The English version of the consolidated financial statements represents a translation of the original consolidated financial statemetns issued in Romanian language
MED LIFE S.A.
AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
PREPARED IN ACCORDANCE WITH ORDER OF THE MINISTRY OF PUBLIC FINANCE NO.
2844/2016 APPROVING THE ACCOUNTING REGULATIONS COMPLIANT WITH THE
INTERNATIONAL FINANCIAL REPORTING STANDARDS
The English version of the consolidated financial statements represents a translation of the original consolidated financial statemetns issued in Romanian language
Name of the issuing company: Med Life S.A.
Registered Office: Bucharest, 365 Calea Griviței, District 1, Romania
Fax no.: 0040 374 180 470
Unique Registration Code at the National Office of Trade Registry: 8422035
Order number on the Trade Registry: J40/3709/1996
Subscribed and paid-in share capital: RON 33,217,623
Regulated market on which the issued securities are traded: Bucharest Stock Exchange
CONTENTS:PAGE:
STATEMENT OF FINANCIAL POSITION2
STATEMENT OF COMPREHENSIVE INCOME3
STATEMENT OF CASH FLOWS4
STATEMENT OF CHANGES IN EQUITY5 – 6
NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS7 – 51
MED LIFE S.A.
STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 2
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
December 31,January 1,
Note 20222022
Current Assets
Inventories6
Trade Receivables7
Loans granted to related parties 23
Other assets7
Cash and cash equivalents8
Prepayments9
Total Current Assets
TOTAL ASSETS
10122,505,239
14 9,894,800
13 26,229,711
80,151,836
9,896,200
23,791,932
1431,933,045
43,215,074
Current Liabilities
Trade and other payables
Overdraft
Current portion of lease liability
Current portion of interest-bearing loans and
borrowings
Loans received from related parties
Current tax liabilities
Provisions
Other liabilities
Total Current Liabilities
TOTAL LIABILITIES
SHAREHOLDER’S EQUITY
Share capital and Share premium
Treasury shares
Reserves
Retained earnings
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
ASSETS
Non-current Assets
Intangible assets5
Property, plant and equipment5
Right-of-use asset 13, 14
Other financial assets4
Total Non-Current Assets
14,665,892
342,815,667
71,911,269
413,831,251
843,224,079
12,513,597
66,525,981
162,430,816
18,251,900
15,141,431
2,674,932
277,538,657
1,120,762,736
LIABILITIES & SHAREHOLDER’S EQUITY
Non-Current Liabilities
Lease liability13, 14
Other long term debt 14
Interest-bearing loans and borrowings 14
Deferred tax liability 24
Total Non-Current Liabilities
50,184,177
12,651,217
508,264,032
19,052,772
590,152,198
23 12,632,124
24 980,993
12 3,480,319
11 17,677,023
225,333,254
815,485,452
15 83,812,556
15 (3,219,221)
16 141,003,106
83,680,844
305,277,285
1,120,762,736
9,895,358
244,673,659
68,420,689
257,432,358
580,422,064
10,038,916
56,744,097
106,337,549
25,421,897
38,629,900
2,608,350
239,780,709
820,202,773
50,129,780
-
322,115,156
11,457,413
383,702,349
441,238
122,115
3,145,135
16,156,461
176,919,991
560,622,340
82,395,091
(4,015,977)
101,127,471
80,073,849
259,580,434
820,202,773
Mihail Marcu,
CEO
Alina Irinoiu,
CFO
MED LIFE S.A.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 3
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
Note2022
2021
(81,748,854)
(96,288,600)
Revenue from contracts with customers
Other operating revenues
Operating Income
Consumable materials and repair
materials
Third party expenses
19(205,746,479)
(179,709,262)
(148,780,015)
21
(173,443,751)
21 (6,090,747)
5, 13 (57,865,833)
(5,391,095)
(49,814,097)
(4,934,093)
16 47,470,993
24 (7,595,359)
-
-
Salary and related expenses
Social contributions
Depreciation and amortization
Impairment losses and gains (including
reversals of impairment losses)
Other operating expenses
Operating expenses
Operating Profit
Finance income
Finance cost
Other financial expenses
Financial result
Result Before Taxes
Income tax expense
Net Result
Other comprehensive income items
that will not be reclassified to profit
