Pelion's activities

20 years of experience supplying medicines to pharmacies
Wholesale to pharmacies is the largest area of PGF's operations and one in which the Company has the most extensive experience. 20 years ago, the Company had just one warehouse with an area of 100 square metres and only two delivery vehicles. Currently, its total storage area is 70 thousand square metres, while its car fleet numbers several hundred vehicles. At present, PGF is one of the largest suppliers of pharmaceuticals in Poland. PGF's warehouses supply pharmacies and hospitals, as well as smaller wholesalers. Every day, our delivery vehicles make over 1,500 trips to pharmacies, filling almost 20 thousand orders and serving approximately 8,700 outlets. Acting through regional companies, PGF delivers a full range of pharmaceuticals to pharmacies all over Poland, rendering its services 24 hours a day, the whole year round. Over 25 thousand products are included in PGF's offering on a permanent basis, including pharmaceuticals from all therapeutic categories, medical and rehabilitation equipment, herbs, dietary supplements and cosmetics. Every day, the Company sells over 1.3m units of pharmaceuticals. In order to ensure that patients have immediate access to each product, PGF supplies pharmacies up to three times a day. The Company is able to operate efficiently thanks to its optimised distribution network and car fleet, as well as 13 centrally managed warehouses which supply over 10 thousand retail outlets: both small, family-run stores and large, chain pharmacies. Five of the warehouses, accounting for more than 40% of the Group's total sales, were automated so as to ensure quicker, cheaper and safer supplies. The modern warehouse facilities meeting the Good Distribution Practice standards, as well as the manner in which drugs are stored and transported, ensure high quality and safety of the pharmaceutical trade and help maintain the highest global standards. Order picking for the most popular products is done almost without any human assistance. The Company has also managed to reduce the time needed to prepare a life-saving delivery to just a few minutes.

Apart from supplying drugs, PGF offers its customers a range of additional services. The Company supports pharmacies at each level of management. Its services include training, assistance in fitting out the premises, marketing programmes, organisation of national and regional pharmaceutical fairs, provision of loans and multi-level support under the Dbam o Zdrowie programme. To facilitate the work of pharmacists, PGF has implemented new IT tools such as the On-Line Pharmacy, an electronic ordering system, the ePruf card and individual sales models developed as part of the GRA scheme, designed to adapt the sales policy to the specific requirements of pharmacies.

No one can beat our prices
As a modern and innovative company, PGF consistently promotes and develops Web-based solutions in its day-to-day operations. PGF has adapted its transaction systems so as to be able to instantly fill all electronic orders placed by pharmacies via any system available on the market. Electronic orders represent 50% of all orders placed with wholesalers. This results from an extensive range of products available at www.efarmtargi.pl, a website providing access to the largest database of special offers and current promotions prepared by PGF together with manufacturers, as well as www.emedicines.pl, an electronic pharmaceutical wholesale website whose offering includes over 12 thousand fastest moving products. Thanks to streamlined order processing, products offered through the websites are among the cheapest on the market. Orders (for any amount and of any value) can be put in 24 hours a day. Ordered goods are delivered within 24 hours.

Given the significant interest in on-line communication among pharmacists and the growing importance of networking sites, PGF has launched www.pharmbook.pl. Pharmbook is a networking website dedicated to pharmacists, manufacturers and medical practitioners, where users can express their opinions in discussion forums, chat with experts, read the most recent industry-related news, consult the drug encyclopaedia, participate in training for pharmacists or join a procurement group. Currently, the website brings together approximately eight thousand pharmacists, who generate 100 thousand views per month.

CEPD N.V. to become the leader on the Lithuanian market
On July 4th 2011 in Vilnius, UAB Gintarine Vaistine (a member of the CEPD N.V. holding) entered into a LTL 14.2m (approximately PLN 16.3m) conditional agreement for the purchase of the Litfarma Vaistine chain of pharmacies. Litfarma Vaistine, consisting of 65 retail outlets, is the fifth largest chain of pharmacies in Lithuania. Litfarma Vaistine will be incorporated into the CEPD N.V group on receipt of approval from the Lithuanian counterpart for the Polish Office of Competition and Consumer Protection (UOKiK). The purchased pharmacies will complement the group's existing retail network which operates in Lithuania through companies of the UAB Nacionaline Farmacijos Grupe (UAB NFG) group and owns 148 Gintarine Vaistine and 69 Norfos Vaistine pharmacies. In addition, UAB NFG manages a chain of 212 Baltijos Vaistinu Grupe partnership pharmacies. Following the transaction, CEPD N.V will manage a total number of 282 own pharmacies in Lithuania, becoming the leader of the Lithuanian market in terms of the number of pharmacies owned. The purchase of Litfarma Vaistine is another step in CEPD's strategy which provides for the development of a leading pharmaceutical retail network in Central and Eastern Europe.

