1 Interim Results 2004

2 Outline of presentation Introduction Financial results Group operations Ongoing consistent improvement

3 In our 2003 Annual Report We said our business strategy was to: Strengthen & rejuvenate retail brands Introduce pharmacy into Clicks Drive efficiency & productivity – shared services Focus on improving stock turns Boost profitability – improved turnover & margin Create further value for shareholders Progress in most areas but still work to be done

4 In our 2003 Annual Report We also said we would: Shift focus from strategy to delivery Aim for ROE target of 4% to 5% above cost of capital in medium-term Address the composition of the board & increase the number of independent non-executives Adopt a board charter Establish a nominations committee

5 Review of the period Disposal of Australian operations Turnaround in lifestyle category Value proposition of Clicks paying off Improved performance from Discom Continued benefits of UPD acquisition Turnover growth ahead of expense increase Continued focus on stock turn improvements Challenging pharmacy environment Transfer of pharmacy licences albeit delayed Single exit pricing legislation proposed

6 Financial Results André Vermeulen Ongoing consistent improvement

7 Performance (continuing operations) Feb 2004 Feb 2003% change Turnover (R’m) Turnover excl. UPD (R’m) Headline earnings (R’m) Headline EPS (cents) Diluted headline EPS (cents) Gross profit margin (%) (12.4) GP margin excl. UPD (%) Operating profit margin (%) (0.03) ROE (%) (9.5)

8 Headline earnings per share (continuing operations) Undiluted Diluted For six months to 28 February Increased by: Net decrease in PM&A interest provision Net impact of acquisition of UPD Organic growth Impact of share options- 0.6 For six months to 29 February

9 Turnover R’mFeb 2004Feb 2003% change Clicks Discom Music Division The Body Shop Link – own brand Total SA excl. UPD UPD * Total SA Australia655891** Total group * UPD included for 2 months in 2003 (comparatively up by 3.3%) ** Australia turnover impacted negatively by strong Rand, but only included for 4 months in 2004

10 Retail turnover by brand (South Africa)

11 Gross profit margin Feb 2004 R’m Feb 2004 % Feb 2003 R’m Feb 2003 % SA – Retail SA – UPD Total SA Australia Total Group Impact on gross margin from: Turnaround in Lifestyle category Competitive pricing Musica margin mix Rand strength – particularly UPD

12 Expenditure – after cost allocation R’000 Feb 2004 Feb 2003% change Clicks Discom Music Division The Body Shop Link Investment Trust (29.2) Intercare Total SA excl. UPD UPD * Total SA Australia ** Total group * UPD included for 2 months in 2003 (comparatively up by 5.1%) ** Australian expenses impacted positively by strong Rand and only included for 4 months in 2004

13 Operating profit R’000Feb 2004Feb 2003% change Clicks Discom2 693(4 820) Music Division (45.4) The Body Shop Link Investment Trust852987(13.7) Intercare(327)(362)9.7 Total SA Retail UPD * Total SA Australia ** Total group * UPD included for 2 months in 2003 (comparatively up 11.5%) ** Australia profit benefited by strong Rand, but only included for 4 months in 2004

14 Interest Feb 2004Feb 2003 Net interest bearing debt to shareholders’ funds at period end 22.5% 24.1% Net int. bearing debt (net of cash) to shareholders’ funds at period end 3.9%24.1% R’000 % change Interest paid (40 737) (45 121)9.7 Interest from PM&A (13.4) Interest impairment (24 986) (28 835)(13.4) Other interest received Net interest paid (36 295) (42 754)15.1 Decrease in rates (Ave prime H1 2004: 12.3%, H1 2003: 16.9%) Increase in inventory Proceeds received from sale of Australia in February 2004

15 Taxation (group) Feb 2004Aug 2003Feb 2003 Effective tax rate 29.9% 28.1%28.0% Impacted by: Unwinding of preference share structure in Australia Prior year – deferred taxation of R5m STC increased as no further scrip dividends