or loss
Revaluation of land and buildings
Deferred tax on other comprehensive
income components
TOTAL OTHER COMPREHENSIVE
INCOME
39,875,634
-
7
(889,139)
20 (44,119,711)
(569,904,514)
23,488,263
226,922,660
22 (21,855,297)
22 (2,752,063)
(17,684,700)
5,803,563
24 (2,196,569)
3,606,994
12 months ended December 31,
17 586,566,266
18 6,826,511
593,392,777
601,508,195
4,057,881
605,566,076
(35,885,636)
(520,802,798)
84,763,278
3,473,598
(16,196,020)
(5,979,555)
(18,701,977)
66,061,301
(10,576,871)
55,484,430
TOTAL COMPREHENSIVE INCOME43,482,62855,484,430
MihailMarcu,
CEO
Alina Irinoiu,
CFO
MED LIFE S.A.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 4
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
Note
2022
2021
Net profit before taxes
Adjustments for
Depreciation and amortization5, 13
Interest expense 22
Allowance for doubtful debts and receivables written-off 7
Provisions for liabilities and charges 12
Other non-monetary gains 18
Unrealised exchange loss 22
Interest revenue 22
Operating cash flow before working capital changes
78,966,362
137,495,129
Decrease / (increase) in accounts receivable
Decrease / (increase) in inventories
Decrease / (increase) in prepayments
Increase / (decrease) in accounts payable
Cash generated from working capital changes
37,511,600
823,501
Cash generated from operations
Income tax paid
Interest paid
Net cash from operating activities
Purchase of investments
Payment of loans assigned from former shareholders
Purchase of intangible assets
Purchase of property, plant and equipment
Loans granted to Group Companies
Net cash used in investing activities
14(32,704,054)
14(27,431,784)
14 204,845,867
15 (7,851,828)
(40,519,720)
(22,934,963)
33,951,383
(3,669,570)
238,523,000
(487,509)
Payment of loans
Lease payments
Proceeds from loans
Payments for purchase of treasury shares
Increase/ (Decrease) from loans obtained from Group
Companies
Net cash from/(used in) financing activities
Net change in cash and cash equivalents
(23,488,469)
4,894,454
Cash and cash equivalents beginning of the period
Cash and cash equivalents end of the period
15,141,431
38,629,900
57,865,833
21,855,297
889,139
335,184
(3,612,057)
2,752,063
(6,922,660)
(3,501,026)
(2,474,681)
(66,582)
43,553,889
116,477,962
24 (1,337,691)
14 (17,016,867)
98,123,404
4 (149,251,414)
(16,746,241)
5 (10,712,880)
5 (70,010,600)
23 (20,271,938)
(266,993,073)
145,381,201
838,629,900
12 months ended December 31,
5,803,563
66,061,301
49,814,097
16,196,020
4,934,093
260,082
(2,276,421)
5,979,555
(3,473,598)
15,102,443
3,185,097
(1,282,688)
(16,181,351)
138,318,630
(14,284,255)
(17,750,515)
106,283,860
(23,423,949)
-
(2,771,220)
(33,169,175)
(8,364,683)
(67,729,027)
(33,660,379)
33,735,446
Mihail Marcu,
CEO
Alina Irinoiu,
CFO
MED LIFE S.A.
STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 5
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
Share Capital
Treasury
shares
Revaluation
Reserve
Accumulated
Results
Total Equity
Balance at January 1, 2022
33,217,623
(4,015,977)
49,177,468
34,538,597
66,588,874
80,073,849
259,580,434
-
-
-
-
-
3,606,995
3,606,995
Profit of the year
Revaluation of land and buildings
(Note 16)
-
-
-
-
47,470,993
-
47,470,993
Deferred tax related to other
comprehensive income (Note 24)
-
-
-
-
(7,595,358)
-
(7,595,358)
Total comprehensive income
Increase from own shares acquisition
(Note 15)
-
(7,851,828)
-
-
-
-
(7,851,828)
Net release of own shares used for
acquiring additional NCI (Note 15)
-
8,648,583
-
-
-
-
8,648,583
Increase in premiums due to
difference between fair value and cost
of own shares when the exchange was
made (Note 15)
-
-
1,417,465
-
-
-
1,417,465
Balance as at December 31, 2022
33,217,623
(3,219,221)
50,594,933
34,538,597
106,464,509
83,680,844
305,277,284
General
Share reserves and
premium other
reserves
-
-
-
-
39,875,635
3,606,995
43,482,630
During 2022, the Company performed a revaluation for land and buildings, please refer to Note 5 and Note 24 for more details.
