MED LIFE S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2018

PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY EUROPEAN UNION

(TOGETHER WITH INDEPENDENT AUDITOR'S REPORT AND ADMINISTRATORS' REPORT)

CONTENTS: PAGE :

INDEPENDENT AUDITOR'S REPORT	1 – 5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	6
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	7
CONSOLIDATED STATEMENT OF CASH FLOWS	8 - 9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	10 – 11
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	12 – 51
ADMINISTRATORS' REPORT	1 – 16

To the Shareholders, Med Life S.A.

Report on the Audit of the Consolidated Financial Statements

Opinion

1. We have audited the consolidated financial statements of Med Life S.A. and its subsidiaries (the Group), with registered office in 365 Grivitei Road, Bucharest, district 1, identified by unique tax registration code 8422035, which comprise the consolidated statement of financial position as at December 31, 2018, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and notes to the consolidated financial statements.
1. The financial statements as at December 31, 2018 are identified as follows:
Net assets/ Equity RON 178.872.902
Net profit/(loss) for the financial year RON 16.782.637
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2018, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Order 2844/2016, with subsequent amendments for the approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation (EU) No. 537/2014 of the European Parliament and the Council (forth named "the Regulation") and Law 162/2017 ("the Law"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), in accordance with ethical requirements relevant for the audit of the financial statements in Romania including the Regulation and the Law and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters

KEY AUDIT MATTER	How our audit addressed the key audit matter
Valuation of goodwill
Goodwill represents 11% of the total assets of the Group. Management conducts impairment tests on an annual basis or whenever there is an indication of impairment to assess the recoverability of the carrying value of goodwill. This is performed using discounted cash flow models. As disclosed in note 4, there are a number of key sensitive judgements made in determining the inputs into these models which include: >> Revenue growth >> Operating margins and >> The discount rates applied to the projected future cash flows. Accordingly, the impairment test of these assets is considered to be a key audit matter. Management have engaged specialists to assist with the determination of the discount rates for the significant Cash Generating Units to which the goodwill relates.	We focused our testing of the impairment of goodwill on the key assumptions made by management. Our audit procedures included: >> Engaging our internal specialists to assist with: −− Critically evaluating whether the model used by management to calculate the value in use of the individual Cash Generating Units complies with the requirements of IAS 36 Impairment of Assets. −− Evaluating the appropriateness of the assumptions used to calculate the discount rates and recalculating these rates. >>We evaluated the future projected cash flows used in the models to determine whether they are reasonable and supportable given the current economic climate and expected future performance of the Cash Generating Unit. >>We subjected the key assumptions to sensitivity analyses. >>We compared the projected cash flows, including the assumptions relating to revenue growth rates and operating margins, against historical performance to evaluate reasonableness of management's projections.

Other information- Administrator's Report

The administrator is responsible for preparation and presentation of the other information. The other information comprises the Administrator's report which includes the non-financial information declaration but does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and, unless otherwise explicitly mentioned in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements for the year ended December 31, 2018, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

With respect to the Administrator's report, we read it and report if this has been prepared, in all material respects, in accordance with the provisions of Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, for the approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU.

On the sole basis of the procedures performed within the audit of the consolidated financial statements, in our opinion:

a) the information included in the administrators' report for the financial year for which the financial statements have been prepared is consistent, in all material respects, with these financial statements;
b) the administrators' report has been prepared, in all material respects, in accordance with the provisions of Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, for the approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU;

Moreover, based on our knowledge and understanding concerning the Company and its environment gained during the audit on the (standalone) financial statements prepared as at December 31, 2018, we are required to report if we have identified a material misstatement of this Administrator's report . We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

1. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Order 2844/2016, with subsequent amendments, for the approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU with subsequent amendments and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
1. In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
1. Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

1. Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
1. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one

resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
1. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
1. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
1. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

We have been appointed by the General Assembly of Shareholders on April 28, 2018 to audit the financial statements of Med Life S.A. for the financial year ended December 31, 2018. The uninterrupted total duration of our commitment is 1 year, covering the financial years ended December 31, 208.

We confirm that:

Our audit opinion is consistent with the additional report submitted to the Audit Committee of the Company that we issued the same date we issued this report. Also, in conducting our audit, we have retained our independence from the audited entity.
No non-audit services referred to in Article 5 (1) of EU Regulation No. 537 / 2014 were provided.

The engagement partner on the audit resulting in this independent auditor's report is Madeline Alexander.

Madeline Alexander, Audit Partner

For signature, please refer to the original Romanian version.

Registered with the Authority for the Public Oversight of the Statutory Audit Activity under number 36

On behalf of:

DELOITTE AUDIT S.R.L.

Registered with the Authority for the Public Oversight of the Statutory Audit Activity under number 25

Sos. Nicolae Titulescu nr. 4- 8, America House, Intrarea de Est, Etajul 2 - zona Deloitte și Etajul 3, sector 1, Bucharest, Romania March 21, 2019

MED LIFE GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

	Note	December 31, 2018	January 1, 2018
ASSETS
Long Term Goodwill Intangible assets Tangible assets Financial assets	4 5 5 5.5	82,378,647 39,647,014 458,033,010 10,115,776	66,035,963 34,299,738 325,845,288 6,161,678
TOTAL NON-CURRENT ASSETS		590,174,447	432,342,667
Current Assets
Inventories Receivables Other receivables Cash and cash equivalents	6 7 8	31,070,480 78,957,879 13,117,114 34,206,159	20,325,330 58,450,406 5,549,527 79,227,766
		157,351,632	163,553,029
Assets classified as held for sale	9	381,665	381,665
Prepayments	10	6,186,462	7,068,126
TOTAL CURRENT ASSETS		163,919,759	171,002,820
TOTAL ASSETS		754,094,206	603,345,487
LIABILITIES & SHAREHOLDER'S EQUITY
Current Liabilities
Trade accounts payable Overdraft	11 14	140,970,528 30,911,018	103,839,523 2,013,469
Current portion of lease liability Current portion of long term debt Current tax liabilities Provisions	13 14	8,949,472 23,162,490 729,572 2,458,957	3,177,961 36,642,740 1,112,707 -
Other liabilities Liabilities directly associated with assets classified as held for sale	12 9	37,605,544 458,785	20,232,973 558,370
TOTAL CURRENT LIABILITIES		245,246,366	167,577,743
Long Term Debt
Lease liability Long term debt	13 14	26,525,231 287,013,365	10,111,452 242,797,699
TOTAL LONG-TERM LIABILITIES		313,538,596	252,909,151
Deferred tax liability	25	16,436,342	15,196,634
TOTAL LIABILITIES		575,221,304	435,683,528
SHAREHOLDER'S EQUITY
Issued capital	15	81,495,470	81,495,470
Treasury shares Reserves Retained earnings	17	(6,056,105) 93,906,109 (9,994,660)	- 93,181,880 (22,640,779)
Equity attributable to owners of the Group		159,350,814	152,036,571
Non-controlling interests	18	19,522,088	15,625,388
TOTAL EQUITY		178,872,902	167,661,959
TOTAL LIABILITIES AND EQUITY		754,094,206	603,345,487

Approved by the Board of Directors on the date of March 21, 2019 and signed on behalf of by:

The accompanying notes are an integral part of the consolidated financial statements. Free translation from the original Romanian version. Mihail Marcu, Vera Firu, Administrator Director Economic

MED LIFE GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

	Note	Year ended December 31 2018	Year ended December 31 2017
Sales Other operating revenues	19 20	794,562,861 9,844,865	623,219,949 7,496,681
Operating Income		804,407,726	630,716,630
Operating expenses	21,22	(766,014,417)	(595,857,844)
Operating Profit		38,393,309	34,858,786
Finance cost Other financial expenses	23 23	(17,567,816) 3,008,389	(14,201,686) (6,380,555)
Financial result	23	(14,559,427)	(20,582,241)
Result Before Taxes		23,833,882	14,276,545
Income tax expense	25	(7,051,245)	(5,544,920)
Net Result		16,782,637	8,731,625
Owners of the Group Non-controlling interests	18	13,370,348 3,412,289	4,382,702 4,348,924
Other comprehensive income items that will not be reclassified to profit or loss
Gain / Loss on revaluation of properties Corrections related to prior years Deferred tax on other comprehensive income components		- - -	- - -
TOTAL OTHER COMPREHENSIVE INCOME		-	-
Total other comprehensive income attributable to: Owners of the Group Non-controlling interests		- -	- -
TOTAL COMPREHENSIVE INCOME		16,782,637	8,731,625
Total comprehensive income attributable to: Owners of the Group Non-controlling interests	18	13,370,348 3,412,289	4,382,702 4,348,924

Approved by the Board of Directors on the date of March 21, 2019 and signed on behalf of by:

Mihail Marcu, Vera Firu,

Administrator Director Economic

The accompanying notes are an integral part of the consolidated financial statements. Free translation from the original Romanian version.

MED LIFE GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

	Note	Year ended December 31 2018	Year ended December 31 2017
Net income before taxes	25	23,833,883	14,276,545
Adjustments for
Depreciation	21	56,982,245	43,078,621
Disposal of subsidiaries Provisions for risks and charges		- (260,399)	- -
Interest revenue	23	(813,677)	(613,193)
Interest expense	23	17,567,816	14,201,686
Allowance for doubtful debts and receivables
written-off	7	(161,589)	(485,889)
Written off and allowance of other current assets Financial Discounts	7 23	- (6,983)	- -
Other non-monetary gains	20	(6,549,809)	(4,561,947)
Unrealized exchange gain / loss	23	1,407,018	7,102,716
Bargain gain	26	-	(729,165)
Net gain on disposal of property	5	-	-

Operating cash flow before working capital changes		91,998,505	72,269,374

Decrease / (increase) in accounts receivable Decrease / (increase) in inventories		(20,931,344) (5,902,259)	(18,029,348) (2,718,311)
Decrease / (increase) in prepayments		1,889,895	(155,089)
Increase / (decrease) in accounts payable		8,257,035	2,380,649
Cash generated from WC changes		(16,686,673)	(18,522,099)

Cash generated from operations		75,311,832	53,747,275
Income Tax Paid		(6,194,673)	(5,058,217)
Interest Paid		(18,165,105)	(13,455,456)
Interest received		813,677	613,193
Net cash from operating activities		51,765,731	35,846,795

Investment in business combination Additional participation interest acquired	26 26	(16,985,373) -	(29,388,050) (2,401,752)
Purchase of intangible assets	5	(2,396,311)	(1,534,853)
Purchase of property, plant and equipment	5	(49,923,781)	(40,626,665)
Proceed from sale business combination		-	-
Proceed from sale of fixed assets		-	-
Net cash used in investing activities		(69,305,465)	(73,951,320)

