Nedcor Securities Healthcare Conference March 2004

New Clicks – Healthcare in changing regulatory environment Healthcare strategy Integrated channel to market –UPD –Clicks Pharmacy Legislative changes Draft pricing regulations

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 Model tried & tested internationally Largest national wholesaler in SA Efficient working capital management Expertise in fine distribution UPD provides distribution for integrated channel to market Pharmacies carry less stock Act as warehouse for pharmacies Distribution & service levels key

Wholesale & distribution - UPD model UPD: 43% of other wholesale business

UPD 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

Clicks Pharmacy Create an experience of pharmacy never seen before in SA Combine the best of what Clicks offers with the best of the pharmacy experience Enhance the Clicks brand qualities of value with convenience & service

Pharmacy in Clicks Regulatory approval for PM&A deal Application for licences –PM&A (waiting for approval of licence transfers to be able to consolidate) –Additional licences in selected stores –Underserviced areas – discuss with government All New Clicks wholly-owned/JV pharmacies to be rebranded Clicks Check this

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%

Legislative changes 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

Draft pricing regulations Support statutory intervention to –address current medicine pricing anomalies –make pricing more transparent –make medicines more affordable & accessible Concerned about negative impact on viability of pharmacy wholesaling & retailing 90 day period to engage in constructive dialogue – working together with other interest groups Don’t expect regulations to be implemented in current form or by May 2004 Aim to achieve the objectives in a constructive & sustainable way that does not undermine the viability of pharmacy & pharmaceutical services

Impact on New Clicks Retail pharmacy –Even though reduced pharmacy margin & volumes, will be benefit from increased front shop sales –Independent pharmacists under threat – potential to attract them into the group –Competitive advantage of discount pharmacies to be eroded

Impact on New Clicks (continued) Wholesale/distribution –Viable for UPD because of efficient model, although volumes would be reduced –However, may lead to consolidation of other distributors - opportunity for UPD to increase volumes & widen geographical footprint –Multinational manufacturers may withdraw from SA – opportunity for UPD to reach distribution & marketing agreements –Public/private partnership possibilities in terms of distribution & dispensaries

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