Mihail Marcu,
CEO
Alina Irinoiu,
CFO
MED LIFE S.A.
STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 6
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
Share Capital
Treasury
shares
Revaluation
Reserve
Accumulated
Results
Total Equity
Balance at Janaury 1, 2021
Increase from own shares acquisition
-
(3,669,511)
-
-
-
-
(3,669,511)
-
320,158
-
-
-
-
320,158
-
-
368,079
-
-
-
368,079
-
-
-
10,527,608
-
(10,527,608)
-
Balance as at December 31, 2021
33,217,623
(4,015,977)
49,177,468
34,538,597
66,588,874
80,073,849
259,580,434
General
Share reserves and
premium other
reserves
33,217,623
(666,624)
48,809,389
24,010,989
66,588,874
35,117,028
207,077,279
Net release of own shares used for
purchase of additional shares in other
entities
Increase in premiums due to
difference between fair value and cost
of own shares when the exchange was
made
Other reserves, including revaluation
reserve
Total comprehensive income
Profit of the year
-
-
-
-
-
-
-
-
-
-
55,484,429
55,484,429
55,484,429
55,484,429
Mihail Marcu,
CEO
Alina Irinoiu,
CFO
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 7
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
1.DESCRIPTION OF THE BUSINESS
Med Life S.A. (“Med Life” or the “Company”) is a joint-stock company incorporated in 1996, in accordance with the laws and
regulations of Romania. The Company’s activity resides in the performance of healthcare services activities (detailed under
3.19 and Note 16) through medical centres located in Bucharest, Cluj, Braila, Timisoara, Iasi, Galati, Ploiesti, Constanta
and Targu Mures.
Med Life is one of the leading health care services providers in Romania, having a significant market share at a national
level. The registered office of Med Life is located in Bucharest, Calea Grivitei, no. 365. The ultimate parent of the Med Life
Group is Med Life SA.
2.ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)
2.1Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year except for the following IFRS
amendments which have been adopted by the Company as of 1 January 2022:
-
IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent
Liabilities and Contingent Assets as well as Annual Improvements 2018-2020 (Amendments)
The amendments are effective for annual periods beginning on or after 1 January 2022 with earlier application
permitted. The IASB has issued narrow-scope amendments to the IFRS Standards as follows:
IFRS 3 Business Combinations (Amendments) update a reference in IFRS 3 to the previous version of the
IASB’s Conceptual Framework for Financial Reporting to the current version issued in 2018 without significantly
changing the accounting requirements for business combinations.
IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from the cost of
property, plant and equipment any proceeds from the sale of items produced while bringing the asset to the
location and condition necessary for it be capable of operating in the manner intended by management. Instead, a
company recognizes such sales proceeds and related cost in profit or loss.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments) specify which costs a
company includes in determining the cost of fulfilling a contract for the purpose of assessing whether a contract
is onerous. The amendments clarify, the costs that relate directly to a contract to provide goods or services
include both incremental costs and an allocation of costs directly related to the contract activities.
Annual Improvements 2018-2020 make minor amendments to IFRS 1 First-time Adoption of
International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the
Illustrative Examples accompanying IFRS 16 Leases
-
IFRS 16 Leases-Cοvid 19 Related Rent Concessions beyond 30 June 2021 (Amendment)
The Amendment applies to annual reporting periods beginning on or after 1 April 2021, with earlier application
permitted, including in financial statements not yet authorized for issue at the date the amendment is issued. In
March 2021, the Board amended the conditions of the practical expedient in IFRS 16 that provides relief to lessees
from applying the IFRS 16 guidance on lease modifications to rent concessions arising as a direct consequence of the
covid-19 pandemic. Following the amendment, the practical expedient now applies to rent concessions for which any
reduction in lease payments affects only payments originally due on or before 30 June 2022, provided the other
conditions for applying the practical expedient are met.
