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2023 ReportMD Medical Group Annual Report 2022 Страница 1 из 132 Contents STRATEGIC REPORT ............................................................................................................................................. 4 MD Medical Group overview ................................................................................................................................. 4 Statement from the CEO ....................................................................................................................................... 5 Key events ............................................................................................................................................................ 5 Strategic goals ...................................................................................................................................................... 7 Business model ..................................................................................................................................................... 8 Nationwide healthcare network .............................................................................................................................. 9 Financial overview for 2022 ................................................................................................................................. 11 Hospitals in Moscow ............................................................................................................................................ 14 Out-patient clinics in Moscow and Moscow region ............................................................................................... 16 Hospitals in regions ............................................................................................................................................. 17 Out-patient clinics in regions ............................................................................................................................... 19 CORPORATE GOVERNANCE ............................................................................................................................... 20 Board of Directors overview ................................................................................................................................ 20 Report of the Board of Directors .......................................................................................................................... 22 Corporate Governance Report ............................................................................................................................ 22 Risk management ............................................................................................................................................... 24 Management Board ............................................................................................................................................. 26 Shareholder and Dividend Report ....................................................................................................................... 28 REPORT AND CONSOLIDATED FINANCIAL STATEMENTS ............................................................................... 30 Management report ............................................................................................................................................. 31 Directors' responsibility statement ....................................................................................................................... 36 Consolidated statement of profit or loss and other comprehensive income.......................................................... 37 Consolidated statement of financial position ........................................................................................................ 41 Consolidated statement of changes in equity ...................................................................................................... 42 Consolidated statement of cash flows ................................................................................................................. 43 Notes to the consolidated financial statements .................................................................................................... 46 REPORT AND FINANCIAL STATEMENTS ............................................................................................................ 75 Management report ............................................................................................................................................. 76 Directors' responsibility statement ....................................................................................................................... 81 Statement of profit or loss and other comprehensive income ......................................................................................... 82 Statement of financial position ............................................................................................................................................. 86 Statement of changes in equity ........................................................................................................................... 86 Statement of cash flows ...................................................................................................................................... 88 Notes to the financial statements ......................................................................................................................... 88 CORPORATE SOCIAL RESPONSIBILITY ........................................................................................................... 107 Our Mission ....................................................................................................................................................... 107 Our People ........................................................................................................................................................ 107 Страница 2 из 132 Our Profession .................................................................................................................................................. 107 Our Technology ................................................................................................................................................. 107 Our Communities .............................................................................................................................................. 107 Key CSR activities in 2022 ................................................................................................................................ 107 SUSTAINABLE DEVELOPMENT ......................................................................................................................... 108 Identifying material topics .................................................................................................................................. 108 Interaction with stakeholders ............................................................................................................................. 108 Our patients ....................................................................................................................................................... 109 Our people ........................................................................................................................................................ 111 Occupational health and safety ......................................................................................................................... 116 Supply chain development ................................................................................................................................ 118 Sustainable development risk management ...................................................................................................... 120 Environmental management .............................................................................................................................. 124 Annexes ............................................................................................................................................................ 127 Страница 3 из 132 STRATEGIC REPORT MD Medical Group overview MD Medical Group Investments PLC is a leading provider in the Russian private healthcare service market by cities of presence and number of employees. As of publication date, MD Medical Group manages 53* modern healthcare facilities, including 10 multifunctional hospitals and 43 out-patient clinics in 28 cities of the Russian Federation. We provide a wide range of high quality medical services – the number of medical specializations is 77. MD Medical Group has a high level of out-of-pocket payments compared to the private medical services market in Russia, which amounted to 76%. The Company has vertically integrated business model supported by technological and educational initiatives. MD Medical Group operates in diversified format both in terms of the range of services offered to clients and price policy, including multidisciplinary clinical hospitals, consultative and diagnostic centres, out-patient clinics in Moscow and regions and MD LAB laboratory network. We also support our work process with educational base which represented by MGIMO-Med Medical University. The Company’s shares trade on the Moscow Exchange and on the London Stock Exchange1 in the form of global depositary receipts (LSE and MOEX: ticker MDMG). One GDR represents one ordinary share. Our investment case Best-in-class network across Russia Comprehensive knowledge of the Russian market of private healthcare services Projects led by highly qualified doctors and managers with extensive experience in building and launching multifunctional hospitals A well-known brand with largest regional medical network, including 28 cities and 26 regions Successful service diversification strategy in terms of range of services offered to clients and price policy The Company's ability to operate well in unusual situations was proven by its highly effective performance during the pandemic COVID-19 Clear and balanced growth strategy Proven regional expansion strategy with well-defined objectives and a track record of successful investments Since its inception, the Group has continuously extended its medical products to satisfy market demand and evolved into a vertically integrated company that meets all human health needs from birth to old age Balanced strategy: combining large greenfield hospital projects with a wide network of clinics that provide core services and benefit from an economy of scale Ready-to-use blueprint for further expansion based on competences and available resources Attractive market fundamentals in Russia Consolidation and saturation are at a low level, especially in the regions Still a developing market with significant growth potential Government support for private healthcare companies is provided by a favourable regulatory framework, which includes a zero income tax rate, a perpetual medical licence, and participation in the Mandatory Health Insurance programme High entry barriers * As of publication date 1 Due to recent sanctions related to events in Ukraine as well as the current market environment, the London Stock Exchange has suspended the listing of the Company’s GDRs in order to maintain market stability. Страница 4 из 132 Statement from the CEO Mark Kurtser, CEO at MDMG, said: “In 2022, the Group delivered solid operating and financial performance, adapting to the new business environment, with revenue flat year-on-year despite the last year’s strong base. I am pleased to note that effective cost control enabled us to maintain a strong EBITDA margin of 31% in the reporting period. We continue to capitalise on our diversification strategy in terms of pricing, service range and geography. We strengthened our market position in Moscow and the Moscow Region by opening two new medical centres with a focus on antenatal care in Butovo and Mytishchi. In 2022, the Group continued to diversify its geographical footprint: during the year, we launched two clinical hospitals, in St. Petersburg and Tyumen, and also tapped into the Sverdlovsk Region, opening our first out-patient clinic with a focus on IVF in Yekaterinburg. During the reporting period, we saw an increase in demand in segments not related to women’s and children’s healthcare, including traumatology, cardiology and oncology. As an example, in just two years after launch, our Lapino-2 surgical unit with a focus on oncology generated as much as RUB 2,182 mln in revenue and achieved a 50% utilisation rate while maintaining potential for further growth. Based on expected demand and expertise we have built in oncology, we will continue to expand the Lapino medical cluster in 2023 and are now commencing the construction of an 13,175-sq.m. Lapino-3 nuclear medical centre, which will support a full cycle of medical care in oncology. In addition, we are at the planning and design stage for our upcoming Domodedovo hospital, which we plan to open in 2025, thus strengthening our leading position in Moscow and the Moscow Region. Thanks to effective steps taken to ensure sufficient liquidity, our financial standing remained stable. It was for the first time in the Company’s history that we posted negative net debt. Throughout the Group's history, we have been focusing on providing high-quality and efficient medical services to our patients while safeguarding the interests of our shareholders. To this end, we have been paying steady dividends. Despite the persistent external headwinds, we distributed more than 50% of our net profit in dividends for H1 2022. In conclusion, I would like to thank the entire MD Medical Group team for their contribution to our results and the Group's ability to provide top-notch medical care and deliver stable performance.” Key events Corporate Governance Board of Directors changes In March 2022, Sergey Kalugin was appointed as an independent non-executive director of the Board of Directors. Mr Kalugin brings to the Company his 31 years of experience in economics, finance, telecommunications and digital transformation. In March 2022, Kirill Dmitriev and Simon Rowlands decided to step down as members of the Company's Board of Directors. Strategic development MD Group Lakhta hospital In January 2022, MD Medical Group opened the new multi-disciplinary hospital MD Group Lakhta in St. Petersburg. The total area of the centre is 9,000 sq.m. Total investments in the project amounted to approximately RUB 2 bln. On 16 March 2022, due to the easing of the COVID-19 pandemic, the MD Group Lakhta hospital, which had been converted into a temporary COVID treatment facility, began operating in its main area of specialisation – healthcare for women and children, with a focus on childbirth and gynaecological surgery. The hospital plans to perform up to 3,000 deliveries per year. Tyumen-2 hospital In February 2022, MD Medical Group launched the clinical hospital Tyumen-2. The total area of the centre is 4,750 sq.m. Total investments in the project amounted to approximately RUB 1 bln. Страница 5 из 132 The Tyumen-2 hospital is already the second for the Group in Tyumen and initially was focused on providing medical care for patients with infectious diseases, including coronavirus. Due to the COVID-19 slowdown, the Tyumen-2 hospital had been converted into a multifunctional hospital with focus on oncology and therapy with the possibility of providing intensive care. Renovation of the reproductive medicine centre in Novosibirsk In June 2022, MD Medical Group completed the renovation of its medical centre in Novosibirsk, increasing its capacity to 1,000 IVF cycles per year. Total investments in the project amounted to some RUB 23 mln. Mother & Child Butovo In June 2022, MD Medical Group opened an out-patient medical centre, Mother & Child Butovo, with a capacity of 30,000 visits per year. The total area of the centre is 195 sq.m. Total investments in the project amounted to circa RUB 16 mln. The medical centre offers a wide range of services for women and men, including preparation for pregnancy and childbirth, as well as functional and ultrasound diagnostics. Mother & Child Yekaterinburg In November 2022, the Company opened the first out-patient clinic in Yekaterinburg with a focus on IVF. The total area of the centre is 434 sq.m. The Group’s total investment in the project amounted to about RUB 74 mln. The clinic has an annual capacity for up to 400 gynaecological operations, up to 800 IVF cycles and more than 30,000 out- patient treatments. Mother & Child Mytishchi In January 2023, MD Medical Group opened an out-patient medical centre, Mother & Child Mytishchi, with a capacity of 24,000 visits per year. The total area of the centre is 235 sq.m. Total investments in the project amounted to circa RUB 23 mln. The medical centre offers a wide range of pregnancy and birth preparation services for women, such as diagnosis and treatment of infertility, as well as functional and ultrasound diagnostics. Expansion of the MD LAB laboratory network In December 2021, MDMG launched its own network of laboratory test collection points under the MD LAB brand in Moscow. During 2022, the MD LAB expanded its presence in Moscow and also opened two more collection points. The collection points provide patients with a wide range of diagnostic services. All analyses are processed in Group’s own laboratory located in the Lapino medical cluster. The laboratory format operates in the middle price segment and facilitates patients' access to the services of the Group's medical centres. Education initiatives Medical University MGIMO-Med In September 2022, MD Medical Group in cooperation with the Moscow State Institute of International Relations (MGIMO) opened a medical university, MGIMO-Med. The educational process will be carried out at the sites of the Lapino medical cluster and the Odintsovo campus of MGIMO. Financial events Net cash position As of 31 December 2022, the Group’s debt declined from the 31 December 2021 level by RUB 4,916 mln to RUB 597 mln. In 2022, the Company fully repaid all its existing credit facilities by settling outstanding obligations in the amount of RUB 3,133 mln ahead of schedule. As a result, as at 31 December 2022, the Company’s Net Cash position amounted to RUB 3,866 mln. Dividends On 26 October 2022, the Board of Directors approved an interim dividend of RUB 642 mln or RUB 8.55 per ordinary share / GDR for the six months of 2022. On 29 November 2022, MD Medical Group made dividend payment on its GDRs following the 6M 2022 results. Страница 6 из 132 Strategic goals Strategic goal Our progress in 2022 To provide the highest quality of care to patients and achieve a high level of customer satisfaction We are strongly committed to maintaining the highest possible quality of our services and not only meeting but also exceeding our patients’ expectations. We focus on ensuring that all of our facilities – both existing and new ones – adhere to MD Medical Group’s customary high standards of medical care. In 2022, despite macroeconomic woes, we continued to operate as usual and delivered strong results while working hard to improve our services and adapting to the new business environment. We optimised the logistics process associated with the supply of medicines and medical equipment. In this regard, we deeply analysed market and started to procure medicines of appropriate quality through alternative suppliers. In addition, we created stocks of vaccines and medicines, taking into account their expiration date and turnover. To recruit and retain the best and the most qualified personnel As one of the largest employers in the sector, we pay specific attention to ensure optimal working conditions and incentives for our personnel. We are constantly improving the professionalism of our specialists. We will continue to employ the best professionals in the market by offering competitive salaries as well as exciting opportunities for career advancement. To deliver value to our stakeholders Ultimately, we want to ensure that all our actions and decisions will benefit all our stakeholders. As the first public healthcare company in Russia, we strive to deliver the best performance and achieve strong results which translate into high long-term value for our investors. This is impossible without providing the best possible service to our patients, creating the best conditions for our employees and maintaining our high business reputation in interaction with our corporate counterparties and the state. To roll out our proven business model With the largest regional medical network in Russia comprised of 53 facilities in 28 cities2, we have a deep understanding of the Russian market and a strong track record. We continue to open new facilities in the regions to expand the range of services offered. In 2022, we continued to hire, retain and train new members of our staff. In addition to the existing facilities, our new Tyumen-2 and MD Group Lakhta hospitals became major employers of medical staff in the region, recruiting both local professionals and current MDMG employees relocated from Moscow and other regional hospitals. Throughout the year, we continued to improve the recruitment process, as well as working conditions and communication within the Group. In 2022, the MGIMO-Med medical university, created jointly with MGIMO, was launched as the future personnel base of the Group. We believe that our consistent investment into the business supports the creation of long-term value for our shareholders. In the reporting year, we continued to share the results of our success with shareholders by paying dividends. Despite the persistent external headwinds, we distributed more than 50% of our net profit in dividends for H1 2022. We strengthened our market position in Moscow and the Moscow Region by opening two new medical centres with a focus on antenatal care in Butovo and Mytishchi. The Group continues to diversify its geographical footprint: during the year, we launched two clinical hospitals in St. Petersburg and Tyumen, and also tapped into the Sverdlovsk Region by opening an out-patient clinic in Yekaterinburg with a focus on IVF cycles. To provide balanced services structure including core and other medical services While we initially focused solely on women and children's healthcare, once we were 100% confident that we were able to maintain our high level of service, we began to add In 2022, we continue to capitalise on our diversification strategy in terms of pricing, service range and geography. During this year, we saw an increase in demand in segments 2 As of publication date Страница 7 из 132 Strategic goal Our progress in 2022 other medical services to our offering to cover all family members. Today MD Medical Group is a diversified healthcare organisation that provides a full range of services for the entire family, including children and seniors. not related to women’s and children’s healthcare, including traumatology, cardiology and oncology. In just two years after its launch, our Lapino-2 surgical unit with a focus on oncology achieved a 50% utilisation rate while maintaining potential for further growth. As a result, 2022 revenue from medical services not related to women’s and children’s health accounted for 48% of total revenue. Business model MD Medical Group’s mission is to provide our patients with best-in-class medical services and to cover all of their healthcare needs from birth to old age. Vertically integrated healthcare delivery system Surface: 15,000 – 40,000 m2 Type of service: Out-patient visits Diagnostics Surgery operations In-patient care Post-hospital rehabilitation Surface: 1,500 – 3,000 m2 Type of service: Out-patient visits – general practice Diagnostics Medical manipulations Surface: 150 – 300 m2 Type of service: Out-patient visits 3. Clinical hospitals 2. Consultative and diagnostic centres 1. Out-patient clinics “close to home” MD Medical Group is a leading private healthcare provider in Russia. We started by providing specialised healthcare for women and children and soon earned a reputation as a sector leader in deliveries and IVF cycles. To respond to an increasing demand for additional medical services outside OBGYN and paediatrics, we started gradually introducing new services, while making sure that we could deliver in line with our high standards. Today, we have facilities all over Russia that offer a full range of healthcare services for our patients, covering their full life cycle. The Group’s offering for patients includes a wide range of services outside of reproductive care, such as surgeries and cancer treatment. Our key objective is to provide for the patients’ comfort and offer a premium level of service. We have a vertically integrated healthcare delivery system. MD Medical Group operates in diversified format both in terms of the range of services offered to clients and price policy, including multidisciplinary clinical hospitals, consultative and diagnostic centre and out-patient clinics and MD LAB laboratory network. Depending on the complexity of the treatment, we can refer our clients from out-patient clinics in a “close to home” format to our clinical hospitals with a full range of services. Страница 8 из 132 Business processes supported by technological and educational initiatives Education Medical University MGIMO-Med Science Participation in clinical research Healthcare service Lapino as a medical cluster Out-patient network We continue to develop vertically integrated business processes, integrating technological and educational initiatives into them. We are developing Lapino as a medical cluster, which now includes the state-of-the-art oncology centre Lapino-2, the Lapino-4 COVID-centre and our flagship hospital Lapino-1. Based on the expected demand and accumulated experience in oncology, we will continue to expand the Lapino medical cluster in 2023 and begin construction of 13,175-sq.m. Nuclear Medicine Centre Lapino-3, which will provide a full cycle of medical care in oncology. The Company's strategy is closely related to attracting the best personnel to our medical facilities. In that regard, in 2022, MD Medical Group jointly with the Moscow State Institute of International Relations (MGIMO) opened MGIMO-Med, a medical university. In cooperation with MGIMO, we have developed a modern educational programme that meets the current needs of the industry. The educational process is carried out at the sites of the Lapino medical cluster, the Odintsovo campus of MGIMO, as well as at sites of our programme partners such as Pirogov Research Medical University, the Research Institute of Human Morphology, the Gamaleya Research Institute of Epidemiology and Microbiology. The current programme includes the General Medicine training of specialists. In the future, the project also will cover other levels of training, in particular, residency and additional professional education. Given the scope of our activities and the accumulated experience, MGIMO-Med offers students the unique individual medical education, as well as excellent opportunities for further career and professional development in MD Medical Group. To increase patient engagement, we are also using Digital Medical Operations (Doctis) telemedicine consultation platform. As of publication date, more than 1,500 doctors were connected to Doctis. The online format has become especially popular during the COVID-19 pandemic, allowing patients to stay in touch with their doctors. The introduction of telemedicine consultations, among other things, made it possible to provide some medical services remotely, e.g., to patients planning IVF cycles. Nationwide healthcare network MD Medical Group operates one of the largest regional private network of healthcare facilities in the country. Today patients from 26 Russian regions have access to medical