16 PM&A - performance R’mFeb 2004Aug 2003Feb 2003 Turnover Stores rebranded Hyperpharm Other stores Operating (loss)/profit Stores rebranded Hyperpharm(1 146) Other stores(9 672)(5 956)(10 396) Loan to PM&A Interest charge Provision against interest(25.0)(59.3)(28.8)

17 PM&A – shareholders’ deficit (including interest expense) R’m Shareholder deficit at Aug 2003(176.1) Post year-end adjustments(3.2) Adjusted deficit(179.3) Pre-acquisition losses – Leon Katz(14.9) Loss for the period(10.8) Interest(25.6) Goodwill(12.2) Shareholder deficit at Feb 2004(242.8)

18 PM&A - take-on balance sheet at 1 March 2004 R’m Goodwill Property & equipment Investments753 Inventories Accounts receivable Other assets Total assets Shareholders’ deficit( ) Loan from New Clicks Accounts payable Other liabilities Total equity & liabilities Notes: Subject to the finalisation of fair value adjustments, most of which are likely to be in respect of trademarks Loan includes interest expense & is pre impairments

19 PM&A – goodwill on acquisition Calculation: PM&A goodwill + Shareholders’ deficit - Loan impairment +/ - Fair value adjustments = Goodwill on acquisition

20 Balance sheet R’000 Feb 2004 Aug 2003 excl. Aus Feb 2003 excl. Aus % change Feb to Feb Property & equipment Inventories Accounts receivable Accounts payable

21 Inventory Feb 2004Feb 2003% change Inventory turn (times) SA Retail UPD Inventory (R’m) Held at the DCs Held at stores UPD Total SA inventory

22 Clicks & Discom - aggressive & successful promotions - better on-shelf position - more regular import programme Body Shop growth - new stores - improved stock turns Inventory levels

23 Loans to third parties R’m Feb 2004 Feb 2003 PM&A Share trust Franchise set-up (Aus) Intercare professionals Other Total

24 Cash flow (group) R’000 Feb 2004 Feb 2003 Operating activities (18 934) Investing activities ( ) Property & equipment (90 095) (79 793) Acquisition of subsidiary (203) Disposal of subsidiaries Loans (57 197) (28 446) Financing activities (7 186) Net increase/(decrease) (35 324) Note: UPD acquisition through share issue

25 Capital expenditure Capital expenditure during the period:R’m Store refurbishments New stores7 148 Pharmacy conversions1 621 IT Other8 130 Total Forecast for the balance of the year to August 2004: Store refurbishments New stores Pharmacy conversions IT Other1 344 Forecast total expenditure

26 Sale of Australian operations The key reason for selling Australia was to concentrate on the opportunity in SA Multiple on sale14.2 Profit on saleR4.5m Effective date27 Dec 2003 Cash repatriatedAus $87.3m Cash repatriation date17 February 2004 Effective exchange rate Aus $4.98 to R1

27 Group Operations Trevor Honneysett Ongoing consistent improvement

28 Clicks - snapshot Feb 2004Feb 2003 SalesR’ Sales growth% Comparable store sales growth% Operating profit before interest & after allocation of net costs of support structures R’ Number of stores Company owned Franchised Number of full-time permanent employees3 724*3 400 Weighted trading aream² Net increase in trading area for the period% Weighted annual sales per m²R * During the period, a number of part-time employees became full-time employees, in terms of the new Labour Relations Act

29 Clicks - turnover growth R’mFeb 2004Feb 2003% change Lifestyle Health & Beauty

30 Clicks Internal selling price inflation3% - 4% Local purchase price inflation3% - 4% Active ClubCard holders 2.1 m Gold card holders 720 k

31 Clicks We said during 2004 we would: Improve the in-stock position ✔ but stock up Continued focus – “Expect to pay less” ✔ Focus on uplifting in-store experience ✔ more to come Enhance performance of top 50 stores ✔ Introduce a new core homeware range ✔ Aggressive promotional strategy ✔ Reduce operating costs ✔

