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Annual Report 2015

Letter of the President of NEUCA Board of Directors 8

Our Mission 10

Our Strategy 12

Key Values 14

Human Resources Strategy 16

Distribution of Pharmaceuticals 24

Services for the Health Market 42

Financial Results 46

Socially Responsible 58

Letter of the Chairman of the Supervisory Board of NEUCA 64

Supervisory Board of NEUCA 66

NEUCA Board of Directors 68

Corporate Governance 70

Investor Relations 72

History of our CapitalMarket Transactions 74

Financial Statements 76

76 / YE A R I F IGURES YE A R IN F IGURES /

Result before

one-time items

Result before

one-time items

M

(4Q 2015)19% 29.4%

122.8

6.95

0.76

42%

6%

102.3MPLN

MPLN

GROWTH IN NET PROFITYEAR IN FIGURES

NET DEBT/EBDITA

NET PROFIT

MARKET SHARES

REVENUES

GROSSPROFIT

GROWTH

GROWTH

PLN

8 / MISS ION A ND STR ATEGY

MISSION AND STRATEGY

The independent pharmacies are

exactly where we focus our activities.

Piotr Sucharski

President of NEUCA SA

Board of Directors

1110 / MISS ION A ND STR ATEGY / MISS ION A ND STR ATEGY /

DE A RSH A R E H O L D E R S

NEUCA belongs to companies that are at the fore-

front of the industry in continuous-ly setting new and

ambitious targets. Every year we raise the bar in all

areas of our business and we deliver on our plans. In

2015, in addition to the fi nancial objective, we carried

out a number of interesting projects which opened up

new development prospects and opportunities.

Our result over PLN 102 m in net profi t before one-time items is another proof that we can meet the promises made to investors. Our delivery on those promises would not be possible without the day-to-day hard work on strengthening our leading position on the pharmacy wholesale market.

Our market shares are largely the result of close relations with and sup-port granted to independent phar-macists as well as confi dence in the correctness of the philosophy of not having any pharmacies of our own, that is not competing with our own customers. The independent phar-macies are exactly where we focus our activities. We try to support them to the best way possible and availa-ble in the industry and all our actions are subordinated to this goal.

Favourable opinions about the support extended to our partners are refl ected in independent cus-tomer satisfaction survey results. In the entire 2015 we achieved in this respect the best marks in the industry and we invited subsequent pharma-cies to participate in our pharmacy programs. Currently over 1/3 of the pharmacies operating in Poland take part in those programs.

Our companys unique positioning at the point of contact between many areas of the health market creates exceptional opportunities to con-tinually improve the quality of our offering for the pharmacies. We know our customers and we know how to best respond to their needs. Hence,

the next step in the development of NEUCA: reaching to patients who are the pharmacies clients.

Investments in this area were started in 2014 but last year was a real break-through. We fi nished the fi rst stage of the construction of the network of wiat Zdrowia medical clinics currently consisting of 31 healthcare centres in six provinces. For this purpose we spent more than PLN 47 m. Access to the patient will allow us to go even one step further because it opens up a lot of synergistic business areas relative to our core business. In recent quarters we invested in three companies involved in clinical trials. We also got involved in a prospective telemedical project which we will begin to commercialise this year. We still have not said the last word in the area of new opportunities. We are constantly looking for innovative solu-tions and products that can improve the competitiveness of the whole Group and support the independent pharmacies.

The independent pharmacies are exactly where we focus our activities.The core business of NEUCA is and will be the distribution of medicines. In this area, especially in the segment of our own products we still see a lot of potential to improve results. There are over 450 products in our portfolio, annual sales exceed PLN 85 m, and the net result in this segment contrib-utes in more than 15% to the profi t of the entire Group.

Thanks to opening our company to new opportunities, we entered the year 2016 full of optimism. In addition to the distribution of pharmaceuticals and the sale of our own products, the profi t will be positively affected by our new patient-oriented business areas. We will take subsequent steps that will allow us to carry out the ambi-tious fi nancial goals, and to increase dividends. I am convinced that the results of our work will translate into a long-term value growth throughout the entire Group.


OU RM I S S I O N

We provide a better future to all independent pharmacies in Poland

For these reasons, independent pharmacists are NEUCA strategic customers. It is only them we pro-vide with the largest benefi ts as part of our comprehensive offer of sales, marketing, IT and fi nancial services. We have a dedicated individually customised service range for our strategic customers. In this way, we support the independent pharma-cies in building competi-tiveness and profi tability.

NEUCA considers independent pharmacists to be the pil lar of the pharmaceutical market in Poland. We believe that only independent pharmacists are able to guarantee security for the patients, inf luence on the development and stabil it y of the pharmaceutical market, and actually shape and implement the medicine policy of the state.

We are an honest partner NEUCA does not and will not have its own pharmacies. We will never compete with the independent pharmacies. We assure a long-term security of cooperation. We build close and lasting relations. Thanks to them, we can immediately respond to the emerging needs of all the independ-ent pharmacies in Poland.

We strengthen our fi nancial potential by benefi ting from synergies on the healthcare market. We develop our businesses directly and indirectly related to the core business of the Group which still is the wholesale distribution of pharmaceuticals.


NEUCA operates in many areas of the healthcare market, focusing on development of core operations, namely wholesale distr ibution of pharmaceuticals.

NEUCA operates in many areas of the healthcare market, focusing on development of core operations, namely wholesale distr ibution of pharmaceuticals .

MA R K E T S T R AT E G YO F T H E G R O U P

Our strategy is to grow the market share in the wholesale of pharmaceuticals to pharmacies and hospitals through organic growth and acquisitions which is further supported by synergy-oriented business activities.

Development strategies for particular areas are drafted individually based on business conditions prevailing in differ-ent markets. In those strategies there are also new groups of recipients and customers.

In parallel, we develop synergy-based businesses: managing our own brands of pharmaceutical products, developing IT systems, providing specialist advertising services for the health care market, delivering medical services through our consistently extended network of outpatient

care clinics, conducting clinical trials, providing products and services in the segment of telemedicine.

OUR STRATEGIC OBJECTIVES

1. THE DEVELOPMENT STRATEGY OF OUR CORE BUSINESS WHOLESALE DISTRIBUTION OF PHARMACEUTICALS

Our growth derives from concen-tration on our customers needs: providing top quality logistics ser-vices, an attractive range of products and services with the emphasis on promotional offers and compre-hensive business support services using the economies of scale. In addition, we deliver exceptional support for our strategic customers. We provide them with programs to build the skills necessary to compete in the market and to manage their pharmacies. We also offer a con-tinuously expanded portfolio of our own products giving them the higher margins and an attractive offer for their patients. What is more, we support the interests of independent pharmacists in different institutions and organisations by being actively involved in the struggle for the phar-macist professions independence and proper position in the health care system .

2. CORE BUSINESS STRATEGY

Our strategy is based on continuous effi ciency improvements through organizational and cost restructuring. We centralize back offi ce activities under shared services centres. We maintain the highest level of fi nancial

discipline by properly managing our stock as well as receivables and liabilities turnovers. We constantly improve our service. We implement and perfect warehouse and trans-port logistics automation solutions in order to increase the availability of products as well as timeliness and correctness of deliveries. Our goal is to assure optimal (compet-itive, shortest, adequate, conven-ient) delivery times. We improve our telemarketing activities in order to meet customer expectations in the area of order acceptance, active product consulting and com-plaints. We develop sales struc-tures adapted to needs in order to maintain direct contacts and strong and lasting relations with our customers. We prepare marketing programs, sales and trade market-ing tools, training programs and IT technologies in order to sup-port businesses in ever changing market and legal environments. We keep carrying out efforts increasing involvement of our employees and their integration in the process of conscious implementation of the Companys strategy and mission.

3. DEVELOPMENT STRATEGY FOR SYNERGY-BASED ACTIVITIES

This group of actions includes medical services we provide in our network of outpatient care clinics, as well as clinical trials. We took efforts aimed at providing products and services in the segment of

telemedicine. NEUCA Group is an innovative company we pursue a number of start-up projects and launch new solutions on the health market. It should be noted, however, that all those activities are only sup-plementary to our core business. They give us the fi nancial strength which allows to provide independ-ent pharmacists with additional benefi ts supporting their position in the market. Individual development strategies for those actions will not be described in detail. How-ever, in their context there is a new category of recipients of NEUCA Group products, i.e. the patients. The patients are fi nal benefi ciaries of all NEUCA activities medicines distributed and manufactured by the Company are addressed to the patients through the pharma-cists. Now, the patients became also direct targets of our actions. NEUCA Group for the fi rst time deals directly with the patients, ini-tiating dialogue and relations with them. They also became our key customers. A further development of synergy-based activities within the Group does not exclude new categories of customers. Following those activities NEUCA now pro-vides its strategic customers with combined total benefi ts.

It does not change the fact that independent pharmacists remain our strategic clients.

16 / MISS ION A ND STR ATEGY

All of our activities carried out under

the strategy are subordinated to sup-

porting the development of independent

pharmacies.

Values are the foundation of our Com-

panys identity - they are an underlying

basis of all our actions. Thanks to our

values we know how to delimit the space

where each of us fi nds his/her appropri-

ate place in the organisation.