The amendments had no impact on the financial statements of the Company.
2.2Standards issued but not yet effective and not early adopted
-
IFRS 17: Insurance Contracts
-
The standard is effective for annual periods beginning on or after 1 January 2023 with earlier application permitted,
provided the entity also applies IFRS 9 Financial Instruments on or before the date it first applies IFRS 17. This is a
comprehensive new accounting standard for insurance contracts, covering recognition and measurement,
presentation and disclosure. IFRS 17 applies to all types of insurance contracts issued, as well as to certain
guarantees and financial instruments with discretional participation contracts.
The company does not issue contracts in scope of IFRS 17; therefore, its application does not have an impact on the
company’s financial performance, financial position or cash flows
.
-
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting
policies (Amendments)
The Amendments are effective for annual periods beginning on or after January 1, 2023 with earlier application
permitted. The amendments provide guidance on the application of materiality judgements to accounting policy
disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose ‘significant’ accounting
policies with a requirement to disclose ‘material’ accounting policies. Also, guidance and illustrative examples are
added in the Practice Statement to assist in the application of the materiality concept when making judgements
about accounting policy disclosures.
-
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting
Estimates (Amendments)
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 8
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
The amendments become effective for annual reporting periods beginning on or after January 1, 2023 with earlier
application permitted and apply to changes in accounting policies and changes in accounting estimates that occur on
or after the start of that period. The amendments introduce a new definition of accounting estimates, defined as
monetary amounts in financial statements that are subject to measurement uncertainty, if they do not result from a
correction of prior period error. Also, the amendments clarify what changes in accounting estimates are and how these
differ from changes in accounting policies and corrections of errors.
-
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(Amendments)
The amendments are effective for annual periods beginning on or after January 1, 2023 with earlier application
permitted. The amendments narrow the scope of and provide further clarity on the initial recognition exception under
IAS 12 and specify how companies should account for deferred tax related to assets and liabilities arising from a
single transaction, such as leases and decommissioning obligations. The amendments clarify that where payments
that settle a liability are deductible for tax purposes, it is a matter of judgement, having considered the applicable tax
law, whether such deductions are attributable for tax purposes to the liability or to the related asset component. Under
the amendments, the initial recognition exception does not apply to transactions that, on initial recognition, give rise
to equal taxable and deductible temporary differences. It only applies if the recognition of a lease asset and lease liability
(or decommissioning liability and decommissioning asset component) give rise to taxable and deductible temporary
differences that are not equal. s
-
IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
(Amendments)
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with earlier
application permitted, and will need to be applied retrospectively in accordance with IAS 8. The objective of the
amendments is to clarify the principles in IAS 1 for the classification of liabilities as either current or non-current. The
amendments clarify the meaning of a right to defer settlement, the requirement for this right to exist at the end of the
reporting period, that management intent does not affect current or non-current classification, that options by the
counterparty that could result in settlement by the transfer of the entity’s own equity instruments do not affect current
or non-current classification. Also, the amendments specify that only covenants with which an entity must comply on
or before the reporting date will affect a liability’s classification. Additional disclosures are also required for non-
current liabilities arising from loan arrangements that are subject to covenants to be complied with within twelve
months after the reporting period. The amendments have not yet been endorsed by the EU.
-
IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with earlier
application permitted. The amendments are intended to improve the requirements that a seller-lessee uses in
measuring the lease liability arising in a sale and leaseback transaction in IFRS 16, while it does not change the
accounting for leases unrelated to sale and leaseback transactions. In particular, the seller-lessee determines ‘lease
payments’ or ‘revised lease payments’ in such a way that the seller-lessee would not recognize any amount of the gain
or loss that relates to the right of use it retains. Applying these requirements does not prevent the seller-lessee from
recognizing, in profit or loss, any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies
the amendment retrospectively in accordance with IAS 8 to sale and leaseback transactions entered into after the date
of initial application, being the beginning of the annual reporting period in which an entity first applied IFRS 16. The
amendments have not yet been endorsed by the EU.