care at the clinical hospitals and out-patient clinics. In 2022, the Company continued actively implementing its development strategy across Russia. By the end of the year, we were managing 53 modern healthcare facilities, including 10 hospitals and 43 out-patient clinics. The development of MD Medical Group in 2022 were marked by the opening of MD Group Lakhta multifunctional hospital in St. Petersburg with a focus on childbirth and gynaecological surgery, which during the pandemic was temporarily focused on providing medical care to patients with infections, including coronavirus. We also expanded our regional presence by launching Tyumen-2 infectious disease hospital as part of further development of our medical cluster in Tyumen. This is the continuation of our dedication to the Company’s strategy aimed at diversification of medical services in our portfolio and geographical expansion into the regions of Russia. We are continuously strengthening our market position in Moscow and the Moscow Region by opening two Страница 9 из 132 new medical centres with a focus on antenatal care in Butovo and Mytishchi. The Group continues to diversify its geographical footprint: in 2022, we also tapped into the Sverdlovsk Region by opening our first out-patient clinic with a focus on IVF in Yekaterinburg. Medical facilities Moscow and Moscow Region District Locality Facility Focus Launch date Area, m2 Property type MD Group Lapino-1 Lapino-2 Lapino-4 M&C Khodynskoe Pole M&C Lefortovo M&C Yugo- Zapad M&C Novaya riga Oncological Care Centre M&C Odintsovo M&C Novogereevo M&C Kuntsevo M&C Savelovskaya M&C Butovo M&C Mytishchi MD LAB (3 points) Regions M&C Barnaul M&C Vladivostok M&C Irkutsk M&C Krasnoyarsk-1 M&C Krasnoyarsk-2 M&C Novokuznetsk Centre for Reproductive medicine Novosibirsk M&C Avicenna (2 clinics) M&C Omck M&C Vladimir M&C Volgograd Central Central Central Central Moscow Moscow Region Moscow Region Moscow Region Central Moscow hospital multifunctional hospital multifunctional oncology hospital infectious hospital disease IVF cycles clinic Central Central Moscow Moscow clinic clinic IVF cycles IVF cycles 2011 2012 2020 2021 2016 2018 2011 Central Moscow Region clinic pediatrics 2020 Central Moscow Region clinic oncology 2021 Central Central Moscow Region Moscow clinic clinic Central Central Central Central Central Moscow Moscow clinic clinic Moscow Moscow Region Moscow clinic clinic test collection point gynecology gynecology, pediatrics and dentistry IVF cycles IVF cycles gynecology gynecology laboratory Siberian Far Eastern Siberian Siberian Barnaul Vladivostok Irkutsk Krasnoyarsk clinic clinic clinic clinic IVF cycles IVF cycles IVF cycles IVF cycles 2016 2011 2011 2011 2022 2023 2021- 2022 2016 2019 2013 2016 Siberian Krasnoyarsk clinic IVF cycles 2016 Siberian Novokuznetsk clinic IVF cycles 2015 27,600 42,000 18,500 4,200 465 392 801 117 450 142 397 770 2,048 195 235 240 559 358 600 712 160 800 owned owned owned owned rented rented owned / rented rented rented rented owned owned owned rented rented rented rented rented rented rented rented owned Siberian Novosibirsk clinic IVF cycles 2016 1,234 rented Siberian Siberian Siberian Central Southern Novosibirsk Novosibirsk hospital multifunctional clinics multifunctional Omsk Vladimir Volgograd clinic clinic clinic IVF cycles IVF cycles IVF cycles 2014 2014 2016 2017 2018 10,260 5,256 376 354 380 owned owned / rented rented rented rented Страница 10 из 132 District Locality Facility Focus Central Central Southern Voronezh Kostroma Krasnodar Volga Nizhny Novgorod clinic clinic clinic clinic IVF cycles IVF cycles IVF cycles IVF cycles Launch date 2017 2016 2019 2018 Southern Rostov-on-Don clinic IVF cycles 2020 Central Northwestern Ryazan St. Petersburg clinic clinic IVF cycles IVF cycles Northwestern Central Central Volga Volga Volga Volga St. Petersburg Tula Yaroslavl Kazan Perm Ufa Tolyatti clinic clinic clinic clinic hospital multifunctional IVF cycles IVF cycles IVF cycles IVF cycles hospital multifunctional IVF cycles clinic Volga Samara Volga Novokuibyshevsk clinic multifunctional clinic multifunctional Volga Volga Volga Ural Ural Samara Samara hospital multifunctional pediatrics clinic Samara Tyumen Tyumen clinic test collection point hospital multifunctional oncology and hospital therapy IVF cycles clinic Area, m2 343 209 360 600 422 1,400 893 9,000 541 822 677 800 33,000 473 2,734 237 15,000 416 Property type rented rented rented rented rented rented owned owned rented rented rented owned owned rented owned owned owned rented 50 owned 15,000 4,750 owned owned 2015 2011 2022 2018 2014 2018 2012 2014 2013 2013 2013 2018 2013 2013 2019 2022 M&C Voronezh M&C Kostroma M&C Krasnodar M&C Nizhny Novgorod M&C Rostov-on- Don M&C Ryazan M&C St. Petersburg St. Petersburg M&C Tula M&C Yaroslavl M&C Kazan M&C Perm Ufa M&C Tolyatti M&A Samara M&C Novokuibyshevsk IDK hospital Сhildren's clinic M&C Samara Diagnostic centre Tyumen-1 Tyumen-2 M&C Yekaterinburg Total Ural Yekaterinburg 2022 434 rented 53 207,761 2022 25,222 7,924 31.4% 4,969 6,005 2021 25,220 8,276 32.8% 6,622 6,098 Change 0.0% (4.3%) (1.4p.p.) (25.0%) (1.5%) Financial overview for 2022 RUB mln Revenue EBITDA EBITDA margin EBIT Adj. net profit Revenue Total revenue in 2022 remained flat y-o-y at RUB 25,222 mln. Due to a drop in COVID-19 diagnosis and treatment services brought on by the pandemic slowdown, revenue of the Group's hospitals in Moscow fell by 7.1% year over year. This decline was completely offset by an increase in revenue at regional hospitals and out-patient clinics. The key drivers behind this growth were a stable demand for IVF in Moscow and the Moscow Region (the Group’s revenue from IVF up 9.9% y-o-y), on-target capacity utilisation rates at regional hospitals (revenue up 12.1% y-o-y) amid a post-COVID recovery in demand for medical services, and strong performance of new projects – MD Group Lakhta and the medical cluster in Tyumen. Страница 11 из 132 Revenue from medical services not related to women’s and children’s health accounted for 47.9% of total revenue, down from 51.2% in 2021. 2022 Key Operating Expenses RUB mln Payroll and social contributions as % of total revenue Material expenses as % of total revenue Medical services expenses as % of total revenue Functional expenses as % of total revenue Gross profit 2022 10,132 40.2% 5,133 20.3% 308 1.2% 336 1.3% 2021 9,526 37.8% 5,568 22.1% 335 1.3% 265 1.1% Change 6.4% 2.4p.p. (7.8%) (1.8p.p.) (8.0%) (0.1p.p.) 26.9% 0.2p.p. Gross profit in 2022 declined by 1.9% y-o-y to RUB 9,793 mln. Gross profit margin decreased by 0.8 p.p. y-o-y to 38.8% primarily due to a rise in personnel costs because of business expansion associated with the launch of MD Group Lakhta and Tyumen-2. Impact of key expenses In the reporting period, the Company's key expenses remained tightly controlled and slightly increased by 1.4 p.p. y-o-y as a percentage of revenue (to 63.1%) amid the growth of personnel costs and functional expenses. The share of personnel costs grew by 2.4 p.p. y-o-y as a percentage of revenue (to 40.2%) mainly due to a decline in COVID- 19 diagnostic and treatment services (resulting from a higher share of fixed costs) and the opening of new facilities (MD Group Lakhta and Tyumen-2) and their gradual ramp-up to design capacity. The share of materials expenses decreased by 1.8 p.p. y-o-y as a percentage of revenue (to 20.3%) on the back of a reduction in material-intensive services in the Company's portfolio, including therapy related to COVID-19. The share of medical services expenses declined by 0.1 p.p. y-o-y as a percentage of revenue (to 1.2%) due to the gradual vertical integration of business processes, including the opening of the Company’s own laboratory and data processing centre. The share of functional expenses increased by 0.2 p.p. y-o-y as a percentage of revenue (to 1.3%), driven by the growth in marketing expenses amid the Group’s business expansion. EBITDA EBITDA declined by 4.3% y-o-y and amounted to RUB 7,924 mln in 2022. EBITDA margin decreased by 1.4 p.p. y-o-y to 31.4% due to a decline in COVID-19 diagnostic and treatment services. Operating profit Following impairment testing in 2022, the Company recognised impairment of investments made in the previous periods, including a one-off RUB 1,000 mln impairment loss on fixed assets of the Ufa clinical hospital (opened in 2014) and a one-off RUB 201 mln impairment loss on goodwill of the Novokuznetsk out-patient clinic (acquired in 2015) on the back of an unfavourable macro environment. In addition, in the reporting period, the Group recognised a RUB 85 mln impairment of previously acquired construction documents due to the change in plans to build a clinic in St. Petersburg. Total impairment recognised in 2022 was RUB 1,287 mln. As a result, operating profit dropped by 25.0% y-o-y to RUB 4,969 mln in 2022, with an operating profit margin of 19.7%. Adjusted net profit In 2022, FX loss amounted to RUB 105 mln, with its growth attributable to a 5.3% rouble appreciation against the US dollar as compared to the beginning of the year. As a result, the Company's adjusted net profit decreased by 1.5% y-o-y to RUB 6,005 mln in 2022. Adjusted net profit margin slightly declined by 0.4 p.p. y-o-y to 23.8%. Страница 12 из 132 Cash flow statement RUB mln Operating cash flow before working capital changes Changes in working capital Taxes Cash from operating activities Cash used in investing activities Cash used in financing activities Effect of movements in exchange rates on cash held Cash and cash equivalents increase 2022 7,902 (155) (13) 7,734 (848) (5,904) (109) 873 2021 8,346 158 (5) 8,499 (2,912) (5,031) (96) 461 Change,% (5.3) n/a 172.4 (9.0) (70.9) 17.4 13.2 89.4 In 2022, operating cash flow before changes in working capital decreased by 5.3% y-o-y to RUB 7,902 mln as a result of the decline in EBITDA. Working capital RUB mln Inventories Accounts receivable Accounts payable Contract liabilities Working capital 31 December 2022 1,212 1,147 (2,447) (1,972) (2,060) 31 December 2021 1,165 1,112 (2,537) (1,990) (2,250) The Company has historically maintained negative working capital as a source of additional financing. In 2022, working capital remained negative at RUB (2,060) mln and amounted to 8.2% of revenue. In 2022, operating cash flow decreased by 9.0% y-o-y to RUB 7,734 mln, primarily due to the changes in working capital caused by the update of medicine and consumable supply terms as suppliers switched from deferred payment by instalments to advance payment. Cash used for investing activities, mainly consisting of capital expenditures and and interest income on deposits, amounted to RUB 848 mln. CAPEX Capital expenditure for the full year of 2022 declined by 69.2% y-o-y and stood at RUB 1,169 mln. The significant drop in CAPEX in the reporting period was due to macroeconomic uncertainty. The Group’s investment programme has now been resumed. We will continue to expand the Lapino medical cluster in 2023 and commenced the construction of an 13,175-sq.m Lapino-3 nuclear medical centre, which will support a full cycle of medical care in oncology. The launch of Lapino-3 will allow for the treatment of oncological diseases using PET CT, radiation therapy and theranostics equipment. We are planning to launch Lapino-3 in 2025, and we currently estimate the CAPEX of this project to be RUB 4 bln. We also plan to open a multifunctional hospital in Domodedovo. The clinical hospital will be built according to the project of already launched hospitals in Samara and Tyumen. This hospital will accommodate 164 beds, and our investments will approximate RUB 4.5 bln. In addition, in Q4 2023, a multifunctional out-patient clinic in the Moscow Citi Business Centre will be put into operation with a planned cost of RUB 236 mln. Moreover, at the end of 2023, we plan to launch a multifunctional out-patient clinic in the ZILART residential complex with an extimated CAPEX of RUB 78 mln. Страница 13 из 132 In 2022, cash outflows related to financing activities amounted to RUB 5,904 mln vs RUB 5,031 mln in 2021. The 17.4% y-o-y increase was due to the distribution of interim dividends to shareholders for H1 2022 in the amount of RUB 642 mln, as well as the early repayment of RUB 3,133 mln to the lender. Dividends On 26 October 2022, the Board of Directors of MD Medical Group approved to pay interim dividends in the amount of RUB 642,318,835.50, or RUB 8.55 per ordinary share / GDR for the 6 months 2022. On 29 November 2022, MD Medical Group made dividend payment on its GDRs following the results of the 6 months of 2022. The payout ratio is equal to 58.1% based on net income according to IFRS. As at 31 December 2022, net cash increased by RUB 873 million to RUB 4,463 mln. Debt portfolio RUB mln Total debt Short-term debt Long-term debt Cash and cash equivalents Net debt / (Net cash position) Net debt/(Net cash position) / EBITDA 31 December 2022 5973 106 489 4,463 (3,866) (0.5х) 31 December 2021 5,5134 1,786 3,727 3,590 1,924 0.2х The Group's debt decreased by 89.2% y-o-y to RUB 597 mln as at the end of 2022 mainly due to the early repayment of RUB 3,133 mln towards the outstanding principal. Cash balance grew by 24.3% y-o-y to RUB 4,463 mln as at 31 December 2022 vs RUB 3,590 mln as at 31 December 2021. As at 31 December 2022, the Company’s net cash position amounted to RUB 3,866 mln. The Company's debt is fully denominated in roubles. The net cash position to EBITDA ratio as at the end of 2022 was at 0.5x. Hospitals in Moscow Multifunctional hospitals for the whole family offering full cycle medical care on a high level Beds Area, m2 Focus MD Group hospital 261 27,600 Multifunctional hospital Multifunctional Lapino-1 191 42,000 Medical cluster Lapino Lapino-2 120 18,500 Oncology centre In-patient days Out-patient visits IVF cycles Deliveries 34,000 355,000 3,000 3,500 hospital 28,500 640,000 1,000 3,000 40,000 180,000 - - Lapino-4 100 4,200 Infectious diseases hospital 36,500 - - - Moscow hospitals include two business units — the Lapino medical cluster and MD Group hospital. In the reporting period, Moscow hospitals account for 51.6% of the Group's total revenue. In 2022, despite macroeconomic shocks, Moscow hospitals performed solidly with a slight decrease in revenue by 7.1% to RUB 13,013 mln. In the reporting period, we observed a decrease in the number of deliveries in Moscow by 9.5% amid overall downward trend in Russia’s birth rate, which was partially offset by a gradual recovery in patient flow and deferred demand for IVF after the COVID-19 pandemic – the number of IVF cycles in Moscow hospitals increased by 12.4%. The expected decline in the utilisation rate of the Lapino-4 amid the fading pandemic was offset by robust demand for treatment unrelated to women’s and children’s healthcare. In particular, we see stable demand in non-core segments, such as 3 Including RUB 106 mln of short-term lease and RUB 489 mln of long-term lease. 4 Including RUB 97 mln of short-term lease and RUB 597 mln of long-term lease. Страница 14 из 132 trauma care and cardiology. In accordance with our portfolio diversification strategy, in just two years after launch, Lapino-2 surgical unit with a focus on oncology generated as much as RUB 2,182 mln in revenue and achieved a 50% utilisation rate while maintaining potential for further growth. Operational and Financial Overview Revenue, RUB mln Out-patient visits In-patient days IVF cycles Deliveries Other revenue Operating indicators Out-patient visits In-patient days IVF cycles Deliveries 2022 13,013 2,695 6,130 764 2,064 1,360 549,256 66,194 2,741 4,275 2021 14,013 2,496 6,839 614 2,258 1,806 594,344 82,517 2,438 4,722 Change,% (7.1) 8.0 (10.4) 24.4 (8.6) (24.7) (7.6) (19.8) 12.4 (9.5) The Lapino-1 and MD Medical Group multifunctional hospitals are capable of providing 4,000 IVF cycles and 6,500 deliveries per year. In 2022, demand for deliveries (-9.5% y-o-y) dropped in Moscow due to the overall downward trend in Russia’s birth rate (-8.2% y-o-y5). This decrease in revenue was partially offset by a 24.4% y-o-y spike in revenue from IVF thanks to the post-pandemic demand recovery (+12.4% IVF cycles y-o-y). At the same time, we saw growing demand in areas not related to healthcare for women and children, such traumatology and cardiology (the number of in-patient days in traumatology and cardiology was up 63.7% and 11.1% y-o-y respectively). This confirms our effective portfolio diversification strategy, which enables us to offer an increasingly varied array of medical services to our customers. Lapino-2 oncology centre, launched in September 2020, in the reporting period reached revenue of RUB 2,182 mln and utilisation rate of 50%, while the facility continues to have significant potential for future growth. For example, in the reporting period, we saw increase in demand for oncological surgery (the number of in-patient days was up 59.4%) and oncomammology (the number of in-patient days was up 95.4%). In addition, the opening of Lapino-3 with an estimated launch date of 2025 will further increase the number of patients in Lapino-2. The launch of Lapino-4 in 2021 was dictated by the realities that the COVID-19 pandemic has placed us in. The Group saw strong demand for coronavirus treatment and decided to set aside the site for a new hospital. The hospital is able to provide a full range of medical services due to its location on the territory of the Lapino medical cluster. For patients with COVID-19, we provide high-quality emergency care and delivery in specially designated “red zones”, as well as complex cardiac and oncological surgeries. Since 2022, in the context of a slowdown in the pace of the COVID-19 pandemic, the Lapino-4 has expanded the range of its services and functions as an infectious diseases hospital, focusing on providing medical care to patients with infectious diseases, including severe forms of influenza and coronavirus. Investment strategy Based on expected demand and expertise we have built in oncology, we will continue to expand the Lapino medical cluster in 2023 and commenced the construction of a 13,175-sq.m. Lapino-3 nuclear medical centre, which will support a full cycle of medical care in oncology. The launch of Lapino-3 will allow for the treatment of oncological diseases using PET CT, radiation therapy and theranostics equipment. We are planning to launch Lapino-3 in 2025 and currently estimate the CAPEX of this project to be RUB 4 bln. We also plan to open a multifunctional hospital in Domodedovo. The clinical hospital will be built according to the project of already launched hospitals in Samara and Tyumen. This hospital will accommodate 164 beds, and our investments will approximate RUB 4.5 bln. 5 Source: The Federal State Statistics Service Страница 15 из 132 Key events in 2022 As we plan to expand our operations over the next few years, we will need to attract the best people to our healthcare facilities. In this regard, in September 2022, the Group jointly with the Moscow State Institute of International Relations (MGIMO) opened MGIMO-Med, a medical university. The MGIMO-Med University was established on the initiative of the governor of the Moscow Region, MGIMO and the MD Medical Group in 2021. The educational process is carried out at the sites of the Lapino medical cluster, the Odintsovo campus of MGIMO, as well as at sites of our programme partners such as Pirogov Research Medical University, the Research Institute of Human Morphology, and the Gamaleya Research Institute of Epidemiology and Microbiology. The 2022 programme includes the General Medicine training of specialists. In the future, the project also will cover other levels of training, in particular, residency and additional professional education. We believe that we will prepare students on our own base in accordance with the high standards of medical care adopted by the MD Medical Group. In cooperation with MGIMO, we have developed a modern educational programme that meets the modern needs of the industry. In addition to gaining medical skills, young doctors will already be familiar with our corporate culture and the high level of competencies we demand from all of our doctors and nurses. Out-patient clinics in Moscow and Moscow region High-end medical services for checks and treatments in a "close to home" format Number of clinics Total area, m2 Average size of clinic, m2 Out-patient visits IVF cycles Moscow and Moscow region 11 6,012 547 510,000 5,600 Out-patient clinics in Moscow and the Moscow region include seven clinics in Moscow, four medical facilities in the Moscow region and MD LAB laboratory network. In 2022, clinics account for 10.4% of the Group's total revenue. Throughout the year, we saw a gradual recovery of patient flows and deferred demand for IVF after the COVID-19 pandemic. In the reporting period, there was a slight decrease (-0.7% y-o-y) in the number of out-patient visits due to a reduction in COVID-19 diagnostic and treatment services. As a result, revenue from out-patient clinics in Moscow and the Moscow Region rose by 8.8% y-o-y to RUB 2,630 mln. Operational and Financial Overview Revenue, RUB mln Out-patient visits IVF cycles Other revenue Operating indicators Out-patient visits IVF cycles 2022 2,630 1,230 1,105 295 175,039 4,079 2021 2,418 1,196 972 250 176,270 3,868 Change,% 8.8 2.8 13.7 18.0 (0.7) 5.5 In 2022, revenues from out-patient clinics in Moscow and the Moscow Region rose by 8.8% y-o- to RUB 2,630 mln. The key driver behind revenue pickup was a 5.5% increase in IVF cycles thanks to the post-pandemic recovery of demand. The average IVF ticket increased by 7.8%, primarily on the back of indexed prices and an increase in the number of IVF services provided using new treatment standards (EmbryoScope). A slight 0.7% drop in the number of out-patient visits was caused by reduction in COVID-19 diagnostic and treatment services driven by the pandemic slowdown. This was offset by an increase in the average ticket by 3.6% y-o-y mainly due to indexed prices. Investment strategy In 2023, we continue to expand our presence in Moscow and will start building a multifunctional clinic in Moscow Citi business complex. The clinic with an approximate area of 1,480 sq.m. will offer a wide range of medical services for women and men, Страница 16 из 132 such as IVF, functional and ultrasound diagnostics. Services provided to patients will also include medical care for all family members, including therapy, genetics, urology, endocrinology, neurology, etc. We currently estimate the CAPEX of this project to be RUB 236 mln. The clinic will have an estimated annual capacity for up to 800 IVF cycles and more than 74,000 out-patient treatments. Centre with an IVF department is designed to serve clients working in Moscow City or living nearby. Moreover, at the end of 2023, we plan to launch a multifunctional out-patient clinic in the ZILART residential complex with an extimated CAPEX of RUB 78 mln. The clinic with an approximate area of 480 sq.m. will offer a wide range of medical services for women and men, including functional and ultrasound diagnostics. The clinic will have an estimated annual capacity for more than 48,000 out-patient treatments. Key events in 2022 and after reporting date We strengthened our market position in Moscow and the Moscow region by opening two new medical centres with a focus on antenatal care in Butovo and Mytishchi. In June 2022, MD Medical Group opened an out-patient medical centre, Mother & Child Butovo, with a capacity of 30,000 visits per year. The total area of the centre is 195 sq.m. Total investments in the project amounted to circa RUB 16 mln. In January 2023, the Company opened an out-patient medical centre, Mother & Child Mytishchi, with a capacity of 24,000 visits per year. The total area of the centre is 235 sq.m. Total investments in the project amounted to circa RUB 23 mln. Both medical facilities offer a wide range of pregnancy and birth preparation services for women, such as diagnosis and treatment of infertility, as well as functional and ultrasound diagnostics. In addition, services provided to patients will also include medical care for men, including ultrasound, endocrinology and therapy. The medical centres were implemented in accordance with the successful business model of the out-patient centre "Mother&Child Odintsovo" launched in 2016. The new centres will allow to further increase the number of patients in the Group's existing medical facilities by referring clients to the Company's clinics and hospitals. In December 2021, MDMG launched its own network of laboratory test collection points under the MD LAB brand in Moscow. During 2022, the MD LAB expanded its presence in Moscow and also opened two more collection points. Hospitals in regions Wide range of first class medical services in regions Name Beds Area, m2 Focus Novosibirsk Avicenna hospital 93 10,260 Multifunctional hospital Samara IDK hospital Ufa hospital Ufa 164 15,000 Multifunction al hospital 185 33,000 Multifunctional hospital St. Petersburg Medical cluster in Tyumen Tyumen-1 MD Group hospital Lakhta 164 150 15,000 9,000 Multifunctional Clinical hospital hospital with a focus on childbirth and gynaecological surgery 10,220 64,800 Tyumen-2 hospital 100 4,750 Oncology and therapy 32,000 220,000 29,200 - Patient-days Out-patient treatments IVF cycles Deliveries 22,630 582,900 1,800 1,000 30,000 220,000 30,295 290,800 1,200 2,500 1,100 2,000 - 3,000 1,200 2,500 - - Regional segment include six clinical hospitals located in Novosibirsk, Samara, Ufa, St. Petersburg and Tyumen. In the reporting period, hospitals in regions account for 25.8% (+2.8 p.p. y-o-y) of the Group's total revenue. In 2022, regional medical facilities demonstrated strong operating performance across the whole network in Russia – revenue of the Group’s regional hospitals increased by 12.1% y-o-y to RUB 6,506 mln. The Group continues to diversify its geographical footprint: during the year, we launched two clinical hospitals in St. Petersburg and Tyumen. Страница 17 из 132 In the reporting period, our results in women's and children's healthcare in regions continue to improve, with a significant increase of 28.5% in the revenue from deliveries in 2022. In addition, clinical hospitals in Samara and Novosibirsk are on track to reach their respective design capacities as expected. As a result, total in-patient treatments in regions increased by 16.0% y- o-y to 79,960. Operational and financial overview Revenue, RUB mln Out-patient visits In-patient days IVF cycles Deliveries Other revenue Operating indicators Out-patient visits In-patient days IVF cycles Deliveries 2022 6,506 1,539 2,788 747 779 653 689,141 79,960 2,902 4,301 2021 5,803 1,429 2,404 680 606 684 678,577 68,951 2,796 3,675 Change,% 12.1 7.7 16.0 9.9 28.5 (4.5) 1.6 16.0 3.8 17.0 In 2022, regional hospitals’ revenue was up 12.1% y-o-y and reached RUB 6,506 mln, driven mainly by a 17.0% y-o-y surge in deliveries, with revenue from this business line up 28.5% y-o-y. A considerable increase in the number of deliveries came on the back of Tyumen-1 and Samara-based IDK hospital, gradually progressing towards target capacity (with utilisation rates going up 4.4 p.p. y-o-y to 26.8% and 3.8 p.p. y-o-y to 40.6%, respectively) as well as strong results of the new MD Group Lakhta hospital in St. Petersburg, which achieved a 18.3% utilisation rate in the reporting period. Revenue growth was also significantly fuelled by an increase in the number of in-patient days (up 16.0% y-o-y), with revenue rising by 16.0% y-o-y in this segment. The strongest growth in in-patient utilisation rates was seen at clinical hospitals in Tyumen and Samara: the IDK multidisciplinary hospital in Samara reached a utilisation rate of 71.8%, while Avicenna hospital in Novosibirsk hit a 67.2% utilisation rate. Meanwhile, our Tyumen medical cluster, which includes the Tyumen-1 multidisciplinary hospital and Tyumen-2 facility with focus on oncology and therapy (launched in February 2022), achieved a 34.9% utilisation rate in 2022, still having a significant potential to support the Group’s future