across all divisions has been in line with the modelled scenarios.
In
addition,
due
to
the
proactive
response
taken
by
the
Company
to
improve
its
liquidity
position,
since
the
beginning
of
the
pandemic
crisis,
the
cashflows
of
the
Company
have
remained
stable,
demonstrating
the
financial
discipline
across
the
Company
and
the
conservative
approach
taken
when
modelling
scenarios.
Cash
and
available
facilities
have
remained
strong at RON 38.6m at year-end, compared to RON 33.7m at 31 December 2020.
All
measures
taken
have
been
decided
upon
having
in
mind
the
Company’s
strategy
to
better
position
itself
to
all
the
new
market
changes,
on
the
long
term.
As
a
consequence,
the
management
focused
on
increasing
efficiency
of
its
operations in order to obtain better flexibility over capitalizing market opportunities.
For
the
covenant
testing
periods
ending
December
2022
and
June
2022,
the
Board
of
Directors
are
confident
that
Med
Life
has
sufficient
headroom
to
stay
within
the
covenant’s
levels,
with
the
mitigations
available
(which
would
include
management
of
working
capital
and
constrained
levels
of
capital
investment),
even
in
its
severe
but
plausible
downside
scenarios.
Based
on
the
Company’s
current
financial
position
and
the
modelled
scenarios,
the
directors
have
concluded
that
the
Company
has
sufficient
liquidity
to
meet
all
its
obligations
for
at
least
the
twelve
months
from
the
date
of
this
report
and
the
directors
considered
it
appropriate
to
adopt
the
going
concern
basis
of
accounting
in
preparing
the
financial
statements.
3.3
Significant judgements, estimates and assumptions
The
preparation
of
the
financial
statements
in
accordance
with
IFRS
requires
management
to
make
judgments,
estimates
and
assumptions
that
affect
the
application
of
policies
and
reported
amounts
of
assets
and
liabilities
as
of
the
date
of
the
balance
sheet
and
revenue
and
expenses
for
the
period.
The
estimates
and
associated
assumptions
are
based
on
historical
experience
and
various
other
factors
that
are
believed
to
be
reasonable
under
the
circumstances,
the
results
of
which
form
the
basis
of
making
the
judgments
about
carrying
values
of
assets
and
liabilities
that
are
not
readily
apparent from other sources. Actual results could differ from those estimates.
The
estimates
and
underlying
assumptions
are
reviewed
on
an
ongoing
basis.
Revisions
to
accounting
estimates
are
recognized
in
the
period
in
which
the
estimate
is
revised
if
the
revision
affects
only
that
period
or
in
the
period
of
the
revision and future periods if the revision affects both current and future periods.
3.4.1. Judgements
In
the
process
of
applying
the
Company’s
accounting
policies,
the
following
judgments
were
made,
particularly
with
respect to the following:
Determining the lease term of contracts with renewal and termination options – Med Life as a lessee
Med
Life
determines
the
lease
term
as
the
non-cancellable
term
of
the
lease,
together
with
any
periods
covered
by
an
option
to
extend
the
lease
if
it
is
reasonably
certain
to
be
exercised,
or
any
periods
covered
by
an
option
to
terminate
the
lease,
if
it
is
reasonably
certain
not
to
be
exercised.
The
Company
has
lease
contracts
which
include
extension
and
termination options.
The
Company
applies
judgement
in
evaluating
whether
it
is
reasonably
certain
whether
or
not
to
exercise
the
option
to
renew
or
terminate
the
lease.
When
determining
the
lease
term
to
be
used
for
the
measurement
of
the
lease,
the
Company
takes
into
account
all
the
relevant
facts
and
circumstances
that
create
an
economic
incentive
for
exercising
either the extension or termination option of the lease term.
For leases of buildings, cars and equipment, the following factors are normally the most relevant:
-
If
there
are
significant
penalty
payments
to
terminate
(or
not
extend),
the
Company
is
typically
reasonably
certain
to extend (or not terminate).
-
If
any
leasehold
improvements
are
expected
to
have
a
significant
remaining
value,
the
Company
is
typically
reasonably certain to extend (or not terminate).
-
Otherwise,
the
Company
considers
other
factors
including
historical
lease
durations
and
the
costs
and
business
disruption required to replace the leased asset.
-
If
the
Company
considers
that
some
of
the
lease
agreement
shall
be
terminated
earlier,
then
the
assumption
of
the
tenor
shall
be
reassessed
accordingly
in
order
to
fairly
represent
the
management’s
view
of
the
leased
asset’s
impact
to the financial statements.
-
In
case
of
lease
term
in
relation
to
indefinite
lease
contracts
the
assumption
applied
was
that
the
lease
term
will
be
similar
to
other
contracts
signed
with
the
same
provider
or
based
on
the
relevant
period
beyond
which
the
exercise
of any option becomes uncertain.
The
lease
term
is
reassessed
if
an
option
is
actually
exercised
(or
not
exercised)
or
the
Company
becomes
obliged
to
exercise
(or
not
exercise)
it.
The
assessment
of
reasonable
certainty
is
only
revised
if
a
significant
event
or
a
significant
change
in
circumstances
occurs,
which
affects
this
assessment,
and
that
is
within
the
control
of
the
lessee.
Please
see
note 13.
Cash generating units
Management
exercises
judgement
in
determining
the
appropriate
level
of
grouping
assets
into
CGUs,
based
on
the
fact
that they share significant common infrastructure.
Contingencies
By
their
nature,
contingencies
will
only
be
resolved
when
one
or
more
future
events
occur
or
fail
to
occur.
The
assessment
of
contingencies
inherently
involves
the
exercise
of
significant
judgment
and
estimates
of
the
outcome
of
future
events.