The values determine the most benefi cial

directions and rules to follow by us all.

Our adherence to the values allows us

to operate effi ciently and ethically at the

same time.

OU RVA LU E S

Integrity

We act in a fair and responsible way in accordance with generally accepted principles of morality (social life). Our operations are based on the rules of corporate responsibility - both in relations with colleagues and outside the Group.

Respect

We acknowledge the autonomy and individuality of each co-worker and customer. In our conduct we take into account the uniqueness of each individual and we do not vio-late the dignity of others. By respect-ing people, we build our authority and value.

Customer Sa sfac on

We run the business to satisfy our customers in the best possi-ble way by actively identifying and addressing their needs, fostering good relations and supporting their activities on a current basis.

17 MISJA I STR ATEGIA /


The secret of our market success

are our employees and partners.

We create the culture of the organisation

based on values and competences

throughout the entire company

HU M A N R E S O U R C E SS T R AT E G Y

The secret of our market success lies in our employees and partners, their work involvement, ideas and determination in the implementation of those ideas. In 2015, once again, we surveyed our employees, with the support of an independent con-sulting fi rm. We do this to improve year by year working environment conditions through a comprehensive analysis and communication about survey results. We manage to keep a high rate of participation in the survey at 84%. The work involve-ment rate, showing the Companys ability to engage employees, rose by 1 percentage point as compared to the results from the previous year. We maintain a positive, upward trend line from the beginning of measurements in 2012 +12 percent-age points .

PARTNERSHIP IN BUSINESS

NEUCA Groups employees are the pillar supporting the growth and development of our organisation. We strive constantly to increase the commitment of our employees. We are convinced that it is with their tal-ent, experience and involvement we will be able to achieve our ambitious business goals and ensure sustaina-ble growth of our organisation.

In all our actions we are guided by the principle of partnership between two parties the Company and our people pursuing profi ts and bene-fi ts for the business while still being fair and honest with our employees.

EMPLOYEES

We value the individuality of our employees. We provide them with unique workplaces in order to allow them to continuously develop their competencies, expand their knowl-edge and acquire new experiences.

We propose our employees to ac-cept certain roles in the organisation thanks to which on the basis of their talents, skills and aspirations they could effectively implement objec-tives individually defi ned for each of them. However we give them space and freedom to act.

For our employees we create the environment of healthy competition while appreciating their efforts and investing in the best and the most outstanding ones. We want to keep everyone focused on expected deliverables and responsible for the development of his/her own compe-tencies. We require each employee to know our strategy and understand his/her role in the organisation

MANAGERS

We expect more from our managers. Members of our management staff are role models for the employees. It is the obligation of each manager to support the employees and take care of them.

Managers, when pursuing the busi-ness strategy, are responsible for the best possible use of talents and capacities of their subordinated employees.

It is a basis for synergies in human resources thanks to which the result of interactions between teams (employees with a variety of talents and competencies) is greater than the sum of individual efforts of their members.


Source: IMS Midas 09/2015, pharmacy market, ex-man prices

without discounts, popula on in 2014 according to Eurostat

100 200 300 400

MA R K E T T R E N D S

FA C T S A N D F I G U R E S

29.4%

AGINGSOCIETY

The process of aging of the Polish society impacts growth of the market of drugs. Prescriptions issued to persons from the plus 45 age group constitute ca. 80% of all prescrip-tions issued in the country. Therefore Poland is considered as belonging to the group of Euro-pean countries where the market growth may turn out to be the most dynamic.

AMENDMENTS TO THE PHARMACEUTICAL LAWREGULATIONS

Changes to the Polish regulations resulted in lower drug spending. In addition, new laws reduced the availability of drugs for patients due to more limited warehouse stocks and increasing exports of pharma-ceuticals.

In terms of the size of the local pharmaceutical market Poland ranks 6th in Europe.

Polish market is two times smaller than the Spanish one where there is a comparable population and slightly larger than the Belgian or Swiss markets with populations several times smaller. As far as the market size per capita is concerned, Poland occupies one of the last places in Europe, with average spending of EUR 120 per year. Average spending in Poland in relation to the year 2014 increased by ca. 5.3% (ca. 120 vs. 114).

SEARCH FOR NEW AREAS

There is a rising need for business diversifi cation as well as a growing trend to search for new operating areas on the healthcare market. Entities operating in the industry are looking for services complementary to their core business activities.

BETTER HEALTH

AWARENESS A rising health knowledge leads to changes in consumer behaviour models which may contribute to a growing interest in diet products and high-margin OTC drugs.

The value of the pharmaceutical distr ibution market in 2015 (pharmacy market): PLN 26.53 bn

Market shares in the 4th quarter 2015.

SWITZERLAND

GERMANY

IRLAND

FRANCE

FINLAND

SWEDEN

AUSTRIA

BELGIUM

ITALY

NORWAY

SPAIN

UNITED KINGDOM

PORTUGAL

HUNGARY

NETHERLANDS

POLAND

Pharmacy market value per capita in 2015 ()


OR G A N I S AT I O N A LS T R U C T U R E ESALEWHOLESESESES

TIESESESESESACTIVITIETIEEETIETIEEEEEECompanies handling the distribution of drugs to pharmacies and health-care facilities.

TMANAGEMEMENTTEM TTEMEM OF OUOUR OWNNOU NOUOU

BRRANDRRRANDSANDANDANDCreating and developing new pharmaceutical brands

EDEEEED SERVD SDD SDDD SD SSHARESHAREESHAREEEEESHARESHAREDED SERVICESD SERVIDDD SERVD SERVIDDDDDEEEREREEEEEEDDDDDDEEE ES EESESESRENTRTRRREEEE CENTNTNTNTIT CEAND III TRECENTRCE TRCECE TRTRANANANAN EEEE

Developing IT systems for pharmacies and providing marketing services for the healthcare market.

SERVICES ON THE HEALTH MARKET

Telemarketing, accounting services and IT services for the Group..

Services for the patients

OGISTICS SSSSLOGOGOGOGTransport and logistics services.

NEW NNNNNNNNNNBUSINENESSESNENENEBBBUBU ESESESES

CLINICCLINICLINICALLINICLINICCLCLCLTRIALS

-COMMERCOMCOMCOMCOM ERCERERER-C-C-C-C-CO-CO-C-C CECCCCCCCE----------E-E-EE-E-EE-E---EEICAL MMEDICICM ICICMM

NT CARE OUTUTPATIENTNTUT NTNTUTUT

SCLINICSSSS

MEDICCICCCLEEMEMEEMEMEEE NENNTTELLT LLTT

OURR OWOWN MEDIACreating magazines and programsto promote pro-health actions.

EFFECTIVE AS AT DECEMBER 31, 2015

24 / DISTR IBUT ION OF PHA RMACEUT ICA LS

DISTRIBUTION OF PHARMACEUTICALS

We pursue margin-oriented initi-atives through an effective imple-mentation of the pharmaceutical product management system in different therapeutic categories. NEUCA Group provides services to 600 manufacturers. Our com-mercial offer includes ca. 17,000 pharmaceutical products and medical materials selected on the basis of the market demand. For this purpose, the market has been classifi ed and divided in terms of therapeutic groups, into categories managed by a highly specialized group of managers.

In our regular assor tment range promotions are of large impor tance.

COMMERCIAL OFFER

ca. 16,500PRODUCTS

WORKING WITH

600 MANUFACTURERS

NEUCA Group is the largest wholesale distr ibutor of pharmaceuticals in Poland. In 2015, we had an almost 30% market share which means that almost every third preparation sold to patients in the pharmacies originated from NEUCA Group.

1 FOR 3PREPARATIONS SOLD

AT THE PHARMACYDELIVERED BY

NEUCA

DI S T R I B U T I O N O FP H A R M A C E U T I C A L S

The assortment belonging to par-ticular groups is worked out through a verifi cation of actual market needs with the emphasis on the analysis of costs and benefi ts for the distributor, for the pharmacy and for the patient as well as of the manufacturers market position. Such a precise breakdown allowed to identify one particularly important group of products, the so-called B Category including about 3,500 preparations and generating the highest mar-gins for the organisation and for the customers. To contribute to a rising share of such assortment in sales

a number of activities and additional projects are undertaken, such as Partner+ and ZYSK+ programs or building a framework for the selec-tion of preparations for marketing campaigns based on B category. Thus it is possible to arrive at a prod-uct portfolio which is optimal for the customer/patient and at the same time permits to maximise benefi ts in the entire supply chain.

Monthly over 11,000 pharmacies use promotional offers of our trading companies. Thanks to partner relations, each month approximately 200 manufacturers, representing 3,900 reference items, are actively involved in marketing activities of the Group.These services providing numerical as well as weighted distribution enable to produce competitive advantages by increasing market shares of selected products in different therapeutic categories.

2726 / DISTR IBUT ION OF PHA RMACEUT ICA LS / DISTR IBUT ION OF PH A RMACEUT ICA LS /


In 2016, our activities will be primarily geared towards an even more active support for selling to the patients. We want to increase the number of pharmacies where ZYSK+ Benefi t motivation systems and pulse zone management solutions are already in place. We also expect to launch new tools that will allow the owners to reach even higher levels of benefi ts .