growth. Investment strategy We continue to capitalise on our diversification strategy in terms of pricing, service range and geography: during the year, we launched two clinical hospital in St. Petersburg MD Group Lakhta and multifunctional hospital Tyumen-2. On 16 March 2022, due to the easing of the COVID-19 pandemic, the MD Medical Lakhta clinical hospital, which had been converted into a temporary COVID treatment facility, began operating in its main area of specialisation: healthcare for women and children, with a focus on childbirth and gynaecological surgery. The hospital plans to perform up to 3,000 deliveries per year. Less than a year in operation after MD Group Lakhta was converted back into a clinical hospital with a focus on childbirth and gynaecological surgery, the facility achieved an 18.3% utilisation rate in terms of number of deliveries, and we continue to increase patient flows. The medical cluster in Tyumen includes two multifunctional hospitals: Tyumen-1 and Tyumen-2. The Tyumen-2 hospital was initially focused on providing medical care for patients with infectious diseases, including coronavirus. Due to the COVID-19 slowdown, the Tyumen-2 hospital currently had been converted into a multifunctional hospital specializing in oncology and therapy. In addition, the clinical hospital is occupied by infectious boxes that serve as red zones, where we provide intensive care to our patients.The Tyumen medical cluster is currently in ramp-up stage and still having a significant potential to support the Group’s future growth. Страница 18 из 132 Key events in 2022 We are continuing to expand our medical network in St. Petersburg, the second largest healthcare market in Russia. In January 2022, Group launched a new multidisciplinary clinical hospital MD Group Lakhta in St. Petersburg. The centre provides the following high quality medical services – obstetrics and gynecology, pediatrics, surgery, therapy, X-ray and laboratory diagnostics. The total area of the centre is 9,000 sq.m. The in-patient facility has 150 beds. Total investment in the project amounts to RUB 2 bln. Patient treatment will be treated under the VHI programme, as well as MHI. During the pandemic, MD Group Lakhta was temporarily focused on providing medical care to patients with infections, including coronavirus. On 16 March 2022, due to the easing of the COVID-19 pandemic, the MD Group Lakhta clinical hospital began operating in its main area of specialisation: healthcare for women and children, with a focus on childbirth and gynaecological surgery. Since 2019, the Tyumen-1 multifunctional clinical hospital has been successfully operating in Tyumen. In that regard, in February 2022 we opened the second wing with the focus on providing medical care in oncology and therapy. The total area of the centre is 4,750 sq.m. It will have 100 beds, including 12 in the emergency room. Total investments in the project amounted to RUB 1 bln. Patient treatment will be carried out under the VHI programme, as well as MHI. Out-patient clinics in regions High-end medical services for checks and treatments in a "close to home" format Number of clinics Cities of presence Total area, m2 Average size of clinic, m2 Out-patient visits In-patient days IVF cycles Regions 29 24 22,200 765 890,300 3,700 19,200 Out-patient clinics in regions include 29 clinics in 24 cities of the Russian Federation. In 2022, clinics account for 12.1% of the Group's total revenue. In the reporting period, revenue of the Group’s regional clinics increased by 2.9% y-o-y to RUB 3,057 mln. Growth in revenue was mainly due to higher utilisation rate, partly because of the gradual recovery in demand for elective medical services after the COVID-19 pandemic. In 2022, the Group continues to diversify its geographical footprint: we entered into the Sverdlovsk Region by opening our first out-patient clinic with focus on IVF in Yekaterinburg. Operational and Financial Overview Revenue, RUB mln Out-patient visits In-patient days IVF cycles Other revenue Operating indicators Out-patient visits In-patient days IVF cycles 2022 3,057 974 71 1,715 297 413,119 2,621 7,140 2021 2,972 901 49 1,674 348 409,442 1,837 7,424 Change,% 2.9 8.1 44.9 2.5 (14.7) 0.9 42.7 (3.8) In 2022, revenues from out-patient clinics in regions increased by 2.9% y-o-y to RUB 3,057 mln. Revenue growth in the reporting period was mainly attributable to a 0.9% y-o-y increase in number of out-patient visits thanks to the post-pandemic recovery of demand and increase of the respective average check by 7.1%, primarily on the back of indexed prices. In 2022, IVF cycles dropped by 3.8% y-o-y mainly due to the suspension of the Novosibirsk Centre for Reproductive Medicine, which was closed for renovation. The renovated centre with an annual capacity of 1,000 IVF cycles opened its doors on Страница 19 из 132 16 June 2022. This slight decrease was partially offset by an increase in the average ticket by 6.6% y-o-y mainly due to indexed prices and an growth in the number of IVF services provided using new treatment standards (EmbryoScope). On top of that, revenue was positively influenced by a 42.7% y-o-y hike in the number of in-patient days due to the allocation of quotas under the MHI programme. Key events in 2022 In June 2022, the Company completed the renovation of the Novosibirsk Centre for Reproductive medicine, acquired under a deal with ARTMedGroup in 2016. As part of the reconstruction project, the centre's capacity was increased, medical equipment, including embryological equipment, was modernized, and new treatment protocols were introduced. After the renovation, the total capacity of the facility has increased to 1,000 IVF cycles per year. The total investment in the project was around RUB 23 mln, of which RUB 21.6 mln were allocated for the maintenance and modernisation of the premises, and RUB 1.3 mln were invested in new modern technical equipment. In November 2022, MD Medical Group continued to expand its presence and entered a new location – the Sverdlovsk Region, the largest and most dynamically developing region of the Ural Federal District. The new clinic in Yekaterinburg with a total area of 434 sq.m. provides a wide range of medical services to all family members, with special attention to the health of women and men. The clinic has an annual capacity for up to 400 gynaecological operations, up to 800 IVF cycles, including under the MHI programme, and more than 30,000 out-patient treatments. CORPORATE GOVERNANCE Board of Directors overview Our strong and experienced Board of Directors is focused on ensuring the long-term successful development of MD Medical Group and sustained returns for our shareholders. Vladimir Mekler Chairman of the Board of Directors, Independent Member of the Board of Directors Vladimir Mekler was appointed as the Non-Executive Director in February 2015 and became the Chairman of the Board of Directors in June 2016. Mr Mekler is the senior and managing partner of Mekler & Partners. Vladimir specialises in corporate law, including support and structuring complex and international transactions, development and optimisation of corporate governance and legal systems in companies, legal support of M&A transactions, settlement of corporate disputes, as well as the organisation and coordination of legal representation and defence in complex economic and property crimes. Vladimir Mekler has been a member of the Moscow City Bar since 1980. From 2003 to 2010, he was also the Vice Chairman of the Presidium of the Moscow City Bar Association. Vladimir graduated from Lomonosov Moscow State University. Mark Kurtser Member of Russian Academy of Sciences, CEO and Member of the Board of Directors Mark Kurtser is the founder of MD Medical Group, CEO and a member of the Board of Directors. Mr Kurtser began his career at the Department of Obstetrics and Gynecology of Pirogov Russian National Research Medical University, where he went from assistant to associate professor of the Department. From 1994 to 2012, he headed the Centre for Family Planning and Reproduction, the largest state hospital with focus on OBGNY in Moscow. From 2003 to 2013, Mark Kurtser was the Chief Obstetrician-Gynecologist of the Moscow Healthcare Department. Mark Kurtser continues to be actively involved in the activities of the Group as the company CEO and practicing physician. Vitaly Ustimenko Independent Member of the Board of Directors Vitaly Ustimenko was elected to the Board of Directors in February 2015. From 2012 to 2016, Vitaly Ustimenko was the Chief Financial Officer of the Group. Vitaly has 20 years of experience in the field of finance and investment, including eight years as a CFO. He worked in such companies as Inventure Partners fund, Страница 20 из 132 Solnechnye Producty, Russian Helicopters and Deloitte. Vitaly is currently the CFO of Skillbox, an online education company in Russia. Mr Ustimenko holds a bachelor’s degree from the Financial University under the Government of the Russian Federation and a PhD in Finance from the State University of Management. Tatiana Lukina Independent Member of the Board of Directors Tatiana Lukina was appointed as an independent non-executive director in December 2019, bringing to the Group 19 years of experience in finance, business restructuring and project management across a wide range of industries. Tatiana's career began at KPMG, where she spent 10 years participating and leading projects in the areas of audit, capital market transactions (IPO, SPO, and Eurobonds), debt restructuring of the largest Russian companies, and M&A services in different countries. After that, Tatiana worked in the Portfolio Asset Management Department at ALFA Group, representing shareholders’ interests on boards and committees of ALFA bank (Russia, Ukraine, and Kazakhstan) and Rosvodokanal. In 2015–2016, Tatiana, as a co-leader of financial function, took part in the preparation for the IPO at OZON.ru, the leading online retailer in Russia. From 2016 to 2020, Ms Lukina worked as the CFO at GAME INSIGHT, a global developer of mobile games. From 2020–2022 Tatiana worked as the CFO of Dyninno, a group of companies providing products and services in the travel, finance, entertainment, and technology sectors in 50 countries. Since November 2022, Ms Lukina has been working as the CEO of a multi-Family office in the Middle East. Ms Lukina graduated with honours from the Financial University under the Government of the Russian Federation with a degree in Finance, Business Valuation and Reorganisation Management and then obtained a PhD degree there. Since 2006, Tatiana has been a member of the Association of Certified Chartered Accountants (ACCA) in the UK, and successfully passed exams for obtaining the Russian Audit Licence. Sergey Kalugin Independent Member of the Board of Directors Sergey Kalugin was appointed as an independent director in March 2022. Mr Kalugin has extensive experience in organising the digital transformation of companies. From 2017 to 2018, he was the Deputy Minister of Digital Development, Communications and Mass Media of the Russian Federation, where he oversaw areas related to Smart City and Digital Health. From 2013 to 2017, he was the President of PJSC Rostelecom, where he upgraded the infrastructure, improved the quality of customer service and adopted a new strategy that launched the company's digital transformation. Sergey Kalugin graduated from Lomonosov Moscow State University with a degree in Economics. Simon Rowlands Ex. Senior Independent Member of the Board of Directors Simon Rowlands was appointed as an independent non-executive director in 2012. In March 2022, Mr Rowlands decided to step down as a member of the Company's Board of Directors. Kirill Dmitriev Ex. Member of the Board of Directors Kirill Dmitriev was elected to the Board of Directors in October 2012. In March 2022, Mr Dmitriev decided to step down as a member of the Company's Board of Directors. Страница 21 из 132 Report of the Board of Directors 27 agenda items were discussed in 2022 11 Board meetings held in 2022 Participation of the Directors in the Board meetings during 2022 Board Member Vladimir Mekler Mark Kurtser Vitaly Ustimenko Tatyana Lukina Sergey Kalugin Kirill Dmitriev Simon Rowlands Number of Board meetings attended via phone 1 Number of Board meetings attended in person 4 1 - 1 - 1 1 10 4 3 4 - - Remuneration paid to Members of the Board in 2022 Board Member total amount paid Sergey Kalugin Vitaly Ustimenko Tatyana Lukina Board Member total amount paid (before taxes) RUB 4,000,000 RUB 944,000 RUB 944,000 Corporate Governance Report At MD Medical Group, we clearly understand that there is a direct link between best corporate governance practices and successful performance of a company. The Board of Directors aims to maintain the highest standards in its engagement with all stakeholders. Corporate governance and control structure General Meeting of Shareholders Board of Directors CEO Board Committees Audit Nomination Remuneration Internal auditor reports to Audit Committee Since the IPO in London, the Company has fully complied with the UK Corporate Governance Code. It established a Remuneration Committee, an Audit Committee and a Nomination Committee with formally delegated duties and responsibilities and written terms of reference. All Committees perform their duties on behalf of the Board of Directors, which is responsible for constituting, assigning, co- opting and setting the terms of service for the Committee members. Страница 22 из 132 Composition of Board Committees Name Vladimir Mekler Mark Kurtser Vitaly Ustimenko Tatiana Lukina Sergey Kalugin Audit Committee Status Independent Executive Director Non-Executive Independent Independent Non-Executive Independent Non-Executive Non-Executive Audit Committee Nomination Committee Chairman ■ Remuneration Committee ■ ■ ■ Chairman ■ ■ Chairman The Audit Committee comprises three independent non-executive directors. The Audit Committee is chaired by Tatyana Lukina, an independent non-executive director, with Vitaly Ustimenko and Sergey Kalugin as other members. The Audit Committee meets at least four times a year and is responsible for considering: Reliability and appropriateness of disclosures in the financial statements and external financial communication Maintenance of an effective system of internal controls including financial, operational and compliance controls and risk management system Preparation of recommendations to the shareholders for approval in general meetings in relation to the appointment, reappointment and removal of the external auditors Approval of the remuneration and terms of engagement of the external auditors in respect of audit services provided Audit process, including the monitoring and the review of the external auditors’ performance, independence and objectivity Development and implementation of a policy on non-audit services provided by external auditors Monitoring compliance with laws and regulations and standard of corporate governance The Audit Committee assists the Board of Directors in overseeing and directing the work of internal audit. Where the Audit Committee identifies problems or opportunities for improvement through monitoring and performance reviews, it shall make recommendation to the Board of Directors the actions needed to address the problems or make improvements. Nomination Committee The Nomination Committee comprises one executive and two non-executive directors, one of whom is independent. The Nomination Committee is chaired by a non-executive director, Vladimir Mekler. The other members of the Nomination Committee are a non-executive director, Sergey Kalugin6, and an executive director, Mark Kurtser. The Nomination Committee meets at least once a year and is responsible for assisting the Board of Directors in fulfilling its corporate governance responsibilities in relation to the appointment of all executive and non-executive directors, as well as the Chief Operating Officer (CEO), First Deputy CEO and Chief Financial Officer of the Company. The main objective of the Nomination Committee is to manage the process of appointing members of theBoard of Directors and presenting respective recommendations to the Board of Directors, ensuring a balanced composition of the Board of Directors and the necessary qualifications of its members. The Nomination Committee also considers the composition of the Audit and Remuneration Committees. Remuneration Committee The Remuneration Committee comprises two non-executive directors and one executive director. The Remuneration Committee is chaired by an independent non-executive director, Sergey Kalugin. The two other members are Mark Kurtser and Vladimir Mekler. 6 In March 2022, Sergey Kalugin was elected to the Nomination Committee. Страница 23 из 132 The Remuneration Committee meets at least once a year and is responsible for assisting the Board of Directors in fulfilling its corporate governance responsibilities in relation to remuneration of all executive directors and the Chairman of the Board of Directors. The main objective of the Remuneration Committee is to determine the framework and policy of the remuneration of the executive directors, the Chairman of the Board of Directors and senior executives, and the specific remuneration of each executive director and the Chairman of the Board of Directors and any compensation payments. Internal Auditor The Audit Committee is responsible for monitoring and reviewing the effectiveness of the Company’s internal audit service. In this respect, the Audit Committee may require or on behalf of the Head of Internal Audit to conduct investigations into any activities of the Group that may be of interest or concern to the Audit Committee. The Company’s internal auditor is responsible for recommending an audit plan to the Audit Committee. The internal auditor carries out auditing assignments in accordance with this plan and oversees the Company’s compliance with the plan recommendations. The internal auditor files a quarterly report to the Audit Committee on its findings. Risk management The Board of Directors of MD Medical Group carefully identifies and manages key potential risks to ensure the long-term sustainable development of the business. We are continuously improving our risk management systems, which enables us to quickly identify potential risks to our operations and find the most efficient ways to mitigate them. Risk overview Reputation risk Risk management Key results in 2022 Risks of dissemination in the Monitoring information about the media of information discrediting the image of the Group, disclosure of confidential business information Risks of dissemination in the mass media of information concerning personal data of patients Likelihood: Moderate Impact: Moderate Risks related to government regulation Introduction of new requirements, including licences and permits Possible changes in the regulation of the Mandatory Health Insurance (MHI) programme Likelihood: Low Impact: Low Group in the media Updating information sources Launching new system controls Improving personal information protection methods on a continuous basis Maintaining constructive relations with the government at both the federal and regional level Participating in a variety of public committees on relevant health issues Supporting the authorities and providing expert advice on relevant laws Monitoring changes in requirements of state regulators regarding the accounting treatment for medical equipment and medicine turnover We have improved the personal data protection system by increasing the share of internal electronic document management, with external contractors, patients and government regulators We have strengthened the work of the call centre by optimising its headcount, providing continuous training and establishing key performance indicators for our staff We have introduced unified electronic forms of information on the treatment of patients We have strengthened the control over the registration of narcotic and psychotropic drugs We have ensured the safety of patients' personal data by encrypting the information in accordance with the law We have equipped our medical facilities and server storages with equipment that protects against network attacks in accordance with the law Страница 24 из 132 Risk overview Risks associated with the quality of services Risk management Key results in 2022 Inconsistency of the quality of services offered to our patients with the established requirements and standards Likelihood: Low Impact: Moderate Running the system for We have optimised the selecting the most modern and advanced equipment, medicines and medical supplies Holding seminars and scientific conferences for doctors Assessing the performance of medical personnel methodology for recording laboratory tests, which has significantly increased the accuracy and speed of data processing We have established a full- fledged exchange of information about patients obtained through telemedicine We have improved our system of work with patients, including conducting mass surveys and questionnaires Macroeconomic risk Deterioration of macroeconomic factors Decrease in the overall standard of living with a corresponding change in the behaviour of customers Likelihood: Moderate Impact: Moderate Investment project execution risk Long payback period and low level of return on investment of new facilities due to a certain lack of reliable information about the potential number of patients in a particular region Likelihood: Moderate Impact: Moderate Recruitment risk Inability to attract or retain highly qualified personnel in the Group Lack of IT specialists in the market Likelihood: Low Impact: Low Adjusting the Group's strategy We have monitored trends in the and financial model Revising investment plans Prioritising regions where we already have presence and/or the largest regions of Russia, where we can have a higher degree of certainty about the local market Exercising budget control of implementation expenses; Conducting tender procedures Conducting post-investment analysis Making indexation of wages Conducting on-the-job training for employees in Moscow for new employees in the regions Cooperating with heads of departments of leading universities in the search of talented personnel Russian economy with an assessment of the potential impact on the business. Our strategy is designed to enable us to adapt to changes in the general economic environment as necessary We have successfully opened new hospitals and clinics, expanding our presence We have increased the number of patients receiving treatment under the government-funding programme We have increased the number of contracts with insurance companies We have improved the quality of the recruitment process, as well as working conditions and communication within the Group We have opened MGIMO-Med as the future base of our personnel Страница 25 из 132 Risk overview Control and efficiency risk Risk management Key results in 2022 Risk is closely related to the Constantly developing size of the business, which was increased in 2022 Likelihood: Moderate Impact: Moderate mechanisms for improving the effectiveness of control over all processes (budgeting, financial control, treasury, accounting, procurement, legal support, personnel management, security and IT, HR) in medical facilities Risks associated with lack of medicines and equipment Shortage of medicines, vaccines, specific equipment, and spare parts Inability to repair or support network equipment, including servers, network medical equipment, etc. Searching for alternative suppliers of medicines Creating stocks of vaccines and medicines Implementing information systems for data processing and storage on the Group’s servers Likelihood: Moderate Impact: Moderate We have implemented ERP system, thanks to which we have increased the efficiency of data collection and optimised business processes We have analysed market and procured medicines of appropriate quality through alternative suppliers We have created stocks of vaccines and medicines taking into account their expiration date and turnover We have started to implement information systems for processing and storing the results of X-ray examinations (CT, MRI) on our servers Management Board Changes in Group’s Management Board in 2022 In 2022, Chief Operating Officer Elena Balashova and Chief Financial Officer Iya Lukyanova were added to the Management Board. First Deputy CEO Alexander Kotov and Head of clinical hospitals Natalia Butkevich joined the Management Board, replacing respectively Andrey Khoperskiy (step down as a member of the Company's Management Board) and Georgy Shebaev (left the Group). Composition of the Management Board7 Name Mark Kurtser Alexander Kotov Iya Lukyanova Elena Balashova Position CEO and Member of the Board of Directors First Deputy CEO Chief Financial Officer Chief Operating Officer Medical Director for Organisational and Scientific- educational work Sergey Arabadzhyan Medical Director for Technology Innovation Medical Director, Head of clinical hospitals Natalia Butkevich Medical Director, Head of out-patient clinics Natalia Yakunina General Director of Lapino Medical Cluster Boris Konoplev Yulia Kutakova Joined Founder 2022 2015 2019 2012 2010 2018 2011 2010 Background Medicine Government relations Finance Procurement management Medicine Medicine Medicine Medicine Medicine Dr Mark Kurtser Member of the Russian Academy of Sciences, CEO and member of the Board of Directors Dr Mark Kurtser is the founder of MD Medical Group, CEO, and a member of the Board of Directors. Dr Kurtser began his career as a graduate assistant to the associate professor at the Obstetrics and Gynaecology Department of Pirogov Medical 7 As of publication date. Страница 26 из 132 University. From 1994 to 2012, he was the Head of the Centre for Family Planning and Reproduction, the largest public obstetrics hospital in Moscow. From 2003 to 2013, Dr Kurtser was the Chief Obstetrician and Gynaecologist of the City of Moscow. He holds a degree in Medicine from Pirogov Medical University in addition to a postdoctoral degree in Medicine. Dr Kurtser remains actively involved in the Group’s healthcare practice and day-to-day operations. Alexander Kotov First Deputy CEO Alexander Kotov joined the Group in 2022 as the First Deputy CEO, where he is responsible for personnel management, legal issues and interaction with government authorities, as well as ensuring the security of MD Medical Group operations. Prior to joining the Group, Alexander held senior positions in government bodies. Alexander graduated from Kutafin Moscow State Law University with a degree in Jurisprudence, and was also qualified as an adviser in social management and personnel work at the Russian Presidential Academy of National Economy and Public Administration. Alexander also holds a PhD in Pedagogy. Iya Lukyanova Chief Financial Officer Iya Lukyanova joined the Group in 2015 as the Chief Accountant, where she oversaw the financial issues and projects on automation and digital transformation. In 2019, Iya appointed Deputy CFO, where she oversaw the financial direction and projects on automation and digital transformation of the Company. Since 2022, she has been holding the position of Chief Financial Officer, where she is responsible for financial, corporate, legal and IR areas of MD Medical Group. Prior to joining the Group, Iya worked as a financial manager at SG Records Management. Iya Lukyanova graduated from Saratov Socio-Economic Institute with a degree in Finance and Credit, a member of self- regulatory organisation of auditors Non-Profit Partnership “Auditor Association Sodruzhestvo”. Elena Balashova Chief Operating Officer Elena Balashova joined the Group in 2019 as the Director of Procurement. Since 2022, she has been holding the position of Chief Operating Officer, where she is responsible for procurement, information technology, marketing and advertising, design and construction of medical facilities, as well as the operation of medical and engineering equipment and