-
Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and
Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The
amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in
dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main
consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business
(whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets
that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015 the IASB
postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity
method of accounting. The amendments have not yet been endorsed by the EU.
The Company anticipates that the adoption of these new standards and amendments to the existing standards will have no
material impact on the financial statements of the Company in the period of initial application, except for the effects of IAS
12 amendment where the analysis of impact is ongoing as of 31 December 2022.
3.SIGNIFICANT ACCOUNTING POLICIES
The individual financial statements (“financial statements”) of the Company have been prepared in accordance with the
provisions of Ministry of Finance Order no. 2844/2016 approving the accounting regulations compliant with the
International Financial Reporting Standards, with all subsequent modifications and clarifications.
The Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, is in accordance with the
International Financial Reporting Standards (IFRS) adopted by the European Union (EU), except for IAS 21 The effects of
changes in foreign exchange rates regarding functional currency, except for the provisions of IAS 20 Accounting for
Government Grants regarding the recognition of revenue from green certificates, except for the provisions of IFRS 15
Revenue from contracts with customers regarding the revenue from taxes of connection to the distribution grid. These
exceptions do not affect the compliance of the financial statements of the Company with IFRS adopted by the EU.
The Company also prepares consolidated financial statements in accordance with IFRS as endorsed by the EU, which are
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 9
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
available on the Company’s website.
The accounting policies applied in these financial statements are the same as those applied in the Company’s annual
individual financial statements as at and for the year ended 31 December 2021, except for the adoption of new standards
effective as of January 1st 2022.
The financial year corresponds to the calendar year.
3.1Basis of preparation
The financial statements of the Company are presented in RON (“Romanian Leu”), using going concern principles. All
values are rounded to the nearest two decimals. The financial statements have been prepared on the historical cost
basis, except for certain items that have been measured at fair value, such as certain non-current assets and financial
instruments, as presented in the notes to the financial statements.
The Company maintains the accounting books in accordance with the Regulations on Accounting and Reporting issued
by the Ministry of Finance in Romania.
3.2Going concern
These financial statements have been prepared on a going concern basis, which assumes the Company will be able to
realize its assets and discharge its liabilities in the normal course of business. The Company will continue its activity
according to the normal course of business in the foreseeable future without encountering the impossibility of continuing its
activity or without the significant decrease of its activity.
For the purposes of assessing liquidity and going concern, the Company has modelled scenarios reflecting suitable
assumptions over the next 12–month period that serve to inform the decisions the Company takes regarding future cost
savings, cash generation, debt covenants and levels of investment. The Company’s financial performance to date in 2023
across all revenue streams has been in line with the modelled scenarios.
As a result of the recent signing of the refinancing syndicated loan contract, the Group has also undrawn facilities of an
amount of EUR 50.7m, which along with other liquidity of the Group, will be used for possible new acquisition
opportunities on the market.
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 andavailable facilities have remained
decreased at RON 15.1m at year-end, compared to RON 38.6m at 31 December 2021, mainly due to the intensified
projects of acquisitions of new subsidiaries in the Group.
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.
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.
3.3Significant 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
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 10
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
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.
Capitalisation of major inspections or components replacement (including spare parts)
The Company exercises judgement in deciding whether or not there are items that should be capitalised as items of
property, plant and equipment. In case of major inspections, the cost can be recognised in the carrying amount of the item
of property, plant and equipment, as a replacement, if the recognition criteria are satisfied. Individual components of a
significant amount in the total value of an equipment may be replaced, as well as spare parts which in aggregate can
become of a significant value that satisfy the recognition criteria. Management performs an assessment whether the
replacement increases the performance of the asset or increases its useful life and capitalises the costs incurred if the
recognition criteria are met.
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 beresolvedwhenoneor more future events occuror fail tooccur. The assessment of
contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events.
Please see note 28.
3.4.2. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are described below. The Company based its assumptions and estimates on parameters available when the
financial statements were prepared. Existing circumstances and assumptions about future developments, however, may
change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are
reflected in the assumptions when they occur.
Revaluation of Land and Buildings
The Group accounts for land and building using the fair value approach based on market comparative valuations
performedbycertifiedANEVARprofessional as perrevaluation reportsconcludedasat31December2022. Thevaluations
conform to International Valuation Standards. Please refer to Note 5 for further information.
