MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF MPHARMA HELD ON

THURSDAY, 20TH JULY, 2023 VIA VIDEO CONFERENCE

PRESENT
Gregory Rockson - Board Member/Chief Executive Officer (CEO)
Walter Baddoo - Board Member
Joanna Lee Shevelenko - Board Member
Shravin Mittal - Board Member
Andrew Carruthers - Board Member

ABSENT
Daniel Breyer - Board Member
Dr. Daniel Vasella - Board Member
Philip Sowah - Board Member

IN ATTENDANCE
Oyeniyi Fakunle - Chief Finance Officer
Samuel Nunoo -
Afsane Jivraj -
Yvonne Ogunoiki - Legal Counsel
JLD & MB Legal Consultancy - (reps Sati Bharwani and Wilhemina Dadzie)

1. OPENING

The meeting started at approximately 2:05 p.m. GMT.

2. OPENING REMARKS

The CEO welcomed everyone to the meeting and indicated that Management’s focus remains on
cost management to allow the Company to successfully close off the current round of financing
and return to investing in growth.

He reported that crises management was being undertaken in a number of countries. Nigeria
was battling an elevated cost of living crisis since the change in Government and changes in
some policies such as the removal of fuel subsidies and currency devaluation. This led to a
general decline in the Nigerian economy. He indicated that suppliers had reduced importations
due to fluctuations in the exchange rate. Some manufacturers such as GSK Plc, had withdrawn
from the Nigerian market leading to an acute drug shortage and a spike in drug prices. He added
that insecurity in Eastern Nigeria had also led to a closure of pharmacies.

He further reported that economic challenges continued to persist in Ghana. The inflation rate
was over forty-five percent (45%) despite the International Monetary Fund (IMF) deal.

He also reported that there were political protests across Kenya and pharmacies are closed
during protests to ensure the safety of employees.

The CEO added that the team size in Zambia and Rwanda had been reduced by almost forty
percent (40%). There was an opportunity to increase revenue growth in Zambia by accepting

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the national social insurance scheme in Mutti pharmacies. He also indicated that the expansion
target had been reduced in Rwanda and attention was being given to growth within the existing
portfolio of stores.

The CEO further reported that Management changes had been executed in Kenya, leading to a
better performance of the existing stores. He indicated that the focus in Kenya was rebuilding
the management team and growth.

He stated that attention was given to performance management in terms of which a premium
was placed on employees achieving their target and this may have impacted attrition which
was double the previous year’s numbers. Performance management enabled Management to
drive operational efficiency within the Company. He reported that a pause had been put on
hiring to allow for more role consolidation.

In conclusion, the CEO stated that, due to an emphasis on retail pharmacy operations, the gross
margin recorded significant growth exceeding the set target. The Company was also able to
unlock suppliers who had stopped supplying due to past issues.

3. UPDATE ON COUNTRIES

The CEO updated the Board on the plans for the Company in Ghana, Kenya, Nigeria, Benin and
Togo as follows:

 KENYA

THE CEO reported that Meridian Clinic pharmacies were restored to the Company after having
been withdrawn in 2022. This has reduced the cost of setting up new pharmacies. A dental clinic
chain had also outsourced its pharmacies to the Company adding another eleven (11)
pharmacies to the Haltons network by the end of the year. He indicated that this would increase
the total number of Haltons pharmacies from twenty-two (22) to thirty-three (33). The target is
to grow the number of Haltons pharmacies under the Company to fifty (50) by 2027.

He also indicated that the Company was leveraging on insurance companies to have Mutti
doctor as a part of the primary healthcare network. Management was also working on the first
payer agreement for Mutti doctor with Old Mutual, one of the biggest insurance providers in
Kenya. A variation of the United Kingdom’s common ailment scheme was also being offered to
insurance companies and this would enable people to visit Mutti pharmacies with a Mutti
doctor office for treatment of fourteen (14) predetermined common conditions.

Three (3) large insurers; Britam, Madison and Jubilee have reached out to have versions of the
common ailment scheme created for their members.