other systems. Before joining the Group, Elena worked in senior positions at ERKAFARM, EVRAZ, BTK Group, as well as Head of the Department for ensuring medical organisations of the Moscow Healthcare Department. Elena Balashova graduated from Ryazan State Radio Engineering University with a degree in Computer-Aided Design Systems. In 2015, she received an MBA degree from Moscow International Higher Business School (MIRBIS). Dr Yulia Kutakova PhD – Medical Director for Organisational and Scientific-Educational Work Dr Yulia Kutakova joined the Group in 2012. She has over 11 years of practice experience in obstetrics and gynaecology. Before joining the Group, Dr Kutakova was the Chief of Maternity in the Organisational and Tutorial Department of Public Healthcare of the City of Moscow. Dr Kutakova holds a degree in medicine from Pirogov Medical University, a degree in management from the Moscow Institute of Management and a PhD in medical science. Dr Sergey Arabadzhyan PhD, Assoc. Prof. – Medical Director for Technology Innovation Dr Arabadzhyan joined the Group in 2010. Until 2012 – a doctor of the Pregnancy Pathology Department at MD Group hospital. From 2012 to 2014, Dr Arabadzhyan worked as the Commercial Director and from 2012 to 2018 was the Head of the Obstetric Physiological Department of the Lapino-1 clinical hospital. From 2018 to 2020, he held the position of Chief Physician of the IDK Mother and Child Hospital in Samara. He was appointed to the position of Medical Director for Innovative Technologies of MD Medical Group in 2020. Mr Arabadzhyan graduated from Pirogov Russian National Research Medical University. A practicing physician, he holds a PhD in Medicine, is an Assoc. Prof. at the Department of Reproductive Medicine, Clinical Embryology and Genetics of Samara State Medical University. Страница 27 из 132 Dr Natalia Butkevich PhD – Medical Director, Head of clinical hospitals Dr Natalia Butkevich joined the Group in 2018 as the Head of the Department of Medical Prevention for Adults. From 2018 to 2022, she was the Head of the Out-patient Treatment Department, as well as the Deputy Director of clinical hospitals of MD Medical Group. In 2022, she was appointed the Medical Director and the Head of clinical hospitals of MD Medical Group. Dr Butkevich graduated from Pirogov Russian National Research Medical University. Practicing physician, she holds a PhD in Medicine, Honoured Doctor of the Russian Federation. Natalia Butkevich has more than 40 years of experience in medicine. Dr Natalia Yakunina PhD, Medical Director, Head of out-patient clinics, General Director of clinical hospital in Ufa Natalia joined the Group in 2011 as the Chief Doctor of MD Yugo-Zapad clinic in Moscow. From 2012 to 2014, Dr Yakunina was the Head of the OBGYN Out-patient Department at MD Group hospital. From 2014 to 2016, she worked as the Chief Doctor and CEO of MD Savelovskaya clinic in Moscow. Since 2016, she has been holding the position of the Head of out- patient clinics in the Group. In 2021, she was also appointed General Director of clinical hospital in Ufa. Before joining the Group, Dr Yakunina was the Chief Obstetrician and Gynaecologist of the Central District of Moscow. Dr Yakunina has more than 30 years of experience in medicine. She graduated from Turkmen State Medical University with a degree in General Medicine and also holds a PhD degree. Dr Boris Konoplev Medical Director, General Director of Lapino Medical Cluster Dr Boris Konoplev joined the Group in 2010 as an obstetrician-gynecologist at MD Group hospital. From 2012 to 2014, he was the Head of the Obstetrics Department of Lapino hospital. From 2014 to 2017, Boris was the Chief Doctor of clinical hospital in Ufa. In 2017, he was appointed as the Deputy Chief Doctor of MD Group Hospital and the Head of clinical hospitals in the Group. Since 2021, he has been CEO of Lapino Medical Cluster. Dr Konoplev graduated from the Pediatric Faculty of Pirogov Medical University. Boris is a practicing obstetrician-gynecologist and has received extensive training in leading European clinics. Shareholder and Dividend Report Structure of shareholders’ equity MD Medical Group has 75,125,010 ordinary shares with a nominal value of RUB 2.4 each. As of 31 December 2022, the authorised capital of MD Medical Group Plc amounted to RUB 180,585,000. Since October 2012, MD Medical Group’s shares have been listed on the London Stock Exchange8 (LSE) under the ticker MDMG in the form of Global Depositary Receipts (GDRs). Each GDR represents an interest in one ordinary share of the Company. Currently, the LSE has suspended the admission to trading of the Company's GDRs listed in the London Stock Exchange. Since November 2020, the Company's GDRs have also been traded on the Moscow Exchange (MOEX) in the first listing level. The quotation is done in Russian roubles. As at the end of 2022, Group’s market capitalisation was RUB 31,845 mln on the MOEX. MD Medical Group has a free float of approximately 32.1%, with the remaining 67.9% owned by MD Medical Holding Limited, which is beneficially owned by Mark Kurtser. The investor portfolio is represented by a number of global institutional investors. 8 Due to recent sanctions related to events in Ukraine as well as the current market environment, the London Stock Exchange has suspended the listing of the Company’s GDRs in order to maintain market stability. Страница 28 из 132 Top 7 Institutional Holders Name Number of shares as of 31.12.2022 Percentage of shares outstanding, % Number of shares as of 31.12.2021 Percentage of shares outstanding, % Russia Partners Advisors Norges Bank Investment Management East Сapital Financial Services AB Prosperity Capital Management Ltd. (Russia) JP Morgan Asset Management (UK) ltd. Holberg Fondsforvaltning AS Handelsbanken Fonder AB 3,235,000 2,737,843 1,350,479 1,002,565 798,394 240,000 163,393 4.3 3.6 1.8 1.3 1.1 0.3 0.2 3,235,000 3,037,606 1,338,479 995,809 798,394 240,000 163,393 4.3 4.0 1.8 1.3 1.1 0.3 0.2 Dividends and Dividend taxation MD Medical Group has been adhering to its unofficial dividend policy to pay out at least 50% of a year’s net profit as dividends. On 26 October 2022, the Board of Directors approved the payment of an interim dividend in the amount of RUB 8.5 on the ordinary share / GDR of MD Medical Group which corresponds to the total payment of RUB 642 mln, based on the results of six months of 2022. On 29 November 2022, MD Medical Group made dividend payment on its GDRs following the results of six months of 2022. MD Medical Group’s dividend history Dividend approval Record date Payout date Total dividends, RUB Dividends per ‘000 GDR, RUB 2018 2019 H1 2020 2020 H1 2021 H1 2022 23.04.2019 03.09.2020 04.09.2020 22.04.2021 06.09.2021 26.10.2022 24.05.2019 25.06.2019 800,081 10.65 16.09.2020 13.10.2020 1,389,813 18.5 18.09.2020 20.10.2020 736,225 9.8 05.05.2021 25.05.2021 1,427,375 19 24.09.2021 26.10.2021 1,352,250 18 07.11.2022 29.11.2022 642,319 8.55 Since 1 January 2015, all Group`s companies have been a Russian tax resident and pays dividends in line with the Russian Tax Code, according to which dividends paid by Russian companies are generally subject to a tax rate of 15%. A reduced rate may be applied in the case of Russian tax residents and residents of foreign jurisdictions whose Governments have signed a double taxation treaty (DTT) with the Government of Russia. MD Medical Group acts as a tax agent and withholds tax in order to transfer it to the Russian tax authorities when paying dividends. Investor relations MD Medical Group regards investor relations as an important priority and have focused on maintaining a continued active dialogue with the investment community since its successful listing on the London Stock Exchange9 in 2012. MD Medical Group rigorously adheres to best practices in terms of openness and transparency of its activities for investors and analysts. The Company uses various formats of interaction with investment community, including publication press releases on operational and financial results, conference calls, organisation of road shows and site visits, and participation in investment conferences and other events. 9 Due to recent sanctions related to events in Ukraine as well as the current market environment, the London Stock Exchange has suspended the listing of the Company’s GDRs in order to maintain market stability. Страница 29 из 132 REPORT AND CONSOLIDATED FINANCIAL STATEMENTS MD MEDICAL GROUP INVESTMENTS PLC REPORT AND CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 OFFICERS, PROFESSIONAL ADVISORS AND REGISTERED OFFICE Board of Directors Vladimir Mekler – Chairman Mark Kurtser Vitaly Ustimenko Tatiana Lukina Sergey Kalugin (appointed on 2 March 2022) Secretary Menustrust Limited Secretary assistant Darya Aleksandrova Independent Auditors JSC “Kept” Registered Office 15 Dimitriou Karatasou street, Anastasio Building, 6th floor, office 601, Strovolos, 2024, Nicosia, Cyprus The Board of Directors of MD Medical Group Investments Plc (the “Company”) presents to the members its Annual Report together with the audited consolidated financial statements of the Company and its subsidiary companies (the Company and its subsidiaries together referred to as the “Group”) for the year ended 31 December 2022. Страница 30 из 132 Management report Incorporation MD Medical Group Investments Plc was incorporated in Cyprus on 5 August 2010 as a private limited liability company. On 22 August 2012 following special resolution passed by the shareholder, the name of the Company was changed from “MD Medical Group Investments Ltd” to “MD Medical Group Investments Plc” and the Company was converted into a public limited liability company. Principal activity The principal activity of the Company is that of an investment holding company and, for that purpose, to acquire and hold controlling and other interests in the share or loan capital of any company or companies of any nature, but primarily in the healthcare industry. Note 4 to these consolidated financial statements gives more detailed information about the service provided by the Group`s medical centres. Financial results The Group’s results of operations are affected by a number of factors, including acquisitions, regulatory conditions, demand for private healthcare services, patient capacity and utilisation rate, pricing and volume, staff costs, capital expenditure programmes and currency exchange fluctuations. The Group's financial results for the year ended 31 December 2022 and its financial position at that date are set out in the consolidated statement of profit or loss and other comprehensive income on page 40-41 and in the consolidated statement of financial position on page 41 of these consolidated financial statements. Profit for the year ended 31 December 2022 amounted to RUB 4,718,800 thousand (for the year ended 31 December 2021: RUB 6,143,026 thousand). The total assets of the Group as at 31 December 2022 were RUB 33,162,389 thousand (31 December 2021: RUB 34,282,277 thousand) and the net assets were RUB 26,963,262 thousand (31 December 2021: RUB 23,097,192 thousand). Dividends In accordance with the Company’s Articles of Association dividends may be paid out of its profits. To the extent that the Company declares and pays dividends, owners of GDRs on the relevant record date will be entitled to receive dividends in respect of ordinary shares underlying the GDRs. The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries to pay dividends to the Company in accordance with relevant legislation in the country of their incorporation and any contractual restrictions. The payment of such dividends by its subsidiaries is contingent upon the sufficiency of their earnings, cash flows and distributable reserves. On 26 October 2022 the Board of Directors recommended the payment of RUB 642,319 thousand as interim dividends which corresponds to RUB 8.55 per share. The dividends were paid on 29 November 2022. On 3 September 2021 the Board of Directors recommended the payment of RUB 1,352,249 thousand as interim dividends which corresponds to RUB 18 per share. The dividends were paid on 26 October 2021. On 19 March 2021 Board of Directors recommended the payment of RUB 1,427,375 thousand as final dividends for the year 2020 which corresponds to RUB 19 per share. The dividends were paid on 25 May 2021. Examination of the development, position and performance of the activities of the group The current financial position and performance of the Group as presented in these consolidated financial statements is considered satisfactory. The Group has developed its growth strategy to meet the increasing demand for high-quality private healthcare services in Russia. The Group has grown significantly through strategic acquisitions and expansion through the construction of new facilities. The Group has one of the largest nationwide private healthcare regional networks for its core services and is expanding into new services. It has significant experience in the provision of full-service private maternity healthcare services. The Group has secured leading positions in the Russian private healthcare market across a range of services including obstetrics and Страница 31 из 132 gynaecology, fertility and IVF treatments, and paediatrics. It has also been diversifying its offering by adding other medical services for all family members, such as surgery, urology, traumatology, cardiology, and oncology, etc. The recently opened facilities have been multidisciplinary from the very beginning. The Group’s principal objective is to use its strong existing platform and experience in the regions to create a scalable concept of establishing new regional hospitals and other medical facilities, utilising rigorous investment decision-making process and targeting the most attractive regions and ensuring seamless execution. The Group believes the experience, depth and diversity of its management team to be a distinct competitive advantage in the complex and rapidly growing healthcare industry in which it operates. Principal risks and uncertainties The Group operates in a highly regulated industry and is a subject to supervision by federal and local authorities. As a result, the Group would be significantly affected by material changes to the existing, or implementation of additional government regulations in Russia. The Board of Directors has the overall responsibility for the establishment and supervision of the Company's risk management framework. Details in relation to principal risks and uncertainties and steps taken to manage these risks and uncertainties are presented in Notes 23 and 25 of these consolidated financial statements. The reputation, expertise and professionalism of the Group’s medical personnel are instrumental to the Group’s ability to attract new and repeat patients. The Group’s operating success depends on its medical personnel providing high-quality healthcare services throughout the Group’s medical network. Directors' interest The direct and indirect interests of the members of the Board in titles of the Company as at 31 December 2022, 31 December 2021 and as at the date of signing these consolidated financial statements are as follows: Name Mark Kurtser Kirill Dmitriev (resigned on 5 March 2022) Simon Rowlands (resigned on 9 March 2022) Vitaly Ustimenko Type of interest Indirect ownership of shares Indirect interest in shares Direct ownership of shares Direct ownership of shares Effective interest % 67.90 5.55 0.33 0.005 Indirect interest in shares by Kirill Dmitriev arises through his capacity as key management personnel of indirect shareholder. Member of the Board of Directors Vitaly Ustimenko acquired GDRs on 27 May 2022 and 29 June 2022, as a result the share of his ownership increased from 0.0053% to 0.0054% of the Сompany's share capital. The calculation of effective interest is based on the total amount of issued and fully paid shares, including treasury shares acquired by the Company. Future developments The Group’s goal is to continually diversify its medical services by expanding its range of services, maintaining its leading position in the field of high-quality women’s health and paediatrics, as well as addressing the increasing demand for private healthcare services in Russia and beyond. As the Group will be growing it intends to expand its portfolio of hospital and outpatient facilities, broaden its service offerings by providing patients with the most up-to-date treatment procedures and medical technology available on the market, expand its services in Moscow and other regions, exploit the value of its integrated healthcare network by making effective use of services across its facilities, optimising the benefits for patients and the Group as a whole. Share capital There were no changes in the share capital of the Company during the year. Страница 32 из 132 Board of Directors The Board of Directors leads the process in making new Board member appointments and makes recommendations on appointments to shareholders. In accordance with the Appointment Policy for the Board of Directors and Committees, all directors are subject to appointment or approval of appointment by shareholders at the first Annual General Meeting after their appointment, and to re-appointment at intervals of no more than three years. Any term beyond six years (e.g. two three-year terms) for a non-executive director is subject to particularly rigorous review, and takes into account the need for progressive refreshing of the Board of Directors. Sergey Kalugin was appointed as an independent director in March 2022. Kirill Dmitriev and Africa Platforms Capital LLP (represented by Simon Rowlands) stepped down as members of the Board of Directors on 5 March 2022 and 9 March 2022 respectively. The members of the Board of Directors who served as at the date of signing of these consolidated financial statements, are presented on page 30. Refer to Note 22 of these consolidated financial statements for the remuneration of the directors and other key management personnel. The Board committees Since September 2012, the Board of Directors established the operation of the following three committees: the Audit Committee, the Nomination Committee and the Remuneration Committee. Audit Committee The Audit Committee comprises of three non-executive directors, two of whom are independent. The Audit Committee has been chaired by independent non-executive director Tatiana Lukina since 6 December 2019, Mr. Kirill Dmitriev and Mr. Simon Rowlands were the other members. Following the resignation of Mr. Simon Rowlands and Mr. Kirill Dmitriev on 5 March 2022 and 9 March 2022, respectively, Mr. Vitaly Ustimenko and Mr. Sergey Kalugin were appointed as other members of the audit committee on 14 March 2022. The Audit Committee meets at least four times each year and is responsible for considering: the reliability and appropriateness of disclosures in the financial statements and external financial communication; the maintenance of an effective system of internal controls including financial, operational and compliance controls and risk management system; preparation of recommendations to the shareholders for approval in General Meetings in relation to the appointment, reappointment and removal of the external auditors; approval of the remuneration and terms of engagement of the external auditors in respect of audit services provided; the audit process, including monitoring and review of the external auditors' performance, independence and objectivity; development and implementation of the policy on non-audit services provided by the external auditors; monitoring compliance with laws and regulations and standard of corporate governance. The Audit Committee assists the Board of Directors in its oversight of the performance and leadership of the internal audit activity. Where the Audit Committee’s monitoring and review activities reveal cause for concern or scope for improvement, it shall make recommendation to the Board of Directors on actions needed to address the issues or to make improvements. Internal audit The Audit Committee is responsible for monitoring and review the effectiveness of the Company’s internal audit function. In this respect, the Audit Committee may require investigations by, or under the authority of, the head of Internal Audit into any activities of the Group which may be of interest or concern to the Audit Committee. Страница 33 из 132 The Company`s internal auditor is responsible for the recommendation of an audit plan to the Audit Committee. The internal auditor carries out auditing assignments in accordance with such plan and oversees the Company`s compliance with the plan`s recommendations. The internal auditor files a quarterly report with his findings to the Audit Committee. Nomination Committee The Nomination Committee comprises of one executive and two non-executive directors, one of whom is independent. The Nomination Committee is chaired by non-executive director Mr. Vladimir Mekler (since June 2016). Mr. Mark Kurtser and Mr. Simon Rowlands were the other members. Following the resignation of Mr. Simon Rowlands on 9 March 2022, Mr. Sergey Kalugin was appointed as other member of the audit committee on 14 March 2022. The Nomination Committee meets at least once a year and is responsible for assisting the Board of Directors in discharging its corporate governance responsibilities in relation to appointment of all executive and non-executive directors, as well as the CEO and CFO of the Company. The main objective of the Nomination Committee is to lead the process for the Board of Directors’ appointments and make respective recommendation to the Board of Directors, ensuring proper balance of the Board of Directors and qualification of its members. The Nomination Committee also considers the composition of the Audit and Remuneration Committees. Remuneration Committee The Remuneration Committee comprises of two non-executive directors and one executive director. The Remuneration Committee was chaired by an independent non-executive director Mr. Simon Rowlands, who stepped down on 5 March 2022. Mr. Sergey Kalugin was appointed as the chairman of the Remuneration Committee on 14 March 2022. The two other members are Dr. Mark Kurtser and Mr. Vladimir Mekler. The Remuneration Committee meets at least once a year and is responsible for assisting the Board of Directors in discharging its corporate governance responsibilities in relation to remuneration of all executive directors and the chairman of the Board of Directors. The main objective of the Remuneration Committee is to determine the framework and policy for the remuneration of the executive directors, the chairman of the Board of Directors and senior executives, and the specific remuneration of each executive director and the chairman of the Board of Directors and any compensation payments. Corporate Governance Since 2012, the Company has maintained full compliance with the UK Corporate Governance Code. The Company is committed to the highest standards of corporate governance and transparency. The Board of Directors recognises that good governance is a strategic asset that helps it to deliver consistent long term value to its shareholders. By running the Company in an open way, the Board of Directors enables shareholders to understand how it has been able to deliver consistently strong results. The Board of Directors believes that corporate responsibility is an essential part of good governance and makes sound business sense, as well as being crucial to the appropriate management of risk within the Company. Improving its corporate governance structure in accordance with the internationally recognised best practices the Company adopted important policies and procedures. The Company’s corporate governance policies and practices are designed to ensure that the Company is focused on upholding its responsibilities to the shareholders. The Company’s corporate governance policies and practices include, inter alia: Appointment policy for the Board of Directors and Committees Terms of reference of the Audit Committee, Nomination Committee and Remuneration Committee Code of Ethics and Conduct Business Continuity Policy Disclosure Policy Regulations on Insider Information Risk Management Policy, and Anti-Fraud Policy Страница 34 из 132 Internal control in relation to the financial reporting process The Group has set formal policies and written term of reference in relation to the financial reporting process that include: Corporate Accounting policy Guidelines Methodology for the Transformation of Financial Statements from RAS to IFRS Methodology for the Consolidation of IFRS Financial Statements Financial Reporting Preparation Procedure and The Group’s structure The objective of this policу is to establish uniform procedures and to implement requirements for the preparation of the consolidated financial statements of the Group. The procedure should be reviewed for compliance with International Financial Reporting Standards as well as current conditions and planned changes in the Group’s business activities at least once a year. When necessary, amendments and additions to this Procedure should be adopted. Meetings of shareholders The Company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year. An annual general meeting and any other shareholders’ meeting called to pass a special resolution can be convened by the Board of Directors by a notice, specifying the matters to be discussed, issued at least 21 days before the meeting. Any other meetings shall be convened by the Board of Directors by a notice, specifying the matters to be discussed, issued at least 14 days before the meeting. If the notice period is less than 21 days or 14 days as applicable, the meeting will be deemed to have been duly called if it is so agreed: in the case of a meeting called as the annual general meeting, by all the shareholders entitled to attend and vote; and in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than 95 per cent in nominal value of the shares giving that right. A notice convening a general meeting must be sent to each of the shareholders. All shareholders are entitled to attend the general meeting or be represented by a proxy authorised in writing. In the general meeting, on a poll, every share gives the holder the right to cast one vote, whereas, on a show of hands, each member has one vote. A corporate member may, by resolution of its directors or other governing body, authorise a person to act as its representative at any meeting of the Company. Branches MD Medical Group Investments Plc has a branch in Moscow. Treasury shares During the year ended 31 December 2022 the Company did not acquire any treasury shares. Events after the reporting period The events after the reporting date are disclosed in Note 29 to the consolidated financial statements. Independent auditors The independent auditors of the Company Messrs. JSC “Kept” (formerly KPMG Limited) have expressed their willingness to continue in office. A resolution giving authority to the Board of Directors to fix their remuneration will be submitted to the Annual General Meeting. By order of the Board of Directors, Vladimir Mekler Chairman of the Board of Directors Mark Kurtser Managing Director, member of the Board of Directors Moscow, 31 March 2023 Страница 35 из 132 Directors' responsibility statement The Company's Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. This responsibility includes selecting appropriate accounting policies and applying them consistently; and making accounting estimates and judgements that are reasonable in the circumstances. In preparing the consolidated financial statements, the Board of Directors is also 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. The Board of Directors’ confirmations The Board of Directors confirms that, to the best of its knowledge: a) the consolidated financial statements, which are presented on pages 40 to 74, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole, and b) the management report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that it faces/they face Further, the Board of Directors confirms that, to the best of its knowledge: i adequate accounting records have been maintained which disclose with reasonable accuracy the financial position of the Group and explain its transactions ii all information of which it is aware that is relevant to the preparation of the consolidated financial statements, such as accounting records and all other relevant records and documentation, has been made available to the Company’s auditors By order of the Board of Directors, Vladimir Mekler Chairman of the Board of Directors Mark Kurtser Managing Director, member of the Board of Directors Moscow, 31 March 2023 Страница 36 из 132 Independent Auditors’ Report To the Shareholders of MD MEDICAL GROUP INVESTMENTS PLC Opinion We have audited the consolidated financial statements of MD MEDICAL GROUP INVESTMENTS PLC (the “Company”) and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December 2022, the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2022, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union (IFRS-EU). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the independence requirements that are relevant to our audit of the consolidated financial statements in the Russian Federation and with the International Ethics Standards Board for Accountants International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the requirements in the Russian Federation 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. Impairment of goodwill and property, plant and equipment the year, the Group Please refer to the Note 13 and 14 in the consolidated financial statements. The key audit matter During recognized an impairment of the property, plant and equipment of one of its cash generating units (the “CGUs”) in the amount of RUB 1,000,015 thousand as well as an impairment of goodwill relating to another CGU in the amount of RUB 201,034 thousand. - - How the matter was addressed in our audit Our audit procedures included: assessment of whether the CGUs were appropriately determined and evaluation of the methodology applied by management in impairment testing assessment of appropriateness of key inputs used and assumptions applied in forming the discounted cash flows’ models, such as estimated revenue and profitability growth, by comparing them to historical results and critically challenging the forecasted amounts We consider the issue as a key audit matter due to inherent estimation uncertainty in forecasting future cash flows which form the basis for the assessment of recoverability and significant management judgement involved in determination of the recoverable amount. We involved our own valuation specialists to assist us in evaluating the appropriateness of the weighted-average cost of capital (discount rate), CAPEX in post-projection period, long-term growth rate, length of the projection period. We also assessed the completeness and consistency of the disclosures in the consolidated financial statements in relation to this matter. Revenue recognition Please refer to the Note 4 in the consolidated financial statements. The key audit matter Revenue is a material amount consisting of a high volume of individually low value transactions. The How the matter was addressed in our audit Our audit procedures in this area included, among others, the following ones. Страница 37 из 132 Group uses special Medialog system to calculate revenue, where revenue data is automatically transferred therefrom to the accounting system. Thus, the Group relies on results of operations of these systems. The most significant risks of revenue misstatement arise due to potential incorrect data on volume and value of the services provided. We tested general IT controls and application-level controls relevant to revenue recognition. We involved our Information risk management specialists, who assisted us in performing the following procedures: - - - to test users’ and administrators’ access rights and password setting controls in Medialog to test Medialog’s automatic links of tickets issued for the provision of services to invoices and payments, including the function to link tickets to a particular service contract to test that revenue data is accurately transferred from Medialog to the accounting system We reconciled Medialog data to accounting ledgers. Further we reconciled the recognized revenue adjusted for the balances of settlements with customers at the beginning and the end of the reporting period, with the amounts of payments recorded in the accounting system; and reconciled the amounts of payments received from customers with external bank confirmations. We also obtained confirmation letters from debtors (legal entities) on a sample basis to confirm balances and turnover. In addition, we analyzed the revenue structure, its’ key trends and correlations. Other Information Management is responsible for the other information. The other information comprises the Management Report, the Directors’ Responsibility Statement and the Annual Report, but does not include the consolidated financial statements and our auditors’ report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS-EU, 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. 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. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditors’ Responsibilities for the Audit of the consolidated Financial Statements 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 auditors’ 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. Страница 38 из 132 As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism 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 auditors’ 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 auditors’ 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 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. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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. The engagement partner on the audit resulting in this independent auditors’ report is: Koliadko E.G. Principal registration number of the entry in the Register of Auditors and Audit organizations No. 22006023423, acts on behalf of the audit organization based on the power of attorney No. 3/23 as of 17 February 2023 JSC “Kept” Principal registration number of the entry in the Register of Auditors and Audit Organizations No. 12006020351 Moscow, Russia 31 March 2023 Страница 39 из 132 Consolidated statement of profit or loss and other comprehensive income For the year ended 31 December 2022 Note 4 5 8 6 13, 14 8 9 9 9 9 10 Revenue Cost of sales Gross profit Other income Selling, general and administrative expenses Impairment loss Other expenses Operating profit Finance income Finance expenses Net foreign exchange transactions loss Net finance expenses Profit before tax Income tax expense Profit for the year Total comprehensive income for the year Profit for the year attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the year attributable to: Owners of the Company Non-controlling interests Earnings per share (RUB) 11 2022 RUB'000 25,222,056 (15,428,617) 9,793,439 36,141 (3,513,145) (1,286,574) (60,510) 4,969,351 355,825 (494,039) (104,751) (242,965) 4,726,386 (7,586) 4,718,800 4,718,800 4,560,217 158,583 4,718,800 4,560,217 158,583 4,718,800 60.70 The Notes on pages 46 to 74 are an integral part of these consolidated financial statements. 2021 RUB'000 25,219,683 (15,231,775) 9,987,908 104,424 (3,402,362) - (68,007) 6,621,963 93,683 (549,361) (8,017) (463,695) 6,158,268 (15,242) 6,143,026 6,143,026 6,003,486 139,540 6,143,026 6,003,486 139,540 6,143,026 79.91 Страница 40 из 132 Consolidated statement of financial position As at 31 December 2022 Note 31 December 2022 RUB'000 31 December 2021 RUB'000 ASSETS Property, plant and equipment Intangible assets Trade, other receivables and deferred expenses Deferred tax assets Total non-current assets Inventories Trade, other receivables and deferred expenses Cash and cash equivalents Total current assets Total assets EQUITY Share capital Share premium Reserves Retained earnings Total equity attributable to the owners of the Company Non-controlling interests Total equity LIABILITIES Loans and borrowings Trade and other payables Deferred tax liabilities Contract liabilities Total non-current liabilities Loans and borrowings Trade and other payables Contract liabilities Total current liabilities Total liabilities Total equity and liabilities 13 14 15 15 16 17 18 18 18 26 19 21 20 19 21 20 24,527,917 1,959,819 87,928 - 26,575,664 1,212,154 911,831 4,462,740 6,586,725 33,162,389 180,585 5,243,319 (655,352) 21,982,033 26,750,585 212,677 26,963,262 489,200 729,173 - 468,505 1,686,878 106,426 2,822,399 1,583,424 4,512,249 6,199,127 33,162,389 26,070,398 2,141,945 339,909 4,300 28,556,552 1,164,761 971,341 3,589,623 5,725,725 34,282,277 180,585 5,243,319 (655,352) 18,064,135 22,832,687 264,505 23,097,192 3,726,707 624,808 6,234 460,420 4,818,169 1,786,326 3,010,232 1,570,358 6,366,916 11,185,085 34,282,277 The Notes on pages 46 to 74 are an integral part of these consolidated financial statements. On 31 March 2023 the Board of Directors of MD Medical Group Investments Plc approved and authorised these consolidated financial statements for issue. Vladimir Mekler Chairman of the Board of Directors Managing Director Mark Kurtser Страница 41 из 132 Consolidated statement of changes in equity For the year ended 31 December 2022 Attributable to the owners of the Company Share capital Note RUB'000 180,585 Share premium RUB'000 5,243,319 Reserves RUB'000 (655,352) Retained earnings RUB'000 18,064,135 Total Non- controlling interests Total equity RUB'000 22,832,687 RUB'000 RUB'000 264,505 23,097,192 - - - - - - 12 - 4,560,217 4,560,217 158,583 4,718,800 - - (642,319) (642,319) (210,411) (852,730) (642,319) (642,319) (210,411) (852,730) 180,585 5,243,319 (655,352) 21,982,083 26,750,585 212,677 26,963,262 Balance at 1 January 2022 Profit and total comprehensive income for the year Contributions and distributions Dividends declared Total contributions and distributions Balance at 31 December 2022 Share premium is not available for distribution. The Notes on pages 46 to 74 are an integral part of these consolidated financial statements. Страница 42 из 132 Consolidated statement of changes in equity For the year ended 31 December 2021 Attributable to the owners of the Company Share capital Note RUB'000 180,585 Share premium RUB'000 5,243,319 Reserves RUB'000 (655,352) Retained earnings RUB'000 14,840,273 Total Non- controlling interests Total equity RUB'000 19,608,825 RUB'000 RUB'000 343,756 19,952,581 - - - - - - - - 12 - 6,003,486 6,003,486 139,540 6,143,026 - - - (2,779,624) (2,779,624) (219,222) (2,998,846) - (2,779,624) - (2,779,624) 431 (218,791) 431 (2,998,415) 180,585 5,243,319 (655,352) 18,064,135 22,832,687 264,505 23,097,192 Balance at 1 January 2021 Profit and total comprehensive income for the year Contributions and distributions Dividends declared Other changes Total contributions and distributions Balance at 31 December 2021 Share premium is not available for distribution. The Notes on pages 46 to 74 are an integral part of these consolidated financial statements. Страница 43 из 132 Consolidated statement of cash flows For the year ended 31 December 2022 Cash flows from operating activities Profit for the year Adjustments for: Depreciation Amortisation Gain from the sale of property, plant and equipment Write-off of property, plant and equipment Impairment loss Finance income Finance expenses (excluding impairment) Impairment of trade and other receivables Net foreign exchange transactions loss Income tax expense Increase in inventories Increase in trade and other receivables (Decrease) / increase in trade and other payables (Decrease) / increase in contract liabilities Cash flows from operations Tax paid Net cash flows from operating activities Cash flows from investing activities Acquisition/construction of property, plant and equipment Proceeds from sale of property, plant and equipment Acquisition of intangible assets Placing short-term bank deposits Proceeds from short-term bank deposits return Bank interest received Net cash flows used in investing activities Note 13 14 13,14 9 9 9 9 10 14 9 2022 RUB'000 4,718,800 1,616,547 51,109 (22,317) 815 1,286,574 (355,825) 400,207 93,832 104,751 7,586 7,902,079 (47,393) (35,292) (55,420) (17,632) 7,746,342 (12,624) 7,733,718 2021 RUB'000 6,143,026 1,577,042 122,176 (2,162) 27,189 - (93,683) 517,714 31,647 8,017 15,242 8,346,208 (190,884) (7,912) (276,341) 80,278 8,504,031 (4,635) 8,499,396 (1,098,983) (3,734,757) 62,796 (70,017) - - 257,760 (848,444) 2,724 (55,466) (866,831) 1 648 623 93,683 (2,912,024) The Notes on pages 46 to 74 are an integral part of these consolidated financial statements. Страница 44 из 132 Consolidated statement of cash flows (continued) For the year ended 31 December 2022 Cash flows from financing activities Repayment of loans and borrowings Payments of lease liabilities Finance expenses paid Proceeds from reimbursed VAT Repayment of reimbursed VAT Dividends paid to the owners of the Company Dividends paid to non-controlling interests Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents as at the beginning of the year Effect of movements in exchange rates on cash held Cash and cash equivalents as at the end of the year Note 19 19 16 16 2022 RUB'000 (4,805,599) (150,743) (262,088) 342,717 (166,634) (636,794) (224,807) (5,903,948) 981,326 3,589,623 (108,209) 4,462,740 2021 RUB'000 (1,490,806) (152,470) (363,727) 33,138 (152,123) (2,726,685) (178,177) (5,030,850) 556,522 3,128,718 (95,617) 3,589,623 The Notes on pages 46 to 74 are an integral part of these consolidated financial statements. Страница 45 из 132 Notes to the consolidated financial statements For the year ended 31 December 2022 Incorporation and principal activities 1. MD Medical Group Investments Plc (the “Company”) was incorporated in Cyprus on 5 August 2010 as a private limited liability company. In August 2012, following the special resolution passed by the shareholder, the Company was converted into a public limited liability company. Its Registered Office is at Dimitriou Karatasou 15, Anastasio Building, 6th floor, office 601, Strovolos, 2024, Nicosia, Cyprus. The principal activity of the Company is that of an investment holding company and, for that purpose, to acquire and hold controlling and other interests in the share or loan capital of any company or companies of any nature (the Company and its subsidiaries together referred to as the “Group”), but primarily in the healthcare industry. Refer to Note 4 for more detailed information about the services provided by the Group’s medical centres. The details of the directly and indirectly owned subsidiaries are as follows: Name JSC MD PROJECT 2000 LLC Khaven LLC Velum LLC Capital Group LLC Clinic Mother and Child LLC Clinica Zdorovia LLC Ivamed LLC Dilamed LLC Mother and Child Perm LLC Mother and Child (Ufa) LLC Mother and Child Saint-Petersburg LLC MD PROJECT 2010 LLC Mother and Child Ugo-Zapad LLC MD Service LLC Mother and Child Nizhny Novgorod LLC Mother and Child Yekaterinburg LLC Mother and Child Tyumen JSC MK IDK LLC Apteka IDK LLC CSR LLC MD Assistance LLC Mother and Child Yaroslavl LLC Mother and Child Kostroma LLC Mother and Child Vladimir LLC Mother and Child Ryazan Country of incorporation Russian Federation Activities Medical services 31 December 2022 Effective holding, % 95 31 December 2021 Effective holding, % 95 Medical services Russian Federation Medical services Russian Federation Russian Federation Assistance services Russian Federation Holding of trademarks Russian Federation Russian Federation Russian Federation Russian Federation Medical services Medical services Medical services Medical services Russian Federation Dormant company Russian Federation Medical services Russian Federation Medical services Russian Federation Medical services Russian Federation Russian Federation Pharmaceutics retail Medical services Russian Federation Medical services Russian Federation Medical services Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Medical services Pharmaceutics retail Dormant company Assistance services Medical services Russian Federation Medical services Russian Federation Medical services Russian Federation Medical services 100 90 95 100 80 100 - 95 95 85 100 90 95 100 100 100 100 100 100 100 80 80 80 100 100 90 95 100 80 100 100 95 95 85 100 90 95 100 100 100 100 100 100 100 80 80 80 100 Страница 46 из 132 Name LLC Mother and Child Kazan JSC MC Avicenna LLC H&C Medical Group LLC Centre of Reproductive Medicine LLC Medica-2 LLC Krasnoyarskii center of Reproductive Medicine LLC Novosibirskii center of Reproductive Medicine LLC Omskii center of Reproductive Medicine LLC Barnaulskii center of Reproductive Medicine LLC Mother and Child Vladivostok LLC Mother and Child Volga LLC MD Finance LLC Mother and Child Krasnodar LLC Mother and Child Rostov-on-Don LLC MD Group Krasnogorsk LLC MD Belgorod LLC MD Lipetsk NFP MGIMO-MED LLC MD Group Holding JSC MD Medical Group LLC Siberia service company LLC TechMedCom LLC Service Hospital Company LLC Elleprof LLC Medtechnoservice Country of incorporation Russian Federation Activities Medical services 31 December 2022 Effective holding, % 100 31 December 2021 Effective holding, % 100 Russian Federation Russian Federation Medical services Pharmaceutics retail Russian Federation Medical services Russian Federation Russian Federation Medical services Medical services Russian Federation Medical services Russian Federation Medical services Russian Federation Medical services Russian Federation Medical services Russian Federation Russian Federation Russian Federation Management company Management company Medical services Russian Federation Medical services Russian Federation Dormant Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Medical services Medical services Medical university Management company Management company Service company Russian Federation Russian Federation Service company Service company Russian Federation Russian Federation Service company Service company 100 100 100 100 100 100 100 100 100 100 100 100 100 90 - - 67 100 100 - - - - - 100 100 100 100 100 100 100 100 100 100 100 100 100 90 100 100 67 - - - - - - - Страница 47 из 132 As at 31 December 2022, 67.9% of the Company’s share capital is owned by MD Medical Holding Limited, a company beneficially owned by Dr. Mark Kurtser. The 32.1% of the Company’s share capital is owned by Guarantee Nominee Limited, which holds the shares on behalf of the GDR holders. 2. Basis of preparation (a) Statement of compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU). These consolidated financial statements were approved by the Board of Directors and were authorised for issue on 31 March 2023. (b) Basis of measurement These consolidated financial statements have been prepared under the historical cost convention. (c) Functional and presentation currency All of the operational Group entities are located in the Russian Federation. The Company and all its operating subsidiaries have RUB as their functional currency. These consolidated financial statements of the Group are presented in RUB, all amounts have been rounded to the nearest thousand, unless otherwise indicated. (d) Use of estimates and judgements Preparing these consolidated financial statements in accordance with IFRSs requires management to exercise their judgement to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are deemed reasonable based on knowledge available at that time. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed and where necessary revised on an ongoing basis. Revisions to estimates are recognised prospectively. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognised in the consolidated financial statements are described below: Impairment of intangible assets and property, plant and equipment Intangible assets and property, plant and equipment are initially recorded at acquisition cost and are amortised on a straight line basis over their useful economic life. Intangible assets and property, plant and equipment that are acquired through a business combination are initially recorded at fair value at the date of acquisition. Intangible assets with indefinite useful life are reviewed for impairment at least annually. The impairment test is performed using the discounted cash flows expected to be generated through the use of the intangible assets and property, plant and equipment, using a discount rate that reflects the current market estimations and the risks associated with the asset. When it is impractical to estimate the recoverable amount of an asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units of the Group to which the goodwill has been allocated. Other Information about judgements, assumptions and estimation uncertainties regarding revenue recognition, deferred taxes assets, provisions, leases and ECL allowance for trade receivables and contract assets as at 31 December 2022 is described in Note 3. The significant judgements made by the management in applying the Group accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2021 except for those reflected in Notes 13, 14. Страница 48 из 132 3. Significant accounting policies The accounting policies applied in these consolidated financial statements are consistent with those followed in the Group’s consolidated financial statements as at 31 December 2021 and for the year then ended. New standards and amendments applied for the first time in 2022 did not impact these consolidated financial statements of the Group. Basis of consolidation These consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. The financial statements of all the Group companies are prepared using uniform accounting policies. Business combinations Acquisitions of businesses are accounted for using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. Acquisitions from entities under common control Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established or, if later, at the date the Company was incorporated. The assets and liabilities acquired are recognised at their book values. Any difference between the consideration paid and the book values is recognised directly in equity. Non-controlling interests Non-controlling interests are measured at their proportionate share of the acquirer’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Loss of control When the Group losses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. Transactions eliminated on consolidation Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions are eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Revenue The Group has two main types of revenue: rendering of services and sales of goods. Revenue is recognised in the moment when the service is provided to the customer. Determining the timing of the services rendering – at a point in time or over time – requires judgement. The details are described below. Страница 49 из 132 Type of product/service Rendering of services (except storage of stem cells and long term contracts described below) Sales of goods Storage of stem cells Rendering of services (long-term contracts) Nature, timing of satisfaction of performance obligations, significant payment terms Sales of services are recognised at point in time in which the services are rendered by reference to completion of the actual service provided. Payments from patients for agreements are usually fully prepaid, one-off services are paid right after the service is rendered. Mandatory Health Insurance (MHI), insurance and other companies usually pay in up to two months after the services are provided. Sales of goods are recognised when control over the goods has been transferred to the customer, which is usually when the Group has sold or delivered goods to the customer, the customer has accepted the goods and collectability of the related receivable is reasonably assured. The payments are usually made at the moment of sale. Nature of service is long-term safekeeping of biological materials comprising stem cells concentrate. Standard terms of contract include predetermined period of contract from 1 to 30 years paid in advance by the customer in full amount. Revenue from contract consists of two parts – revenue from blood collection and stem cells isolation (charged and recognised at the moment of the appropriate services rendered) and revenue from storage of stem cells. Revenue from storage is accrued monthly during the whole period of contract. Long-term contracts for offering medical services that last from 1 to 5 years with performance obligations satisfied via passage of time. Payments from legal entities are usually fully prepaid. Revenue is accrued monthly during the whole period of contract. Finance income Finance income includes: interest income which is recognised as it accrues in profit or loss using the effective interest method income from initial recognition of other payables to tax authorities at a market interest rate Finance expenses Finance expenses include interest expense and other borrowing costs and are recognised in profit or loss using the effective interest method. The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to: the gross carrying amount of the financial asset, or the amortised cost of the financial liability In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer creditimpaired, then the calculation of interest income reverts to the gross basis. Страница 50 из 132 Foreign currency translation Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in profit or loss 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 at the reporting date. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised 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. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting 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 is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity. 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. Dividends declared Dividend distribution to the Company's shareholders is recognised in the Group's financial statements when the shareholders’ right to receive the dividends is established, either through Board resolution (for interim dividends) or by the Group’s shareholders in the Annual General Meeting (for final dividends). Government grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is deducted in reporting from the related expense. When the grant relates to an asset, it reduces the carrying amount of the asset. The grant is then recognised in profit or loss over the useful life of the depreciable asset by way of a reduced depreciation charge. Property, plant and equipment Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation is recognised in profit or loss on the straight line method over the useful lives of each part of an item of property, plant and equipment. Страница 51 из 132 The annual depreciation rates for the current and comparative periods are based on the following estimations of useful lives: Freehold buildings Leasehold improvements Plant and equipment No depreciation is provided on land. Years 50 10-20 5-10 Assets under construction are not depreciated until they are completed and available for use. At that moment they are reclassified in the relevant class of property, plant and equipment and depreciated accordingly. Depreciation methods, useful lives and residual values are reassessed at the reporting date. Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is impaired immediately to its recoverable amount. Expenditure for repairs and maintenance of property, plant and equipment is charged to profit or loss for the year in which it is incurred. The cost of major renovations and other subsequent expenditure 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. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any 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 recognised in profit or loss. Intangible assets (i) Goodwill Goodwill represents the difference between the cost of an acquisition and the fair value of the Group's share of the net identifiable assets of the acquired undertaking at the date of acquisition. Positive goodwill on acquisition of subsidiaries is included in intangible assets. The excess of the Group’s interest in the fair value of the new subsidiaries’ net assets over the consideration paid for their acquisition (a bargain purchase gain) is recognised in profit or loss in the year of acquisition of the relevant subsidiary. Positive goodwill is tested annually for impairment and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an undertaking include the carrying amount of goodwill relating to the undertaking sold. For the purpose of impairment testing goodwill is allocated to cash generating units that are expected to benefit from the synergies of the combinations. (ii) Patents and trademarks Patents and trademarks are measured initially at purchase cost and are amortised on a straight line basis over their estimated useful lives. Their estimated useful life is from five to seven years. (iii) Software and web site costs External costs that are directly associated with web site controlled by the Group and that will probably generate economic benefits exceeding costs beyond one year are recognised as intangible assets. Subsequently web site costs are carried at cost less any accumulated amortisation and any accumulated impairment losses. Web site costs are amortised using the straight line method over their useful lives, not exceeding a period of five years. Amortisation commences when the site is available for use and is included within administrative expenses. An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised. Inventories Inventories include medicines and medical material and are stated at the lower of cost and net realisable value. The cost is determined using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business, less the costs to completion and selling expenses. Страница 52 из 132 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Financial instruments Recognition The Group recognises financial assets and financial liabilities when, and only when, it becomes a party of the contractual provisions of the financial instrument. Trade receivables and debt securities issued are initially recognised when they are originated. Classification The Group classifies financial assets on the basis of both: the Group`s business model for managing financial assets, as well as the contractual cash flow characteristics of the financial assets. The Group’s financial assets comprise of trade and other receivables, as well as cash and cash equivalents. All of the Group financial assets are measured at amortised cost. They are classified as current assets unless the Group has an unconditional responsibility to accept deferral of receipt for at least twelve months after the balance sheet date, in which case they are classified as non-current assets. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: it is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets – Business model assessment The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets; how the performance of the portfolio is evaluated and reported to the Group’s management; the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group’s continuing recognition of the assets. Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. Страница 53 из 132 In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers: contingent events that would change the amount or timing of cash flows terms that may adjust the contractual coupon rate, including variable‑rate features prepayment and extension features; and terms that limit the Group’s claim to cash flows from specified assets (e.g. non‑recourse features) A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition. The Group’s financial liabilities comprise of trade and other payables and borrowings. They are classified as current liabilities unless there is an unconditional right to defer settlement for at least twelve months after the balance sheet date, in which case they are classified as long-term liabilities. Initial measurement Financial assets and financial liabilities are initially measured at fair value plus or minus correspondingly of any directly attributable transaction costs. Subsequent Measurement Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gain and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Trade and other receivables are amounts due from customers for services performed in the ordinary course of business and are stated after deducting the appropriate allowances for any impairment. For the purpose of the statement of cash flows, cash and cash equivalents include cash in hand, cash at bank and short-term highly liquid investments with maturity of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Group in the management of its short term investments. Financial liabilities at amortised cost: Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. Impairment of non-derivative financial assets At each balance sheet date the Group recognises a loss allowance for expected credit losses on financial assets measured at amortised cost. The loss allowance for financial assets at amortised cost is recognised in profit or loss in respondence with a balance sheet account reducing the carrying amount of the financial asset. Expected credit losses for counterparties, including banks, are determined based on historical data of relevant probability of default and loss given default. Impairment on cash and cash equivalents is measured on a 12‑month expected loss basis and reflects the short maturities of the exposures. The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. The Group measures loss allowances at an amount equal to lifetime ECLs. Страница 54 из 132 When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment, that includes forward‑looking information. The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days past due. The Group considers a financial asset to be in default when the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held). Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit‑impaired. A financial asset is ‘credit‑impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit‑impaired includes the following observable data: significant financial difficulty of the debtor; it is probable that the debtor will enter bankruptcy or other financial reorganisation; or the disappearance of an active market for a security because of financial difficulties. Write-off The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 3 years without movements past due based on Russian legislation. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write‑off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss. Derecognition of financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a “pass through” arrangement; or the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Any interest in such derecognised financial assets that is created or retained by the Group, is recognised as a separate asset or liability. Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. Changes in cash flows on existing financial liabilities are not considered as modification, if they result from existing contractual terms, e.g. changes in fixed interest rates initiated by banks due to changes in the CBR key rate, if the loan contract entitles Страница 55 из 132 banks to do so and the Group have an option to either accept the revised rate or redeem the loan at par without penalty. The Group treats the modification of an interest rate to a current market rate using the guidance on floating-rate financial instruments. This means that the effective interest rate is adjusted prospectively. Offsetting financial instruments Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the consolidated statement of financial position. Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Share capital Proceeds from the issue of ordinary shares are classified as equity. The difference between the issue price of the shares and their nominal value is taken to the share premium account. Incremental costs directly attributable to the issue of new shares are recognised as a deduction from share premium net of any tax effect. Earnings per share The Group presents earnings per share (“EPS”) data for its ordinary shares. EPS is calculated by dividing the profit or loss attributable to the owners of the Company by the weighted average number of ordinary shares in issue during the period, adjusted for own shares held. Capitalised interest Interest expense on borrowed funds used for capital construction projects and the acquisition of property, plant and equipment is capitalised provided that the interest expense could have been avoided if the Group had not made capital investments. Interest is capitalised only during the period when construction activities are actually in progress and until the resulting properties are put into operation. Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases in which the Group is a lessee At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand‑alone prices. However, for the leases of property the Group has elected not to separate non‑lease components and account for the lease and non‑lease components as a single lease component. The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and Страница 56 из 132 equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased. Lease payments included in the measurement of the lease liability comprise the following: fixed payments, including in‑substance fixed payments; variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; amounts expected to be payable under a residual value guarantee; and the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in‑substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right‑of‑use asset, or is recorded in profit or loss if the carrying amount of the right‑of‑use asset has been reduced to zero. The Group presents right‑of‑use assets that do not meet the definition of investment property in ‘property, plant and equipment’ and lease liabilities in ‘loans and borrowings’ in the consolidated statement of financial position. Short-term leases and leases of low-value assets The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. COVID-19-related rent concessions The Group has applied COVID-19-Related Rent Concessions - Amendment to IFRS 16. The Group applies the practical expedient allowing it not to assess whether eligible rent concessions that are a direct consequence of the COVID-19 pandemic are lease modifications. The Group applies the practical expedient consistently to contracts with similar characteristics and in similar circumstances. For rent concessions in leases to which the Group chooses not to apply the practical expedient, or that do not qualify for the practical expedient, the Group assesses whether there is a lease modification. Leases in which the Group is a lessor The Group does not have significant contracts where it is a lessor. Standards issued but not yet effective: The following new and amended standards are not expected to have a significant impact on the Group’s consolidated financial statements. IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) Definition of Accounting Estimates (Amendments to IAS 8) Страница 57 из 132 4. Revenue Therapy, surgery and other in-patient medical services In vitro fertilisation (IVF) Deliveries Oncology Obstetrics and gynaecology out-patient treatments Diagnostic centre and other out-patient medical services Laboratory examinations and other medical services Paediatrics out-patient treatments Obstetrics and gynaecology in-patient treatments Paediatrics in-patient treatments Sales of goods Storage of stem cells Other income Total revenue from contracts with customers 2022 RUB'000 4,643,136 4,331,930 2,843,344 2,480,842 2,399,259 2,321,624 1,983,791 1,637,982 1,224,345 714,102 280,706 170,442 190,553 25,222,056 2021 RUB'000 5,486,629 3,939,363 2,863,685 2,131,922 2,217,946 2,180,239 2,493,346 1,588,170 1,031,978 676,330 251,654 162,643 195,778 25,219,683 Disaggregation of revenue The Group renders the services on the territory of the Russian Federation. The Group’s operations and main revenue streams are those described in the table above. The majority of the Group's customers are physical persons (76% of total revenue); some services are rendered through the governmental and non-governmental insurance companies and legal entities. All the contracts are fixed-price and short-term except for the contracts for the storage of stem cells and the contract for offering medical services to a significant corporate client, such contracts are fully prepaid. All the Group's revenue except for the revenue from the storage of stem cells and long-term contracts is recognised at the point of time when the services are provided; the revenue from the storage of stem cells and long-term contracts is recognised over the time of the contract. The contract liabilities primarily relate to the advance consideration received from patients. The amount of RUB 808,532 thousand was recognised in short-term contract liabilities at the beginning of the year was recognised as revenue during the year ended 31 December 2022 (31 December 2021: RUB 717,705 thousand). The amount of RUB 60,529 thousand was returned to the patients and the amount of RUB 197,295 thousand was transferred to the other contracts during the year ended 31 December 2022 (31 December 2021: RUB 67,932 thousand and RUB 271,001 thousand respectively). 5. Cost of sales Payroll and related social taxes Materials and supplies used Depreciation Medicl services Energy and utilities Property tax Repair and maintenance Other expenses Total cost of sales 2022 RUB'000 8,104,750 5,031,519 1,402,538 308,087 282,059 176,071 96,973 26,620 15,428,617 2021 RUB'000 7,517,576 5,477,791 1,367,565 334,712 269,316 148,058 88,513 28,244 15,231,775 Страница 58 из 132 6. Selling, general and administrative expenses Payroll and related social taxes Utilities and materials Depreciation Advertising Other professional services Acquiring and encashment Commission fees IT support Amortisation Communication costs Independent auditors' remuneration Learning and development Other expenses Total selling, general and administrative expenses 7. Staff costs Wages and salaries Social insurance contributions and other taxes Total staff costs 2022 RUB'000 2,036,089 305,540 214,009 211,196 174,443 159,461 118,270 77,933 51,109 45,631 19,924 17,582 81,958 3,513,145 2022 RUB'000 8,050,193 2,090,646 10,140,839 2021 RUB'000 2,022,217 270,838 209,477 161,968 134,770 172,536 90,232 20,913 122,176 39,630 22,964 23,433 111,208 3,402,362 2021 RUB'000 7,592,490 1,947,303 9,539,793 The number of employees as at 31 December 2022 was 8,466 (31 December 2021: 8,461). During the year ended 31 December 2022 the Group did not receive any government grants to cover the additional payroll costs paid to doctors and other medical staff as a result of COVID-19 (for the year ended 31 December 2021: RUB 4,526 thousand, which reduced the staff costs accordingly). 8. Other income and expenses During the year ended 31 December 2022 the Group received other income of RUB 36,141 thousand including income from fixed assets sale amounted to RUB 21,103 thousand. (During the year ended 31 December 2021 the Group received other income of RUB 104,424 thousand including a property tax refund amounted to RUB 44,966 thousand by MD Project 2010). The Group incurred other expenses amounted to RUB 60,510 thousand in the reporting year. (During 2021 the Group incurred other expenses amounted to RUB 68,007 thousand, including write-off of fixed assets amounted to RUB 26,753 thousand). 9. Net finance expenses Note Finance income Bank interest received Initial recognition of other payables to tax authorities at market rate Finance income Finance expenses Interest on bank loans Unwinding of discount on other payables to tax authorities 2022 RUB'000 257,760 98,065 355,825 (228,607) (60,177) 2021 RUB'000 93,683 - 93,683 (339,240) (63,950) Страница 59 из 132 Interest on leases Other interest expenses Other finance expenses Impairment of trade and other receivables Bank charges Other impairment provision Finance expenses Net foreign exchange transactions loss Net finance expenses 10. Income tax Note 15 2022 RUB'000 (51,881) (38,783) (93,832) (20,759) - (494,039) (104,751) (242,965) Reconciliation between profit before tax and income tax expense: Profit before tax Less profit before tax of non-taxable subsidiaries Loss before tax excluding not- taxable subsidiaries Tax using the Group’s domestic tax rate Effect of subsidiaries taxable at lower tax rates Non-deductible expenses Current-year losses for which no deferred tax asset is recognised Total income tax expense 2022 RUB'000 4,726,386 (5,048,713) (322,327) 64,465 586 (10,138) (62,500) (7,586) 2021 RUB'000 (49,033) (41,259) (31,647) (23,650) (582) (549,361) (8,017) (463,695) 2021 RUB'000 6,158,268 (6,447,365) (289,097) 57,819 99 (20,086) (53,074) (15,242) All Group companies, that are offering medical services and are operating in the Russian Federation and meet the conditions specified in the Federal law 395-N, apply 0% corporate income tax rate. Other companies apply standard income tax rate of 20% or 15%. As at 31 December 2022 deferred tax assets relating to tax losses carried forward in the amount of RUB 396,256 thousand (31 December 2021: RUB 333,285 thousand) have not been recognised. Deferred tax assets have not been recognised in respect of these tax losses because it is not probable that future taxable profit will be available for utilisation against the benefits therefrom. As at 31 December 2022, there were temporary differences (before calculating tax effect) of RUB 11,486,136 thousand (31 December 2021: RUB 9,965,811 thousand) related to investments in subsidiaries. Deferred tax liabilities related to these temporary differences were not recognised because the Group controls the dividend policy of its subsidiaries and, therefore, controls the timing of reversal of the related taxable temporary differences and management is satisfied that they will not reverse in the foreseeable future. Страница 60 из 132 11. Earnings per share Basic and fully diluted earnings attributable to the owners of the Company (RUB'000) Weighted average number of ordinary shares in issue during the year Basic and fully diluted earnings per share (RUB) 2022 4,560,217 75,125,010 60.70 2021 6,003,486 75,125,010 79.91 12. Dividends On 26 October 2022 the Board of Directors recommended the payment of RUB 642,319 thousand as interim dividends which corresponds to RUB 8.55 per share. The dividends were paid on 29 November 2022. On 3 September 2021 the Board of Directors recommended the payment of 1,352,249 thousand as interim dividends which corresponds to RUB 18 per share. The dividends were paid on 26 October 2021. On 19 March 2021 Board of Directors recommended the payment of RUB 1,427,375 thousand as final dividends for the year 2020 which corresponds to RUB 19 per share. The dividends were paid on 25 May 2021. 13. Property, plant and equipment Property under construction Freehold land and buildings Plant and equipment RUB'000 RUB'000 RUB'000 Right-of-use of freehold land, buildings and plant and equipment RUB'000 Total RUB'000 Initial cost Balance as at 1 January 2021 Additions Disposals Transfer from construction in progress Balance as at 31 December 2021 Additions Disposals Impairment loss Transfer from construction in progress Balance as at 31 December 2022 Depreciation Balance as at 1 January 2021 Depreciation during the year Accumulated depreciation on disposals Balance as at 31 December 2021 Depreciation 21,283,540 158,752 9,158,576 723,077 31,323,945 53,044 (10,390) 749,169 3,696,801 (436) (1,398,872) 327,992 (159,485) 649,703 331,199 (53,168) - 4,409,036 (223,479) - 22,075,363 2,456,245 9,976,786 1,001,108 35,509,502 49,429 (33,911) (1,000,015) 2,517,195 981,538 (815) (85,525) (3,192,038) 151,059 (83,205) - 664,843 65,758 (54,705) - - 1,247,784 (172,636) (1,085,540) - 23,618,061 159,405 10,709,483 1,012,161 35,499,110 (2,231,515) (461,155) 5,133 (2,687,537) (502,409) - - - - - (5,562,862) (233,030) (8,027,407) (991,882) (124,005) (1,577,042) 137,427 22,785 165,345 (6,417,317) (334,250) (9,439,104) (978,440) (135,698) (1,616,547) Страница 61 из 132 Freehold land and buildings Property under construction Plant and equipment RUB'000 RUB'000 RUB'000 Right-of-use of freehold land, buildings and plant and equipment RUB'000 Total RUB'000 7,381 (3,182,565) - - 69,256 7,821 84,458 (7,326,501) (462,127) (10,971,193) 19,052,025 158,752 3,595,714 490,047 23,296,538 19,387,826 2,456,245 3,559,469 666,858 26,070,398 20,435,496 159,405 3,382,982 550,034 24,527,917 during the year Accumulated depreciation on disposals Balance as at 31 December 2022 Carrying amounts Balance as at 1 January 2021 Balance as at 31 December 2021 Balance as at 31 December 2022 Impairment loss of Ufa hospital’s property, plant and equipment As at 30 June 2022, due to macroeconomic conditions, such as a deterioration in general economic situation, and excessive capacity, the Group performed an impairment test with respect to property, plant and equipment of the regional hospital of LLC MD PROJECT 2010 located in Ufa, representing a separate CGU. The recoverable amount of this CGU was based on its value in use, determined by discounting the future cash flows to be generated from the continuing use of the CGU. The carrying amount of the CGU (RUB 2,936,892 thousand) exceeded its recoverable amount (RUB 1,936,877 thousand) and an impairment loss of RUB 1,000,015 thousand was (the year ended 31 December 2021: nil). The impairment loss was allocated to property, plant and equipment. The recoverable amount was estimated based on the value in use, which was determined using a pre-tax discount rate of 17.5% and a terminal growth rate of 4% applied after the 5.5-year projection period. The discount rate was based on the rate of 10-year bonds issued by the Russian government, adjusted for a risk premium to reflect both the increased risk of investing in equities generally and the systematic risk of the specific CGU. The long-term growth rate into perpetuity has been determined as the lower of the nominal gross domestic product (GDP) rates for Russia, where the CGU operates, and the long-term compound annual EBITDA growth rate estimated by management. Estimated EBITDA was based on expectations of future outcomes taking into account past experience, whereas the EBITDA margin amounted to 20.4%-23.2% further adjusted for anticipated annual revenue growth of 4%-6.8%. Revenue growth was projected taking into account the estimated utilization and price growth for the next five years. Once the impairment loss was recognised, the recoverable amount equaled the carrying amount. Therefore, any adverse movement in a key assumption would lead to further impairment. As at 31 December 2022 the Group considered whether there were indicators of additional impairment or reversal thereof and concluded that there were none. Impairment loss of construction documentation in Saint-Petersburg During the reporting period the Group recognized an impairment of previously acquired construction documentation in the amount of RUB 85,525 thousand as the Group revised its plans on construction of a clinic in Saint-Petersburg that made the documentation no longer usable (During the year ended 31 December 2021: nil). The impairment loss was allocated to construction in progress. Impairment testing of other CGUs On 30 June 2022 the Group performed impairment tests for all CGUs with a goodwill (see Note 14), as well as considered whether the changes in the economic environment represents impairment indicators for other CGUs. The testing was Страница 62 из 132 performed for a number of CGUs. No additional impairment loss was identified. No reasonably possible change in key assumptions will cause an impairment. As a result the Group did not recignise any additional impairment other than mentioned above. Construction in progress includes machinery and equipment, X-ray equipment, tomographs and other items of property, plant and equipment not yet available for use and predominantly relates to the buildings construction through the use of sub- contractors. As at 31 December 2022 construction in progress mainly includes construction costs of Lapino hospital (LLC Khaven) amounting to RUB 91,148 thousand and MD Group hospital (JSC MD PROJECT 2000) amounting to RUB 26,746 thousand (31 December 2021: MD Lakhta hospital (LLC Khaven) – RUB 1,825,075 thousand and Tyumen-2 hospital (LLC Mother and Child Tyumen) – RUB 564,720 thousand). 14. Intangible assets Initial cost Balance as at 1 January 2021 Additions Balance as at 31 December 2021 Additions Impairment loss Balance as at 31 December 2022 Amortisation Balance as at 1 January 2021 Amortisation during the year Balance as at 31 December 2021 Amortisation during the year Balance as at 31 December 2022 Carrying amounts Balance as at 1 January 2021 Balance as at 31 December 2021 Balance as at 31 December 2022 Goodwill RUB'000 2,032,320 - 2,032,320 - (201,034) 1,831,286 - - - - - Patents and trademarks RUB'000 Software and website RUB'000 564,812 - 564,812 - - 564,812 253,072 58,466 311,538 70,017 - 381,555 Total RUB'000 2,850,204 58,466 2,908,670 70,017 (201,034) 2,777,653 (511,384) (133,165) (644,549) (53,426) (68,750) (122,176) (564,810) (201,915) (766,725) (2) (51,107) (51,109) (564,812) (253,022) (817,834) 2,032,320 2,032,320 1,831,286 53,428 2 - 119,907 109,623 128,533 2,205,655 2,141,945 1,959,819 Goodwill is allocated to each cash-generating unit (CGU), which is defined as each individual subsidiary or group of subsidiaries acquired operating as one business in one particular location. JSC MC Avicenna ARTMed Group (Centres of Reproductive Medicine, located in Krasnoyarsk, Omsk, Novosibirsk and Barnaul) 31 December 2022 RUB'000 1,055,593 360,154 31 December 2021 RUB'000 1,055,593 360,154 Страница 63 из 132 LLC Medica-2 CJSC MK IDK LLC Centre of Reproductive Medicine Subsidiaries acquired in 2011 47,216 211,303 142,193 14,827 1,831,286 248,250 211,303 142,193 14,827 2,032,320 Impairment loss of Medica-2 The Group performed an impairment test with respect to goodwill in regional clinic LLC Medica-2 as at 30 June 2022. The recoverable amount of this CGU was based on its value in use, determined by discounting the future cash flows to be generated from the continuing use of the CGU. The carrying amount of the CGU (RUB 323,112 thousand) was determined to be higher than its recoverable amount (RUB 122,078 thousand) and an impairment loss of RUB 201,034 thousand was recognised during the year ended 31 December 2022 (the year ended 31 December 2021: nil). The impairment loss was allocated to goodwill. The discount rate and terminal growth rate were as specified above in the Note 13. The EBITDA margin was assessed as 15.8%-18% and the revenue growth rate was 4%-6.1% for the 5.5 years projection period. Impairment test of other subsidiaries The Group performed an impairment test with respect to goodwill in other subsidiaries as at 30 June 2022. The discount rate and terminal growth rate were as specified above in the Note 13. The revenue growth rate was 4%-9% and EBITDA margin for JSC MC Avicenna, ARTMed Group (Centres of Reproductive Medicine, located in Krasnoyarsk, Omsk, Novosibirsk and Barnaul), JSC MK IDK and other was 30.2%-30.9%, 40.5%-42.1% and 27.5%-33.4% respectively for the 5.5 years projection period. No impairment loss was identified. No reasonably possible change in key assumptions will cause an impairment. As a result the Group did not recignise any additional impairment other than mentioned above. 