MED LIFE GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

	Note	Year ended December 31 2018	Year ended December 31 2017
Cash flow from financing activities
Share capital contribution	17	-	67,563,436
Increase in Loans	14	46,683,462	65,257,781
Payment of loans	14	(58,474,480)	(21,661,647)
Financial Lease payments		(9,341,826)	(14,218,842)
Dividends paid to NCI	18	(292,924)	(310,287)
Payments for acquisition of treasury shares		(6,056,105)	-
Net cash from / (used in) financing activities		(27,481,873)	96,630,441
Net change in cash and cash equivalents		(45,021,607)	58,525,916
Cash and cash equivalents beginning of the period		79,227,766	20,701,850
Cash and cash equivalents end of the period		34,206,159	79,227,766

Approved by the Board of Directors on the date of March 21, 2019 and signed on behalf of by:

Mihail Marcu, Vera Firu,

Administrator Director Economic

MED LIFE GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

	Share Capital
	Paid and registered	Paid, registered after year end**	Treasury shares	Share premium	General reserves and other reserves	Revaluation Reserve*	Accumulated Results	Attributable to owners of the parent	Non controlling interests	Total Equity
Balance as at January 1, 2018	5,023,000	513,271	-	75,959,199	10,920,039	82,261,841	(22,640,779)	152,036,571	15,625,388	167,661,959
Recognition of other reserves for
fiscal purposes	-	-	-	-	617,485	-	(617,485)	-	-	-
Recognition of other reserves	-	-	-	-	106,744	-	(106,744)	-	-	-
Sale of subsidiaries	-	-	-	-	-	-	-	-	-	-
Share capital contribution	-	-	-	-	-	-	-	-	-	-
Additional non-controlling interest arising as of result of business
combinations	-	-	-	-	-	-	-	-	777,335	777,335
Subsequent acquisition of NCI	-	-	-	-	-	-	-	-	-	-
Distribution of dividends	-	-	-	-	-	-	-	-	(292,924)	(292,924)
Acquisition of treasury shares	-	-	(6,056,105)	-	-	-	-	(6,056,105)	-	(6,056,105)
Total comprehensive income	-	-	-	-	-	-	13,370,348	13,370,348	3,412,289	16,782,637
Gain/loss on revaluation of properties Deferred tax related to revaluation	-	-	-	-	-	-	-	-	-	-
reserve Profit of the year (loss)	- -	- -	- -	- -	- -	- -	- 13,370,348	- 13,370,348	- 3,412,289	- 16,782,637
Balance as at December 31, 2018	5,023,000	513,271	(6,056,105)	75,959,199	11,283,019	82,261,841	(9,994,660)	159,350,814	19,522,088	178,872,902

Note*: The closing balance of the revaluation reserve as of December 31, 2018 in amount of RON 82,261,841 comprises revaluation reserve in amount of RON 97,438,877 and deferred tax computed on revaluation reserve in amount of RON (15,177,036).

Note**: In 2017, as a result of a Second Public Offering, Med Life S.A. issued 2,053,082 new shares with a nominal value of RON 0.25 per share, increasing the share capital from RON 5,023,000 to RON 5,536,271. The subscribers of the share increase will benefit from full rights related to the acquired shares starting from the date of the registration by the Central Depository. The shares were subscribed in 2017. The Central Depository registered the newly subscribed shares on January 11, 2018.

Approved by the Board of Directors on the date of March 21, 2019 and signed on behalf of by:

Mihail Marcu, Vera Firu,

Administrator Director Economic

The accompanying notes are an integral part of the consolidated financial statements. Free translation from the original Romanian version.

MED LIFE GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

	Share Capital
	Paid and registered	Paid, registered after year end**	Share premium	General reserves and other reserves	Revaluation Reserve*	Accumulated Results	Attributable to owners of the parent	Non controlling interests	Total Equity
Balance as at January 1, 2017	5,023,000	-	8,909,034	9,699,583	82,261,841	(24,346,985)	81,546,473	11,472,411	93,018,884
Recognition of other reserves for fiscal
purposes	-	-	-	18,040	-	(18,040)	-	-	-
Recognition of other reserves	-	-	-	1,202,416	-	(1,202,416)	-	-	-
Sale of subsidiaries	-	-	-	-	-	-	-	-	-
Share capital contribution	-	513,271	67,050,165	-	-	-	67,563,436	-	67,563,436
Additional non-controlling interest arising as
of result of business combinations	-	-	-	-	-	-	-	1,060,052	1,060,052
Subsequent acquisition of NCI	-	-	-	-	-	(1,456,040)	(1,456,040)	(945,712)	(2,401,752)
Distribution of dividends	-	-	-	-		-	-	(310,287)	(310,287)
Total comprehensive income	-		-	-	-	4,382,702	4,382,702	4,348,924	8,731,626

Gain/loss on revaluation of properties	-	-	-	-	-	-	-	-	-
Deferred tax related to revaluation reserve	-	-	-	-	-	-	-	-	-
Profit of the year (loss)	-	-	-	-	-	4,382,702	4,382,702	4,348,924	8,731,626
Balance as at December 31, 2017	5,023,000		513,271 75,959,199	10,920,039	82,261,841	(22,640,779)	152,036,571	15,625,388	167,661,959

Note*: The closing balance of the revaluation reserve as of December 31, 2017 in amount of RON 82,261,841 comprises revaluation reserve in amount of RON 97,438,877 and deferred tax computed on revaluation reserve in amount of RON (15,177,036).

							Approved by the Board of Directors on the date of March 21, 2019 and signed on behalf of by:
--	--	--	--	--	--	--	----------------------------------------------------------------------------------------------

Mihail Marcu, Vera Firu,

Administrator Director Economic

The accompanying notes are an integral part of the consolidated financial statements. Free translation from the original Romanian version.

1. DESCRIPTION OF THE BUSINESS

Med Life S.A. ("Med Life" or the "Parent Company" 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 through medical centres located in Bucharest, Brasov, Cluj, Braila, Sibiu, Timisoara, Iasi, Galati and Constanta.

Medlife Group is offering a large range of medical service having opened 20 Hyperclinics in Bucharest, Timisoara, Brasov, Arad, Iasi, Galati, Craiova, Braila, Sibiu, Cluj and Constanta, one Hyperclinic recently opened in Oradea, 47 Clinics, 10 hospitals – located in Bucharest, Sibiu, Arad and Brasov, 33 Laboratories, 10 Pharmacies and 9 Dental Clinics. The Group has also more than 140 private Clinic partners around Romania.

Medlife is one of the leading health care services providers in Romania, having a significant market share at a national level. The registered office of Medlife is located in Bucharest, Calea Grivitei, no. 365.

Medlfie's business model is based on providing medical services to its clients both individuals and companies.

The group's activities are split in six business lines:

Corporate: the corporate business line offers client companies health prevention packages as part of the benefits granted by the later to their employees
Clinics: the clinics business line includes ambulatory and imagistic medical services provided by the Group
Laboratories: the laboratory business line includes providing laboratory analyses, biochemical, haematological, coagulation, immunological, microbiological, anatomical, pathological, cytological, molecular and toxicological laboratory analyses
Hospitals: The Hospitals business line covers the Group's hospitalization activities, consisting of a wide range of medical and surgical specializations. The 10 hospitals of the group are located in Arad, Bucharest, Brasov, Cluj and Sibiu.
Pharmacies: The Business Line Pharmacies offer recipe products, free products and other associated medical products in the 10 pharmacies opened in or near the Clinics of the Group.
Dentistry: The Dentistry business line provides a wide range of dental services ranging from simple examinations to complex surgery

Details of Med Life SA's subsidiaries at December 31, 2018 and January 1, 2018 are as follows:

	Name of subsidiary	Principal Activity	Place of operation	December 31, 2018	January 1, 2018
1	Policlinica de Diagnostic Rapid SA	Medical Services	Brasov, Romania	80.01%	80.01%
2	Medapt SRL	Medical Services	Brasov, Romania	80.01%	80.01%
3	Histo SRL	Medical Services	Brasov, Romania	48.01%	48.01%
4	Policlinica de Diagnostic Rapid Medis SRL	Medical Services	Sfantul Gheorghe, Romania	64.01%	64.01%
5	Bahtco Invest SA	Development of building projects	Bucharest, Romania	100%	100%
6	Medsanrom SRL (Med Life Ocupational SRL)	Medical Services	Bucharest, Romania	100%	100%
7	Pharmalife Med SRL	Distribution of Pharmaceutical Products in specialised stores	Bucharest, Romania	100%	100%
8	Med Life Broker de Asigurare si Reasigurare SRL	Insurance broker	Bucharest, Romania	99%	99%
9	Accipiens SA	Rental activities	Bucharest, Romania	58%	58%
10	Genesys Medical Clinic SRL	Medical services	Bucharest, Romania	58%	58%
11	Biofarm Farmec SRL	Distribution of Pharmaceutical Products in specialised stores	Bucharest, Romania	58%	58%
12	RUR Medical SA	Medical services	Brasov, Romania	100%	100%
13	Biotest Med SRL	Medical services	Constanta, Romania	100%	100%
14	Vital Test SRL	Medical services	Bucharest, Romania	100%	100%
15	Bactro SRL (indirectly)	Other healthcare services	Deva, Romania	58%	58%
16	Centrul Medical Sama S.A.	Medical Services	Craiova, Romania	55%	55%

17	Ultratest S.A.	Other healthcare services	Craiova, Romania	55%	55%
18	Diamed Center SRL	Medical Services	Bucharest, Romania	100%	100%
19	Prima Medical SRL	Medical Services	Craiova, Romania	100%	100%
20	Stem Cells Bank SA	Medical Services	Timisoara, Romania	100%	100%
21	Dent Estet Clinic SA	Dental healthcare activities	Bucharest, Romania	60%	60%
22	Centrul Medical Panduri SA	Medical Services	Bucharest, Romania	90%	90%
23	Almina Trading SA	Medical services	Targoviste, Romania	80%	80%
24	Anima Specialty Medical Services SRL	Medical services	Bucharest, Romania	100%	100%
25	Anima Promovare si Vanzari SRL	Medical services	Bucharest, Romania	100%	100%
26	Valdi Medica SRL	Medical services	Cluj, Romania	55%	55%
27	Clinica Polisano SRL	Medical services	Sibiu, Romania	100%	0%
28	Solomed Clinic SA	Medical services	Pitesti, Romania	80%	0%
30	Ghencea Medical Center SA	Medical services	Bucharest, Romania	90%	0%
31	Sfatul medicului	Medical platform	Bucharest, Romania	100%	0%

