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Ladies and Gentlemen,

I present to you the consolidated report of the Pelion Healthcare Group detailing our performance in 2015.

Marking our 25th anniversary, 2015 was an important year for us. The history of Pelion S.A. began in 1990 in Łódź – a city which epitomises entrepreneurship and resourcefulness. Together with a group of enthusiasts, we have built a company from scratch which now stands as an example of success in Poland. Consistently, year after year, we have worked to create value in healthcare. The strategic direction we have taken has defined the growth vision for Pelion, which – thanks to a strong focus on patients and high operational efficiency – remains the largest and most efficient healthcare company in Poland and Central Europe. Our 25th anniversary is a symbolic start of a new era in Pelion’s growth.

All of our activities are now centred around our redefined mission. We are here to ensure a long and quality life for our customers and patients.

Pelion’s paramount objective remains to strengthen our core business, which consists in comprehensive, modern and safe drug distribution. At the same time, we work to improve our existing service range and develop new services based on innovations. Sustainable development also features prominently in our strategy, driving us to develop and implement solutions needed in a world of limited resources.

The past year was a period of particularly hard work. In 2015, the Pelion Healthcare Group delivered consolidated revenue of PLN 8.5bn – an improvement of nearly 10% compared with 2014 despite unfavourable regulatory conditions.

Current regulations severely limit growth and jeopardise the future of growth-oriented projects.

2015 also brought initiatives designed to secure full access to healthcare. We are especially aware of the significance of the free drug programme for the elderly, whom we have always believed to be a special category of patients, and we regret that our efforts to systemically reduce drug prices for seniors were hampered some years ago.

Irrespective of economic and regulatory conditions, we strive to develop our business based on robust foundations. Most importantly, we aim to create lasting value of our individual business lines. We have carried out an extensive transformation of DOZ pharmacies – today, the DOZ brand includes 900 pharmacies with a modern and professional service offering for patients. DOZ pharmacies are available to everyone, conveniently situated and, most importantly, offer the best prices. We have also introduced a range of modern, high-quality proprietary DOZ products, which are very popular among patients. We are proud to say that DOZ pharmacies have become Poland’s pharmacies of choice.

We also worked hard to integrate the Natura beauty store chain into our operations, which required deployment of a uniform management system and strengthening of our sales force. Our goal is for the Natura beauty stores to be perceived as modern stores offering excellent customer service and a broad range of top-quality Polish products, in addition to being a stable and stimulating work environment for our employees.

We also take special care to ensure that Polska Grupa Farmaceutyczna’s pharmaceutical distribution activities are perceived as reliable and safe. We believe that the pharmacies we cater to have access to a full range of services, which helps them grow and provide professional pharmaceutical care.

Our business line of sales to hospitals confirmed its position as the Polish market’s leader. Thanks to a dedicated team and the ability to adapt its offering to fit the needs of both hospitals and manufacturers, Urtica is creating lasting value.

We are also happy to see our Lithuanian companies grow. Their successful performance proves that we have strong potential for growth in an environment free from regulation that impacts patients and hampers growth. It also shows the range of services which could be available to patients in Poland.

We strive to build a modern world through innovation and partnership, developing new strategic initiatives and strengthening our research and development efforts. The development of Pharmena is one of such initiatives. Our research on 1-MNA and its potential application in dermatology and treatment of cardiovascular diseases is nearing completion. We are also working to expand our product offering.

Pelion provides stable employment to more than nine thousand people, which is a tremendous challenge for us. We owe our success and growth to them and their dedication.

As far as financial performance is concerned, we – as the Management Board – are aware that the consolidated net result we have delivered is not satisfactory despite our many efforts. However, we believe that these efforts will contribute to a significant performance improvement in the coming years.

In 2016–2020, we will focus all our efforts on the implementation of the Pelion strategy, whose core objective is to give us a leading position in all key business areas: distribution, pharmaceutical care and patient services at DOZ pharmacies, beauty store services and sales to hospitals. We are convinced that the foundations we have laid will ensure our successful performance throughout this time frame. We will consistently improve our operations to achieve organisational excellence and create competitive advantages, just like we have done for these past 25 years.

Respectfully,
Jacek Szwajcowski
CEO, President of the Management Board