Pelion's activities

The year 2010 is of special importance to us all as the Company celebrates its 20th anniversary. This is an excellent opportunity to look back on our past achievements and identify lessons learnt. Over these past twenty years, PGF, in common with all businesses, has had its ups and downs, but owing to a carefully designed and persistently implemented strategy, as well as to the commitment of all our employees, we managed to secure a top position on the Polish and Lithuanian pharmaceutical distribution markets while maintaining strong growth potential, said Jacek Szwajcowski, CEO. We stand by our previous earnings forecast, expecting sales revenue to reach PLN 6bn and hoping for double-digit growth of net profit, added Mr Szwajcowski.

Strong Performance

The first six months of 2010 saw improvement in all major performance metrics. The most substantial rise was reported in net profit attributable to owners of the parent, which in Q2 2010 alone grew by PLN 10m, or 116.8%, relative to the corresponding period of prior year. Sales revenue for Q2 2010 and H1 2010 totalled PLN 1,408bn and PLN 2,803bn, respectively, with the latter figure having increased by 4.3% year on year. Compared with H1 2009, operating profit and EBITDA also strengthened, by 23.4% and 17.1%, respectively.

Strengthened Foothold on the Lithuanian Market

A defining moment in the history of the Group, which took place in these past six months, was the signing of an agreement under which our wholly-owned subsidiary Central European Pharmaceutical Distribution N.V. purchased 66,811,675 shares in UAB Nacionaline Farmacijos Grupe. The purchase price of PLN 100,878 thousand comprised the price for the shares (EUR 24,500, or PLN 97,744 thousand) and dividend for 2009 (LTL 2,500 thousand, or PLN 3,134 thousand). Following the transaction, CEPD N.V. holds 100% shares in UAB NFG, which gives it control over ten pharmaceutical wholesalers and retailers active on the Lithuanian market. The UAB NFG group owns, manages or has business relations established with a total of over 420 pharmacies, which gives it a 28.8% share in the Lithuanian market. Financed with CEPD N.V.’s internally generated funds, the share purchase deal was the culmination of efforts initiated in July 2007. Investments in Lithuania are part of the consistently implemented strategy to strengthen PGF’s presence in the CEE region. Lithuania was the first major test of our abilities on the international markets. We started our expansion in Lithuania for it is a country with solid macroeconomic foundations and stable regulatory environment, said Jacek Szwajcowski. Thanks to our strong presence in Lithuania, PGF is bound to become an even more trusted business partner.

Senior Programme

In H1 2010, we embarked on a number of innovative projects, with the Senior Programme, launched in February and aimed at helping the elderly obtain easy access to the necessary medication, being of particular importance to us. What urged us to devise the programme was the staggering statistics. According to GfK Polonia, the research agency, as much as one fourth of Polish patients, 40% of which are old age, cannot afford to buy prescription drugs. This leads to delayed or interrupted treatment, a very common cause of serious medical conditions among the elderly. As a socially responsible company, we simply could not turn a blind eye on a huge problem like that, and we decided to develop a special financial assistance programme for people over 75 years of age. A free-of-charge card issued to the patient’s name entitles the holder to receive a 25% discount on all prescription products sold at the Dbam o Zdrowie pharmacies until the PLN 500 limit is reached, explains Mr Szwajcowski. Since the programme launch date, nearly 1,200 pharmacies have joined the project, and the aggregate value of discounts given has exceeded PLN 10m.

SMS Pharmacy

PGF, a company with 20 years of experience in the business, is well aware of the ever-higher expectations and standards set for the corporate world. In our day-to-day operations, we strive to be a professional and innovative market player whose major strength is the aspiring and creative staff. Our goal is to deliver high-quality pharmaceutical care that meets or exceeds customer expectations. We provide access to around two thousand pharmaceutical outlets operating under the Dbam o Zdrowie brand. To the convenience of our patients, PGF has developed an innovative concept of pharmacy care and information delivered via short message system. Apteka SMS (SMS Pharmacy) enables patients to check drug prices, localise any given Dbam o Zdrowie pharmacy in Poland and order products from a selected outlet via a mobile phone by sending a text message to 661 004 000.

www.doz.pl

PGF continuously develops and refines its on-line pharmacy, a part of the www.doz.pl health portal. It is the largest platform of this type on the Polish market and the only one that offers prescription drugs. The unique feature of the on-line service is its interconnectedness with the nation-wide physical pharmacy chain. Products ordered through the website may be collected from any of the 1,600 or so Dbam o Zdrowie pharmacies, which gives customers a double advantage of full availability of the ordered product and direct interaction with a professional pharmacist. As shipping costs are not included in the order price, the prices of drugs bought on-line at www.doz.pl are the lowest you can get on the market.

Business Support Solution

The Business Support Solution (BBS) has been in operation since April 2010. It is an advanced shared service centre which supports financial, accounting, payroll, control, and legal services, as well as consolidated financial statements input. The comprehensive feature gives BSS a competitive advantage. BSS provides services to PGF S.A. and 140 related companies, and is currently probing the market for potential external customers in Poland and abroad. BSS’s headcount is over 300 employees, three fourths of whom hold college or university degrees. BSS staff are professionals, including licensed legal counsels, auditors and persons holding statutory authorisations to provide commercial accounting services. Outsourcing of this type of services is increasingly popular with Polish corporations as it helps reduce costs, optimise business processes, eliminate various risks and enhance efficiency. It also provides assurance that the services are delivered by firms with solid track record and expertise, argues Jacek Szwajcowski.

As ever, the focal point of our strategy is to secure the top position across all distribution channels and to create sustainable shareholder value on the complex and fast-moving pharmaceutical market. To this end, we flexibly accommodate the needs of our customers and continuously expand our portfolio. Newly emerged and varied market expectations offer us unique opportunities for further growth, says Mr Szwajcowski.

The table below presents H1 2010 financial highlights along with year-on-year comparative data:

For further details please contact:
Renata Borkowska-Kubiak
Spokesperson for PGF S.A.
Landline: (+48 42) 200 79 19
Fax: (+48 42) 613 35 35
Mobile: (+48) 785 858 991
E-mail: renata_borkowska-kubiak@pgf.com.pl / biuroprasowe@poczta.pgf.com.pl