Thanks to the services delivered by NEUCA Group under ZYSK+ pro-gram the pharmacies:

obtain additional fi nancing in the form of rebates received on purchases of preparations from a special dedicated list,

have the opportunity to generate unlimited benefi ts depending only on the level of their involvement in the program,

receive an effi cient and automatic system to motivate their employ-ees in the form of prepaid cards onto which selling bonuses are transferred (ZYSK+ Benefi t),

are given support in the devel-opment of sales competences of their staff,

get access to tools and solutions used in chain pharmacies,

are granted rebates for pur-chases of the Pharmacist Brand

ZYSK+

ZYSK+ is a program for independent pharmacies to suppor t them in their sales to the patients and to contribute to the pharmacy profitabil it y growth ZYSK+ was designed so that the suppor t granted to the pharmacies contributes to their success in the market

preparations (the only program offering rebates for APTEO, PLUS DLA SKRY and GENOPTIM products),

and have guarantees to stay fully independent.

2015ZYSK+

1,000

PHARMACIES

We try to properly and timely respond to the needs of our customers and to ever changing market environment.

Pharmacists cooperating with NEUCA Group are offered support and development already at their education stage (Pharmaceutical Faculties). We accompany our customers at every stage of the development of their pharmacies, while ensuring the loyalty, knowledge, experience and a range of business solutions.

In NEUCA Group, behind each of our activit ies there is always the Mission of the Company: We provide a bet ter future to all independent pharmacies in Poland.

WE S U P P O RT I N D E P E N D E N T P H A R M A C I E S


PAT I E N T S A S S I S TA N C E P R O G R A M

Patients Assistance Program is implemented in almost 4,000 pharmacies and medical clinics. PAP of fers suppor t for pharma-cists in fulf i l l ing their mission including pharmaceutical care and actions targeted on patients, including preventive health care, education and improvement to the qualit y of l ife.

In accordance with its underlying assumptions, it has become the most advanced program out of the entire portfolio of support programs contributing to active and dynamic development of the pharmacies.

PARTNER+

To achieve its primary objective refl ected in the motto We support the development of Your Pharmacy, the program covered areas which are the most critical for pharmacy operations, providing the participating customers with access to:

a set of advanced tools and services that contribute to a continuous growth in margins generated by the pharmacies and an improving profi tability of their operations,

professional business consulting services provided by a dedicated comprehensive team of coordinators whose constant care is focused around developing business acumen of pharmacists working in the pharmacies,

comprehensive support permitting the pharmacies to raise business effi ciency in areas

In 2016 we will help pharmacists and educate the patients in the following health problems:

cardiovascular diseases, respiratory diseases, movement dysfunctions, diabetes and obesity, cutaneous conditions, depressions and mental disorders, urinary incontinence as well as other

mass disorders.

Mobile health clinics will appear all over Poland to improve awareness and knowledge of patients across the country.

PA RT N E R+ A N D PA RT N E R

Par tner+ is a new par tnership program of suppor t for independent pharmacies which was f irst of fered by NEUCA Group in the second half of 2014.

such as: selection of the optimal width of the range available in the pharmacy, pharmacy inventory optimisation, price management for products sold by the pharmacy, lawful marketing and promotional activities directed to patients or pharmacy display management,

an additional source of revenues resulting from a synergy-based cooperation as a part of trilateral relations pharmacy supplier manufacturer and from other synergies achieved in other services.

The strategy for 2016 provides for a further dynamic development of Partner + program both in terms of the number of participating pharmacies and of its shape.

PARTNER

Partner + program will be be supplemented by services provided under Partner module program ( former name wiat Zdrowia Partner). Currently, dedicated units are established to draw up a timetable for the

implementation of the program. The new revised formula will be aimed at both customers participating in the program in its existing form as well as new customers interested in joining the program.

The program is also aimed at the integration and consolidation with other healthcare entities. Through cooperation with wiat Zdrowia medical clinics and non-govern-mental organisations we build a new dimension of health educa-tion. In 2015, PAP was enriched with free mobile diagnostic tests. More than 6,000 spyrometric tests were made. About 6,500 patients were diagnosed against the diseases of the cardiovascu-lar system.There is a wide interest in the program from pharmacists and patients.

2015PARTNER+

over 350PHARMACIES


Last year NEUCA Group consist-ently strengthened its position in the market, developed its activities and improved its range of products and services for the customers. By increasing the scale of operations, the Group got a stronger bargain-ing position in relations with its business partners which directly translated to more effective imple-mentation of the mission to provide a better future to all independent pharmacies in Poland. In 2015 we completed sales to nearly 850 public and private hos-pitals. In the segment of non-phar-macy sales we reach 2,500 entities (doctors offi ces, hospices, prisons, social care establishments, etc.).

Through its subsidiaries: Farmada Transport, NEUCA Logistyka, NEKK and INFONIA, besides core business activities, we provide logistic and marketing services such as:

national and international transport,

warehousing lease of space for

pharmaceutical wholesalers, call centre, helpline, a wide range of promotion and

marketing services from leafl ets to media campaigns,

tailored services developed according to the needs of the client and combining all the above elements.

More than 20 manufacturers entrusted NEUCA with a variety of such projects. Among them there are the key suppliers of medicines on the market, including: Sanofi , Novartis, GlaxoSmithKline, AstraZeneca, Eli Lilly, Boehringer Ingelheim, Astellas and many others.

NEUCA has many years of experience in designing and implementing modern distr ibution solutions.

We repor ted PLN 6.95 bn in revenues generating sales 6% higher than in 2014. In 2015, we were reaching the market and customers through structures including 90 sales representatives.

OU T S TA N D I N G C U S TO M E R S E R V I C E

LO G I S T I C S S E R V I C E S F O R T H E M A N U FA C T U R E R

One of the most important strate-gic directions, and one of the key NEUCA values is customer satisfac-tion.

We continue advanced works on the CRM project. For NEUCA it is primarily a way to implement the strategy and mission of the Group aimed at preparing a dedicated customer service best suited to the needs both in terms of the range of offering as well as the quality of service.We develop the project named OTIF (on time in full) perfectly supplementing the order delivery customer satisfaction indicator one of the key processes for the organisation. We want to improve

it and implementation of the process quality measurement from the perspective of the customers needs and satisfaction. This approach ensures reaching one of the strategic objectives, namely providing services individually tailored and agreed with each of the customers. Throughout the entire 2015, we worked on the continuous improvement of customer service processes, both through on-going operational work based on satisfaction surveys and internal quality level ratios as well as new projects which in con-junction with the CRM project will bring a signifi cantly noticeable improvement in the quality of service. All of these activities will be continued in 2016.

HAVING THE SUPPORT OF INDEPENDENT PHARMACIES IN THE DEVELOPMENT OF THEIR BUSINESS IN MIND, AT THE END OF THE YEAR WE INTRODUCED A PHARMACY ADVISOR POSITION IN OUR SALES STRUCTURES. HIS/HER TASK IS TO SUPPORT THE RESALE OF SELECTED PREPARATIONS AS WELL AS TO HELP PHARMACIES IN THE DEVELOPMENT OF COMPETENCES.

2015 revenues

PLN 6.95 bn 6% growth


Synoptis Industrial works in a variety of business areas for internal needs of NEUCA Group as well as provides the following external services:

manufacturing and packaging tablets and capsules,

importing products from outside the European Union,

laboratory batch quality control, related to marketing authorisa-

tions in the EU, manual repacking of products for

the industries listed below: cosmetic, pharmaceutical, clinical trials.

We use the latest technology solu-tions in the processes of manufac-turing, packaging and quality system management in order to deliver pharmaceutical products and dietary supplements that meet the stringent requirements of the European Union.

Our quality policy is based on the guidelines which may be found in the European GMP (Good Manufactur-ing Practice) and ICH (International Conference on Harmonisation).

We follow PDCA (plandocheckact) philosophy which means we are an organisation based on learning and constant improvements to the quality of processes and delivered services.

Factory of

Synop s Industrial

in Swarzdz

Synoptis Pharma is a dynamically growing technology company. It manufactures and registers drugs leveraging on our core competencies

REGISTR ATION

High-class professionals respon-sible for the registration of our products ensure their compliance with the requirements imposed by relevant authorities:Chief Sanitary Inspector, Offi ce for Registration of Medicinal Products, Medical Devices and Biocidal Prod-ucts and the Chief Pharmaceutical Inspector. Registration dossiers prepared for medicinal products, food supplements, cosmetics and medical devices are developed in accordance with applicable Polish and European laws and guidelines. Thus, the medicinal products are registered in accordance with the national as well as European proce-dures.

REIMBURSEMENT

Research & Development Offi ce is responsible for a reimbursement of our medicinal products. It prepares all the documentation including requests for offi cial pricing and for entering the products on the reim-bursement lists.

PHARMACOVIGIL ANCE

Taking care for the health and safety of patients, we discharge our pharmacovigilance obliga-tions. We follow applicable internal procedures and national as well as European laws. Our specialists col-lect, evaluate and draw conclusions from reports on possible adverse reactions in order to continuously monitor risk and benefi ts.