32 Clicks Pharmacy / PM&A We said during 2004 we would: Open first 5 Clicks Pharmacies in 2003, subject to licences Convert most PM&A stores to Clicks during 2004 Introduce pharmacies into many refurbished stores Introduce other disease management programmes Develop relationships with medical funders What happened: Licences delayed – opened March 2004 Now scheduled 2004 & 2005 due to licence delays Awaiting licences On track - next initiative May – 3 others planned for 2004/5 Took time – all but one of the major schemes

33 Clicks performance “Expect to pay less” Inroads into visual merchandising Expense control Heavy promotional drive Datamining initiatives Improved lifestyle mix Stock turn Better in- stock position Turnaround started Store refurbishment on track FMCG continues to perform

34 Clicks - comparative pricing ClicksCompetitor A Competitor B Competitor C GautengR R R R KZNR R R R E CapeR R R R W CapeR R R R Industry survey conducted by an independent research house - basket of 132 items Clicks cheapest in 3 out of 4 provinces before ClubCard benefits

35 Clicks - key action plans Further enhance homeware experience Value proposition maintained Continued focus on top 50 stores Store presentation – 77 of 270 stores in 2004 Continued aggressive promotional programme Maintain focus on costs New datamining initiatives in May Developing Clicks/Discovery Health alliance Profitable pharmacy integration

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39 Pharmacy performance Delay in licences & Clicks branding Postal medicines Time taken to secure agreements with funders Heavier medical aid discounting Holding onto unsuitable stores for licences Disappointing results Competitive pressure in Gauteng Disease state mgmt on track

40 Pharmacy implementation

41 Pharmacy implementation

42 Pharmacy implementation

43 Pharmacy implementation

44 Pharmacy - key action plans Challenges Delay in licences & Clicks branding Competitive pressure Immediate responses Aggressive promotions for PM&A Internal pricing comparison - top 148 lines: HyperpharmR AN Other CompetitorR

45 Pharmacy implementation continued

46 Pharmacy Stores Already converted to Clicks5 Conversion in process: remain in current location5 To be converted in current location13 Second applications to move to Clicks store27 Hyperpharm14 Under review16 Total80 Approximate cost of conversion - pharmacy to Clicks Pharmacy R Approximate cost of combining - pharmacy into a Clicks store R

47 Pharmacy Environment remains uncertain Single exit pricing legislation Timing of licence approvals: Balance of PM&A stores Applications for all new Clicks stores Second applications for transfers into Clicks stores Success of Hyperpharm Success of Clicks Pharmacy Positive to date, but still early days

48 Pharmacy - key action plans Integration into Clicks – 5 stores done, next 4 by June/July Category management/buying further integrated with Clicks More focused & aggressive promotions Generic substitution going well & expanding PM&A to move closer to branding used in Clicks Pharmacy Hyperpharm introduced – monitored IT platform integration on track – automated centralised pricing by August Sustain relationship with government Introduce Clicks Chronic Direct

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50 UPD - snapshot Feb 2004Feb 2003 * SalesR’ Operating profit before interest & after allocation of net costs of support structures R’ Inventory turn Debtors days Number of full-time permanent employees * Two months

51 UPD We said during 2004 we would: Provide group pricing benefits to independent customers to grow turnover Simplify the Multicare offering Develop the Link offering as a premium banner Develop programmes to enhance Link pharmacy loyalty to UPD Progress Ongoing with some success so far Franchise model being reviewed Regional discussions complete National forum scheduled

52 UPD Performance Trading profit up 11.5% Continued growth in turnover from PM&A & independent pharmacies Good cost control – 5.1% increase Continued sound working capital & cost management Key action plans Continued dialogue with government Continued focus on service & value added services Increase volumes – industry rationalisation

53 Discom - snapshot Feb 2004 Feb 2003 SalesR’ Sales growth% Comparable store sales growth% Operating profit/(loss) before interest & after allocation of net costs of support structures R’ (4 820) Number of stores Company owned Franchised Number of full-time permanent employees 1 529* Weighted trading aream² Net increase in trading area for the period% 0.7 (6.6) Weighted annual sales per m²R * During the period, a number of part-time employees became full-time employees, in terms of the new Labour Relations Act

