen before in SA To combine the best of what Clicks offers with the best of the pharmacy experience To enhance the Clicks brand qualities of value with convenience & service

Pharmacy in Clicks Regulatory approval for PM&A deal Application for licences –PM&A –Additional licences in selected stores –Underserviced areas – discuss with government All New Clicks wholly-owned/JV pharmacies to be rebranded Clicks

Format 1 Clicks Health, Home & Beauty with Dispensary Health & dispensary as additional components to our current understanding of Clicks Value for money Servicing womans world For me, my home, my life Heavy promotional drive

Format 2 Clicks Health and Beauty with Dispensary Health & Beauty focus supported by gifting & convenience statement Personal connection to pharmacist Strong promotional offering Strong value statement Convenience & longer trading hours

What the customers had to say... Customers expected Glengariff to be like a Clicks with an added pharmaceutical department The relationship with the pharmacist & customer service are key Clicks Pharmacies would be more price competitive than other pharmacies Can I use my ClubCard? Glengariff opens shortly Systems ready ClubCard ready

Learning from Australia Conversions: Converting existing Priceline store (Prahran) –Sales growing in excess of 40% –Back & middle shop sales already at 18% - should double Converting existing pharmacy (Bentleigh) –Script sales grown by 20% –Front shop sales up from 10% to 75% New site: Mornington –Turnover A$45k per week from 300m² –Front shop sales 50%

Questions ?

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