1. DESCRIPTION OF THE BUSINESS (continued)

Dent Estet Clinic SA, Solomed Clinic SRL and Genesys SRL also own the following companies as described below:

	Name of subsidiary	Main activity	Place of operation	December 31, 2018	January 1, 2018
1	Green Dental Clinic SRL	Dental healthcare activities	Bucharest, Romania	51%	51%
2	Dentist 4 Kids SRL	Dental healthcare activities	Bucharest, Romania	52%	52%
3	Dent A Porter SRL	Dental healthcare activities	Bucharest, Romania	51.61%	51.61%
4	Dentestet Kids	Dental healthcare activities	Bucharest, Romania	52.94%	52.94%
5	Aspen Laborator Dentar	Dental healthcare activities	Bucharest, Romania	75%	75%
6	Solomed Plus SRL (owned by Solomed Clinic SA)	Medical services	Pitesti, Romania	100%	0%
7	Transilvania Imagistica SA (owned by Genesys SRL)	Medical services	Oradea, Romania	100%	0%

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)

2.1 Initial application of new amendments to the existing standards and interpretation effective for the current reporting period

The following standards, amendments to the existing standards and new interpretations issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for the current period:

Amendments to IFRS 4 "Insurance Contracts" Applying IFRS 4 Insurance Contracts adopted by the EU on 3 November 2017 (effective for annual periods beginning on or after 1 January 2018 or when IFRS 9 "Financial Instruments" is applied first time),
Amendments to IFRS 1 and IAS 28 due to "Improvements to IFRSs (cycle 2014-2016)" resulting from the annual improvement project of IFRS (IFRS 1, IFRS 12 and IAS 28) primarily with a view to removing inconsistencies and clarifying wording – adopted by the EU on 7 February 2018 (amendments to IFRS 1 and IAS 28 are to be applied for annual periods beginning on or after 1 January 2018).

The Group expects that the adoption of these new standards and amendments to existing standards will not have a material impact on the Group's financial statements during the initial period of application.

2.2 Amendments to the existing standards issued by IASB and adopted by the EU, adopted by Group, as at December 31, 2018

At the date of authorization of these consolidated financial statements, the following new standards and amendments to standards issued by IASB and adopted by the EU and adopted by Group:

IFRS 9 "Financial Instruments" adopted by the EU on 22 November 2016 (effective for annual periods beginning on or after 1 January 2018),
IFRS 15 "Revenue from Contracts with Customers" and amendments to IFRS 15 "Effective date of IFRS 15" - adopted by the EU on 22 September 2016 (effective for annual periods beginning on or after 1 January 2018).

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) (continued)

Amendments to IFRS 15 "Revenue from Contracts with Customers" - Clarifications to IFRS 15 Revenue from Contracts with Customers – adopted by the EU on 31 October 2017 (effective for annual periods beginning on or after 1 January 2018).

As at December 31, 2018, the Group has adopted these new standards and amendments to existing standards.

2.3 Amendments to the existing standards issued by IASB and adopted by the EU but not yet effective

At the date of authorization of these financial statements, the following new standards issued by IASB and adopted by the EU are not yet effective:

IFRS 16 "Leases" – adopted by the EU on 31 October 2017 (effective for annual periods beginning on or after 1 January 2019).

2.4 New standards and amendments to the existing standards issued by IASB but not yet adopted by the EU

At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Accounting Standards Board (IASB) except for the following new standards and amendments to the existing standards, which were not endorsed for use in EU as at the date of publication of financial statements (the effective dates stated below is for IFRS in full):

IFRS 14 "Regulatory Deferral Accounts" (effective for annual periods beginning on or after 1 January 2016) - the European Commission has decided not to launch the endorsement process of this interim standard and to wait for the final standard,
IFRS 17 "Insurance Contracts" (effective for annual periods beginning on or after 1 January 2021),
Amendments to IFRS 2 "Share-based Payment" Classification and Measurement of Share-based Payment Transactions (effective for annual periods beginning on or after 1 January 2018),
Amendments to IFRS 9 "Financial Instruments" Prepayment Features with Negative Compensation (effective for annual periods beginning on or after 1 January 2019),
Amendments to 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 and further amendments (effective date deferred indefinitely until the research project on the equity method has been concluded),
Amendments to IAS 19 "Employee Benefits" Plan Amendment, Curtailment or Settlement (effective for annual periods beginning on or after 1 January 2019),
Amendments to IAS 28 "Investments in Associates and Joint Ventures" Long-term Interests in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2019),
Amendments to IAS 40 "Investment Property" Transfers of Investment Property (effective for annual periods beginning on or after 1 January 2018),
Amendments to various standards due to "Improvements to IFRSs (cycle 2015-2017)" resulting from the annual improvement project of IFRS (IFRS 3, IFRS 11, IAS 12 and IAS 23) primarily with a view to removing inconsistencies and clarifying wording (effective for annual periods beginning on or after 1 January 2019),

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) (continued)

IFRIC 22 "Foreign Currency Transactions and Advance Consideration" (effective for annual periods beginning on or after 1 January 2018),
IFRIC 23 "Uncertainty over Income Tax Treatments" (effective for annual periods beginning on or after 1 January 2019).

The Group anticipates that the adoption of these new standards and amendments to the existing standards will have no material impact on the financial statements of Group in the period of initial application.

According to the Group's estimates, the application of hedge accounting to a portfolio of financial assets or liabilities pursuant to IAS 39: "Financial Instruments: Recognition and Measurement" would not significantly impact the financial statements, if applied as at the balance sheet date.

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of these consolidated financial statements of the Group are set out below.

3.1 Statement of compliance

The consolidated financial statements have been prepared in accordance with International Accounting Standards for Financial Reporting ("IFRSs") as adopted by the European Union ("EU").

The accounting policies applied in these financial statements are the same as those applied in the Group's annual consolidated financial statements as at and for the year ended 31 December 2017, except for the adoption of new standards effective as of January 1st 2018.

Starting with January 1st 2018, the Group has applied for the first time two new standards, IFRS 9 "Financial instruments" and IFRS 15 "Revenues from contracts with customers".

Additionally, the consolidated financial statements have been prepared in accordance with Order 2844/2016 for the approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU with subsequent amendments.

3.2 Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for the revaluation of certain non-current assets and financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

These consolidated financial statements have been prepared to serve the Group as statutory consolidated financial statements.

The Group maintains its accounting records in Romanian Lei ("RON") and maintains the accounting books in accordance with the Regulations on Accounting and Reporting issued by the Ministry of Finance in Romania. The accompanying consolidated financial statements are based on the statutory accounting records of the individual entities and have been adjusted to present the consolidated financial statements in accordance with IFRS.

3.3 Going concern

These consolidated financial statements have been prepared on a going concern basis, which assumes the Group will be able to realize its assets and discharge its liabilities in the normal course of business. The Group 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.

3.4 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Parent Company (Med Life S.A.) and entities controlled by the Company (its subsidiaries). Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Noncontrolling interests in subsidiaries are identified separately from the Group's equity therein.

The interests of non-controlling shareholders are initially measured at the non-controlling interests' proportionate share of the fair value of the acquired company's identifiable net assets.

Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

3.5 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method.

The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree.

The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair value at the acquisition date.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognized amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

3.6 Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see 3.5 above) less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cashgenerating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statement of comprehensive income/income statement. An impairment loss recognized for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

3.7 Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

3.8 Accounting estimates and judgments

The preparation of the consolidated 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. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.9 Foreign currency translation

Functional and presentation currency

These consolidated financial statements are presented in Romanian Leu ("RON"), which is the currency of the primary economic environment in which the Group operates (its "functional currency").

As at December 31, 2018 the exchange rate was of 4.0736 RON for 1 USD (31 December 2017: RON 3.8915 for 1 USD) and of 4.6639 RON for 1 EUR (31 December 2017: RON 4.6597 for 1 EUR). The average exchange rate for the period of 12 months ended 31 December 2018 was of 3.9416 RON for 1 USD (12 months period ended 31 December 2017 : 4.0525 for 1 USD) and 4.6535 RON for 1 EUR (12 months period ended 31 December 2017 : 4.5681 RON for 1 EUR).

The monetary assets and liabilities in foreign currency as of reporting date have been converted from EUR to RON at the closing exchange rate as announced by the National Bank of Romania.

The profit and loss incurred before the transaction date of the acquired businesses in 2018 and in 2017 were eliminated.

3.10 Comparative information

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

3.11 Property, plant and equipment

Land and buildings held for use in the supply of services, or for administrative purposes, are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The value of land and buildings owned presented in these consolidated financial statements is based on the valuation reports which were performed as of December 31, 2016 by independent valuators certified by ANEVAR. The revaluation is performed with sufficient regularity as to ensure that the Group presents land and buildings at fair value in the consolidated financial statements. The Group performed the revaluation as of December 31, 2018 for a sample of buildings to identify whether there have been significant changes in fair value. Considering that the resulted fair values were not significantly different compared to the carrying values of the selected assets, the revaluation exercise was not extended to all the relevant assets and no revaluation was recorded as of December 31, 2018.

Repairs and maintenance are charged to the statement of income during the financial period in which they incur. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. Freehold land is not depreciated.

Fixtures and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on the amounts of property, plant and equipment on a straight-line basis down to the assets' estimated residual values. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

The following useful lives are used in the calculation of depreciation:

Years

Buildings 10 – 50 years Plant and equipment 3 – 15 years Fixtures and fittings 3 – 15 years

3.12 Assets held under finance leases

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

3.13 Intangible assets

Intangible assets acquired are reported 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.

The Group's intangible assets are represented by software licenses which are amortized straight-line over a period of three years.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

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 tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group 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 with indefinite useful lives and intangible assets 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.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its 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 relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

3.13 Intangible assets (continued)

Impairment of tangible and intangible assets other than goodwill

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.

3.14 Investments in subsidiaries

A subsidiary is an entity, including an unincorporated entity such as a partnership, which is controlled by another entity (known as the parent). Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

A parent company, shall present consolidated financial statements in which it consolidates its investments in subsidiaries in accordance with this IAS 27 Consolidated and Separate Financial Statements.

3.15 Investments in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in the consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments.

Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate.

3.16 Inventories

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, being valued on a first in first out basis. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. The group applies FIFO as a costing method.

3.17 Trade receivables

Receivables are stated in the balance sheet at anticipated realizable value. An allowance for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the collection terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the allowance is determined based on Management risk assessment of the trade receivables collectability.

