Commentary
  Note to the interim profit statement
The interim financial statements comply with South African Statements of Generally Accepted Accounting Practice.

Review of trading
Exceptional performances from the Australian businesses and the Music division in South Africa and strong performance by Clicks have characterised the group's performance for the six months to February 2002.

Sales have increased by 23,1% and operating profit before interest and tax by 20,9%.

The group had its best December for many years and this trend has continued into January and February. Although trading conditions are regarded as tough in both geographies, this momentum is being sustained.

Discom is in the middle of a major repositioning and has recorded a loss.

During the period under review 42 new stores were opened, 30 in southern Africa and 12 in Australia. In excess of 50 new stores are planned for the second half-year to August 2002 which will take the total number of stores in the group to nearly 1 200.

Stocks
55% of all stock now flows through our distribution centres with an increase to 65% expected by the financial year-end. Stocks have reached a high level due to strategic buy-ins to ensure that our service levels to the stores would not be impacted during this process.

Stock levels are planned to be reduced in the next few months with the consequent paybacks to the balance sheet. This will be assisted by a world-class category management initiative which is currently underway.

Divisional overview
New Clicks South Africa
Clicks
All store sales have increased by 12,8% with existing stores increasing at 6,1%.

The ClubCard continues to grow from strength to strength and the database now has in excess of 3,2 million customers.

This year Clicks will open in excess of 32 new stores – a record for the brand and ensures a continuation of the brand's dominant footprint throughout southern Africa.

Number of stores  
  Company owned 238
  Franchised 13
Contribution to group sales 48,7%
Contribution to group operating profit        78,1%

The Body Shop
South Africa's new beauty brand, The Body Shop has proved to be an unqualified success, registering a profit from opening day. Five stores have been opened to date and a further five stores are scheduled to open by the end of August.

Number of stores  
  Company owned 5
Contribution to group sales 0,4%
Contribution to group operating profit        0,6%

Discom
Discom is in the conversion and repositioning stage. The first of the new look stores were opened in November 2001 and early signs are encouraging. However, given the vagaries of the market in which the brand operates, it is still too early to pronounce this project a success.

We anticipate, however, improved performance during the next review period. 13 stores have been closed and we anticipate that there will be at least a further 10 store closures.

Number of stores  
  Company owned 193
  Franchised 7
Contribution to group sales        13,2%

Music Division – Musica and the Compact Disc Wherehouse
The Music division has increased its market share with exceptional sales growth of 26.6% in all stores and 13.4% in existing stores as well as exceeding profit targets by a substantial margin.

The success of the Compact Disc Wherehouse large store format has given us the confidence to expand this offer and further opportunities are being researched.

Number of stores  
  Company owned 137
Contribution to group sales 8,7%
Contribution to group operating profit        8,3%

Healthcare/The Link Investment Trust
This division comprises the 56% interest the group holds in The Link Investment Trust. There has been a rapid build up in activities and support services to the Link and LinkMax brands with consequent improvement in their profit performance.

Number of stores  
  Franchised 344

New Clicks Australia
Priceline
Priceline has delivered a sparkling performance and the brand is now reaching a level whereby it is becoming a household name in Australia. An all store sales increase of 14,8% and an existing stores sales increases of 6,6% have been achieved in a low inflation environment.

The Priceline ClubCard has been received favourably by customers in Victoria and will be rolled out nationally in the next few months.

Five stores were opened during the period under review with a further 12 planned to open by the end of August 2002.

Number of stores  
  Company owned 122
Contribution to group sales 28,6%
Contribution to group operating profit        18,2%

House
House has achieved franchisee sales increases of 32% for all stores and 15% in existing stores. An aggressive store expansion programme is underway and we expect to have 86 stores open by August 2002. The introduction of a direct import programme has resulted in a product differentiation and increased margins will flow through in the future.

Number of stores  
  Company owned 2
  Franchised 74
Contribution to group operating profit        2,4%


Prospects
Given the focus of management it is realistic to expect the group's improved performance in both South Africa and Australia to continue.

We have great confidence in South Africa and our store expansion and format growth strategies are testimony to this. The Australian business grows from strength to strength and we envisage House entering the New Zealand market in the third quarter.

The group is in an exciting phase of its development with rapid growth and continued brand focus.

Capitalisation issue and interim dividend
The directors have resolved to award capitalisation shares to ordinary shareholders.

Shareholders will be given the opportunity to decline the award of capitalisation shares in respect of all or any part of their shareholding and to receive an interim cash dividend of 9,9 cents per share.

The terms of the award of the capitalisation shares will be published on or about 14 May 2002 and a circular and form of election will be posted to shareholders on 27 May 2002.


By order of the Board

Allan Scott

Company Secretary


22 April 2002

Directors: D.M. Nurek*,T.C. Honneysett, R.B. Godfrey, P.W.G. Green, E. Osrin*, J.C. Sher (Australian), P.E.I. Swartz*, A. Zimbler*, E.D.G. Batts* (alt), M.C. Henkel* (alt) * non-executive
Registered Address: Cnr Searle and Pontac Streets, Cape Town 8001. PO Box 5142, Cape Town 8000
Sponsor: Investec Securities Limited

 
Registration Number 1996/000645/06
Share Code: NCL
ISIN: ZAE000014585