Impairment of non-financial assets
The Company bases its impairment calculation on most recent budgets and forecast calculations, which are prepared
separately for each of the Company’s CGUs to which the individual assets are allocated. These budgets and forecast
calculations generally cover a period of five or six years. A long-term growth rate is calculated and applied to project
future cash flows after the fifth year.
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the
higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based
on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market
prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The
cashflowsarederivedfromthe budgetfor the nextfiveyears anddonotincluderestructuring activitiesthat the Company is
not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being
tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future
cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other
intangibles with indefinite useful lives recognised by the Company. The key assumptions used to determine the
recoverable amount for the various cash-generating units, including a sensitivity analysis, are calculated and
explained below in Note 20.
Allowance for expected credit losses of trade receivables
The Company always recognises lifetime expected credit losses (ECL) for trade receivables. The expected credit losses
are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 11
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time value of money where appropriate.
In determining adjustments for impairment of receivables, management incorporates forward-looking information,
exercises professional judgement and uses estimates and assumptions. Estimation of expected credit risk losses involved
forecasting future macroeconomic conditions for the next 2 years. More details on the assumptions, scenarios used and the
weights assigned to each scenario can be found in Note 7 dedicated to accounts receivables.
The incorporation of forward-looking elements reflects the expectations of the Company and involves the creation of
scenarios, including an assessment of the probabilities of materialization of each scenario.
Leases - Estimating the incremental borrowing rate
The Company cannot readily determine the interest rate implicit in its leases. Therefore, it uses the relevant incremental
borrowingrates tomeasurelease liabilities. Theseincremental borrowingratesweredetermined takingintoconsideration
factors such as the credit risk, currency in which the lease was denominated and economic environment.
Provision for untaken holidays
The Company recognizes a provision for untaken holidays equal to the number of unused leave multiplied by the relevant
employee’s gross salary at the reporting date. Please see note 12.
3.4Foreign currency and translation
Presentation currency
These financial statements are presented in Romanian Leu (“RON”), which is the currency of the primary economic
environment in which the Company operates (its “functional currency”).
The exchange rates as announced by the National Bank of Romania on 31 December 2022 were RON 4.9474 for EUR 1 (31
December 2021: RON 4.9481 for EUR 1), respectively 1.2354 for HUF 100 (31 December 2021: RON 1.3391 for 100 HUF).
The average exchange rates for the period of 12 months 2022 were 4.9315 RON for 1 EUR (12 months 2021: 4.9204
RON for 1 EUR), respectively 1,2648 RON for 100 HUF (12 months 2021: 1.3733 for 100 HUF).
Translation of foreign currencies
Transactions in foreign currencies are translated to the respective functional currency of the Company at the exchange
rate ruling at the time of the transaction. Foreign currency monetary assets and liabilities are retranslated into the
functional currency at rates of exchange ruling at the reporting date. The foreign exchange differences arising on these
translations are recognised as other financial income/expense in the income statement.
3.5Property, plant and equipment
Property, plant and equipment under the revaluation model
Land and buildings held for use in the supply of services, or for administrative purposes, are stated in the balance sheet at
their fair value, being the revalued amount at the date of revaluation, less any subsequent accumulated depreciation and
subsequent accumulated impairment losses, if any.
The value of land and buildings owned presented in these financial statements is based on the valuation reports which
were prepared as of December 31, 2022 by independent valuators certified by ANEVAR. The following steps were taken to
estimate the market value of the assets: analysis of assets subject to valuation; the evaluation approaches and the
valuation methods applied were based on the category of assets analysed, their location, their characteristics, specific
marketinformation; application of appropriate valuation methods foreach asset category(i.e. land and buildings)subject to
evaluation and estimation of the fair value of the assets analysed at the valuation date, 31 December 2022. The land is not
depreciated.
Valuations are performed with sufficient frequency to ensure that the carrying amount of a revalued asset does not differ
materially from its fair value.
Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and
the net amount is restated to the revalued amount of the asset.