3.18 Cash 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 original maturities of three months or less.

3.19 Financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are initially recognized at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction cost. Fair value is the amount for which a financial instrument could be exchanged between knowledgeable and willing parties in an arm's length transaction.

3.20 Accounts payable

Liabilities for trade payables are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group.

3.21 Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss. Contingent rentals are recognized as expenses in the periods in which they are incurred.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.

3.22 Borrowing costs

All loans and borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. The transaction costs incurred in issuing the liability are amortized over the life of the loan.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method; any difference between fair value of the proceeds (net of transaction costs) and the redemption amount is recognized as interest expense over the period of the borrowings.

3.23 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the combined income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax base used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognized directly in equity, in which case the tax is also recognized directly in equity.

3.24 Share capital

Ordinary shares are classified as equity. Dividends on ordinary shares are recognized in equity in the period in which they are declared.

3.25 Share premiums

Share premiums are own funds created as a result of the difference between the issue value of the shares and the nominal value of the shares. The Group recorded share premiums as a result of the issue of shares.

3.26 Revaluation reserve

The increases in the fair value of land and buildings are recorded against revaluation reserves. Any decreases in the fair value of land and buildings are first deducted from the revaluation reserves and then the difference is recorded through profit and loss accounts. The revaluation is performed with sufficient regularity as to ensure that the Group presents land and buildings at fair value in the consolidated financial statements.

Free translation from the original Romanian version.

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.27 Provisions for risks and charges

Provisions are recognized when the Group has a legal or constructive obligation, as a result of a past event and it is probable that there will be a future outflow of resources in order to extinguish this liability. Provisions for risks and charges are assessed at the end of each period and adjusted in order to present management's best estimate.

3.28 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Rendering of services

Sales of services are recognized in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. The Group does not operate any customer loyalty program.

The Group is rendering health care medical services to corporate and retail customers. Corporate customers revenues are recognized based on monthly prevention packages at the end of the month at the level of the agreed value for the each prevention package. Revenues for retail customers are recognized when the services are actually rendered.

Interest revenues

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

3.29 Employee benefits

Employee benefits

The Group, in the normal course of business, makes payments to the Romanian State on behalf of its employees for pensions, health care and unemployment cover. The cost of these payments is charged to the income statement in the same period as the related salary cost.

All employees of the Group are members of the Romanian State pension plan. The Group does not operate any other pension scheme.

3.30 Related parties

The relationships between the entities and the company are special when one of the parties has the ability to directly control or significantly influence the other party, by using ownership, contractual rights, family relationships or any other means.

Related parties also include individuals which are principal owners, management or members of the Group's Board of Directors, as well as the members of their families.

These consolidated financial statements have been prepared based on the fact that the parties have entered into arm's length transactions with the entities within the group and according to objectively established prices.

3.31 Fair value

As described above, certain accounting policies of the Group and information presentation criteria require determination of the fair value both for the assets and the liabilities of the Group.

In determining the fair value of assets and liabilities, the Group uses as much as possible observable market values. Fair values are classified on various levels based on inputs used in valuation techniques, as follows:

Level 1: (unadjusted) quoted prices on active markets for identical assets and liabilities
Level 2: inputs, other than the prices included in level 1,which are observable for assets and liabilities, either directly (e.g.: prices) or indirectly (e.g: derived from prices)
Level 3: inputs for evaluation of assets and liabilities which are not based on observable market data.

The fair values were assessed for evaluation or presentation of information based on the methods and techniques described below.

Fair value was assessed for land and buildings owned as of December 31, 2016 based on independent evaluators reports. The fair value of land was established based on market value approach. The fair value for buildings was established based on cost of replacement approach.

3.32 IAS 29

Med Life SA was created in 1996. The development of the Company was continuous throughout the years. The significant additions to non-current assets and the material share capital subscriptions and the share premiums were recorded after Romania stopped being considered a hyperinflationary economy. As such, no inflation adjustments have been applied to equity and the Company did not have to apply IAS 29 requirements.

3.33 IFRS 8

IFRS 8 disclosures are meant to enable users of financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.

An operating segment is a component of an entity:

(a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity),
(b) whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and
(c) for which discrete financial information is available.

The Group considers that all the business activities from which it earns revenues are intertwined and that the main business activity represents one segment- the rendering of medical services.

In order to enable users of the financial statements to evaluate the nature and financial effects of the business, the Group decided to present the revenues split on the main business lines.

3.34 IFRS 9 "Financial instruments"

Starting with January 1st 2018, the Group has applied for the first time the new standard IFRS 9 "Financial instruments". IFRS 9 introduces changes regarding the recognition and measurement of financial assets and results in an earlier recognition of bad debt allowances for receivables.

Being permitted by the standard, the Group adopted IFRS 9 starting with January 1st 2018 using the modified retrospective method, with cumulated adjustments from the initial application recognized in equity as of January 1st 2018 and without restating the figures of the comparative period.

For the Group's trade receivables, there are no significant differences between the initial evaluation method according to IAS 39 and the new evaluation criteria under IFRS 9.

3.35 IFRS 15 "Revenues from contracts with customers"

IFRS 15 "Revenues from contracts with customers" introduces a comprehensive model for revenue recognition and measurement. The standard replaces the existing criteria for revenue recognition, replacing the standards IAS 18 "Revenue", IAS 11 "Construction Contracts" and IFRIC 13 "Customer Loyalty Programmes".

Under the new standard, revenue is recognized when or as the customer acquires control over the goods or services rendered, at the amount which reflects the price at which the Group is expected to be entitled to receive in exchange of those goods or services.

Being permitted by the standard, the Group adopted IFRS 15 starting with January 1st 2018 using the modified retrospective method, with cumulated adjustments from the initial application recognised in equity as of January 1st 2018 and without restating the figures of the comparative periods. The initial application has no impact on the Group's Retained Earnings.

In respect to the timing of the revenue recognition, all of the Group's services provided are transferred to the customer when the services are rendered. Based on internal assessment of the possible impact resulting from the application of IFRS 15 not significant effect was identified on these consolidated financial statements.

Also, a number of other amendments and interpretations have been effective starting with January 1st 2018, but do not have a significant effect on these consolidated financial statements.

3.36 IFRS 16 "Leases"

Starting with January 1st 2019, the Group will adopt the new standard IFRS 16 "Leases". IFRS 16 is effective for annual periods beginning on or after January, 1st 2019. IFRS 16 replaces existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The Group is currently performing a detailed assessment of the impact resulting from the application of IFRS 16. Recognition of a right of use as an asset and a lease liability for contracts existing on 31 December 2018 will result in an increase in the value of tangible assets and liabilities of approximately ROL 110 million on 1 January 2019. On the income and expense side, will report depreciation expense and interest expense instead of rental expenses. This will lead to an increase in operating result that will be offset by higher interest expense. Based on the analysis, the resulting impact is not significant.

3.37 Subsequent events

The effect of significant subsequent events, after the reporting period, which supplies additional information regarding the financial position of the Group and require adjustments are reflected in the balance sheet or profit and loss, if the case. The significant events that do not require adjustments are disclosed in the notes of the separate financial statements.

4. GOODWILL

The Group records goodwill resulting from business combinations.

Please see below the goodwill recorded as of December 31, 2018 and January 1, 2018:

	December 31, 2018	December 31, 2017
Policlinica de Diagnostic Rapid Group	11,281,899	11,281,899
Pharmalife Med SRL	138,997	138,997
Accipiens Group	10,853,416	10,853,416
Biotest Med SRL	215,289	215,289
Vital Test SRL	90,706	90,706
Centrul Medical Sama SA	1,492,537	1,492,537
Ultratest Craiova SA	9,807	9,807
Bactro	68,393	68,393
Diamed Center SRL	2,646,208	2,646,208
Prima Medical SRL	1,422,493	1,422,493
Stem Cells Bank SA	1,217,669	1,217,669
Dent Estet Clinic SA	7,576,551	7,576,551
Centrul Medical Panduri SA	6,979,272	6,979,272
Almina Trading SRL	6,354,631	6,354,631
Anima Specialty Medical Services SRL	12,863,892	12,863,892
Valdi Medica SRL	2,824,203	2,824,203
Clinica Polisano SRL	4,070,023	-
Ghencea Medical Center	4,693,895	-
Grupul Solomed	6,066,602	-
Sfatul medicului	1,503,438	-
Transilvania Imagistica	8,726	-

TOTAL	82,378,647	66,035,963

Movement in Goodwill

	December 31, 2018	December 31, 2017
Balance at the beginning of the year Goodwill recognized during the year Disposal of subsidiaries	66,035,963 16,342,684 -	43,993,237 22,042,726 -
TOTAL	82,378,647	66,035,963

During the year ended December 31, 2018, the Group obtained control over various companies and recorded a goodwill of RON 16,342,684. For further details on business combinations performed in the year ended December 31, 2018 and the year ended December 31, 2017, please see note 25.

Management conducts impairment tests on an annual basis or whenever there is an indication of impairment to assess the recoverability of the carrying value of goodwill. This is performed using discounted cash flow models.

There are a number of key sensitive judgements made in determining the inputs into these models which include:

Revenue growth
Operating margins and
The discount rates applied to the projected future cash flows.

Management have engaged specialists to assist with the impairment analysis. No impairment of goodwill was identified as of December 31, 2018.

5. TANGIBLE AND INTANGIBLES FIXED ASSETS

As of December 31, 2018 the Group's tangible and intangible assets' structure was the following:

	Intangibles*	Land	Constructions	Vehicles and equipment	Construction in progress	Total
January 1, 2018	66,401,761	27,114,136	243,558,849	229,918,397	12,089,627	579,082,770
Additions Transfers	5,485,867	- -	545,292 10,683,259	63,882,798 109,930	13,876,893 (10,793,189)	83,790,850 -
Disposals	(36,144)	-	-	(4,199,280)	-	(4,235,424)
Additions from business combinations Disposals from business combinations Revaluation	6,496,547 - -	- - -	55,731,400 - -	110,597,699 - -	33,606 - -	172,859,252 - -
December 31, 2018	78,348,031	27,114,136	310,518,800	400,309,544	15,206,937	831,497,448

For details regarding additions from business combinations – please see further details in Note 25.