15. Trade, other receivables and deferred expenses Trade receivables net of impairment provision Advances paid to suppliers CAPEX prepayments Deferred expenses Property tax to be reimbursed Other receivables Non-current portion Current portion Ageing analysis of trade receivables: 31 December 2022 RUB'000 734,938 31 December 2021 RUB'000 751,604 113,013 87,928 7,884 83 55,913 999,759 87,928 911,831 999,759 119,336 339,909 4,866 59,735 35,800 1,311,250 339,909 971,341 1,311,250 Not past due Past due Gross amount 31 December 2022 RUB'000 594,321 375,662 969,983 Impairment 31 December 2022 RUB'000 (1,028) (234,017) (235,045) Gross amount 31 December 2021 RUB'000 572,052 320,647 892,699 Impairment 31 December 2021 RUB'000 (9,434) (131,661) (141,095) In addition to the bad debt provision accrued as at 31 December 2022 the accounts receivable in the amount of RUB 118 thousand were written-off during the year ended 31 December 2022 (year ended 31 December 2021: RUB 2,023 thousand). Страница 64 из 132 The Group performed the calculation of ECL rates separately for patients, legal entities and insurance companies, meanwhile ECL rates for the insurance companies were calculated based on their ratings. The following table provides information about the exposure to credit risk and ECLs for trade receivables for patients as at 31 December 2022. Ageing Status Weighted- average loss rate 2022 0-30 days 31-60 days 61-90 days more than 91 days TOTAL past due past due past due past due 18% 33% 44% 74% Gross carrying amount 2022 RUB'000 46,081 7,986 7,115 243,736 Loss allowance 2022 RUB'000 (8,436) (2,633) (3,159) (180,321) Gross carrying amount 2021 RUB'000 48,317 17,740 19,251 187,059 Loss allowance 2021 RUB'000 (7,685) (4,757) (5,840) (83,542) 304,918 (194,549) 272,367 (101,824) The following table provides information about the exposure to credit risk and ECLs for trade and other receivables for legal entities except insurance companies and amounts receivable from related parties as at 31 December 2022. Ageing Status Weighted- average loss rate 2022 0-30 days 31-60 days 61-90 days more than 91 days TOTAL not past due past due past due past due 13% 20% 28% 58% Gross carrying amount 2022 RUB'000 7,636 5,993 3,142 61,609 Loss allowance 2022 RUB'000 (1,028) (1,188) (875) (36,031) Gross carrying amount 2021 RUB'000 37,383 17,187 1,553 29,540 Loss allowance 2021 RUB'000 (9,434) (5,001) (630) (22,833) 78 380 (39,122) 85,663 (37,898) Based on the analysis of the historical data for accounts receivable from related parties amounted to RUB 67,875 thousand no provision is accrued. For accounts receivable from insurance companies amounted to RUB 518,810 thousand provision is accrued only for those which licences had been revoked (as the most part relates to accounts receivable for MHI services provided which payments are guaranteed by the government). Such provision of RUB 1,373 thousand was accrued as at 31 December 2022 (31 December 2021: RUB 1,373 thousand). The exposure of the Group to credit and currency risk in relation to trade, other receivables and deferred expenses is reported in Note 23 of these consolidated financial statements. 16. Cash and cash equivalents and short-term deposits Current bank accounts and cash in hand Bank deposits with maturity less than 3 months Total cash and cash equivalents Currency: RUB USD 31 December 2022 RUB'000 901,000 3,561,740 4,462,740 31 December 2022 RUB'000 4,399,794 62,946 4,462,740 31 December 2021 RUB'000 1,536,457 2,053,166 3,589,623 31 December 2021 RUB'000 2,869,105 720,518 3,589,623 Страница 65 из 132 The exposure of the Group to credit risk and currency risk in relation to cash and cash equivalents is reported in Note 23 of these consolidated financial statements. 17. Share capital Number of shares 125,250,000 75,125,010 Nominal value USD 0.08 0.08 Share capital RUB'000 - 180,585 Share capital USD'000 10,020 6,010 Authorised Issued and fully paid ordinary shares 1 January / 31 December 18. Share premium, reserves and retained earnings Share premium Share premium includes the total amount received in excess of the total nominal value of the new share capital issued. Incremental costs directly attributable to the issue of new shares are recognised as a deduction from equity (share premium) net of any tax effect. Retained earnings Retained earnings include accumulated profits and losses incurred by the Group. Reserves Reserves include negative common control transactions reserve in the amount of RUB 682,873 thousand and positive capital contribution reserve in the amount of RUB 27,521 thousand. Common control transactions reserve includes differences between the carrying amount of net assets acquired through purchases of subsidiaries from parties under common control and the consideration paid for their acquisition. There were no changes during 2022. 19. Loans and borrowings Long-term liabilities Bank loans Lease liabilities Short-term liabilities Bank loans Lease liabilities Total loans and borrowings Maturity of loans and borrowings: Within one year Between one and five years More than 5 years 31 December 2022 RUB'000 31 December 2021 RUB'000 - 489,200 - 106,426 595,626 31 December 2022 RUB'000 106,426 379,761 109,439 595,626 3,129,443 597,264 1,688,878 97,448 5,513,033 31 December 2021 RUB'000 1,786,326 3,515,922 210,785 5,513,033 In the reporting period, the Group fully repaid all its existing credit facilities by settling outstanding obligations ahead of schedule. No property, plant and equipment is held as collateral for the bank loans as at 31 December 2021. Страница 66 из 132 More information is disclosed in Note 13. The terms and debt repayment schedule of loans and lease liabilities are as follows: Currency Maturity RUB RUB RUB RUB RUB 2023 2024 2022 2026 2023 Face value RUB'000 - 31 December 2022 Carrying amount RUB'000 - Face value RUB'000 1,012,859 31 December 2021 Carrying amount RUB'000 1,012,859 - - - - - - 1,128,830 1,128,830 210,247 210,247 2,466,385 2,466,385 106,426 106,426 97,448 97,448 RUB 2024-2032 489,200 489,200 597,264 597,264 595,626 595,626 5,513,033 5,513,033 Unsecured bank loan Unsecured bank loan Unsecured bank loan Unsecured bank loan Current lease liabilities Non-current lease liabilities The contractual cash flows and the exposure of the Group to liquidity risk in relation to loans and borrowings is reported in Note 23 of these consolidated financial statements. Reconciliation of movements of financial liabilities to cash flows arising from financing activities Bank loans 31 December 2022 Lease liabilities 31 December 2021 Bank loans Lease liabilities RUB'000 4,818,321 (4,805,599) - - (241,329) RUB'000 694,712 - (98,862) (51,881) - RUB'000 6,309,964 (1,490,806) - - (340,077) RUB'000 508,034 - (152,470) - - (5,046,928) (150,743) (1,830,883) (152,470) - - 228,607 228,607 - 65,758 (65,982) 51,881 51,657 595,626 - - 339,240 339,240 4,818,321 331,199 (41,084) 49,033 339,148 694,712 Balance at 1 January Changes in cash flows Repayment of loans and borrowings Payments of lease liabilities Interest under lease agreements paid Interest paid included in financing cash flows Total changes in cash flows Liability-related changes Additions of lease liabilities Leases terminated Interest accrued during the period Total liability-related other changes Balance at 31 December 20. Contract liabilities Patient advances including: Contract liabilities after more than one year Contract liabilities within one year 31 December 2022 RUB'000 2,051,929 468,505 1,583,424 31 December 2021 RUB'000 2,030,778 460,420 1,570,358 Страница 67 из 132 Contract liabilities that relate to long term client advances represent money received from patients on stem cells storage contracts lasting from 1 to 30 years and long-term contracts for offering medical services lasting from 1 to 5 years. Contract liabilities that relate to short term client advances represent money received from patients on stem cells storage contracts, childbirth management contracts lasting from 1 to 9 months, and other contracts valid up to 1 year. 21. Trade and other payables Other payables to tax authorities Taxes payable Accruals Trade payables Payables to employees CAPEX payables Other payables Income tax liability Non-current portion Current portion 31 December 2022 RUB'000 923,279 814,083 702,537 517,270 462,884 66,575 61,802 3,142 3,551,572 729,173 2,822,399 3,551,572 31 December 2021 RUB'000 785,084 278,294 686,820 1,080,420 462,495 268,879 71,235 1,813 3,635,040 624,808 3,010,232 3,635,040 The group received the right to postpone social insurance payments (included in taxes payable) for 2 years due to Governmental Decree #776 on 29 April 2022. However, the Group plans to settle these liabilities fully in 2023. The contractual cash flows (except for income tax liability) and the exposure of the Group to liquidity risk in relation to trade and other payables is reported in Note 23 of these consolidated financial statements. 22. Related party transactions The following transactions were carried out with related parties: 22.1. Balances and transactions with related parties The remuneration of the members of the key management personnel and non-executive directors for the year ended 31 December 2022 was RUB 122,164 thousand (for the year ended 31 December 2021: RUB 142,277 thousand). The remuneration of the members of the key management personnel which remained unpaid as at 31 December 2022 was RUB 24,977 thousand (31 December 2021: RUB 25,338 thousand). The Group provided medical informational services to related parties amounted to RUB 395,949 thousand for the year ended 31 December 2022 (for the year ended 31 December 2021: RUB 310,438 thousand) and received commission services from related parties amounted to RUB 59,138 thousand for the year ended 31 December 2022 (for the year ended 31 December 2021: RUB 41,620 thousand). The receivables from medical informational services which remained unpaid as at 31 December 2022 was RUB 67,479 thousand (31 December 2021: RUB 36,795 thousand). The Group purchased medical materials from related parties amounted to RUB 189,954 thousand for year ended 31 December 2022 (for the year ended 31 December 2021: RUB 140,721 thousand). The payables for medical materials as at 31 December 2022 were RUB 15,719 thousand (the payables as at 31 December 2021: RUB 10,768 thousand). The Group received medical services from related parties amounted to RUB 51,383 thousand for the year ended 31 December 2022 (for the year ended 31 December 2021: RUB 71,819 thousand). The payables from medical services which remained unpaid as at 31 December 2022 was RUB 6,759 thousand (31 December 2021: RUB 17,769 thousand). Страница 68 из 132 The Group provided services to the key management personnel under non-exclusive commercial concession agreement for the year ended 31 December 2022 amounted to RUB 1,671 thousand (for the year ended 31 December 2021: RUB 1,527 thousand). The receivables services under non-exclusive commercial concession agreements which remained unpaid as at 31 December 2022 was RUB 396 thousand (as at 31 December 2021: RUB 548 thousand). The Group purchased intangible assets from related parties amounted to RUB 14,173 thousand for the year ended 31 December 2022 (for the year ended 31 December 2021: RUB 5,010 thousand). 22.2. Directors' interests The direct and indirect interests of the members of the Board in titles of the Company as at 31 December 2022, 31 December 2021 and as at the date of signing these consolidated financial statements are as follows: Name Mark Kurtser Kirill Dmitriev (resigned on 5 March 2022) Simon Rowlands (resigned on 9 March 2022) Vitaly Ustimenko Type of interest Indirect ownership of shares Indirect interest in shares Direct ownership of shares Direct ownership of shares Effective interest % 67.90 5.55 0.33 0.005 Indirect interest in shares by Kirill Dmitriev arises through his capacity as key management personnel of indirect shareholder. Member of the Board of Directors Vitaly Ustimenko acquired GDRs on 27 May 2022 and 29 June 2022, as a result the share of his ownership increased from 0.0053% to 0.0054% of the Сompany's share capital. The calculation of effective interest is based on the total amount of issued and fully paid shares, including treasury shares acquired by the Company. 22.3. Dividends declared to related parties Dividends declared to the parent company MD Medical Holding Limited amounted to RUB 436,250 thousand for the year ended 31 December 2022 (31 December 2021: RUB 1,887,866 thousand). 23. Financial risk management Financial risk factors The Group is exposed to the following risks from its use of financial instruments: Credit risk Liquidity risk Market risk The Board of Directors has the overall responsibility for the establishment and supervision of the Company's risk management framework. The Group's risk management policies are established to identify and analyse the risks faced by the Group to set appropriate risk limits and controls and monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in the Group's activities. (i) Credit risk Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date. The Group has no significant concentration of credit risk. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history and monitors on a continuous basis the ageing profile of its receivables. Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Страница 69 из 132 Trade and other receivables Cash and cash equivalents excluding cash in hand Trade and other receivables 31 December 2022 RUB'000 792,817 4,451,895 31 December 2021 RUB'000 846,706 3,578,216 5,244,712 4,424,922 The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group has no significant concentration of credit risk regarding trade and other receivables. This fact significantly reduces possible delays and other negative consequences that may potentially affect matching the maturity of assets with liabilities. Furthermore, according to the internal policy, clients usually pay in advance except for some particular cases. Cash and cash equivalents and short-term bank deposits The Group held cash and cash equivalents excluding cash in hand of RUB 4,451,895 thousand as at 31 December 2022 (31 December 2021: RUB 3,578,216 thousand) which represents its maximum credit exposure on these assets. The Group maintains the majority of cash with the bank that is subject to sanctions. No rating from international rating agencies was available as at 31 December 2022. In accordance with the Russian rating agency AKRA the rating was ААА(RU). 2022 Number of banks 3 2 Total External credit rating ruAAA other The carrying amounts as of 31 Dcember 2021 and external ratings of 2021 were as follows: 2021 Number of banks 2 1 2 Total External credit rating Baa3 A2 A1 Carrying amount 4,376,840 75,055 4,451,895 Carrying amount 2,883,927 394,682 299,607 3,578,216 The cash and cash equivalents and short-term bank deposits were mostly held with bank and financial institution counterparties, which were rated Baa3-A1, based on rating agency Moody’s Investors Service ratings (ii) Liquidity risk Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Group has procedures to minimise such losses including maintaining sufficient cash and other highly liquid current assets. The following are the contractual maturities of financial liabilities including estimated interest payments: 31 December 2022 Lease liabilities CAPEX payables Trade payables Other Note Carrying amounts Contractual cash flows 2 months or less Between 2-12 months Between 1-2 years Between 2-5 years More than 5 years RUB'000 595,626 RUB'000 735,399 RUB'000 27,429 RUB'000 135,392 RUB'000 144,233 RUB'000 292,381 RUB'000 135,964 66,575 66,575 14,094 52,481 517,270 517,270 517,270 - - - - - - - 19 21 21 21 2,964,585 3,283,014 1,018,786 1,217,162 195,521 429,877 421,668 Страница 70 из 132 payables and accrued expenses 31 December 2021 Bank loans Lease liabilities CAPEX payables Trade payables Other payables and accrued expenses 4,414,056 4,602,258 1,577,579 1,405,035 339,754 722,258 557,632 Note Carrying amounts Contractual cash flows 2 months or less Between 2-12 months Between 1-2 years Between 2-5 years More than 5 years 19 19 21 RUB'000 4,818,321 694,712 RUB'000 5,327,905 886,444 RUB'000 333,966 24,670 RUB'000 1,580,779 120,691 RUB'000 1,548,275 143,298 RUB'000 1,864,885 361,691 RUB'000 - 236,094 268,879 268,879 123,820 145,059 21 1,080,420 1,080,420 1,080,420 - - - - - - - 21 2,283,928 2,560,592 1,020,010 637,417 161,843 379,765 361,557 9,146,260 10,124,240 2,582,886 2,483,946 1,853,416 2,606,341 597,651 (iii) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, may affect the Group's income or the value of its holdings of financial instruments. Interest rate risk Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's management monitors the interest rate fluctuations on an ongoing basis and acts accordingly. As at the reporting date the interest rate profile of interest bearing financial instruments was as follows: Fixed rate instruments Financial assets Financial liabilities 31 December 2022 RUB'000 31 December 2021 RUB'000 3,561,740 (595,626) 2,966,114 2,053,166 (5,513,033) (3,459,867) The Group does not account for any fixed interest rate instruments at fair value through profit or loss and does not have any derivative financial instruments, therefore a change in interest rates at the reporting date would not affect profit or loss or equity. Currency risk Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group's functional currency. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the United States Dollar and the Euro. The Group's management monitors the exchange rate fluctuations on an ongoing basis and acts accordingly. Страница 71 из 132 The Group's exposure to foreign currency risk was as follows: Assets Cash at bank Trade and other receivables Liabilities CAPEX payables Trade and other payables and accruals Net exposure USD 62,946 - (23,515) (3,491) 35,940 31 December 2022 EUR - - (2,207) (48) (2,255) USD 720,518 464 (59,813) - 661,169 31 December 2021 EUR - - (22,227) (40) (22,267) The following significant exchange rates applied during the year: USD EUR GBP Sensitivity analysis 2022 68.5494 72.5259 85.5708 Average rate 2021 73.6541 87.1877 101.3437 Reporting date spot rate 2021 74.2926 84.0695 100.0573 2022 70.3375 75.6553 84.7919 A 10% weakening of the Russian Ruble against the above currencies will result in the increase in profit and equity of RUB 3,369 thousand as at 31 December 2022 (31 December 2021: RUB 63,890 thousand). A 10% strengthening of the Russian Ruble would have an opposite impact. Capital management The Group's objectives in managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns to owners and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure the Group may adjust the amount of dividends paid to shareholders, return capital to owners or issue of new shares. The Group monitors capital on the basis of the net debt to equity ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total loans and borrowings less cash and cash equivalents. Total equity is calculated as “equity” shown in the consolidated statement of financial position. Financial liabilities Less: cash and cash equivalents Net debt Total equity Net debt to equity ratio Note 19 16 31 December 2022 RUB'000 595,626 (4,462,740) (3,867,114) 26,963,262 (14.34%) 31 December2021 RUB'000 5,513,033 (3,589,623) 1,923,410 23,097,192 8.33% 24. Fair values As at 31 December 2022 and 31 December 2021 the Group had no significant financial assets or liabilities measured at fair value. The financial assets of the Group include cash and cash equivalents and trade and other receivables. The financial liabilities of the Group include loans and borrowings and trade and other payables. The fair value of these financial instruments is classified as Level 3 of fair value class hierarchy and is estimated only for disclosure purposes using discounted cash flows taking interest rates adequate to the relevant risk. The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the reporting date. Страница 72 из 132 25. Operating environment (a) Insurance As per current legislation in Russian Federation medical clinics are not required to insure their activities. There is a draft Law regarding obligatory insurance of medical clinics as from 2013. The Law has not yet been enacted. At present the Group does not insure its operational activities but has obtained insurance cover for some property, plant and equipment. Until the Group obtains adequate insurance coverage there is a risk of material adverse effect on operations and statement of financial position. (b) Russian business environment The Group’s operations are primarily located in the Russian Federation. Consequently, the Group is exposed to the economic and financial markets of the Russian Federation, which display the characteristics of an emerging market. The legal, tax and regulatory frameworks continue development, but are subject to varying interpretations and frequent changes which contribute together with other legal and fiscal impediments to the challenges faced by entities operating in the Russian Federation. Starting in 2014, the United States of America, the European Union and some other countries have imposed and gradually expanded economic sanctions against a number of Russian individuals and legal entities. Since February 2022, after the recognition of the self-proclaimed Donetsk and Lugansk People's Republics and the start of a special military operation in Ukraine by the Russian Federation, the above countries have imposed additional tough sanctions against the Government of the Russian Federation, as well as large financial institutions, legal entities and individuals in Russia. In addition, restrictions were imposed on the supply of various goods and services to Russian enterprises. Also, in the context of the imposed sanctions, a number of large international companies from the United States, the European Union and other countries discontinued, significantly reduced or suspended their own activities in the Russian Federation, as well as doing business with Russian citizens and legal entities. Further to the sanctions the London Stock Exchange has suspended the admission to trading of the Group`s instruments on 3 March 2022. In September 2022, partial mobilization was announced in the Russian Federation. Referendums were held in the recognized republics of Donetsk and Lugansk, as well as in the Zaporozhye and Kherson regions of Ukraine, which resulted in incorporation of the territories into the Russian Federation. As a result of these events further sanctions were imposed and there is a risk of increasing pressure on the Russian economy. In response to the above , the Government of the Russian Federation has introduced a set of measures, which are countersanctions, currency control measures, a number of key interest rate decisions and other special economic measures to ensure the security and maintain the stability of the Russian economy. The imposition and subsequent strengthening of sanctions and the partial mobilization resulted in elevated economic uncertainty, including reduced liquidity and high volatility in the capital markets, volatility of the Rouble exchange rate and the key interest rate, a decrease in foreign and domestic direct investments, difficulties in making payments for Russian Eurobond issuers, and also a significant reduction in the availability of sources of debt financing. In addition, Russian companies have virtually no access to the international stock market, the debt capital market and other development opportunities, which may lead to their increased dependence on the governmental support. The Russian economy is in the process of adaptation associated with the replacement of retiring export markets, a change in supply markets and technologies, as well as changes in logistics, supply and production chains. It is difficult to assess the consequences of the imposed and possible additional sanctions as well as partial mobilization, in the long term, however, these events can have a significant negative impact on the Russian economy. The wave-like nature of the spread of COVID-19 coronavirus infection continues to create additional uncertainty in the business environment. The Group primarily operates in Russian healthcare system which is subject to a specific regulatory regime and has its own peculiarities. A part of the Group’s operations are covered by the Mandatory Health Insurance that require compliance with certain requirements. Due to the business specifics purchases of medical equipment, medicines and medical consumables are generally not sanctioned at the current moment. Therefore the above situation does not negatively influence the business of the Group. The Management monitors the situation on the constant basis. The consolidated financial statements reflect management’s assessment of the impact of the Russian business environment on the operations and the financial position of the Group. The future business environment may differ from management’s assessment. Страница 73 из 132 (c) Russian tax environment The taxation system in the Russian Federation continues to evolve and is characterised by frequent changes in legislation, official pronouncements and court decisions, which are sometimes contradictory and subject to varying interpretation by different tax authorities. The tax authorities have the power to impose fines and penalties for tax arrears. A tax year is generally open for review by the tax authorities during three subsequent calendar years. Currently the tax authorities are taking a more assertive and substance-based approach to their interpretation and enforcement of tax legislation. 26. Non-controlling interests The only material non-controlling interest in the Group is related to JSC MD PROJECT 2000. The information about the subsidiary before any intra-group eliminations is presented below. Most of the turnovers are cash based. Revenue Profit and total comprehensive income Profit and other comprehensive income allocated to non-controlling interests Dividends paid to non-controlling interests Non-controlling interests percentage Non-current assets Current assets Non-current liabilities Current liabilities Net assets Carrying amount of non-controlling interests Other non-controlling interests 2022 RUB'000 3,740,660 1,413,073 70,654 102,500 5% 31 December 2022 RUB'000 2,963,704 657,396 (346,889) (739,146) 2,535,065 126,753 85,924 212,677 2021 RUB'000 3,569,840 1,310,622 65,531 129,150 5% 31 December 2021 RUB'000 3,613,194 1,022,314 (269,557) (1,193,958) 3,171,993 158,600 105,905 264,505 27. Capital commitments Capital commitments mostly comprise of the obligations under construction and equipment purchase contracts in the amount of RUB 681,311 thousand as at 31 December 2022 (31 December 2021: RUB 1,037,548 thousand). 28. Segment reporting The Group operates in Russian Federation and has one primary reporting segment: provision of medical services. The Group evaluates the performance and makes investments and strategic decisions based upon a review of profitability for the Group as a whole and does not group subsidiaries by geography and service lines during the analysis of their performance. 