A revaluation surplus is recorded in OCI and credited to the asset revaluation surplus in equity. However, to the extent that
it reverses a revaluation deficit of the same asset previously recognised in profit or loss, the increase is recognised in profit
and loss. A revaluation deficit is recognised in the statement of profit or loss, except to the extent that it offsets an existing
surplus on the same asset recognised in the asset revaluation surplus.
The Company transfers the revaluation surplus included in equity in respect of an item of property, plant and equipment
directly to retained earnings when the asset is derecognised (i.e., retired or disposed of).
Property, plant and equipment using the cost model
Leasehold improvements fall in this category and are stated at cost less accumulated depreciation and accumulated
impairment losses. Depreciation is recognised on a straight-line basis over the estimated useful life. The estimated useful life
for this type of asset is usually over the life of the lease, considering any potential contract prolongations.
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 12
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
Installations and equipment are also stated at cost, less accumulated depreciation and accumulated impairment losses,
if any.
Assets under construction are recorded at cost, less accumulated impairment losses and depreciated once they become
available for use.
An item of property, plant and equipment is initially recorded at cost. Cost includes all costs necessary to bring the asset to
working condition for its intended use. This includes not only its original purchase price, but also costs of site
preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated
cost of dismantling and removing the asset and restoring the site, if the case.
Proceeds from selling items produced while bringing an item of property, plant and equipment to the location and
condition necessary for it to be capable of operating in the manner intended by management are not deducted from the cost
of the item of property, plant and equipment, but recognised in profit or loss.
An entity evaluates under the recognition principle all its property, plant and equipment costs at the time they are
incurred. These costs include costs incurred initially to acquire or construct an item of property, plant and equipment and
costs incurred subsequently to add to, or replace part of it.
A condition of continuing to operate an item of property, plant and equipment may be performing regular major
inspections for faults regardless of whether parts of the item are replaced.
Costs with capital repairs are included in the carrying amount of the asset when it is probable that future economic
benefits above the initially evaluated standard of performance of the existing asset will be transferred to the Group.
Capital repairs are depreciated over the remaining useful period of the respective asset.
When each major inspection is performed, its cost is recognised in the carrying amount of the item of property, plant and
equipment as a replacement if the recognition criteria are satisfied. Any remaining carrying amount of the cost of the
previous inspection (as distinct from physical parts) is derecognised. This occurs regardless of whether the cost of the
previous inspection was identified in the transaction in which the item was acquired or constructed. If necessary, the
estimated cost of a future similar inspection may be used as an indication of what the cost of the existing inspection
component was when the item was acquired or constructed.
Expenses for repairs and maintenance are recognized in the profit or loss account when incurred.
In case of replacements, cost includes the cost of replacing part of the plant or equipment when that cost meets the
recognition criteria. If an item of property, plant and equipment consists of several components with different estimated
useful lives, the individual significant components are depreciated over their individual useful lives.
Itemssuch as spare parts, stand-byequipment andservicing equipment are recognised asproperty, plant andequipment
when they meet the definition, considering the aggregation and materiality criteria. Otherwise, such items are classified as
inventory.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives,
residual values and depreciation method are reviewed at the end of each year, and the effects of changes in estimates are
recorded prospectively.
The following useful lives are used in the calculation of depreciation:
Years
Buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
10 – 50 years
Term of the lease contract
3 – 15 years
3 – 15 years
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal (i.e., at
the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain
or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the statement of profit or loss when the asset is derecognised.
3.6Intangible assets
Intangible assets acquired separately are measured at initial recognition at cost. Following initial recognition, intangible
assets are stated at cost less accumulated amortization and accumulated impairment losses. Amortization is charged on a
straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the
end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Internallygenerated intangibles, excludingcapitaliseddevelopment costs, are not capitalised and the related expenditure
is reflected in profit or loss in the period in which the expenditure is incurred.
Company’s intangible assets are represented by software licenses, concessions, patents and other intangible assets
that are amortized on a straight-line basis over a period of 3 years. Please see Nota 5.
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 13
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the
net disposal proceeds and the carrying amount of the asset are recognized in profit or loss when the asset is
derecognized.
De-recognition of intangible assets
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, and are recognized in profit or loss when the asset is derecognized.
Impairment of non-financial assets
At the end of each reporting period, the Company reviews whether there is an indication that an asset may be impaired.