QUALIT Y ASSUR ANCE AND CONTROL (QA/QC)

We work only with the manufacturing sites which, for the sake of the highest quality and safety of their products, have in place GMP, HACCP, GHP or ISO systems depending on the status of their manufactured products. We supervise and monitor manufacturing processes through a qualifi cation of raw materials suppliers and quality audits at subcontractors. We test all our products before marketing. We care about the quality and safety of all offered products throughout their entire life which is why we carry out stability tests not only for medicinal products, but also for food supple-ments and other products having the food status.In 2015, we accepted 1,086 deliver-ies of APTEO, PLUS DLA SKRY and GENOPTIM products, i.e. for almost 27,000,000 products. All deliv-eries were thoroughly checked by QA/QC team in Otarzew. In the same time we sold almost 29,000,000 pieces. Only a small percentage of those products had quality defects. The complaint ratio for the year 2015 amounted to 0.02%.

Synoptis Industrial is the first manufacturing company of NEUCA Group which started operations in the fourth quarter 2014 .Its mission is to offer a full portfolio of con-tracted production services for the pharma-ceutical industry.

Competencies

Synop s Pharma

36 / DISTR IBUT ION OF PHA RMACEUT ICA LS 37 DISTRIBUTION OF PHARMACEUTICALS/

We provide the pharmacies with interesting

benefits as part of the Pharmacist Brand offering.

74 44 335PRODUCTS PRODUCTS PRODUCTS

PLUS DLA SKRY cosmetics were created in collaboration with renowned Polish cosmetic labo-ratories which guarantee a high quality of the products. For manu-facturing we use modern ingredi-ents and proprietary formulations while maintaining affordable prices for the fi nal consumers.Currently, the range includes over 70 products. In 2015, we extended this offer and introduced new lines of pharmacy sunbathing cosmetics and MEN PLUS Solutions for mens skin care.

For more than 4 years we have been continuously working for success of GENOPTIM brand professional brand of genericdrugs. The brand offering allows pharmacists to combine their professional mission with a stable business. Meanwhile, the patients are offered an effective and safe therapy at a price that will allow them to purchase prescriptions. Genoptim brand currently com-prises of 44 products in thera-peutic categories which are the most popular on the market such as: cardiovascular, digestive, nervous, urological, ophthalmo-logic and antibiotics. The brand expanded its range by subse-quent hospital products.

We also gradually expand the portfolio of APTEO brand by new preparations. APTEO is the brand created for pharmacists in response to their most important needs. Its broad portfolio includes dietary supplements, general consumption items, OTC medicinal products, medical devices, care products as well as diagnostic and dressing materials.Under fi ve sub-lines of the brand in 2015 we launched 58 new products while maintaining their high quality and attractive pricing.

MPLN

MPLN

60

43%

2015

2014

GROWTH

2014:2015SALESOF OUR OWNPRODUCTSTO PHARMACIES

85

G O

B

O

L

G


640 deliverytrucks

57 millionkilometres

AUTOMATICCENTR ALWAREHOUSES4

TR A D I T I O N A LA N D M O D E R N M E D I A

OU R LO G I S T I C S S E R V I C E

We build our relations with the pharmaceutical market through a consistent communication using tradit ional media magazines:Magazyn Aptekarski, wiat Zdrowia, Moje Zdrowie and modern media NEUCAs website, Pharmaceutical and Medical Por tal.

In 2015, we completed over 4.5 million deliveries of pharmaceuticals to over 13,000 pharmacies, 2,000 hospitals and entities from health-related areas.

is a monthly magazine aimed at pharmacists and medical doctors, it is known and read by 86% of phar-macists in Poland.

once again was a leader among national magazines about health for patients, reaching over a million readership .

is a monthly magazine for patientsfocusing on issues related to agingsociety.

Neuca.pl investor relations websiteis a laureate of the competition Issuers Gold Website for the best investor relations in the Web.

is a source of medical knowledge for pharmacists, medical doctors and patients.

For that purpose we used our logistic structure: 15 warehouses and our fl eet of 640 delivery trucks with the last-year mileage of ca. 57 million kilometres. More than 80% of deliveries are carried out from high-performance automated central warehouses.

In 2015, we commissioned a subse-quent central warehouse in Wrocaw, where procedures were imple-mented that contribute to its further development, including automation.

In 2015, we implemented a mobile system that provides many benefi ts to all independent pharmacies, includ-ing but not limited to quick posting for deposits, keeping track of each consignment, electronic delivery con-fi rmation. In addition, we use a special system to monitor temperature on-line.

Stable quality bases of warehouse processes which we achieved through the implementation of the 5S are fur-ther developed in accordance with the Lean philosophy by implementing statistical tools (among others tact-time) we produced a non-investment

capacity increase for the deliveries (completion), the optimal load of the existing infrastructure and we continue the trend of quality improvements. The warehouse in Toru as the fi rst one reached the level of six sigma quality.

Efficient and ef fective operations of the Group are possible following the consolidation of services which are shared throughout the entire organization. We carry out our strategy for back of f ice centralisation through the Centre of Modern Services for NEUCA Group entit ies. The Centre includes the Shared Services Centre (CUW) and IT Centre (CIT ).

OU R B U S I N E S S S U P P O RT U N I T S

CIT delivers complex and broad IT services, in particular in the following areas:

acceptance of development directions for IT business solutions used in NEUCA Group,

implementation of innovative IT solutions, improving certain business processes,

development of software contributing to NEUCA Group business objectives,

IT strategy and architecture , support for the users, managing business applications, managing the IT infrastructure and assuring

continuity of IT systems operations.

CUW provides comprehensive services to NEUCA Group companies based on uniform standards in the following shared areas:

accounting and fi nance, monitoring of receivables and credit control, human resources and payroll, administration and investments, controlling.

Starting from 2013, CUW provides services not only to pharmacy entities but to entities from other industries too. Comprehensive services such as bookkeeping, including HR and payroll services, as well as additional services in the form of man-agement information and business and organisa-tional consulting, are offered.

IT CENTRE SHARED SERVICES CENTRE

SUPPORTUNITS

MORE THAN 300SPECIALISTS


42 / SERV ICES FOR THE HE A LTH M A RK E T

SERVICES FOR THE HEALTH MARKET

4544 / SERV ICES FOR THE HE A LTH M A RK E T SERV ICES FOR THE HE A LTH MA RK E T/

The year 2015 was a period of intense development of the mul-ti-channel pharma-marketing offer by NEKK agency. Thanks to NEUCA Group new acquisitions NEKK widened is potential reach by subsequent target groups, such as medical doctors, patients of outpatient care clinics, nurses, thus creating a market advantage unattainable for other pharma-mar-keting agencies. As a result of these activities, the clients portfolio and the number of conducted projects grew signifi cantly the group of reg-ular customers (Angelini, Herbapol Pozna, Bioton, Roche, Bayer, USP) was joined by new entities: Stada, Lohmann, BeOrganic, Lifescan, Voerwag, Sandoz. In addition to the quantitative changes the agency made a qualitative leap, provid-ing strategic, design and software

FOR THE PHARMACEUTI-CAL INDUSTRY

The company continued to develop advanced reporting and commu-nications platforms for the phar-maceutical market. This allowed NEUCA Group to launch new business offers for the independent pharmacies. In 2015, the IT project for B2B2C channel was completed. This is the fi rst such complex pro-ject carried out in NEUCA Group it is oriented on consumers and aimed at supporting businesses of independent pharmacies. The integration platform produced last year reached its full produc-tion capacity and thus allowed to faultlessly identify products in the market programs. It enhanced signifi cantly the quality of reporting and settlements, thus increasing satisfaction of NEUCA Groups cus-tomers .

The agency also took part in key pro-jects for NEUCA Group, e.g. communication about activities of the Association Leki Tylko z Apteki, a number of new implementations and rebranding of the portfolio of its own products, loyalty and promo-tional actions targeted to the entire pharmacy market in Poland.

Important developments in 2015 new pharma-marketing tools in

NEKK portfolio (Pharmpedia.pl, communication to medical doc-tors),

expansion of the team by Internet and medical marketing compe-tencies,

a very high percentage of won tenders (more than 80% of all tenders in which the agency took part).

ILC is an IT company from NEUCA Group established in 1991. It develops software and implements IT solutions in enterprises and companies related to the pharmaceutical, medical and sales & service industr ies.

support highly rated by pharmaceu-tical manufacturers, and translating directly into sales effects for the promoted products.

NEKK carries out NEUCA Groups strategy and participates in its intensive development, implement-ing pharma-marketing projects based on the new tools and com-petencies:

Pharmpedia.pl a platform for webinars to reach pharmacists and medical doctors with the interactive and personalised edu-cational or promotional contents,

Pfm.pl specialist portal enriched by new, professional contents and functionalities,

multimedia publications replacing traditional printed materials.

SE R V I C E S F O R T H E H E A LT H M A R K E T

FOR THE RETAILINDUSTRY

In the retail industry ILC continued working with its strategic custom-ers by carrying out large develop-ment projects.In 2015, a new sales platform was commenced to be sold and imple-mented. This product from the very beginning is acclaimed for ease of deployment, low system require-ments, versatile functionality and thoughtful architecture adapted to diverse needs of the retail market.