 OTHER COUNTRIES

The CEO reported that plans were underway to create a national common ailment plan for the
Ghana Health Insurance Scheme to be run by mPharma through a public-private partnership
(PPP).

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He indicated that the patient support programme (PSP) business has crossed one million United
States Dollars (USD1,000,000) in revenue. The first PSP business was launched in Kenya with
Boaeringer Ingleheim (Ingleheim) for asthma patients where five hundred (500) patients would
be screened every month and about one hundred (100) would be enrolled in the programme.
The screening would be scaled up to one thousand, five hundred (1,500) patients a month.
Ingleheim was looking to replicate this in other countries.

He further reported that Pfizer Inc., the Company’s biggest PSP, recently selected mPharma to
run their Nigeria cancer programme. The business was estimated to be a two million United
States Dollars (USD2,000,000)/year business.

The CEO indicated that in Ghana, an agreement had been concluded with MTN Ghana with
respect to Mutti Plus, a product to be launched and sold by MTN Ghana as a digital health
product for its subscribers..

He also stated that the Company had postponed the opening of new pharmacies to avoid any
CAPEX investments until the financing round had closed. In Nigeria, a pipeline of about forty
(40) pharmacies had been built.

With regards to the Francophone Africa market expansion, he indicated that there were three
(3) Mutti pharmacies in Togo, with high revenues and profits.

He added that the Company was ready to go live in Benin with two (2) pharmacies after the
current fundraise and the expansion to Democratic Republic of Congo had been put on hold
until Q4.

Board Comments
 The Board enquired about how costs would affect or tie into the PSP business and how to
allocate cost to it. The CEO indicated that most of the PSP contracts were profitable as all
Management costs were passed on to the drug companies.

 Responding to an enquiry regarding how the PSP business created the opportunity for the
Company to import drugs directly from pharmaceutical companies, the CEO responded
indicating that the PSP business had been instrumental in unlocking direct importation
contracts. For example, Pfizer Inc. was focused on its drug therapeutic portfolios and
mPharma was to be the market shaping partner allowing for direct importation. He added
that the Company would launch a PSP with Sanofi in Uganda and Zambia in the near future
which would allow for direct importation of Sanofi drugs, including insulin, into these
markets. The Company’s focus was on newer therapies that legacy distributers had ignored.
He indicated that the Company was currently the largest supplier of Pfizer Inc.’s meronem, a
critical care antibiotic medication.

 On how much the MTN Ghana partnership would cost the Company, the CEO indicated that
MTN Ghana had been offered fifteen percent (15%) of the subscription fees collected and
they would be required to remit the remaining eighty-five percent (85%) to the Company.

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 The fifteen percent (15%) covered administrative activities which would be handled by
MTN Ghana. He added that data was being generated on the cost profile for the partnership
and if the utilisation showed a higher spend, the subscription fee could be increased.

4. Q1 FINANCIAL REPORT PRESENTATION

Oyeniyi Fakunle, the Chief Financial Officer (CFO), presented the financial updates.

He reported that, comparing the top line in Q1 to Q2, growth remained flat. Year on year growth
was impacted negatively due to the currency devaluation affecting most markets. The Company
was however able to achieve a good organic growth due to operational efficiencies. He indicated
that the bottom line had also improved across all business units due to restructuring and
rationalisation of the business. The Company was on the path to profitability and becoming cash
flow positive.

The CFO added that liquidity of the Company had dropped considerably but a good balance
sheet had been maintained due to quality inventory and focus on fast moving drugs. This helped
maintain a good inventory turnover and minimize risk of inventory write offs from expiries.

He concluded by reporting that the year to date rate of collections remained flat. The Company
had ensured a good aging of receivables to avoid the risk of further write-offs Cash conversion
cycle days had also been reduced from about two hundred and forty (240) days to below one
hundred and eighty (180) days. At the group level, the cash conversion cycle was one hundred
and ninety (190) days due to the legacy receivables on the balance sheet.

Board Comments
 A Board member enquired about the decline of retail health services from a positive
operating margin in Q1 to a negative one in Q2. The CEO indicated that billings in Q2 were
lower than billings in Q1 for the PSP business especially, which impacted the operating
margin.