New sorting line in the Łódź warehouse
On June 17th 2011, a new line for automatic sorting of goods was launched at the Łódź branch of PGF. The project cost about EUR 0.5m. The new line with a sorting capacity of 3,500 packages/hour is used to sort goods purchased by the Łódź warehouse into regions. Previously, goods had been sorted by hand. Additionally, the line automatically sorts packages containing products ordered remotely and on-line into regional warehouses. If a product ordered by a customer (i.e. a pharmacy in one of the regions or an on-line patient) is not available through a local warehouse but is available in Łódź, such order is executed by the warehouse of the Łódź branch. The sorted packages along with other goods are transferred to the regional warehouses, from which they are sent on to pharmacies. The automatic line not only makes the sorting process easier, but also improves its accuracy and efficiency since it eliminates mistakes which may arise in the course of manual sorting and dispatching, ensures a faster transfer of goods through the sorting facility of the Łódź warehouse and marks products with additional labels enabling electronic identification of all their parameters (such as origin and destination).

The Łódź Maraton - Dbam o Zdrowie
On June 5th 2011, the Łódź Maraton Dbam o Zdrowie running event was held for the first time. The event was organised under the auspices of Ms Hanna Zdanowska, President of Łódź. The Łódź Maraton Dbam o Zdrowie is a unique sports and social event. Modelled after the famous London Marathon, it is to promote healthy lifestyle, physical activity and modern forms of charity. At the same time as the marathon, a 10-kilometre run took place. In total, the number of Polish and foreign runners reached almost 1,500, including participants of the world's greatest marathons: Oleksandr Sitkovski and Witalij Szafar from Ukraine, Sammy Limo from Kenya, Joseph Daudi from Tanzania, Valentina Delion from Moldavia, Maria Butakova and Maryna Domantsevich from Belarus, as well as Polish athletes: Rafał Wójcik, Maciej Miereczko, Agnieszka Janasiak and Arleta Meloch, Poland's current marathon champion. Małgorzata Sobańska, who took part in the Atlanta and Athens Olympic Games, was the guest of honour. Sammy Limo was the first on the finish line among male runners, Joseph Daudi was the second, and Maciej Miereczko was the third. Maryna Domantsevich won in the female category. The Belarussian runner reached the finish line only 0.03 second before the extremely exhausted Agnieszka Janasiak, who fell down twice before completing the marathon. Arleta Meloch took the third place. On the day of the marathon, the Dbam o Zdrowie pharmacies organised free medical examinations and consultations, and demonstrated relaxation exercises and techniques for elderly people. Patients could check their blood levels of sugar and cholesterol, blood pressure, bone density, concentration of carbon oxide in the lungs as well as undergo professional laryngological, ophthalmic and dermatological examinations. Many fringe events took place on the eve of the Łódź Maraton Dbam o Zdrowie, including the 2.5-kilometre charity run Bieg Śniadaniowy Fundacji Dbam o Zdrowie, with the participation of top marathon runners, aimed to raise money for people under the Foundation's care, runs for children and young people over distances between 300 and 1,500 metres, and an urban family picnic with numerous highlights for the youngest. The next Łódź Maraton Dbam o Zdrowie will be held on April 15th 2012. We hope that the event will become a fixture in the calendar of Polish sports events, while helping to raise people's health awareness. For this reason, we are planning to set up runners clubs in Poland's biggest cities before the next year's marathon, so that everyone can practise and prepare for the spring marathon under the supervision of experts , says Jacek Szwajcowski, President of PGF.

Financial Highlights
The table below presents the H1 2011 financial highlights, along with year-on-year comparative data:

In H1 2011, the PGF Group focused its investment efforts on strengthening its market position, achieving in each segment a markedly higher growth of sales revenue compared with the overall market growth. This, however, led to a percentage drop in sales margin, attributable chiefly to dedicated retail segment programmes Senior and 60+, which entitle their beneficiaries, i.e. customers over 60 years of age, to purchase prescription drugs at much lower prices. A major increase in promotional spending on the Apteki Dbam o Zdrowie pharmacies drove up selling costs. Due to the combined effect of the two factors, the Group reported a fall in operating profit for H1 2011 vs. H1 2010. Nonetheless, the expenditure was necessary to strengthen PGF's market foothold in the face of the forthcoming legislative changes: a ban on drug price discounts and a complete ban on pharmacy advertising. The "Apteki Dbam o Zdrowie" brand already enjoys the highest recognition rate in Poland, and the growing patient numbers allow us to better prepare for operating on the market after January 1st 2012.

For further details please contact:
Renata Borkowska – Kubiak, Spokesperson for PGF S.A.
Landline: (+48 42) 200 79 19
Mobile: 785 858 991
E–mail: renata_borkowska-kubiak@pgf.com.pl