ADVERTISING SERVICES MULTI-CHANNELAND MULTI-TOOL PHARMA-MARKETING

MEDICAL OUTPATIENT CARE CLINICS

In 2015, NEUCA MED acquired subsequent medical outpatient care clinics. Currently, they make up the network of 31 clinics in 6 provinces where the services are provided for nearly 80,000 patients. Every month we give ca. 25,000 specialised advices under the outpatient spe-cialist care. We also provide services for 17,000 employees in the fi eld of occupational medicine. We work with insurance fi rms (such as PZU, ALLI-ANZ, MEDICA, SIGNAL, GENER-ALI), and as part of the cooperation with medical operators (LUX MED, MEDICOVER, ENEL-MED, POLMED) we serve patients with medical care packages in those companies. From this year we also have our own IT system to support outpatient care clinics Mediporta which is also made available on commercial basis to other medical entities. In 2016, we expect a further devel-opment of our network of outpatient care clinics.

CLINICAL TRIALS

In 2015, the Company acquired three companies operating on the market of clinical trials: Clinport, Bioscience and Medica Pro Familia. In aggregate we operate 8 centres for clinical trials in Poland.

TELEMEDYCYNA

Last year, the Group was joined by Diabdis, a company carrying out a telemedical diabetology project which we will start to commercialise in 2016.

E-COMMERCE

In mid-January 2016 the Group was enlarged by Ortopedio.pl which is a sales platform, dedicated to dis-tributing orthopaedic and rehabilita-tion equipment..

SERVICESFOR THE PAT IENTS

4746 / SERV ICES FOR THE HE A LTH M A RK E T SERV ICES FOR THE HE A LTH MA RK E T/

We develop a coherent strategy around access to knowledge, products and services for the patients.

We allow patients to access high-quality information and knowledge (care in outpatient care clinics).

We facilitate access to health care in order to improve the quality of life and a sense of security among patients. By creating value for the patients through a number of synergies, we strengthen the relationship with our strategic clients independent pharmacies.

Thanks to the synergies, we ex-pand the total benefi ts we offer to independent pharmacies, thus increasing their competi-tiveness.

We provide access to the medical products and services (own prod-ucts and clinical trials.

We improve the quality of life and solve health problems of the patients (telemedical solutions).

The mission of the Neuca group in the patient area

We achieve a positive fi -nancial effect on the level of margins.

48 / FINA NCIA L RESULTS

F I N A N C I A L R E S U LT S

GROWTH

4

GROWTH

19%%

NET DEBT

PLN M

PLP NN M

PLN M

GROWTH

GROSS PROFITON SALES

PLPLNN MM

EQUITY

PLN M

NET PROFIT*

1

GROSS PROFIT*

* result before one-off items

50 / FINA NCIA L RESULTS 51/ WYNIK I F INA NSOWE /

WORKING CAPITAL TURNOVER 2015 2014

Inventory turnover cycle /1/ 56 50

Receivables turnover cycle /2/ 48 46

Liabilities turnover cycle /3/ 100 89

Operating cycle /1 + 2/ 104 96

Cash conversion cycle (4 3) 4 7

DEBT R ATIOSDECEMBER 31,

2015

DECEMBER 31,

2014

Total debt ratio 0,80 0,82

Debt/equity ratio 4,08 4,53

Fixed capitals to fi xed assets ratio 1,10 1,23

Short-term debt ratio 0,76 0,75

Long-term debt ratio 0,05 0,07

STRUCTURE OF THE BALANCE SHEET (IN PLN 000)DECEMBER 31,

2015

DECEMBER 31,

2014

Fixed assets 589 502 22% 517 888 20%

Current assets 2 091 874 78% 2 048 689 80%

Total assets 2 681 376 2 566 577

Equity 528 189 20% 464 424 18%

Liabilities and provisions for liabilities 2 153 187 80% 2 102 153 82%

Tota l equi t y and l iabi l i t ies 2 681 376 2 566 577

RATIO CALCUL ATION METHODS:gross sales margin gross profi t on sales/sales revenues

EBITDA margin EBITDA for the period/sales revenues

margin on operating activities (EBIT) profi t on operating activities for the period/sales revenues

net margin net profi t for the period/sales revenues

return on assets (ROA) net profi t/average assets

return on equity (ROE) net profi t/average equity

inventory turnover cycle (closing balance of inventory/sales revenues) x number of days in the period

receivables turnover cycle closing balance of trade receivables/sales revenues x number of days in the period

liabilities turnover cycle (closing balance of trade liabilities/sales revenues) x number of days in the period

total debt ratio (long- and short-term liabilities + provisions for liabilities)/total equity and liabilities

debt to equity ratio (long- and short-term liabilities)/equity

fi xed capitals to fi xed assets ratio (equity + long-term liabilities)/fi xed assets

short-term debt ratio short-term liabilities/total equity and liabilities

long-term debt ratio long-term liabilities/total equity and liabilities

5352 / FINA NCIA L RESULTS / FINA NCIA L RESULTS /

WE MAINTAIN POSITIVE PROFITABILITY RATIOS

In 2015, NEUCA Group recorded sales revenue growth of 6% and the pharmacy wholesale market rose by 5%. The combined share of NEUCA Group companies in the domestic pharmaceuti-cal wholesale market in 2015 amounted to 29.3% (4Q 2015).

Our gross sales margin equalled 9.75% and was lower as com-pared to 2014 by 0.83 p.p. The increase in profitability was due to synergies in connection with the acquisition of the wholesale companies of ACP Pharma S.A. Group. The increase in sales profitability resulted also from improvements in the efficiency of trade marketing activities, from a rising importance of the services provided to producers as well as from a growing share of our own products and from acqui-sitions of entities from new business segments. In the fourth

WE IMPROVE FINANCIAL FLOWS

In 2014, NEUCA Group generated EBITDA + PLN 148.8 m and obtained positive cash fl ows from operating activities in the amount of + PLN 180.4 m. These funds were used among others for the acquisition of shares in subsidiaries PLN -38.5 m and for purchases of intangible assets and property, plant and equipment PLN -31.4 m. On its fi nancial activities the Group generated negative cash fl ows in the amount of PLN -91.9 m. Cash fl ows related to the repayment of loans and borrowings totalled PLN -23.8 m, to the repayment of fi nancial lease liabilities PLN -11.9 m, and to the repayment of interest PLN -11.9 m. Additionally, the Group allocated PLN -26.6 m for the purchase of its own shares and the payment of dividends PLN -19.2 m. In 2015, there were no threats for NEUCA Groups ability to service its liabilities.

WE IMPROVE LIQUIDITY

In 2015, there was an increase by about 11 days in the turnover of liabilities and extension of the operat-ing cycle by 8 days which translated into a cash conversion cycle being by 3 days shorter than in 2014.

quarter 2015 our margin equalled 10.06% and was higher as com-pared to 2014 by 1.136 p.p.

In 2015, cost of sales amounted to PLN 364.1 m and were higher than in the same period last year by 10%. .

In 2015, overhead expenses reached PLN 172.4 m and were higher by 5% as compared to 2014 (PLN 164.1 m in 2014). The increase in operating costs is the result of the combination with ACP Pharma Group and of the devel-opment of business areas other than the pharmacy whole-sale business. A small increase in the cost of sales and in overhead expenses in the fourth quarter only (2.1% yoy) in relation to the increase in gross margin (9% yoy) is the result of a significant increase in cost effectiveness in the pharmacy wholesale area.

2015

KEY FINANCIAL DATA 2015 4Q 2015 2014 4Q 2014% CHANGE DURING THE

YEAR

% CHANGE DURING THE 4TH QUARTER

Sales revenue 6 945 703 1 714 416 6 568 700 1 779 689 6% -4%

Gross profi t on sales 677 034 172 514 585 605 158 933 16% 9%

Gross sales margin 9,75% 10,06% 8,92% 8,93%

Sales expenses 364 192 95 435 331 140 92 314 10% 3%

Overhead expenses 172 402 44 678 164 114 44 903 5% 1%

Other operating revenues 16 431 3 572 14 118 5 012 16% 29%

Other operating expenses 37 480 11 315 27 856 7 281 35% 55%

Profi t on operating activities 119 391 24 658 76 613 19 447 56% 27%

Margin on operating activities 1,72% 1,44% 1,17% 1,09%

EBITDA 148 810 32 138 104 536 28 640 42% 12%

EBITDA margin 2,14% 1,87% 1,59% 1,61%

Financial revenues 15 920 7 192 19 240 7 560 17% 5%

Financial expenses 14 134 3 590 17 165 4 315 18% 17%

Other profi t (loss) on investment activities - -

Gross profi t 121 177 28 260 78 688 22 692 54% 25%

Net profi t 101 496 23 116 93 357 34 110 9% 32%

Net profi t margin 1,46% 1,35% 1,42%

Return on assets 3,87% 4,16%

Return on equity 20,45% 21,34%


Financial expenses,operating result and profi t

WE OPTIMISE OPERATING AND FINANCIAL EXPENSES

In 2015, financial expenses decreased compared to 2014 by 18% and amounted to PLN 14.4 m. The main reason for the decrease in financial expenses was a more limited use of external financing (primarily bank loans) and a reduction in financing costs (margins). In 2015, finan-cial revenues decreased by 17% and amounted to PLN 15.9 m. The decrease was mainly due to a decrease in market interest rates. In 2015, other operating

revenues rose to PLN 16.4 m from PLN 14.1 m in 2014. A princi-pal item under other operating revenues was the reversal of impairment write-offs on fixed assets (PLN 8.2 m). Other oper-ating expenses decreased by 35% in 2015 to PLN 37.5 m . Main items under the other operating expenses include: costs related to shortages and liquidation of assets (PLN 14.6 m) as well as created impairment write-offs on receivables (PLN 10.9 m).

