16 May 2004

Release Date: 2004/05/16

Cape Town – Specialist retail group, New Clicks Holdings, today outlined the plans for the implementation of its healthcare strategy in response to the far-reaching changes to legislation governing pharmacy ownership which were announced late last month.

Addressing an analyst presentation in Cape Town, group leader Trevor Honneysett said New Clicks has invested considerable energy and resources in recent years to position the group for the dawning of the healthcare revolution. “Our strategy was formulated around the spirit of the National Drug Policy and it is encouraging that our plans were so closely aligned with the legislative changes gazetted last month.”

“Clicks was originally conceived as a drugstore but owing to the regulations governing pharmacy ownership it has operated as a drugstore without the drugs,” he said.

Honneysett said New Clicks healthcare interests were expected to generate a sustainable income stream in the medium to long term, although it will not have a material impact on earnings in the current financial year.

New Clicks has assembled a multi-dimensional team with considerable expertise in specialist areas of healthcare, wholesale distribution and retail sales, to implement its integrated healthcare strategy.

He said the most critical issue for the introduction of a pharmacy offering into Clicks stores is the approval of the Purchase Milton & Associates (PM&A) transaction by the competition authorities. “The application was lodged this week and we are confident of a positive outcome within the next three months.”

Once this approval has been granted, Clicks will apply for the transfer of licences for the 81 PM&A pharmacies and over time will convert these into the various Clicks store formats. “We will also apply for licences to operate pharmacies in Clicks stores which will not be serviced by the PM&A stores, and plan to have between 20 and 25 of these pharmacies by the end of the year.”

Honneysett said “We believe the turnaround in PM&A is sustainable and have every confidence in its longer term prospects. The change in healthcare regulations also means that the risk element in the loan to PM&A has been greatly reduced.”

He said New Clicks planned to spend around R100 million over the next three to four years in converting stores to accommodate pharmacy dispensaries. The cost of conversion ranges between R140 000 and R250 000 per store, before IT expenses, he said.

“The Clicks store of the future will cater primarily for the needs of woman. While our focus will continue to be on health, beauty and lifestyle goods, we will be adding the exciting dimension of healthcare into some of our stores.

“This will necessitate a fundamental change to our stores and we have been creating a new format in anticipation of these changes. We have developed a flexible store format and the balance between our various categories will in future depend in the size of the store, the location, and also the healthcare needs of the community serviced by the store.

“Key to the integration of pharmacy into Clicks is that our value proposition remains intact and we aim to provide healthcare at affordable prices.”

Honneysett said an essential aspect of the new regulations is to make affordable healthcare more accessible to a broader range of communities, and we are committed to working with government to help make this a reality.

“Clicks will in future operate wholly-owned and joint venture stores, as well as continuing to support franchise operations, which will allow the group to facilitate meaningful black economic empowerment at a store level, and presents a real opportunity for retailers and entrepreneurs in disadvantaged areas.”

Issued by Tier 1 Investor Relations on behalf of the Clicks Group
For further information kindly contact
Graeme Lillie, Tier 1 Investor Relations 021 702 3102 / 082 468 1507

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