If any such indication exists, the recoverable amount of the asset is estimated.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be
identified.
Intangible assets that are not yet available for use are tested for impairment at least annually, and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted. The Company bases its impairment calculation on most recent budgets andforecast calculations.
These budgets and forecast calculations generally cover a period of six years. A long-term growth rate is calculated and
applied to project future cash flows after the fifth year.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than it carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognized immediately in profit or loss, unless the asset is previously revalued with the revaluation taken to OCI, in
which case the impairment loss is recognized in OCI up to the amount of any previous revaluation.
An assessment is made at each reporting date to determine whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the assets or
CGU’s recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset (or a
cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for
the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or
loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
3.7Inventories
Inventories are stated at the lower of cost and net realizable value. Cost of inventories comprises of all the costs incurred in
bringing the inventories to their present location and condition. Net realizable value represents the estimated selling price
for inventories less all estimated costs of completion and costs necessary to make the sale. The Company applies FIFO as a
costing method.
3.8Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the statement of cash flows, cash
and cash equivalents comprise cash on hand, cash held at call with banks with maturities of three months or less.
3.9Government grants
Government grants are assistance by government in the form of transfers of resources to an entity in return for past or
future compliance with certain conditions relating to the operating activities of the entity. They exclude those forms of
government assistance which cannot reasonably have a value placed upon them and transactions with government which
cannot be distinguished from the normal trading transactions of the entity.
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached
conditions will be complied with.
The Company has chosen to present grants related to income to be deducted in reporting the related expense.
The Company has elected to present government grants relating to the purchase of property, plant and equipment in the
statement of financial position as deferred income, which is recognised in profit or loss on a systematic and rational basis
over the useful life of the asset.
3.10 Financial instruments – initial recognition and subsequent measurement
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 14
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
3.10.1 Financial assets
Investments in subsidiaries
In the individual financial statements investments in subsidiaries are stated at historical cost less accumulated
impairment losses.
Dividends from subsidiaries
Dividends on equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is
established.
Initial recognition and classification
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
This classification on initial recognition depends on the Company’s business model with regard to the management of
financial assets and on the financial asset’s contractual cash flows characteristics.
With the exception of trade receivables that do not contain a significant financing component, the Company initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transactioncosts.Trade receivables thatdonotcontainasignificantfinancingcomponentare measuredatthe transaction
price as disclosed in note 3.20. Revenue from contracts with customers recognition.
Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at
fair value through profit or loss) are added to or deducted from the fair value of the financial assets, as appropriate, on
initial recognition.
A financial asset is measured at amortized cost if both of the following conditions are met:
-
the financial asset is held using a business model that aims to hold financial assets to collect contractual cash flows;
and
-
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely repayments of
principal and interest on the principal outstanding.
The Company has only recognised and subsequently measured financial assets at amortised cost.
Subsequent measurement
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject
to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest
income over the relevant period.
For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-
impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts
(including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where
appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the
principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that
initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset
is the amortised cost of a financial asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at
amortised cost. For financial assets other than purchased or originated credit-impaired financial assets, interest income is
calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial
assets thathavesubsequentlybecome credit-impaired.Forfinancialsets thathave subsequentlybecomecredit-impaired,
interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in
subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial
asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross
carrying amount of the financial asset. Interest income is recognised in profit or loss.
The Company’s financial assets at amortized cost include the following: trade receivables, other receivables, other
financial assets, cash and cash equivalents.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Company’s statement of financial position) when:
-
The contractual rights to receive cash flows from the asset have expired or
MED LIFE S.A.
NOTES TO THE AUDITED INDIVIDUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
(all amounts are expressed in RON, unless otherwise specified)
The accompanying notes are an integral part of the indivudual financial statemetns. | page 15
The English version of the consolidated financial statements represents a translation of the original individual financial statemetns issued in Romanian language
-
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either
(a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough
arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of
the asset, the Company continues to recognise the transferred asset to the extent of its continuing involvement. In that
case, the Company also recognises an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the Company could be required to
repay.
Impairment
The Company recognises an allowance for expected credit losses (ECLs) for all financial assets not held at fair value