SALES REVENUES (IN PLN 000) 2015 2014 ZMIANA %

NEUCA GROUP 6 945 703 6 568 700 6%

NEUCA SA 6 801 585 6 250 478 9%

MMPLNLNN

EBITDA

111111111111111111111111111111111111111111111111 000000050555555555555555555555555555555055555555555555555555555Rresult before one-off items

The effect of the changes to the a/m value was an increase in operating profit in 2015 to PLN 119.4 m (56% yoy) which trans-lated into an increase in the operating profitability by 0.55 p.p. In the fourth quarter 2015 the operating profit rose by 27% to PLN 24.7 m.


Description of one-offfactors and items

We actively manage our operating risk

In 2015, besides the one-off items listed under the Description of key economic and financial figures there were no other extraordinary items with a significant impact on the financial result of NEUCA Capital Group.

RISKS ASSOCIATED WITH THE MACROECONOMIC CONDITIONS

An economic slowdown in Poland may contribute to a lower growth rate of the pharmaceutical market, and ultimately may also adversely affect our sales. In particular, sales growth is likely to deteriorate in the segment of OTC drugs where the Group earns a higher gross sales margin which as a consequence could lead to worse fi nancial results. The Group monitors conditions on the pharma-ceutical market and its development perspectives on an ongoing basis and accordingly undertakes appro-priate adaptations and adjustments corresponding with the anticipated demand for goods, products and services we sell.

GROWING COMPETITION RISK

Any possible decrease in average margins earned on the pharmacy wholesale market may adversely impact the Groups fi nancial results. The uniform sales structure which is currently in place in the entire Group combined with centralized man-agement of commercial terms and conditions should enable to actively manage levels of margins earned by all the Groups Companies.

LIQUIDIT Y GAP

The need to finance operat-ing activities with bank credits exposes the Group to liquidity risk if such external funding is lost. The Group optimises work-ing capital turnover on a current basis and keeps significant liquidity reserves in the form of unused credit limits. The Group did not either have any dif ficul-ties in being granted and main-taining credit limits.

FINANCIAL POSITION OFPHARMACIES

Too intense competition among the pharmacies (growing number of chain pharmacies), the dete-rioration of access to fi nancing and a rather slight rise in eco-nomic growth and the changes introduced by the new Act on the reimbursement of medicines may worsen the fi nancial situation of pharmacies and limit their ability to service their obligations which might negatively affect activities of NEUCA Group. The Group actively monitors the fi nancial position of our customers and offers them all necessary fi nancial, IT and market-ing support.

LEGAL CHANGES WITH REGARD TO OFFICIAL MAR-GINS, INCLUDING STAND-ARDS AND REGULATIONS APPLICABLE IN THE EURO-PEAN UNION

The new Act on the reimbursement of medicines (Act of May 12, 2011 on the reimbursement of medi-cines, special foodstuffs and med-ical devices) introduced signifi cant changes in the legal environment of the Group. The Act provides among others for a reduction in the wholesale margin for reimbursable medicines to 5.66% in 2013 and 4.76% in 2014 and new retail mar-gins, as well as a total ban on the use of any incentives when selling reimbursable medicines. Those le-gal changes may still largely affect the fi nancial position of pharmacies and pharmaceutical distributors. A drop in the margins adversely affects the entire pharmaceutical industry, and smaller, independ-ent pharmacies in particular. The decline in wholesale margins on reimbursable medicines drastically limited the profi tability of this seg-ment within the Group. The legal changes apply to all entities on the market, thus they do not worsen the Groups competitive position.

IMPACT OF ONE-OFF ITEMSON EBIT, EBITDA, NET

2015 4Q 2015 2014 4Q 2014% CHANGE DURING THE

YEAR

% CHANGE DURING THE 4TH QUARTER

EBIT 119 391 24 658 76 613 19 447 56% 27%

EBITDA 148 810 32 138 104 536 28 640 42% 12%

One-time items (gross) 1 000 0 7 537 2 500

restructuring expenses 1 000 0 7 537 2 500

One-time items (net) 810 0 6 105 2 025

restructuring expenses 810 0 6 105 2 025

Adjusted EBIT 120 391 24 658 84 150 21 947 43% 12%

Adjusted EBITDA 149 810 32 138 112 073 31 140 34% 3%

Net profi t 101 496 23 116 93 357 34 110 9% 32%

Created deferred tax assets 13 151

Adjusted net profi t 102 306 23 116 86 311 36 135 19% 36%

NEUCA SA Board of Directors on March 23, 2015 publicly presented forecasts of net profi t of NEUCA Group for 2015.

* excluding one-time items


We deliver on our fi nancial forecasts

Internal factors important for the development of the company

External factors important for the development of the company

1/ Forecasted results of the Group (in PLN m):

The Group expects the net profi t of PLN 100 m (excluding one-off items)

2/ Period covered by the forecast: The forecast covers the period

from January 1, 2015 to Decem-ber 31, 2015.

3/ Forecast basis and essential assumptions:

Growth in the pharmacy whole-sale market by 4% in 2015.

4) How the Group monitors the fea-sibility of the forecasted results:

The Group will monitor feasi-bility of the forecast by current analyses of the implementation of the Groups fi nancial budget and analyses of the main exter-nal factors affecting the results of the issuer (including growth of the pharmacy wholesale mar-ket).

5/ Periods in which the Group will evaluate the possibility of achieving forecasted results and

make adjustments, if any, to the forecasts presented, together with the description of the criteria used :

The Company will be assessing the feasibility of the forecasted results of the Group and of adjustments to the forecasts presented on a quarterly basis, after analyses of the actual fi nancial results. Assessment criteria will include the degree of implementation of the Groups fi nancial budget.

FORECASTED RESULTS OF THE GROUP (IN PLN M) PREDICTION CONSTRUCTION MEASUREMENT % CHANGE

Net profi t* 100 102,3 2,3 2,3%

WE PURSUE OURINVESTMENT PL ANS

In 2016, the Group intends to carry out investment plans for ca. PLN 43 m in total. The planned invest-ments include but are no limited to the construction of a medicine manufacturing plant, the automa-

tion of a subsequent warehouse, adaptations of warehouses to the new rules of the Good Distribu-tion Practices, implementation of modernisation changes and improvements in the existing warehouses (access roads, ventila-tion and heating systems), IT sys-tems, systems related to transport

and relations with the customer, purchase of vehicles.

At the moment, NEUCA Group does not see any threats which may jeopardize our investment plan.

THE ABILIT Y TO MAINTAIN MARKET SHARES AND TO CONTINUE ORGANIC GROW TH

As the Companys operations are characterised by low net margins, a strict control over expenses and an effective management of cus-tomers profi tability are of critical importance for the results. Effi -ciency improvements should also stem from the successful integra-tion of the companies from ACP Pharma Group.

GROWTH OF THE PHARMA-CEUTICAL MARKET IN PO-LAND TRANSLATING DIRECTLY INTO NEUCA GROUP SALES GROWTH

In recent years, the rate of growth of the market of pharmaceutical products was stable and exceeded 5% per annum. In 2012, the market fell by ca. 6% due to the introduction of signifi cant legal changes in such areas as e.g. medicine reimburse-ment rules and maximum margins applied by the entities active in the

EFFICIENCY OF THE RE-ORGANIZATION PROCESS

As the Companys operations are characterised by low net margins, a strict control over expenses and an effective management of cus-tomers profi tability are of critical importance for the results. Effi -ciency improvements should also stem from the successful integra-tion of the companies from ACP Pharma Group.

PRODUCING A SATISFAC-TORY RETURN ON INVEST-MENTS IN DRUG DISTRIBU-TION - RELATED ACTIVITIES

We manage to consistently improve fi nancial performance of NEUCA Group by further developing our own brand products, launching the medicine packaging process in Synoptis Industrial Sp. z o.o. and integrating operations of the acquired outpatient care clin-ics in order to benefi t from syn-ergy effects.

wholesale and retail trading in med-icines. 2013 marked a growth in the pharmacy wholesale market by 10%. In 2014, the growth rate returned stabilised at 5%. The forecasts indi-cate that a rising trend will continue on the pharmacy wholesale market due to a number of factors. The most important is the process of aging of the society (demographic factor) and a rising awareness (social fac-tor). In 2016

The Group expects the pharmacy wholesale market to grow by 1-3%.

CHANGES IN L AWS ON-TR ADING IN REIMBURSA-BLE DRUGS

Changes in the rules and principles for fi nancing reimbursable medi-cines may substantially affect the Companys operations through, among others, fi xed wholesale margins and capped margins of pharmacies.

