Strategic Report 01 Overview 02 03 04 Pharmacy and distribution We operate two pharmacy brands, each with a distinct positioning: GPC for the high-end customer segment and Pharmadepot for the mass retail segment. 270 The pharmacies are located in Tbilisi and other major regional cities. The total number of bills issued at our pharmacies exceeded 27 million in 2018, making us the country’s largest retailer in terms of both the revenue and the number of bills issued. Our scale of operations gives us a Pharmacies bargaining power over suppliers to extract procurement synergies, reflected in strong margins, posting 25.5% gross profit margin and 10.1% EBITDA margin in 2018. Consequently, it also helps us share the synergies with the local population by providing affordable pricing on key 2.3 products, as well other small pharmacy chains through wholesale business. Furthermore, pharmacy and distribution business is a pure out-of-pocket business favourably diversifying the Group’s revenue stream. Monthly customer interaction We are also constantly working on improving the product mix in our pharmacies and enhancing our position in private label segment. Currently 37 private label medicines are offered at GHG pharmacies and we are working on to increase this number. In 2019, we will also introduceGEL 13.4 our first private label personal care products under the brand name Attirance, which will include a wide range of personal care products. Average bill size c.700,000 30% Members of loyalty programme The share of parapharmacy sales in retail revenue Revenue (GEL million) 518.6 450.3 21 +15.2% Pharmacies located at our healthcare facilities 2017 2018 EBITDA and EBITDA margin (GEL million) 52.2 38.9 10.1% 8.6% 2017 2018 15