Georgia Healthcare Group PLC Annual Report 2018 Strategic Report Chairman’s Statement The overall economic picture in Georgia remains a promising one for our company; Implementation of progressive healthcare policies and public health measures appears to command broad support Against that backdrop, I’d like to highlight three of the ambitious goals we have for the company: 1. Fully realise the quality and financial performance potential of our hospital, clinic and retail networks. We have created a modern healthcare and retail networks. Our priority now is to fully utilise that capacity, drive continuous improvement in clinical quality and productivity and generate cash. These networks provide important scale economies for procurement, operating productivity and platforms for patient/customer satisfaction and clinical quality performance. Nikoloz Gamkrelidze, our CEO, has modernised his management structure to ensure accountability for operating, quality and financial KPIs in each of our lines of business. He continues to deepen and develop our pool of general managers and functional leaders. 2. Grow profitably. We have a promising portfolio of growth opportunities, most of which will be realised with minimal capital. Our retail pharmacy business Fellow shareholders, is pioneering new product concepts and store formats. We are expanding the range of healthcare services to attractive markets, I begin this letter with a thank you to Irakli Gilauri, the founding Chair such as dental and diagnostic testing, in which our capabilities can of GHG. While serving as CEO of the Bank of Georgia, he recognised deliver better care and create value. We have begun to build a medical the potential for building a modern healthcare company serving tourism business, targeting consumers in the region for whom Georgia. He led the spinout in 2015 and attracted US$100 million Georgia offers superior care at an affordable price in an attractive travel in capital to create a first-class nationwide healthcare network. He destination. This business, which we are building with a dedicated assembled a management team and a board capable of delivering business model, can generate attractive returns and provide attractive quality care and creating value in what is now the largest private opportunities for our best physicians. We believe the vigorous growth employer in the Georgia. Irakli has stepped down as chair but remains in Georgia’s tourism will be a helpful tailwind. Finally, our digital an active board member. I am honoured to succeed him. innovations will provide unmatched capabilities for our customers and patients across our retail, insurance and healthcare portfolio. The overall economic picture in Georgia remains a promising one for our company. The economy grew at estimated rate of 4.7% in 2018, 3. Contribute to a healthier Georgia. with annual average inflation at 2.6%. Per-capital GDP is estimated Our management team is proud of the contributions we make to the to have grown to US$4,345 in 2018. The EU-Georgia Association healthcare capabilities and infrastructure of Georgia. Each year, we Agreement and related Deep and Comprehensive Free Trade invest on average 11 hours of training per person across our c.16,000 Agreement lay solid groundwork for more economic opportunities as employees — mostly on our physicians, nurses, pharmacists and Georgia continues to deepen its commitment to European standards managers. Examples include the residency program designed and norms. Looking east, the Free Trade Agreements with China and to deepen the skills in important medical specialties and develop Hong Kong should create export opportunities and increase FDI. next generation of doctors. We partner broadly with the Georgian government on a variety of educational and public health programs The country consistently ranks well on indicators of governance and such as screenings and vaccinations, including the recent deployment doing business. It ranks just 6th out of 190 countries for the latter, of a leading-edge e-prescribing capability. up from 9th from last year. Strong anti-corruption policies and the Government’s active engagement to attract international investors I invite you to read this report to learn more about our company, with tax and legal incentives, positions the country on a par with its performance and its promise. many European Union member states. Implementation of progressive healthcare policies and public health William (Bill) Huyett measures appears to command broad support. Georgia government Chairman has more than doubled its healthcare spending to 3% of GDP (total 2 April 2019 spending on healthcare at US$324 per capita). We see significant growth potential; government spending in most countries with a universal healthcare system are above 5% of GDP. 6