 With respect to the forex changes and its effect on margins,the CFO indicated that the
further devaluation in the Naira in June 2023 had not yet reflected in the Company’s books
and that this would affect the Q3 numbers. He indicated that this would cause a thirty-four
percent (34%) reduction in the balance sheet in Nigeria causing a decline in the top line as
well. The CEO added that internally, the Company did not spend in US dollars and as such
the auditors would decide on a rate to be used at the end of the year. The CFO informed the
Board that from Q3, the financial report presented to the Board would show the numbers
based on the budget rate fixed at the beginning of the year and the new rate to enable
comparison of both.

 The Board enquired about the strategies Management had employed on the cost of sales
that had impacted the gross profit positively. The CEO indicated that the gross profit grew
from twenty-eight percent (28%) in July 2022 to thirty-seven percent (37%) in July 2023.
The two drivers of this growth were an increase in wholesale and retail but with retail
holding a bigger share of the revenue.

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5. FUNDRAISE

The CEO summarised the Company’s fundraising activities.

He reported that at the end of June 2023, the Company signed an updated joint financing
agreement with Sanofi and the Investment Fund for Developing Countries (IFU). IFU and Sanofi
were co-leading the round with thirteen million United States Dollars (USD13,000,000). The
process was underway beginning with an external legal due diligence, a commercial due
diligence, an impact due diligence and an anti-bribery and anti-money laundering due diligence
check. Consultants had been hired in the various fields to assist in the process. The consultants
are to complete the work by the first of August 2023 according to IFU and Sanofi’s timelines. A
legal team was also hired to draw up the investment documents to prevent delays between the
due diligence process and the final documents required for closing. IFU had requested a
convertible note agreement, a shareholder agreement and a share pledge agreement. The
Company would lead on the first two (2) documents and IFU would be responsible for drafting
the last document. Per the agreement signed, the deal should be closed by 31 st August, 2023.

The CEO indicated that in April 2023, at the Skoll World Forum, the CEO received an invitation
to meet with a new foundation which was ready to deploy over one hundred million United
States Dollars (USD100,000,000) to organizations and new private foundations. The Company
had submitted a funding request for seventeen million United States Dollars (USD17,000,000).
The foundation had informed the CEO that a final decision would be taken on 26 th July, 2023.

Board Comments
 The Board enquired if the funding from the foundation would change the trajectory of the
main fund raise. The CEO informed the Board that this would not change the trajectory as
the foundation would be investing in the round to bring in more capital and also give
leverage to the Company to push IFU into finalizing the agreement.

 Regarding the balance of the twenty-five million United States Dollars (USD25,000,000),
the CEO indicated that the Company was looking at about seven million United States
Dollars (USD7,000,000) from existing shareholders and various investors. Additional new
investors were being engaged as well for the balance of five million United States Dollars
(USD5,000,000). He also indicated that if the Skoll foundation funding was successful, it
would be a relief for the Company.

 The Board enquired if there was a cap on the amount of fees that the Company would be
required to pay with regards to the IFU and Sanofi funding process. The CEO informed the
Board that there was a cap of one hundred thousand United States Dollars (USD100,000)
but this would be exclusive of other legal fees to be borne by the Company for its own
investigations.

 Regarding the risk of gender-based violence and harassment (GBVH) issues surfacing in the
due diligence process, Management indicated that GBVH investigation was closed in March
2023. The allegations were duly investigated by the human capital and internal control
team and went through a disciplinary process with adequate representation including legal
representation for the employee involved. The process resulted in an employment

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 termination in compliance with local law. Focus group sessions were also conducted with
the employees on the anti- discrimination and anti-harassment policies. The Company also
reinforced the code of conduct among employees through quizzes and other forms.

 Management agreed to set up a meeting to discuss the lessons learnt from the GBVH issues
with the Board.

6. AOB

There were no other matters discussed.

7. CLOSING

The meeting was brought to an end at approximately 4:45 pm GMT.

..........................................................
Gregory Rockson
Chairman

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