6160 / FINA NCIA L RESULTS / FINA NCIA L RESULTS / ESULTS / 61RERERAAAAAAAAAAAAAAAAAAAAA RRL ESUSULTS 0066666060660006060600000 / FF/ FFFFFF///// FF/ F// /// F/////// F//// III6666666606006060

SOCIALLY RESPONSIBLEBUSINESS

BENEFITS

Depending on their grade, employ-ees have access to a number of non-pay benefi ts: recreation & sports, private medical care, life insurance and investment fund packages which are complementary to our work compensation system. In pre-Christmas periods employ-ees are entitled to special benefi ts in the form of prepaid gift cards. In the event of health troubles and emergencies our employees are offered aids or low-interest loans. In 2014, NEUCA put in place a pro-gram addressed to the parents as part of the social benefi t package.

NEUCAAKTYWNI PROGRAM

We encourage our employees to spend their free time actively that is why we have a comprehensive NEUCAaktywni program. Three sub-routines are supposed to stimulate physical activity, care about health and help to the ones in need. Under NEUCAaktywni program, the employees regularly practice their selected sports, participate in competitions and implement other healthy habits. Their additional moti-vation is the fact that in exchange for their involvement NEUCA donates money for a good cause as part of NEUCA March For Health two pro-health initiatives addressed to seniors.

NEUCAaktywni_sport is a proposal for employees who want to integrate by actively spending together their free time. Thanks to co-fi nancing sports hall rentals the Companys sports teams can regularly train and take care of physical condition during the winter time too. Participat-ing in NEUCAaktywni_wolontariat program, employees pursue volun-teering projects in their own commu-nities. Every year, we select the most original ideas contributing to building relations between employees - volunteers and local communities. Authors of the best projects receive

LIFE BOX

It is the second project carried out thanks to the participants of the NEUCA for Health March. The idea is to allow emergency services to provide fast and effective assistance, especially in the case of persons who are lonely, sick or elderly. The box bears a special sticker. It contains the information given by the patient: suffered dis-eases, medications taken, allergies, contact data to persons who should be notifi ed in case of emergency as well as organisational information.LIfe Box with the completed form is stored by the patient in the refriger-ator. A magnetic sticker is placed on the refrigerator acknowledging the fact that the box is inside . In the case of the deterioration of the health condition emergency services reach for the Life Box and the information contained therein is helping to pur-sue the rescue operations. 15,000 boxes were distributed free of charge among the inhabitants of Toru and the surrounding area, they were available in independent phar-macies, and in the City Hall in Toru.Benefi ts from the program are two-fold: our employees and inhabitants of Toru are healthier and the ones in need get support.

WITH EMPLOYEES IN MIND

In NEUCA Group social responsi-bility is understood as caring about employees and collaborators. Know-ing that health and well-being affect productivity, we strive to provide them with a sense of security and the conditions to keep the balance be-tween private life and working life

We treat the area of corporate social responsibility with the utmost care. Therefore, we developed a comprehensive strategy for this area and commence reporting on our actions in NEUCA Responsible Business Report. Thus we are able to broadly communicate our objectives and priorities as well as subsequent steps taken for their implementation.

It offers many forms of parenting support for both parents from co-fi nancing a nursery or kindergar-ten through layettes for children to an additional day of paid leave for the birth of a child. On the other hand, as part of the pro-health program My Dbamy we give employees the opportunity to have a free preven-tive check-up in their workplace (e.g. osteobus) and we promote a healthy lifestyle.

fi nancial support for their implemen-tation. In 2015, volunteers helped in the completion of 6 projects, we provided support among others to: holidays for children , theatre performances with the participation of children promoting a healthy lifestyle, organisation of a cycling family excursion promoting active leisure, modernisation and additional equipment for play corner in the childrens hospital, organisation of a cycle of educational meetings and trainings to prepare seniors for the annual initiative, i.e. NEUCA March for Health.

SENIOR ACADEMY

In 2015, thanks to the participants of NEUCA for Health March the edu-cational project for seniors (among others students of Torun University of the Third Age and members of the Council of Elders) was carried out. It was a series of lectures on health and health prevention, devel-oped for the needs / interests of people over 60 years of age).

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HE A LT H B E F O R E A L L

ET H I C S A N D R E S P O N S I B I L I T Y

NEUCA FOR HEALTH MARCH

In 2015, there was the fourth edition of NEUCA dla Zdrowia! walkathon organised to promote healthy and active forms of spending free time. In September, we invited inhabitants of Toru to a Nordic walking charity event. For each kilometre made by each single participant of the event we paid PLN 2 for two pro-health initiatives targeted on seniors. In total the participants of the March produced about PLN 175,000. Money from the previous three edi-tions (over PLN 350,000) supported the construction of the Stem Cell Bank in Toru.

PATIENTS ASSISTANCE PROGRAM

In cooperation with pharmacists all over Poland (more than 4000 phar-macies participate in the program) we work to improve pharmaceutical care and to strengthen the pre-vention, with a particular focus on patients affected and threatened by chronic diseases. We want to con-sistently increase the awareness

ETHICS OFFICER AND ETHICS CODE

Our greatest asset are the people which is why we pay special atten-tion to human relations, respect for differences and promotion of ethical behaviours. The function of the Ethics Offi cer has been in place for over a year. The Ethics Offi cer responds to reported attempted behaviours, being contrary to NEUCA values.

ENVIRONMENTAL PROTECTION

Not forgetting about responsibility for our surrounding environment, we try to minimise and constantly monitor our environmental footprint.

HELP TO THE ONES IN NEED

Thanks to a clearly defi ned health-related social policy, in accordance with the adopted inter-nal Regulations, Fundacja NEUCA dla Zdrowia also supports persons seriously ill or needing help or organisations and institutions acting for them. We help by providing sup-port in various forms we donate medicines or any other material help, we co-fi nance rehabilitation and treatment. In 2015, this kind of help was addressed to charges of various institutions.

We consistently educate patients, help those who are sick or in need to access appropriate therapies, and we support independent phar-macists in pursuing their mission pharmaceutical care. These are key areas of NEUCA corporate social responsibility strategy. We created it with the participation of our employees and groups of external stakeholders: academics, patients groups, doctors as well as local authorities and NGOs.NEUCA dla Zdrowia Foundation operating since 2013 and coordinat-ing pro-social initiatives allows us to more effectively pursue our policy.

NEUCA activities are based on providing the pharmacies with medicines, including often life-saving ones. Therefore, there is a great responsibility involved both at macro-social, as well as individual scales. It is natural that health is a key value that all our social actions are subordinated to. They take various forms, are addressed to different groups, but their common denominator is health care.

of the risk factors, symptoms and effective treatment. Through pharmacies patients receive free tutorials (so far, dedi-cated to oncology, cardiology and respiratory diseases or diabetes), and in selected locations educa-tional and prevention events are held, such as for example free spe-cialist check-ups. In 2015, patients received over 600,000 free guides which reached 2 million readers. In the area of pharmaceutical care

Through systematic education and training there is a growing awareness of how important for the effectiveness is a good atmos-phere at work. A collection of values and principles that we follow in relations inside the Company and in dealings with our customers and business partners is included in NEUCA Ethics Code.

we also support education of pharmacy students. Its practical dimension is presented during lectures by widely recognised experts who share their experience with students as part of a series of meetings Akademia Modego Far-maceuty. In 2015, they were held in four medical universities in Poland.

64 / SUPERV ISORY BOA RD

SU P E R V I S O R Y B O A R D

6766 / SUPERV ISORY BOA RD / SUPERV ISORY BOA RD /

We focus on innovation and develop-

ment of new technologies that will

increasingly play a significant

role in the health market worldwide.

Kazimierz Herba

Chairman of the Supervisory

Board NEUCA SA

DE A RSH A R E H O L D E R S

In 2015, NEUCA opened up to new perspectives and

opportunities, while remaining faithful to its operating

philosophy . Having in mind the support for Polish inde-

pendent pharmacies, the Company is constantly evolv-

ing and looking for new market solutions.

Last year, the Group signifi cantly improved its fi nancial results, taking full advantage of synergies result-ing from the combination with ACP Pharma, and also benefi ted from a growing wholesale pharmacy market. NEUCA focused not only on increasing profi ts, but above all made a big job on improving cus-tomer satisfaction. The independent pharmacies were, are, and will be at the centre of the Groups attention. A continuous development of our offer to pharmacists contributes to the improvement of their condition, whereas a still better level of service provided to pharmacies positively affect our position in the market. As a shareholder I feel great sat-isfaction that for 25 years we have had the same, consistent strategy of not competing with our customers independent pharmacies. Moreover, this strategy has been successful and is aptly suited to the prevailing market trends.

Our mission and philosophy is the unchanged which does not mean that NEUCA stands still. Each year, the Groups Board of Directors sets new challenges, realising more and more ambitious fi nancial plans, and at the same time entering into new business areas. In the recent years the Company gained a lot of expe-rience in various segments of the healthcare market. We have had a lot of knowledge not only on the whole-sale distribution of pharmaceuticals, but also in the sale of our own prod-ucts, logistics, advertising, IT. We have deeply understood the needs of pharmacies and decided to fur-

ther support them, creating services to their customers, i.e. patients.

Already two years ago we started to make the fi rst steps toward launching investments in medical outpatient care clinics. Last year we got involved in clinical trials and telemedicine. We see many syner-gies between new business areas and our hitherto existing businesses. The cooperation of pharmacies with companies carrying out clinical trials and the telemedical initiative will be pioneering projects. Yet no one in Poland has ever combined expertise in so many areas of the healthcare market. We are looking for innovative solutions in other areas, including those that can raise the level of competitiveness of the core seg-ments of the Group. We focus on innovation and development of new technologies that will increasingly play a signifi cant role in the health

market worldwide. We want NEUCA to create a new quality in the industry also in this area.