	Intangibles*	Land	Constructions	Vehicles and equipment	Construction in progress	Total
Depreciation
January 1, 2018	32,102,023	84,120	45,751,453	141,000,148	-	218,937,744
Charge of the year	6,223,206	-	16,585,505	34,173,534	-	56,982,245
Disposals	(19,075)	-	-	(2,021,308)	-	(2,040,383)
Additions from business combinations	394,863	-	8,364,245	51,178,710	-	59,937,818
Disposals from business combinations	-	-	-	-	-	-
Revaluation	-	-	-	-	-	-
Impairment losses recognized in profit or loss	-	-	-	-	-	-
December 31, 2018	38,701,017	84,120	70,701,203	224,331,084	-	333,817,424
Net Book Values
January 1, 2018	34,299,738	27,030,016	197,807,396	88,918,249	12,089,627	360,145,026
December 31, 2018	39,647,014	27,030,016	239,817,597	175,978,460	15,206,937	497,680,024

Free translation from the original Romanian version.

6. TANGIBLE AND INTANGIBLES FIXED ASSETS (continued)

As of December 31, 2017 the Group's tangible and intangible assets' structure was the following:

	Intangibles*	Land	Constructions	Vehicles and equipment	Construction in progress	Total
January 1, 2017	49,662,705	27,114,136	220,255,015	187,925,500	9,939,797	494,897,153
Additions	6,096,799	-	10,376,979	26,149,889	10,531,607	53,155,274
Transfers	-	-	8,516,418	-	(8,516,418)	-
Disposals	-	-	(15,865)	(1,890,496)	-	(1,906,361)
Additions from business combinations	10,642,257	-	4,426,302	17,733,504	134,641	32,936,704
Disposals from business combinations	-	-	-	-	-	-
Revaluation	-	-	-	-	-	-
December 31, 2017	66,401,761	27,114,136	243,558,849	229,918,397	12,089,627	579,082,770

For details regarding additions from business combinations – please see further details in Note 25.

	Intangibles*	Land	Constructions	Vehicles and equipment	Construction in progress	Total
Depreciation
January 1, 2017	23,149,782	84,120	28,880,616	111,412,319	-	163,526,837
Charge of the year Disposals Additions from business combinations Disposals from business combinations Revaluation Impairment losses recognized in profit or loss	5,792,478 - 3,159,763 - - -	- - - - - -	16,874,941 (15,865) 11,761 - - -	20,411,202 (1,564,250) 10,740,877 - - -	- - - - - -	43,078,621 (1,580,115) 13,912,401 - - -
December 31, 2017	32,102,023	84,120	45,751,453	141,000,148	-	218,937,744
Net Book Values
January 1, 2017	26,512,923	27,030,016	191,374,399	76,513,181	9,939,797	331,370,316
December 31, 2017	34,299,738	27,030,016	197,807,396	88,918,249	12,089,627	360,145,026

Free translation from the original Romanian version.

5. TANGIBLE AND INTANGIBLES FIXED ASSETS (continued)

5.1. Land and buildings carried at fair value

The value of land and buildings related to Med Life, PDR, Accipiens, Rur Medical and Bahtco Invest presented in this consolidated financial information is based on the valuation reports which were performed as of December 31, 2016 by independent valuators certified by ANEVAR. The Group performed the revaluation as of December 31, 2018 for a sample of buildings to identify whether there have been significant changes in fair value. Considering that the resulted fair values were not significantly different compared to the carrying values of the selected assets, the revaluation exercise was not extended to all the relevant assets and no revaluation was recorded as of December 31, 2018.

The plots of land subject to the revaluation reports were valued using the market comparison approach as well as the residual method. The value conclusion was based on the market comparison approach.

The buildings were valued by using both the cost approach and the income approach (capitalization of net rental income). The final value conclusion is the one derived from the application of the cost approach.

Had the Group's land and buildings been measured on a historical cost basis, their carrying amount would have been as presented below:

Carrying amount without revaluation	December 31, 2018	January 1, 2018
Land Buildings	4,705,086 186,320,397	4,705,086 130,019,084
TOTAL	191,025,483	134,724,170

5.2. Assets pledged as securities

Land and buildings have been pledged to secure borrowings of the Group (see note 14). The land and buildings have been pledged as security for bank loans under a mortgage. The Group is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

mortgage on the land located in Calea Grivitei nr 365 sector 1 Bucharest Romania (cadastral number 13183/1) and related constructions
mortgage on the land and buildings that make up the Pediatric Hospital in Bucharest. str. Zagazului nr. 7 - CF 218010
mortgage on the land and buildings that make up the Clinic and PDR Hospital located in Brasov str. 5 - CF 127854

5. TANGIBLE AND INTANGIBLES FIXED ASSETS (continued)

5.3. Intangible assets

Carrying amount	December 31, 2018	January 1, 2018
Set-up and development costs Customer lists Contract advantage	8,563 6,022,310 4,992,463	13,758 3,683,529 4,088,463
Trademark Concessions, patents, licenses, trademarks and similar rights	15,452,595	12,655,595
and assets Other intangible assets	4,267,216 8,903,867	4,572,641 9,285,752
TOTAL	39,647,014	34,299,738

5.4. Intangible assets acquired in a business combination

	Customer	Contract
Subsidiary	List	Advantage	Trademark	Total
Policlinica de Diagnostic Rapid
(2010)	2,335,446	282,163	-	2,617,609
Med Life Ocupational (2010)	10,427	64,546	-	74,973
Genesys Clinic (2011)	631,221	-	-	631,221
Vital Test (2014)	-	8,462	-	8,462
Biotest (2014)	-	25,579	-	25,579
Diamed (2016)	-	839,438	605,153	1,444,591
Prima Medical (2016)	-	115,865	688,850	804,715
Stem Cells Bank (2016)	338,056	-	-	338,056
Dent Estet Clinic (2016)	930,189	-	9,654,592	10,584,781
Centrul Medical Panduri (2016)	-	318,179	-	318,179
Almina Trading SRL (2017)	-	632,000	321,000	953,000
Anima S (2017)	1,130,000	1,150,000	1,288,000	3,568,000
Anima P (2017)	-	870,567	-	870,567
Valdi Medica SRL (2017)	-	-	98,000	98,000
Clinica Polisano (2018)	-	-	2,076,000	2,076,000
Ghencea Medical Center (2018)	-	600,000	280,000	880,000
Grupul Solomed (2018)	-	170,000	157,000	327,000
Sfatul medicului (2018)	2,338,781	-	235,000	2,573,781
Transilvania Imagistica (2018)	-	134,000	49,000	183,000
Total	7,714,120	5,210,799	15,452,595	28,377,514

5. TANGIBLE AND INTANGIBLES FIXED ASSETS (continued)

5.5. Financial assets

Carrying amount	December 31, 2018	January 1, 2018
Long-term receivables for stem cells processing Additional acquisition of shares in Sama (10%) Other receivables	8,581,006 1,532,500 2,270	6,160,418 1,260
TOTAL	10,115,776	6,161,678

As of December 31, 2018, the Group presents RON 8,581,006 as long-term receivables for stem cells processing.

6. INVENTORIES

	December 31, 2018	January 1, 2018
Consumables	20,132,101	10,981,134
Materials in the form of inventory items	254,463	112,671
Commodities	10,682,477	9,230,143
Inventory in transit	1,439	1,382
TOTAL	31,070,480	20,325,330

7. ACCOUNTS RECEIVABLE

	December 31, 2018	January 1, 2018
Customers	91,081,445	71,761,034
Advances to suppliers Bad debt provisions	5,285,312 (17,408,878)	3,581,967 (16,892,595)
TOTAL	78,957,879	58,450,406

Trade receivables as of December 31, 2018 and as of January 1, 2018 include a receivable of RON 7,365,835 representing amounts to be collected from the National Health House of Bucharest not yet invoiced. The Group started legal actions against the National Health House of Bucharest. The management is confident that the receivable may be eventually recovered, but given the adverse court decisions in similar cases, the Group decided to record a 100% allowance during 2016.

Trade receivables disclosed above are classified as receivables and are therefore measured at amortized cost.

The average credit period on collection for services rendered is 90 days. No interest is charged on trade receivables for the first 90 days from the date of the invoice.

As of December 31, 2018 and January 1, 2018, the Management of the Group performed an assessment regarding the collectability of receivables - a total allowance of RON 17.408.878 (which includes the amount of RON 7,365,835 in relation to the National Health House described above) represents management's best estimate regarding the receivables which are not to be collected. The assessment takes into consideration the collection pattern of the receivables over the last two years. The Group monitors the credit quality of its customers on an ongoing basis. Credit risk is spread over a large customer base and the Group is not dependent on the collection of receivables from a limited number of customers.

7. ACCOUNTS RECEIVABLE (continued)

Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting period but against which the Group has not recognized an allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Group to the counterparty.

Ageing of past due but not impaired

	December 31, 2018	January 1, 2018
90 - 180 days	624,033	488,216
180 days - 270 days 270 - 365 days	677,174 654,092	973,664 2,271,282
Over 365 days TOTAL	4,784,670 6,739,968	3,874,936 7,608,098
Average age (days)	90	90

The corporate receivables are spread over a large pool of clients. The main state budget customer is: The National Health Insurance House.

Movement in the allowance for doubtful debts	December 31, 2018	January 1, 2018
Balance at the beginning of the year	16,892,595	16,670,802
Additions from business combinations	516,283	707,682
Impairment losses and reversals recognized on receivables	-	(485,889)
TOTAL	17,408,878	16,892,595

In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivables from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the customer base being large and unrelated. The Group is not dependent on the collection of receivables from a limited number of customers.

Ageing of impaired trade receivables	December 31, 2018	January 1, 2018
270-365 days Over 365 days	- 10,043,043	- 9,526,760
TOTAL GENERAL	10,043,043	9,526,760
Other allowance (described above)	7,365,835	7,365,835
TOTAL	17,408,878	16,892,595

8. CASH AND BANKS

	December 31, 2018	January 1, 2018
Cash in bank Cash in hand	30,568,057 2,038,387	76,956,322 1,683,744
Cash equivalents	1,599,715	587,700
TOTAL	34,206,159	79,227,766

As of December 31, 2017, the cash at bank increased materially as a result of the subscription of the new shares. Please see note 15 for more details.

9. ASSETS CLASSIFIED AS HELD FOR SALE

	December 31, 2018	January 1, 2018
Apartment owned by Med Life Ocupational	381,665	381,665
TOTAL	381,665	381,665

The Group intends to dispose of the above assets within a twelve month period. The disposal of the apartment held by Med Life Occupational is directly linked to advance payment made by the former shareholders, recorded as a liability as of December 31, 2018 and January 1, 2018 in Med Life Group's consolidated financial statements and to a loan from Bancpost, contracted to buy this apartment.

The amount of liabilities directly linked to assets held for sale as of December 31, 2018 is RON 458,785 (January 1, 2018: RON 558,370).

