Georgia Healthcare Group PLC Annual Report 2018 Strategic Report Key performance indicators Value creation performance metrics Return KPIs The margins in all of our businesses is a function of our scale and largely reflects the realised procurement synergies and utilisation level of our healthcare facilities in Tbilisi. Repriced portfolio of our medical insurance business and improved cost efficiency Group-wide, while our two flagship hospitals remain in their initial roll-out phase, translated into a 15.9% growth in profit. Profit before tax (GEL million) Healthcare services EBITDA margin (%) 53.9 2018 53.9 24.9 2018 24.9 2017 46.3 2017 26.4 +16.3% y-o-y 2016 40.2 -1.5 ppts y-o-y 2016 30.2 Profit before tax represents revenue less cost of goods sold and operating expenses,Healthcare services EBITDA margin is calculated as EBITDA divided by revenue, net of non-recurring expenses. gross of corrections and rebates. Pharmacy and distribution EBITDA margin (%) Loss ratio (%) 10.1 2018 10.1 77.3 2018 77.3 2017 8.6 2017 84.2 +1.5 ppts y-o-y 2016 4.3 -6.9 ppts y-o-y 2016 84.1 Pharmacy and distribution EBITDA margin is calculated as EBITDA divided by revenue.Loss ratio is calculated as net insurance claims divided by net insurance revenue. Earnings per share (GEL) Return on invested capital (%) (adjusted)2 0.27 2018 0.27 13.9 2018 13.9 2017 0.23 2017 12.8 20161 0.24 2016 9.0 +17.4% y-o-y +1.1 ppts y-o-y EPS is calculated as profit attributable to shareholders divided by weighted averageROIC is calculated as EBITDA minus depreciation, plus interest income divided number of outstanding shares. by aggregate amount of total equity and borrowed funds. Growth KPIs Our main growth drivers in 2018 were a growing number of healthcare facilities and pharmacies, enhanced medical services and product mix, a successful turnaround and expansion strategy of our medical insurance business. In 2019 and beyond, we will continue to focus on profitable revenue growth. We expect the increase mainly through organic growth driven by the roll-out of newly-opened hospitals, as well as by increasing our share in the fast-growing, highly fragmented and under-penetrated outpatient market, investing in medical equipment to capitalise on the existing service gaps, opening the Mega Lab, developing medical tourism, continuing to lead the market in the quality of our medical care, strengthening pharma presence through new launches and adding more private label products in the range, and expandigour edical insurance business. Revenue (GEL million)3 EBITDA (GEL million) 849.9 2018 849.9 132.3 2018 132.3 2017 747.8 2017 108.1 +13.7% y-o-y 2016 426.4 +22.3% y-o-y 2016 78.0 Revenue comprises healthcare services revenue from both inpatient and outpatientEBITDA is defined as earnings before interest, taxes, depreciation and amortisation services; pharmacy and distribution business revenue and net insurance premiumsand is derived as the Group’s profit before income tax expense but excluding the earned from medical insurance. following line items: depreciation and amortisation, interest income, interest expense, net losses from foreign currencies and net non-recurring (expense)/income. 12016 earnings per share (“EPS”) is calculated as normalised net profit divided by weighted average number of shares outstanding during the same period. 2Return on invested capital adjusted to exclude newly-launched hospitals and polyclinics that are in roll-out phase. 3The amount represents gross revenue before corrections and rebates (see Financial Statements, Note 3). Revenue net of corrections and rebates was GEL 846.3 million in 2018 (2017: GEL 745.7 million, 2016: GEL 423.8 million). 38