I am convinced that our new ventures will be successful and according to announcements of the Board of Directors within a few years they will have a major part in the net profi t of the Group. My faith in these perspectives is largely based on our management staff which has repeatedly demonstrated its ability to fulfi l the promises and pursue new projects.

Our unique strategy, constantly improving results and interesting projects oriented on the future make me, as an investor, to have long-term plans related to my engagement and involvement in NEUCA. I believe that also this year NEUCA will boast of good results and projects that will contribute to its long-term value growth.


WIESAWA HERBA

IWONA SIER ZPUTOWSK A

SU P E R V I S O R Y B O A R D O F NE U C A

CHAIRMAN OF THE SUPERVISORY BOARDMember of the Supervisory Board since January 15, 2009

Graduate of the Faculty of Trade at the University of Economics in Pozna. Founder of Torfarm SA (today NEUCA), in the years 1994-2008, he held the position of the President of the Board of Directors. Main shareholder of NEUCA SA

He actively supports the Company with regard to setting and following strategic development directions.

MEMBER OF THE SUPERVISORY BOARDMember of the Supervisory Board since June 16, 2009

Ph.D. in technical sciences, graduate of the Warsaw University of Technology. Having

received the diploma, he continued academic work at the University as a lecturer.

In 1990, he established and managed Prosper which, for over 17 years, was one of the

leaders in pharmaceutical distribution in Poland. The company started from importing

pharmaceuticals and OTC drugs from Western European countries, and then gradually

extended its assortment and the scope of operations with distribution of pharmaceuticals.

Many times he advised on and participated in new projects on the pharmaceutical market.

Member of the Audit Committee.

He advicess the Company with regard to strategic issues.

DEPUT Y CHAIRMAN OF THE SUPERVISORY BOARDMember of the Supervisory Board since March 24, 2004

She graduated from the University of Economics (formerly the Academy of

Economics) in Pozna. Along with Kazimierz Herba she founded and man-

aged Torfarm SA (today NEUCA) progressing through all levels of the organ-

isational structure. In the years 2001-2003, she was the General Director and

then the Operations Director (2003-2004). Until January 2004, she was a proxy

of Torfarm SA. From March 2004 to January 2009, she was appointed the

Chairwoman of the Supervisory Board

Chairwoman of the Audit Committee and a large shareholder of NEUCA SA.

Assists in corporate governance matters.


In 1995, she graduated from Masters studies at the Warsaw School of Economics. Graduate of

postgraduate studies at the Universit Paris Dauphine in Paris, major in banking and fi nancial

markets and, in 2007, of Ph.D. studies at the Warsaw School of Economics, International Busi-

ness Department. In 2008, she graduated from the Canadian International Management Institute.

She gained experience working in the following companies: from 1999 to 2008, at Go Sport

Poland, as the Administrative & Finance Director, then at Aelia Poland, as the Finance Director, in

the years 2009-2011, as the Finance Manager at Smyk, and presently at Leroy Merlin Poland, as

the Head of Financial Controlling Department

Member of the Audit Committee. In NEUCA Group, as a Member of the Supervisory Board, she

shares her knowledge in the area of management and fi nance of distribution companies..

KA ZIMIER Z HERBA

TADEUSZ WESOOWSKI


Graduate of the Medical University of Warsaw, major in pharmacy. She graduated with the 1st and the 2nd

degree specialization in pharmacy. From 1991, she was a pharmacy manager in Kielce. She completed a course

for candidates for members of supervisory boards in the companies with participation of the State Treasury and

in commercial law companies. From 2007, she is the President of Kielce Regional Pharmaceutical Chamber of

the 5th term, and from 2009 the Coordinator of the Supreme Pharmaceutical Council (NRA), Department for

Contacts with NFZ (National Health Fund). From 2010, she is a Member of the Presidium of NRA of the 5th term,

Member of the Supervisory Board of Radix SA, Member of the Supervisory Board of Optima Radix SA, from

2005, the Chairwoman of the Supervisory Board of Optima Radix Vita Plus Tadanco. A.

As a member of the Supervisory Board of NEUCA SA she supports the Company in contacts

with pharmacies in general.

BOENA LIWA


He graduated from the Faculty of Management, AGH University of Science and Technology in Krakow. Since then he has pursued his pro-fessional career in fi nance divisions of the following companies: Huta Sendzimira (1993--1994), PLC Leasco S.A. (1995-1998; as the Finance Director), Press Glass sp. z o.o. (1999, as the Finance Director), Mostostal Krakw SA (2000, as the Finance Director). From 2001, in NEUCA SA as the Finance Director; from March 2005, in the Board of Directors of NEUCA SA. From January 2009, on the offi ce of the President of the Board of Directors.

He graduated from Wrocaw University of Technology and completed post-graduate studies at the University of Economics in Wrocaw. For many years he was associated with Lotte Group. He started his professional career in Wrocaw and worked among others in Fadroma, Alfa Laval Agri, then Cadbury Poland as Head of Logistics and Opera-tions Director (1994-1999) and Cadbury Wedek (2000-2010) as Logistics and Purchasing Director , Strategy Develop-ment, Logistics and Customer Service Director for Central Europe, Production Director for Poland. From 2010 as Chief Operating Offi cer, and from 2012 as Managing Director at Lotte Wedel. In the meantime, he served as Vice-President of the Polish Federation of Food Industry and was a member of the Board of Directors at Polbisco. Since June 1, 2015 he has been a member of the Board of Directors of NEUCA Group.

Graduated from the Faculty of Eco-nomics of Maria Skodowska-Curie University in Lublin and from MBA program of the Business School of Warsaw University of Technology and London Business School. Graduated from INSEAD and Duke University management programs, he has qualifi cations of the British Association of Chartered Certifi ed Accountants (ACCA). He worked for Lafarge Group, recently as a Board Member responsi-ble for fi nance and supply chain. Earlier, was employed in the global headquar-ters of NKT CABLES in Germany and in the Department of Audit and Business Consulting at Andersen. Since August 2010, he has been a member of the Board of Directors of NEUCA Group. He is responsible for management, among others, over such areas as: fi nance, IT and controlling.

He is a graduate of Marketing and International Business from New York University Stern School of Business. In 2002, at the same university he completed MBA studies. The last three years he held the position of the President of Benefi t Systems SA. Previously, he was with with Agora SA where since 2008 he served as a Member of the Management Board of Agora and oversaw the Companys Internet Segment. From 2014 he held the position of Gazeta Wyborcza Branch Network Director. In the years 1999-2004 was asso-ciated with The New York Times Company where he was responsible for the marketing and promotion of NYTimes.com. In 2002 he was appointed Head of Development and Strategy for Business and Tech-nology Sections at NYTimes.com portal.

NE U C A B O A R DO F D I R E C TO R S

PIOTR SUCHARSKIPresident of the Board of Directors, General Director

GR ZEGOR Z DZIKVice-President of the Board of Directors, Chief Financial Officer

WITOLD ZIOBROWSKIVice-President of the Board of Directors for Supply Chain

TOMASZ JZEFACKIVice-President of the Board of Directors for Development


CORPORATEGOVERNANCE

GENERAL MEETING

The General Meeting of Sharehold-ers is a principal governing body of NEUCA SA. Shareholders may participate in the Meeting and exer-cise their voting rights in person or by proxy.

The General Meeting is attended by Members of the Supervisory Board and members of the Board of Directors. In the event when the agenda covers the Companys fi nancial affairs, the General Meeting is attended by auditors too. Mem-bers of the Supervisory Board and of the Board of Directors and the Companys auditors,each within their competences and to the extent necessary to resolve matters dis-cussed during the Meeting, provide explanations and information about the Company to participants of the Meeting.

SUPERVISORY BOARD

The Supervisory Board exercises supervision over NEUCA SA. opera-tions, appoints members of the Board of Directors and determines terms and conditions for their remuneration. The board consists of fi ve to nine mem-bers. The General Meeting defi nes the number of Members of the Super-visory Board within the limits stipu-lated above. The term of offi ce of the Supervisory Board is three years. Their work is managed by the Chairman of the Supervisory Board appointed by absolute majority of votes of the Members of the Board present at the meeting. Resolutions are adopted by absolute majority of votes of the Mem-bers present. In the event of an equal number of votes, the Chairman has a casting vote.

BOARD OF DIRECTORSThe Board of Directors manages current operations of NEUCA SA., represents it in any outside dealings and manages its assets. It consists of one to fi ve members, including the President of the Board of Direc-tors, who manages its work. The members of the Board of Directors are appointed by the Supervisory Board for a joint term of fi ve years. The Supervisory Board appoints the President of the Board of Directors from among members of the Board of Directors. Except the President of the Board of Directors, each of other Members of the Board of Directors has the title of the Vice President of the Board of Directors.

The Supervisory Board of the Company as at December 31, 2015 included:

Kazimierz HerbaChairman of the Supervisory Board

Wiesawa Herba Deputy Chairman of th

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