10. PREPAYMENTS

As of December 31, 2018 the Group has prepayments in amount of RON 6,186,462 (RON 7,068,126 as of January 1, 2018). The prepayments balance as of December 31, 2018 and January 1, 2018 consists mainly of deferred commissions for financing related to the Club loan and amounts related to rent paid in advance for rented properties and other amounts such as insurance policies for professionals and tangible assets.

11. ACCOUNTS PAYABLE

	December 31, 2018	January 1, 2018
Suppliers Fixed assets suppliers Advances paid by customers	121,406,820 17,802,730 1,760,978	88,686,385 13,667,285 1,485,853
TOTAL	140,970,528	103,839,523

12. OTHER SHORT TERM LIABILITIES

	December 31, 2018	January 1, 2018
Salary and related liabilities
(including social contributions) Other liabilities	13,028,465 24,577,079	14,985,699 5,247,274
TOTAL	37,605,544	20,232,973

13. LEASING LIABILITIES

December 31, 2018	January 1, 2018
26,525,231	10,111,452
	3,177,961 13,289,413
	8,949,472 35,474,703

Leasing facilities refer to medical equipment and vehicles acquired.

Obligations under finance lease	December 31, 2018	January 1, 2018
Minimum Lease Payments
Short-term (less than one year) Long-term (between 2 and 5 years)	10,355,394 29,808,409	3,977,222 12,828,762
Total	40,163,803	16,805,984
Less: future finance charges	(4,689,100)	(3,516,571)
Present value of lease obligations
Analyzed as follows: Maturing within one year Maturing after more than one year but not later than five	8,949,472	3,177,961
year	26,525,231	10,111,452
TOTAL	35,474,703	13,289,413

The fair value of the finance lease liabilities is approximately equal to their carrying amount.

14. FINANCIAL DEBT

Loan contracts	December 31, 2018	January 1, 2018
Current portion of long term debt Long term debt	54,073,508 287,013,365	38,656,209 242,797,699
TOTAL	341,086,873	281,453,908
Overdraft	December 31, 2018	January 1, 2018
Short term loan	30,911,018	2,013,469
TOTAL	30,911,018	2,013,469

As at December 31, 2018, the Group's drawn and undrawn financing facilities included the following:

• On 31 October 2018, Med Life SA (together with the co-borrowers of the Rapid Diagnostic Polyclinic SA, Bahtco Invest SA and Accipiens SA) signed with Banca Comerciala Romana, Raiffeisen Bank, BRD Groupe Societe Generale and Banca Transilvania the refinancing of the existing facilities, the extension the reimbursement of the related terms and conditions, as well as an additional credit limit of 10 million euros, which will be in the form of a term facility and will be used by Medlife, together with other company's own cash, for possible new opportunities acquisitions in the market. At December 31, 2018, the balance of these facilities is 265,482,480 RON;

• a guaranteed overdraft facility between Garanti Bank S.A. and Med Life S.A., the amount drawn on 31 December 2018 is of RON 9,327,800;

• 4 secured loan contracts concluded between Banca Transilvania S.A. and Sama Medical Center S.A. for the purchase of medical equipment and the construction of a clinic, in a total amount of 797,148 RON, on 31 December 2018;

• an overdraft facility concluded between Transylvania Bank S.A. and Sama Medical Center S.A. since September 2016, having as balance on December 31, 2018 the amount of RON 900,000;

• 3 guaranteed loan contracts concluded between Banca Transilvania S.A. and Genesys Medical Center S.R.L., having on 31 December 2018 a balance of the borrowed amount of EUR 2,118,487 and RON 349,515; an overdraft facility with a balance on December 31, 2018 of RON 268,010;

• an overdraft facility between Unicredit Tiriac Bank and Prima Medical S.R.L., with a maximum credit limit of RON 800,000, drawn in full on 31 December 2018;

• a credit facility concluded between Garanti Bank S.A. and Dent Estet Clinic S.A. with the amount remaining to be reimbursed at December 31, 2018 of RON 589,272;

• a credit facility concluded between Marfin Bank Romania and Dent Estet Clinic S.A. with the amount remaining to be reimbursed at 31 December 2018 of RON 2,800,000;

• 10 guaranteed loan facilities concluded between Garanti Bank S.A. and Anima Specialty Medical Services S.R.L; the balance outstanding at 31 December 2018 is RON 4,621,906;

• an overdraft facility concluded between Garanti Bank S.A. and Anima Specialty Medical Services S.R.L within 1,500,000 RON; on 31 December 2018 the amount drawn is RON 1,000,000;

• a guaranteed loan agreement concluded between Banca Transilvania S.A. and Almina Trading S.A., with a balance outstanding at December 31, 2018 of RON 381,162;

Free translation from the original Romanian version.

14. FINANCIAL DEBT (continued)

• a guaranteed loan concluded between Bancpost and Med Life Ocupational S.R.L. worth EUR 225,000; the balance outstanding at 31 December 2018 is RON 458,785;

• 3 guaranteed loan contracts concluded between Libra Internet Bank and Valdi Medica S.R.L., the balance outstanding at 31 December 2018 is RON 1,305,792;

• 2 guaranteed loan contracts concluded between Banca Transilvania S.A. and Ghencea Medical Center, the balance outstanding at 31 December 2018 is RON 783,037;

• a loan agreement and a guaranteed overdraft facility between CEC Bank S.A. and Clinic Polisano S.R.L., the balance outstanding at 31 December 2018 is RON 40,710,343.

As at December 31, 2018 none of the Group members was in breach of any applicable term of the financing facilities.

15. ISSUED CAPITAL

As of December 31, 2018 the shareholders' structure of Med Life SA, the parent company of Med Life Group, is as presented below:

	No. of shares	%
Marcu Mihail	4,119,320	18.6015%
Marcu Nicolae Cristescu Mihaela Gabriela	2,913,800 3,110,115	13.1578% 14.0443%
Others	12,001,847	54.1964%
TOTAL	22,145,082	100%

In 2017, as a result of a Second Public Offering, Med Life S.A. issued 2,053,082 new shares with a nominal value of RON 0.25 per share, increasing the share capital from RON 5,023,000 to RON 5,536,271. The subscribers of the share increase will benefit from full rights related to the acquired shares starting from the date of the registration by the Central Depository. The shares were subscribed in 2017. The Central Depository registered the newly subscribed shares on January 11, 2018.

As of December 31, 2017 the shareholders' structure of Med Life SA, the parent company of Med Life Group, is as presented below:

	No. of shares	%
Marcu Mihail	4,219,320	21.00%
Marcu Nicolae	3,013,800	15.00%
Cristescu Mihaela Gabriela	3,028,892	15.08%
Others	9,829,988	48.92%
TOTAL	20,092,000	100%

The shareholders' structure of Med Life SA in place following the share capital increase process, as presented in the Central Depository notification, dated January 11, 2018, is as presented below:

	No. of shares	%
Marcu Mihail	4,219,320	19.05%
Marcu Nicolae	3,013,800	13.61%
Cristescu Mihaela Gabriela	3,243,892	14.65%
Others	11.668.070	52.69%
TOTAL	22,145,082	100%

Free translation from the original Romanian version.

16. EARNINGS PER SHARE

	2018	2017
Profit for the period	16,782,637	8,731,625
Number of ordinary shares at the begining of the period	22,145,082	20,092,000
Earning per share (lei/ share)	0.76	0.43

17. RESERVES

The structure of the Group's reserves is presented below:

	December 31, 2018	January 1, 2018
General reserves	1,867,202	1,867,202
Other reserves	9,415,817	9,052,837
Revaluation reserves	82,261,841	82,261,841
TOTAL	93,544,860	93,181,880

As of December 31, 2014, Med Life SA used a fiscal facility available starting 2014 for re-invested profit and increased its reserves according to the fiscal rules by RON 4,933,776 based on the profit obtained in 2014. As of December 31, 2015, Med Life SA used the fiscal facility of re-invested profit and increased its reserves by RON 3,705,398. This reserve will be taxed when it will be used under any form. These are included in Other reserves as of December 31, 2018 and January 1, 2018.

General reserves and other reserves

	December 31, 2018	January 1, 2018
Balance at beginning of the year	10,920,039	9,699,583
Movements	724,229	1,220,456
Balance at the end of the year	11,644,268	10,920,039

Revaluation reserves December 31, 2018 January 1, 2018 Balance at beginning of the year 82,261,841 82,261,841 Decrease arising revaluation correction - - Increase due to revaluation - - Deferred tax related to revaluation - - Balance at the end of the year 82,261,841 82,261,841

The properties revaluation reserve arises on the revaluation of land and buildings. When revalued land or buildings are sold, the portion of the properties revaluation reserve that relates to that asset, and that is effectively realized, is transferred directly to general reserves.

The effects of taxes on income, if any, resulting from the revaluation of property, plant and equipment are recognized and disclosed in accordance with IAS 12 Income Taxes (please see note 24).

18. NON-CONTROLLING INTEREST

	December 31, 2018	January 1, 2018
Balance at beginning of year	15,625,388	11,472,411
Decrease in non-controlling interest as a result of group acquisition of additional interest	-	(945,712)
Share of profit for the year Non-controlling interests arising on the acquisition of	3,412,289	4,348,924
subsidiaries	777,335	1,060,052
Distribution of dividends	(292,924)	(310,287)
TOTAL	19,522,088	15,625,388

19. SALES

Sales consist of medical services, including revenues from prevention packages of corporate customers and fees for services rendered within Med Life's clinics and various hospitals within Romania. Please see breakdown below.