54 Discom We said during 2004 we would: Return Discom to profitability in 2004 Improve margin - stronger lifestyle & import programme Close 12 stores, open 10 new stores & relocate 3 stores Have strong sales & margin growth for ethnic beauty & hair care products Implement POSware platform & merchandise planning Progress: On track Realising benefits Closed 5, opened 5 & relocated 4 so far Progressing well Still on track for August

55 Discom - performance Strong growth in “dry hair” Some inroads into visual merchandising Expense control Improved lifestyle mix Differentiation from Clicks & market Stock turn Marginal improvement in shrinkage Strong FMCG growth On track – profit for 2004 Trading densities improved Vitamin & health products doing well

56 Discom - key action plans Procure new store locations Entrench dominant position in African beauty & hair care Continued & sustainable improvement in margin Continuing improvement in lifestyle offering Implement POSware platform & merchandise planning Exploit potential of inland consumer markets Continual improvements in store design for new stores Focused promotion activity

57 Music Division - snapshot Feb 2004Feb 2003 SalesR’ Sales growth% Comparable store sales growth% Operating profit before interest & after allocation of net costs of support structures R’ Number of stores Company owned Number of full-time permanent employees Weighted trading aream² Net increase in trading area for the period% Weighted annual sales per m²R

58 Music Division We said during 2004 we would: Reposition from music to broader entertainment products –70 stores by December 2003 –Branded lifestyle accessory range Implement POSware retail store system by March 2004 Major marketing drive for Christmas Open 7 new stores, relocate / revamp 7 stores Progress: On track and being expanded –98 stores converted by Dec 2003 (106 currently) –In stores by December 2003 Done Flat Christmas sales On track: 5 opened, 3 upgraded & 3 closed to date

59 Music Division - performance Musica –Declining trend in CD sales –Gaming, DVD’s & lifestyle products grew from 8.3% to 16.5% of sales CD Wherehouse –Drop in CD sales –Strong growth in DVD sales –DVD biggest category in 2 of 4 CDW stores Expense growth ahead of sales growth We believe we are moving in the correct direction with entertainment

60 Music Division - key action plans Continuing repositioning from music to broader entertainment products Store plans: 4 new stores, 2 stores relocated & 2 revamped Aggressive price promotions Collaboration with NuMetro & Ster Kinekor to dominate DVD market

61 The Body Shop - snapshot Feb 2004Feb 2003 SalesR’ Sales growth% Operating profit before interest & after allocation of net costs of support structures R’ Number of stores Company owned2113 Number of full-time permanent employees8063 Weighted trading aream² Net increase in trading area for the period% Weighted annual sales per m²R

62 The Body Shop We said during 2004 we would: Continue to show growth but at a slower rate Heighten brand awareness through catalogue mailing & promotions Focus on Christmas gifting Introduce new range of sun care & hair care products Open five new stores Introduce four new concept stores in Clicks stores ✔ 3 opened, 2 to open in April ✔

63 The Body Shop Performance Good sales growth Good cost control Increased number of stores nationally to 21 Stock turn improves to 6.25 Key action plans Promotions programme & radio advertising Opening two new stores ClubCard points - earned at Body Shop from May Tight control on costs with further savings

64 Shared Services We said we would: Align shared services infrastructure with the needs of the brands Improve the management of stock in stores Implement a new financial system Improve the speed & quality of information Progress: On track Disappointing progress Phase 1 complete – balance on track On track

65 The next six months Integration of pharmacies Continued focus on lifestyle category Clicks to be the pre-eminent health, home & beauty brand UPD integral to healthcare plans Increase volumes in UPD Increasing profitability in Discom Enhancing entertainment offering in music Focus on stock distribution & management systems Continued focus on expense control Ongoing consistent improvement

66 Questions ? Ongoing consistent improvement

67 Thank You Ongoing consistent improvement