Business Line	12 months 2018 Sales	% of Total Sales	12 months 2017 Sales	% of Total Sales
Clinics	233,339,171	29,4%	166,650,648	26.7%
Stomatology	44,733,559	5,6%	37,565,681	6.0%
Hospitals	167,320,772	21,1%	119,106,274	19.1%
Laboratories	134,680,878	17,0%	115,259,329	18.5%
Corporate	169,171,271	21,3%	144,621,716	23.2%
Pharmacies	36,111,885	4,5%	29,526,655	4.7%
Other revenue	9,205,325	1,2%	10,489,645	1.7%
TOTAL	794,562,861	100%	623,219,949	100%

20. OTHER OPERATING REVENUES

Other operating revenues caption comprises:

December 31, 2018	December 31, 2017
1,988,316	2,934,734
4,803,137	-
3,053,412	4,561,947
9,844,865	7,496,681

21. OPERATING EXPENSES

	December 31, 2018	December 31, 2017

Consumable materials & repair materials	126,048,830	97,974,250
Commodities expenses	29,367,048	24,115,025
Utilities	9,056,380	6,573,637
Repairs maintenance	8,984,186	6,435,809
Rent	41,986,204	38,281,750
Insurance premiums	2,538,221	2,103,123
Promotion expense	15,011,240	10,976,803
Communications	3,748,038	3,326,050
Third party expenses (including doctor's agreements)	206,077,081	165,638,063
Salary and related expenses	245,139,121	152,403,119
Social contributions	8,136,171	34,608,368
Depreciation	56,982,245	43,078,621
Other administration & operating exp.	12,939,652	10,343,226
TOTAL	766,014,417	595,857,844

22. KEY MANAGEMENT PERSONNEL EXPENSES

The structure of Med Life personnel is described below:

	December 31, 2018	December 31, 2017
Management Staff	158 4,969	93 3,511
Total	5,127	3,604

The short-term benefits (salary expenses) paid by the Group, by type of personnel are described below:

	December 31, 2018	December 31, 2017
Management Staff	31.227.409 213.911.711	22,805,657 129,597,462
Total	245.139.121	152,403,119

23. NET FINANCIAL RESULT

	December 31, 2018	December 31, 2017
Other financial income Net foreign exchange rate impact - loss	6,983 (1,409,294)	- (7,109,598)
Net finance cost – interest expense	(17,567,816)	(14,201,686)
Other income	3,597,023	115,850
Interest income	813,677	613,193
NET FINANCIAL RESULT - LOSS	(14,559,427)	(20,582,241)

24. RELATED PARTIES

The related parties identified are: Nautic Life SRL, DR. CRISTESCU I. MIHAELA-GABRIELA (shareholder) and Marcu Nicolae (shareholder).

Closing balances	December 31, 2018	January 1, 2018
Payables MARCU NICOLAE DR. CRISTESCU I. MIHAELA-GABRIELA NAUTIC LIFE	- 49,804 -	- 52,400 -
Receivables NAUTIC LIFE MARCU NICOLAE	- -	- -

Transactions during the year	December 31, 2018	December 31, 2017
Expenses NAUTIC LIFE	-	-
MARCU NICOLAE	-	-
DR. CRISTESCU I. MIHAELA-GABRIELA	642,400	466,835
Total	642,400	466,835

Acquisition of fixed assets NAUTIC LIFE - -

25. TAXATION

	December 31, 2018	December 31, 2017

Current income tax expense	5,811,538	5,004,268
Deferred tax expense/release	1,239,708	540,652
Total income tax	7,051,245	5,544,920

	December 31, 2018	December 31, 2017
Profit / (Loss) before tax	23,833,882	14,276,545
Income tax expense calculated at 16% Effect of expenses that are not deductible in determining	3,921,717	2,284,247
taxable profit	1,889,820	2,720,021
Effect of temporary differences	1,239,708	540,652
Income tax expense recognized in profit or loss	7,051,245	5,544,920

Med Life accrues income taxes at the rate of 16% on profits computed in accordance with the Romanian tax legislation.

The components of deferred tax as of December 31, 2018 are presented below:

Components of deferred tax	December 31, 2018	Change in deferred tax	January 1, 2018
Deferred tax assets Non-current assets Trade receivables	- 1,332,184	- -	- 1,332,184
Total deferred tax asset	1,332,184		1,332,184

Deferred tax liability	December 31, 2018	Change in deferred tax	January 1, 2018
Non-current assets Revaluation reserve	2,058,145 15,710,381	1,239,708 -	818,437 15,710,381
Total deferred tax liability	17,768,526		16,528,818

25. TAXATION (continued)

The components of deferred tax as of December 31, 2017 are presented below:

Components of deferred tax	December 31, 2017	Change in deferred tax	January 1, 2017
Deferred tax assets Non-current assets Trade receivables	- 1,332,184	- -	- 1,332,184
Total deferred tax asset	1,332,184	-	1,332,184
Deferred tax liability	December 31, 2017	Change in deferred tax	January 1, 2017
Non-current assets new acquisitions Revaluation reserve	818,437 15,710,381	540,652 -	277,785 15,710,381

Total deferred tax liability	16,528,818	540,652	15,988,166

The net effect of the change on deferred tax balances recognized as at December 31, 2018, except for the deferred tax related to the revaluation reserve which is recognized in equity, is reflected in the statement of comprehensive income for the year then ended.

26. BUSINESS COMBINATIONS

26.1. Subsidiaries acquired and consideration transferred

Acquisition of Clinica Polisano SRL, Solomed Clinic SA, Ghencea Medical Center SA, Sfatul medicului and Centrul Transilvania Imagistica Oradea

In 2018, the Group signed the Sales Purchase Agreement for the acquisition of shares in the following companies:

100% of share capital in Clinica Polisano SRL
80% of share capital of Solomed Clinic SA
90% of share capital of Ghencea Medical Center SA
100% of share capital in Sfatul medicului
100% of share capital in Centrul de Imagistica Transilvania Oradea through Genesys Medical Clinic SRL

Clinica Polisano ("Polisano") In October 2017 Medlife announced the acquisition of the entire stake of Polisano medical services division, one of the largest private medical operators in Romania. Founded in the 1990s, Polisano is the first fully integrated medical group in Romania. It includes a series of four clinics with its own laboratories located in Bucharest and Sibiu, a private hospital - the European Polisano Hospital in Sibiu - recognized as one of the most modern and performing hospital units in Romania, one in vitro fertilization center and the largest private maternity in Transylvania. The transaction has been concluded on 4th of April 2018, following the fulfillment of the conditions precedent.

26. BUSINESS COMBINATIONS (continued)

25.1. Subsidiaries acquired and consideration transferred (continued)

Solomed Clinic ("Solomed") In March 2018, Medlife announced the acquisition of the 80.00% majority stake in Solomed, a group of medical clinics present on Pitesti, Costesti and Curtea de Arges markets. The Solomed Group was founded in 1997 and is one of the leading local medical operators in the region. The group consists of five clinics - three in Pitesti, the other two in Costesti and Curtea de Arges - and a laboratory (Pitesti), offering to its patients a wide range of investigations from multidisciplinary consultations for a range of over 15 medical specialties and laboratory services, CT investigations, ultrasounds, medical recovery services and small laser interventions. All medical units are equipped with state-of-the-art medical equipment and have a medical team with over 90 specialists. The transaction has been concluded on 14th of May 2018, following the fulfillment of the conditions precedent.

Ghencea Medical Center ("Ghencea") In February 2018, Medlife announced the acquisition of the 90.00% majority stake in Ghencea Medical Center in Bucharest. The medical services provider has two clinics in Bucharest and Magurele with 135 employees, medical staff and support employees, offering to its patients a wide range of investigations for laboratory and imaging areas, specialized treatment for medical recovery and alternative medicine. The transaction has been concluded on 24th of May 2018, following the fulfillment of the conditions precedent.

Sfatul medicului Med Life acquired 100% majority stake in sfatulmedicului.ro platform, the largest medical information hub in Romania. Established 15 years ago, sfatulmedicului.ro is among the top sites dedicated to the Romanian health segment. The platform has a monthly average of more than 3.2 million unique users and over 12 million views. In addition to the information service, users access the medical self-evaluation service and online analysis of the analyzes on this platform. As a result of this transaction, Sfatulmedicului.ro will retain the team that has carried out the project all these years, and in order to preserve its independence and impartiality towards the market, the management will be completely independent from Med Life and the current directors. The transaction was finalized on 14 August 2018 once the suspensive conditions were met.

Centrul Transilvania Imagistica Oradea Medlife has taken over Centrul Transilvania Imagistica Oradea, a provider of medical diagnostic, imaging and radiology services, one of the most important players in the northwest of the country on this segment. The center is equipped with high-performance medical equipment and investigations are carried out by a team of specialist.

26.2. Assets acquired and liabilities recognized at the date of acquisition

Assets acquired and liabilities recognized at the date of acquisition	2018	2017
Non-current assets Current assets Current liabilities Non-current liabilities	114,842,433 15,255,599 69,476,415 56,527,294	19,024,403 9,389,426 9,945,796 6,438,004
Net assets	4,094,323	12,030,029

26. BUSINESS COMBINATIONS (continued)

26.3. Goodwill arising on acquisition

	2018	2017
Consideration transferred	19,659,671	32,283,538
Less: fair value of identifiable net assets acquired	(4,094,323)	(12,030,029)
Plus non-controlling interest	777,335	1,060,052
Goodwill arising on acquisition	16,342,683	22,042,726
Bargain gain arising on acquisition	-	(729,165)

26.4. Net cash outflow on acquisition of subsidiaries

	December 31, 2018	December 31, 2017
Consideration paid in cash	19,272,179	32,283,538
Less: cash and cash equivalent balances acquired at acquisition date	(2,286,806)	(2,895,488)
	16,985,373	29,388,050

27. FINANCIAL INSTRUMENTS (IFRS 7)

(a) Capital risk management

The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 14, cash and cash equivalents disclosed in note 8 and equity, comprising issued capital, reserves and retained earnings as disclosed in note 15 and note 16.

The Group's risk management reviews the capital structure regularly. As a part of this review, the management considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the management, the Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the consolidated financial statements.

(c) Financial risk management objectives

The Group's Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.

27. FINANCIAL INSTRUMENTS (IFRS 7) (continued)

(d) Market risk

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see (g) below).

There has been no change to the Group's exposure to market risks or the manner in which it manages and measures the risk.

(e) Interest rate risk management

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

(f) Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

(g) Fair value of financial instruments

Financial instruments in the balance sheet include trade receivables and other receivables, cash and cash equivalents, short-term and long-term loans and trade and other payables. The estimated fair values of these instruments approximate their carrying amounts. The carrying amounts represent the Group's maximum exposure to credit risk for existing receivables.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

2018	1 EUR = RON 4,6639 RON	EUR	Total
ASSETS
Cash and cash equivalents Trade receivables Financial assets	34,206,159 78,957,879 1,533,509	- - 8,582,267	34,206,159 78,957,879 10,115,776
LIABILITIES
Trade payables Liabilities held for sale Overdraft Short-Term and Long-Term portions of loans Short-Term and Long-Term portions of	140,970,528 - 9,327,800 44,464,202	- 458,785 21,583,218 265,711,653	140,970,528 458,785 30,911,018 310,175,855
financial leasing	2,056,966	33,417,737	35,474,703

27. FINANCIAL INSTRUMENTS (IFRS 7) (continued)

(g) Fair value of financial instruments (continued)

2017	1 EUR = RON 4.6597
	RON	EUR	Total
ASSETS
Cash and cash equivalents	79,227,766	-	79,227,766
Trade receivables	58,450,406	-	58,450,406
Financial assets	-	6,161,678	6,161,678
LIABILITIES
Trade payables	103,839,523	-	103,839,523
Liabilities held for sale	-	558,370	558,370
Overdraft	-	2,013,469	2,013,469
Short-Term and Long-Term portions of loans Short-Term and Long-Term portions of	27,000,000	252,440,439	279,440,439
financial leasing	2,036,525	11,252,888	13,289,413

The Group is mainly exposed in respect of the exchange rate of the RON versus EUR. The above table details the Group's sensitivity to a 10% increase and decrease in RON against EUR. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.

A negative number below indicates a decrease in profit where EUR is weakening 10% against RON. For a 10% strengthening of EUR against the RON there would be an equal and opposite impact on the profit and other equity, and the balances below would be positive. Change is mainly attributable to the exposure outstanding on RON cash and cash equivalents at year end in the Group.

	December 31, 2018	December 31, 2017
Profit or loss	31,258,913	25,529,579

26. FINANCIAL INSTRUMENTS (IFRS 7) (continued)

(g) Fair value of financial instruments (continued)

The following table details the Group's remaining contractual maturity for financial liabilities as of December 31, 2018. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

	Weighted average effective interest rate	Carrying amount	Less than 1 year	1 to 5 years	More than 5 years
Non-interest bearing instruments Trade payables		140,970,528	140,970,528	-	-
Interest bearing instruments Liabilities directly linked to assets held for sale		458,785	458,785
Loans - others	EURIBOR/ROBOR + applicable spread %	44,693,375	5,828,289	33,650,457	5,214,629
Club Loan	EURIBOR/ROBOR + applicable spread %	265,482,480	17,334,201	248,148,279	-
Transilvania overdraft and others		30,911,018	30,911,018	-	-
Lease contracts		35,474,703	8,949,472	26,525,231
Total		517,990,889	204,452,293	308,323,967	5,214,629

27. FINANCIAL INSTRUMENTS (IFRS 7) (continued)

(g) Fair value of financial instruments (continued)

The following table details the Group's remaining contractual maturity for financial liabilities as of December 31, 2017. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

	Weighted average effective interest rate	Carrying amount	Less than 1 year	1 to 5 years	More than 5 years
Non-interest bearing instruments Trade payables		103,839,523	103,839,523	-	-

Interest bearing instruments
IFC loans	EURIBOR 6M + relevant spread %	54,917,894	9,985,069	39,940,276	4,992,549
Liabilities directly linked to assets held for sale		558,370	558,370
Transilvania Loans	EURIBOR 6M + relevant spread %	11,123,985	1,090,575	10,033,410
Club Loan	EURIBOR 6M + relevant spread %	203,647,209	21,060,274	129,067,901	53,519,033
Transilvania overdraft and others		2,013,469	2,013,469	-	-
Lease contracts		13,289,413	3,177,961	10,111,452	-
Total		389,389,863	141,725,241	189,153,040	58,511,582

28. COMMITMENTS AND CONTINGENCIES

Contingent liabilities are not recognized in the consolidated financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is probable. A contingent asset is not recognized in the consolidated financial statements but disclosed when an inflow of economic benefits is probable.

Club loan related commitments

In accordance with the Club loan facilities agreement, the Group shall ensure that it shall not incur any additional Capital Expenditure except for any acquisition financed from Facility C and capital expenditures up to the aggregate amounts agreed in the contract for the years 2016-2023.

Med Life SA shall not enter into any agreement which will amend, novate, modify or vary the provisions of Med Life's Shareholders' Agreement without the prior written consent of the lenders.

Other commitments

As at December 31, 2018 and December 31, 2017, the Group holds insurance policies to cover possible liabilities towards doctors for malpractice as well as insurance contracts related to buildings and medical equipment.

In conformity with the concluded agreement with the National House of Health Insurance, the Group has to provide primary medical services to National House's insured citizens.

BCR issued letters of warranties in the favour of Med Life S,A, in amount of RON 2,138,270, out of which in EUR 332,046 as of December 31, 2018 (December 31, 2017: RON 1,710,563, equivalent of EUR 323,559).

Fiscal environment

The taxation system in Romania is still developing and is subject to various interpretations and constant changes, which may sometimes be retroactive. Although the actual tax due for a transaction may be minimum, delay interests may be significant, as they can be calculated at the value of the transaction and at a rate of 0.02% per day (interest) and 0.01% (penalties) per day in 2018.

In Romania the statute of limitation for tax controls (audits) is of 5 years. Management believes that the tax obligations included in these financial statements are adequate.

Transfer pricing

The fiscal legislation from Romania includes the "market value" principle, according to which the transactions between related parties have to be performed at the market value. The local tax payers, who carry transactions with related parties, have to prepare and make available to the tax authorities from Romania, at their written request, the transfer pricing documentation file. If the companies do not prepare the documentation or they present an incomplete transfer pricing file may attract penalties for nonconformity, and additionally to the information presented in the transfer pricing file, the fiscal authorities may have a different interpretation of the transactions and the circumstances compared to the management's assessment and, as a result, they may impose additional fiscal obligations as a result of adjusting transfer prices. The management of the Group is confident that, if required, they will submit the necessary information in due time to the fiscal authorities. The transactions with related parties and group companies are performed based on the market value principle.

Litigation

The Group is involved in various litigations as part of normal course of business. Management has assessed the legal status together with the Group's legal advisors and all necessary adjustments have been recorded in the consolidated financial statements.

29. AUDITORS 'FEES

The auditor of the Group is Deloitte Audit SRL.

The fee for the audit of the consolidated financial statements as of December 31, 2018 of the Group prepared in accordance with IFRS as adopted by EU and the individual financial statements as of December 31, 2018 of the Group prepared in accordance with IFRS as adopted by EU of Med Life SA was EUR 115,500 excluding VAT and out of pocket expenses.

The fee for other audit related services performed in 2018 (in accordance with ISAE 3000 and ISAE 3,240) was EUR 8,000, excluding VAT.

30. EVENTS AFTER THE BALANCE SHEET DATE

Initiation of Share buy-back Program

Medlife announced, by decision of the Board of Directors adopted on 18 October 2018, the initiation of the share buy-back program starting on 9 November 2018. By the EGSM decision of October 8, 2018, it was approved the buy-back of a maximum number of 868,000 own shares for a maximum period of 18 months from the date of publication of the decision in the Official Gazette of Romania. Thus, Medlife will buy-back up to 868,000 own shares with a nominal value of 0.25 lei / share, not exceeding the 10% threshold of the share capital of the Company. The own shares acquired under the Program will be offered to former or current members of the management or former or current employees of some of the Company's subsidiaries in exchange for the shares held by them in the respective subsidiaries of the Company.

Increase participation in Group Sama Craiova and Group PDR Brasov

Medlife has announced the acquisition of a 35% stake in Group Sama Craiova, which is why Medlife has become the shareholder with 90% shares (from 55% of the initial package). Medlife also has acquired another 3 percent of the Group PDR Brasov (Policlinica de Diagnostic Rapid), the company currently owning 83% of the package (from 80% initial package). Additional shares of Sama and PDR groups were acquired by Medlife as a result of an exchange with Medlife's shares, a decision taken by the Board of Directors of the Company, empowered by the Extraordinary General Meeting of Shareholders on October 8, 2018. This operation aims at alignment at the group level, but is also in line with the acquisition strategy, which recognizes and encourages the contribution of the founders of the subsidiaries to the integrated activity of the Medlife Group.

Acquisition of Rozsakert Medical Center Hungary

Medlife announced the first international transaction: the purchase of 51% of the majority package of Rozsakert Medical Center in Hungary. Rozsakert Medical Center is among the top 10 private health care providers in Hungary. The company is comprised of a multidisciplinary clinic that includes a compartment equipped with a small surgery room and a dental center. Over 40,000 patients access a diverse range of outpatient clinical and paraclinical services and investigations, as well as a comprehensive range of interventions.

There were no other significant events after December 31, 2018.

Approved by the Board of Directors on the date of March 21, 2019 and signed on behalf of by:

Mihail Marcu, Vera Firu,

Administrator Director Economic

AI assistant

MedLife S.A. — Audit Report / Information 2018

2292_10-k_2019-03-22_994eda26-80be-4527-9cbe-df58753458e0.pdf

MED LIFE S.A.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2018

PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY EUROPEAN UNION

CONTENTS: PAGE :

Report on the Audit of the Consolidated Financial Statements

Opinion

Basis for Opinion

Key Audit Matters

Other information- Administrator's Report

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Report on Other Legal and Regulatory Requirements

DELOITTE AUDIT S.R.L.

MED LIFE GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

MED LIFE GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

MED LIFE GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

MED LIFE GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

MED LIFE GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

MED LIFE GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2018 (all the amounts are expressed in RON, unless otherwise specified)

1. DESCRIPTION OF THE BUSINESS

1. DESCRIPTION OF THE BUSINESS (continued)

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)

2.1 Initial application of new amendments to the existing standards and interpretation effective for the current reporting period

2.2 Amendments to the existing standards issued by IASB and adopted by the EU, adopted by Group, as at December 31, 2018

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) (continued)

2.3 Amendments to the existing standards issued by IASB and adopted by the EU but not yet effective

2.4 New standards and amendments to the existing standards issued by IASB but not yet adopted by the EU

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) (continued)

3. SIGNIFICANT ACCOUNTING POLICIES

3.1 Statement of compliance

3.2 Basis of preparation

3.3 Going concern

3.4 Basis of consolidation

3.5 Business combinations

3.6 Goodwill

3.7 Non-current assets held for sale

3.8 Accounting estimates and judgments

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.9 Foreign currency translation

Functional and presentation currency

3.10 Comparative information

3.11 Property, plant and equipment

3.12 Assets held under finance leases

3.13 Intangible assets

Intangible assets acquired in a business combination

De-recognition of intangible assets

Impairment of tangible and intangible assets other than goodwill

3.13 Intangible assets (continued)

Impairment of tangible and intangible assets other than goodwill

3.14 Investments in subsidiaries

3.15 Investments in associates

3.16 Inventories

3.17 Trade receivables

3.18 Cash and cash equivalents

3.19 Financial instruments

3.20 Accounts payable

3.21 Leasing

3.22 Borrowing costs

3.23 Taxation

Current tax

Deferred tax

Current and deferred tax for the period

3.24 Share capital

3.25 Share premiums

3.26 Revaluation reserve

Free translation from the original Romanian version.

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.27 Provisions for risks and charges

3.28 Revenue recognition

Rendering of services

Interest revenues

3.29 Employee benefits

Employee benefits

3.30 Related parties

3.31 Fair value

3.32 IAS 29

MedLife S.A. Audit Report / Information 2018