29. Events after the reporting period The out-patient medical centre "Mother&Child Mytishchi" with a focus on preparation for pregnancy and childbirth was opened on 13 January 2023. No other significant events occurred after the reporting period. Страница 74 из 132 REPORT AND FINANCIAL STATEMENTS MD MEDICAL GROUP INVESTMENTS PLC REPORT AND FINANCIAL STATEMENTS For the year ended 31 December 2022 OFFICERS, PROFESSIONAL ADVISORS AND REGISTERED OFFICE Board of Directors Vladimir Mekler – Chairman Mark Kurtser Vitaly Ustimenko Tatiana Lukina Sergey Kalugin (appointed on 2 March 2022) Secretary Menustrust Limited Assistant Secretary Darya Aleksandrova Independent Auditors GAC Auditors Ltd Registered Office 15 Dimitriou Karatasou street, Anastasio Building, 6th floor, office 601, Strovolos, 2024, Nicosia, Cyprus Страница 75 из 132 Management report The Board of Directors of MD Medical Group Investments Plc (the “Company”) presents to the members its Annual Report together with the audited separate financial statements of the Company for the year ended 31 December 2022. Incorporation MD Medical Group Investments Plc was incorporated in Cyprus on 5 August 2010 as a private limited liability company under the provisions of the Cyprus Companies Law, Cap. 113. On 22 August 2012 following special resolution passed by the shareholder, the name of the Company was changed from “MD Medical Group Investments Ltd” to “MD Medical Group Investments Plc” and the Company was converted into a public limited liability company in accordance with the provisions of the Cyprus Companies Law, Cap. 113. Principal activity The principal activity of the Company is that of an investment holding company and, for that purpose, to acquire and hold controlling and other interests in the share or loan capital of any company or companies of any nature, but primarily in the healthcare industry. Financial results The Company's financial results for the year ended 31 December 2022 and its financial position as at that date are set out in the statement of profit or loss and other comprehensive income on page 85 and in the statement of financial position on page 86 of these financial statements. Profit for the year ended 31 December 2022 amounted to RUB 2,558,425 thousand (2021: RUB 3,703,469 thousand). The total assets of the Company as at 31 December 2022 were RUB 14,511,922 thousand (31 December 2021: RUB 12,599,310 thousand) and the net assets were RUB 14,444,752 thousand (31 December 2021: RUB 12,528,646 thousand). Dividends In accordance with the Company’s Articles of Association dividends may be paid out of its profits. To the extent that the Company declares and pays dividends, owners of GDRs on the relevant record date will be entitled to receive dividends in respect of ordinary shares underlying the GDRs. The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries to pay dividends to the Company in accordance with relevant legislation in the country of their incorporation and any contractual restrictions. The payment of such dividends by its subsidiaries is contingent upon the sufficiency of their earnings, cash flows and distributable reserves. On 26 October 2022 the Board of Directors recommended the payment of RUB 642,319 thousand as interim dividends which corresponds to RUB 8.55 per share. The dividends were paid on 29 November 2022. On 3 September 2021 the Board of Directors recommended the payment of RUB 1,352,249 thousand as interim dividends which corresponds to RUB 18 per share. The dividends were paid on 26 October 2021. On 19 March 2021 Board of Directors recommended the payment of RUB 1,427,375 thousand as final dividends for the year 2020 which corresponds to RUB 19 per share. The dividends were paid on 25 May 2021. Examination of the development, position and performance of the activities of the company The current financial position and performance of the Company as presented in these financial statements is considered satisfactory. The Company through its subsidiaries has one of the largest nationwide private healthcare regional networks for its core services and is expanding into new services. It has significant experience in the provision of fullservice private maternity healthcare services. The Company has secured leading positions in the Russian private healthcare market across a range of services including obstetrics and gynaecology, fertility and IVF treatments, and paediatrics. It has also been diversifying its offering by adding other medical services for all family members, such as surgery, urology, traumatology, cardiology, and oncology, etc. The recently opened facilities have been multi-disciplinary from the very beginning. Страница 76 из 132 Principal risks and uncertainties Details in relation to principal risks and uncertainties and steps taken to manage these risks and uncertainties are presented in Note 17. The Board of Directors has the overall responsibility for the establishment and supervision of the Company's risk management framework. Directors' interest The direct and indirect interests of the members of the Board in titles of the Company as at 31 December 2022, 31 December 2021 and as at the date of signing these financial statements are as follows: Name Mark Kurtser Kirill Dmitriev (resigned on 5 March 2022) Simon Rowlands (resigned on 9 March 2022) Vitaly Ustimenko Type of interest Indirect ownership of shares Indirect interest in shares Direct ownership of shares Direct ownership of shares Effective interest % 67.90 5.55 0.33 0.005 Indirect interest in shares by Kirill Dmitriev arises through his capacity as key management personnel of indirect shareholder. The Director Vitaly Ustimenko acquired GDRs on 27 May 2022 and 29 June 2022, and as a result the share of his ownership increased from 0.0053% to 0.0054% of the Сompany's share capital. The calculation of effective interest is based on the total amount of issued and fully paid shares, including treasury shares acquired by the Company. Future developments The Company’s goal is to continually diversify its medical services through its subsidiaries by expanding its range of services, maintaining its leading position in the field of high-quality women’s health and paediatrics, as well as addressing the increasing demand for private healthcare services in Russia and beyond. The Company intends through its subsidiaries to expand its portfolio of hospital and outpatient facilities, broaden its service offerings by providing patients with the most up-to-date treatment procedures and medical technology available on the market, expand its services in Moscow and other regions, exploit the value of its integrated healthcare network by making effective use of services across its facilities, optimizing the benefits for patients and its subsidiaries as a whole. Share capital There were no changes in the share capital of the Company during the year. Board of Directors The Board of Directors leads the process in making new Board member appointments and makes recommendations on appointments to shareholders. In accordance with the Appointment Policy for the Board of Directors and Committees, all directors are subject to appointment or approval of appointment by shareholders at the first Annual General Meeting after their appointment, and to re-appointment at intervals of no more than three years. Any term beyond six years (e.g. two three-year terms) for a non-executive director is subject to particularly rigorous review, and takes into account the need for progressive refreshing of the Board of Directors. Sergey Kalugin was appointed as an independent director on 2 March 2022. Kirill Dmitriev and Africa Platforms Capital LLP (represented by Simon Rowlands) stepped down as a member of the Board of Directors on 5 March 2022 and 9 March 2022 respectively. The members of the Board of Directors who served as at the date of signing of these financial statements, are presented on page 76. Refer to Note 16.1. of these financial statements for the remuneration of the directors and other key management personnel. Страница 77 из 132 The Board committees Since September 2012, the Board of Directors established the operation of the following three committees: the Audit Committee, the Nomination Committee and the Remuneration Committee. Audit Committee The Audit Committee comprises of three non-executive directors, two of whom are independent. The Audit Committee has been chaired by the independent non-executive director Tatiana Lukina since 6 December 2019, Mr. Kirill Dmitriev and Mr. Simon Rowlands were the other members. Following the resignation of Mr. Simon Rowlands and Mr. Kirill Dmitriev on 5 March 2022 and 9 March 2022, respectively, Vitaly Ustimenko and Sergey Kalugin were appointed as the other members of the audit committee on 14 March 2022. The Audit Committee meets at least four times each year and is responsible for considering: the reliability and appropriateness of disclosures in the financial statements and external financial communication the maintenance of an effective system of internal controls including financial, operational and compliance controls and risk management system the preparation of recommendations to the shareholders for approval in General Meetings in relation to the appointment, reappointment and removal of the external auditors the approval of the remuneration and terms of engagement of the external auditors in respect of audit services provided the audit process, including monitoring and review of the external auditors' performance, independence and objectivity the development and implementation of the policy on non-audit services provided by the external auditors the monitoring of compliance with laws and regulations and standard of corporate governance The Audit Committee assists the Board of Directors in its oversight of the performance and leadership of the internal audit activity. Where the Audit Committee’s monitoring and review activities reveal cause for concern or scope for improvement, it shall make recommendation to the Board of Directors on actions needed to address the issues or to make improvements. Internal audit The Audit Committee is responsible for monitoring and reviewing the effectiveness of the Company’s internal audit function. In this respect, the Audit Committee may require investigations by, or under the authority of, the head of Internal Audit into any activities of the Company which may be of interest or concern to the Audit Committee. The Company`s internal auditor is responsible for the recommendation of an audit plan to the Audit Committee. The internal auditor carries out auditing assignments in accordance with such plan and oversees the Company`s compliance with the plan`s recommendations. The internal auditor files a quarterly report with his findings to the Audit Committee. Nomination Committee The Nomination Committee comprises of one executive and two non-executive directors, one of whom is independent. The Nomination Committee is chaired by the non-executive director Mr. Vladimir Mekler (since June 2016). Mr. Mark Kurtser and Mr. Simon Rowlands were the other members. Following the resignation of Mr. Simon Rowlands on 9 March 2022, Mr. Sergey Kalugin was appointed as the other member of the audit committee on 14 March 2022. The Nomination Committee meets at least once a year and is responsible for assisting the Board of Directors in discharging its corporate governance responsibilities in relation to appointment of all executive and non-executive directors, as well as the CEO and CFO of the Company. The main objective of the Nomination Committee is to lead the process for the Board of Directors’ appointments and make respective recommendation to the Board of Directors, ensuring proper balance of the Board of Directors and qualification of its members. The Nomination Committee also considers the composition of the Audit and Remuneration Committees. Remuneration Committee The Remuneration Committee comprises of two non-executive directors and one executive director. The Remuneration Committee was chaired by an independent non-executive director Mr. Simon Rowlands, who stepped down on 5 March 2022. Страница 78 из 132 Mr. Sergey Kalugin was appointed as the chairman of the Remuneration Committee on 14 March 2022. The two other members are Dr. Mark Kurtser and Mr. Vladimir Mekler. The Remuneration Committee meets at least once a year and is responsible for assisting the Board of Directors in discharging its corporate governance responsibilities in relation to remuneration of all executive directors and the chairman of the Board of Directors. The main objective of the Remuneration Committee is to determine the framework and policy for the remuneration of the executive directors, the chairman of the Board of Directors and senior executives, and the specific remuneration of each executive director and the chairman of the Board of Directors and any compensation payments. Corporate governance Since 2012, the Company has maintained full compliance with the UK Corporate Governance Code. The Company is committed to the highest standards of corporate governance and transparency. The Board of Directors recognises that good governance is a strategic asset that helps it to deliver consistent long-term value to its shareholders. By running the Company in an open way, the Board of Directors enables shareholders to understand how it has been able to deliver consistently strong results. The Board of Directors believes that corporate responsibility is an essential part of good governance and makes sound business sense, as well as being crucial to the appropriate management of risk within the Company. In order to improve its corporate governance structure in accordance with the internationally recognised best practices, the Company adopted important policies and procedures. The Company’s corporate governance policies and practices are designed to ensure that the Company is focused on upholding its responsibilities to the shareholders. The Company’s corporate governance policies and practices include, inter alia: Appointment policy for the Board of Directors and Committees Terms of reference of the Audit Committee, Nomination Committee and Remuneration Committee Code of Ethics and Conduct Business Continuity Policy Disclosure Policy Regulations on Insider Information Risk Management Policy; and Anti-Fraud Policy Internal control in relation to the financial reporting process The Company has set formal policies and written terms of reference in relation to the financial reporting process that include: Corporate Accounting policy Guidelines Methodology for the Transformation of Financial Statements from RAS to IFRS Financial Reporting Preparation Procedure; and The Group’s structure The objective of this policу is to establish uniform procedures and to implement requirements for the preparation of the financial statements of the Company. The procedure should be reviewed for compliance with International Financial Reporting Standards as well as current conditions and planned changes in the Company’s business activities annually. When necessary, amendments and additions to this Procedure should be adopted. Meetings of shareholders The Company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year. An annual general meeting and any other shareholders’ meeting called to pass a special resolution can be convened by the Board of Directors by a notice, specifying the matters to be discussed, issued at least 21 days before the meeting. Any Страница 79 из 132 other meetings shall be convened by the Board of Directors by a notice, specifying the matters to be discussed, issued at least 14 days before the meeting. If the notice period is less than 21 days or 14 days as applicable, the meeting will be deemed to have been duly called if it is so agreed: in the case of a meeting called as the annual general meeting, by all the shareholders entitled to attend and vote, and in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than 95 per cent in nominal value of the shares giving that right A notice convening a general meeting must be sent to each of the shareholders. All shareholders are entitled to attend the general meeting or be represented by a proxy authorised in writing. In the general meeting, on a poll, every share gives the holder the right to cast one vote, whereas, on a show of hands, each member has one vote. A corporate member may, by resolution of its directors or other governing body, authorise a person to act as its representative at any meeting of the Company. Branches MD Medical Group Investments Plc has a branch in Moscow. Treasury shares During the year ended 31 December 2022 the Company did not acquire any treasury shares. Events after the reporting period The events after the reporting date are disclosed in Note 20 to these financial statements. Independent auditors The independent auditors, GAC Auditors Ltd, were appointed in replacement of the previous auditors KPMG Limited and have expressed their willingness to continue in office and a resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting. By order of the Board of Directors, Vladimir Mekler Chairman of the Board of Directors Mark Kurtser Managing Director, member of the Board of Directors Moscow, 31 March 2023 Страница 80 из 132 Directors' responsibility statement The Company's Board of Directors is responsible for the preparation of separate financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap.113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error. This responsibility includes selecting appropriate accounting policies and applying them consistently; and making accounting estimates and judgements that are reasonable in the circumstances. In preparing the separate financial statements, the Board of Directors is also responsible for assessing the Company’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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. The Board of Directors’ confirmations The Board of Directors confirms that, to the best of its knowledge: (a) the financial statements, which are presented on pages 85 to 106, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap.113, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and (b) the management report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces Further, the Board of Directors confirms that, to the best of its knowledge: i adequate accounting records have been maintained which disclose with reasonable accuracy the financial position of the Company and explain its transactions ii all information of which it is aware that is relevant to the preparation of the financial statements, such as accounting records and all other relevant records and documentation, has been made available to the Company’s auditors iii iv v the financial statements disclose the information required by the Cyprus Companies Law, Cap.113 in the manner so required the Management Report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap.113, and the information given therein is consistent with the financial statements the information included in the corporate governance statement in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which is included as a specific section of the Management Report, have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap, 113, and is consistent with the financial statements; and vi the corporate governance statement includes all information referred to in subparagraphs (i), (ii), (iii), and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113 By order of the Board of Directors, Vladimir Mekler Chairman of the Board of Directors Mark Kurtser Managing Director, member of the Board of Directors Moscow, 31 March 2023 Страница 81 из 132 Independent Auditor's Report To the Members of MD Medical Group Investments PLC Report on the Audit of the Financial Statements Opinion We have audited the accompanying separate financial statements of the parent company MD Medical Group Investments PLC (the ''Company''), which comprise the statement of financial position as at 31 December 2022, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the parent company MD Medical Group Investments PLC as at 31 December 2022, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). 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' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, 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. Emphasis of Matter We draw attention to Note 19 to the financial statements, which describes the operating environment and the impact of conflict between Russia and Ukraine. Our opinion is not modified in respect of this matter. Key Audit Matters In addition to the matter described on Emphasis of Matter paragraph above, we have determined the matters described below to be the key audit matters to be communicated in our report. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Investments in subsidiaries Refer to 8 of the separate financial statements (RUB12,860,242 thousand) Key audit matter The carrying value of the investments in subsidiaries amounts for RUB 12,860,242 thousand and accounts for more than 89% of the company's total assets as at 31 December 2022. How the matter was addressed in our audit Our audit procedures included among others the following: a) Made inquiries of management regarding the indicators they assess as possible indicators of impairment for relevant assets/CGUs Significant judgement is required by the management of the Company in determining whether there are any indicators for impairment and, where such indications exist, in assessing the recoverable amount of the investments. We focus on this area because of the significance of the carrying amount of the investments in the separate financial statements and because inherent uncertainty and subjectively is involved in forecasting and sicounting future cash flows, which are the basis of the assessment of the recoverable amount of the investments and hemce thir carrying b) Inspected management's assessment and consider whether further indicators should have been assessed based on our knowledge of the business, its operating environment, industry knowledge, current market conditions and other information obtained during the audit c) Verified the accuracy of management's calculations for those assets/CGUs subject to impairment testing and consider whether the assets/CGUs tested are completed d) Evaluated the valuation techniques, assumptions and data used by management to make their accounting estimates used for value in use/fair values less costs of disposalse e) Evaluated the completness, accuracy and relevance of Страница 82 из 132 amount recorded in the separate financial statements. disclosres required by IAS 36, including disclosures Other information The Board of Directors is responsible for the other information. The other information comprises the information included in the Management Report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, 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. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors for the Financial Statements The Board of Directors is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors is responsible for assessing the Company'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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is responsible for overseeing the Company's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the 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 Company's internal control Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors Conclude on the appropriateness of the Board of Directors' 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 Company'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 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 Company to cease to continue as a going concern Страница 83 из 132 Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.We communicate with the Board of Directors 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 We communicate with the Board of Directors 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. Report on Other Legal Requirements Pursuant to the additional requirements of the Auditors Law of 2017, we report the following: In our opinion, the Management Report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap 113, and the information given is consistent with the financial statements In our opinion, and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Management Report Other Matters This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to. We have reported separately on the consolidated financial statements of the Company and its subsidiaries for the year ended 31 December 2022. Comparative figures The financial statements of the Company for the year ended 31 December 2021 were audited by another auditor who expressed an unmodified opinion on those financial statements on 25 March 2022. Michalis Lambrianides Certified Public Accountant and Registered Auditor for and on behalf of GAC Auditors Ltd Certified Public Accountants and Registered Auditors 48, Inomenon Ethnon Street Guricon House, 1st floor 6042 Larnaca, ................... 2023 Страница 84 из 132 Statement of profit or loss and other comprehensive income For the year ended 31 December 2022 Dividend income Revenue from recharging of expenses Revenue from advertising Total revenue Other income Other expenses Selling, general and administrative expenses Operating profit Finance income Finance expenses Net foreign exchange transactions loss Net finance expenses Profit before tax Income tax Profit for the year Total comprehensive income for the year Note 16.2 16.3 4 5 5 5 5 6 2022 RUB'000 2,969,952 102,667 9,841 3,082,460 2,136 (71,749) (411,531) 2,601,316 62,455 (1,825) (103,521) (42,891) 2,558,425 - 2,558,425 2,558,425 2021 RUB'000 3,993,512 98,886 16,199 4,108,597 8,126 (5,503) (405,752) 3,705,468 5,949 (1,022) (6,926) (1,999) 3,703,469 - 3,703,469 3,703,469 The Notes on pages 89 to 106 are an integral part of these reports and financial statements. Страница 85 из 132 Statement of financial position As at 31 December 2022 Note 31 December 2022 RUB'000 31 December 2021 RUB'000 ASSETS Property, plant and equipment Intangible assets Investments in subsidiaries Total non-current assets Inventories Trade and other receivables Current tax assets Cash and cash equivalents Total current assets Total assets EQUITY Share capital Share premium Other reserves Retained earnings Total equity LIABILITIES Trade and other payables Total non-current liabilities Trade and other payables Total current liabilities Total equity and liabilities 9 10 8 11 12 13 14 14 14 15 15 12,398 31,599 12,860,242 12,904,239 1,911 203,699 4,919 1,397,154 1,607,683 14,511,922 180,585 5,243,319 328,510 8,692,338 14,444,752 5,793 5,793 61,377 61,377 14,511,922 7,592 15,130 11,245,257 11,267,979 3,396 563,400 4,919 759,616 1,331,331 12,599,310 180,585 5,243,319 328,510 6,776,232 12,528,646 - - 70,664 70,664 12,599,310 On 31 March 2023 the Board of Directors of MD Medical Group Investments Plc approved and authorised these reports and financial statements for issue. Vladimir Mekler Chairman of the Board of Directors Mark Kurtser Managing Director The Notes on pages 89 to 106 are an integral part of these reports and financial statements. Страница 86 из 132 Statement of changes in equity For the year ended 31 December 2022 Note Share capital RUB'000 180,585 Share premium RUB'000 5,243,319 Other reserves RUB'000 328,510 Retained earnings RUB'000 6,776,232 Total RUB'000 12,528,646 - - - - 7 - 2,558,425 2,558,425 - (642,319) (642,319) 180,585 5,243,319 328,510 8,692,338 14,444,752 Balance as at 1 January 2022 Total comprehensive income Profit and other comprehensive income for the year Contributions by and distributions to owners Dividends declared and paid Balance as at 31 December 2022 Share premium is not available for distribution. The Notes on pages 89 to 106 are an integral part of these reports and financial statements. Statement of changes in equity For the year ended 31 December 2021 Note Share capital RUB'000 180,585 Share premium RUB'000 5,243,319 Other reserves RUB'000 328,510 Retained earnings RUB'000 5,852,387 Total RUB'000 11,604,801 - - - 3,703,469 3,703,469 7 (2,779,624) (2,779,624) 180,585 5,243,319 328,510 6,776,232 12,528,646 Balance as at 1 January 2021 Total comprehensive income Profit and other comprehensive income for the year Contributions by and distributions to owners Dividends declared and paid Balance as at 31 December 2021 Share premium is not available for distribution. The Notes on pages 89 to 106 are an integral part of these reports and financial statements. Страница 87 из 132 Statement of cash flows For the year ended 31 December 2022 Cash flows from operating activities Profit for the year Adjustments for: Depreciation Amortisation Dividend income Finance expenses Finance income Net foreign exchange loss Disposal of investments in subsidiaries due to liquidation Impairment of investments in subsidiaries Cash flows used in operations before working capital changes (Increase) / decrease in trade and other receivables Decrease / (increase) in inventories Decrease in trade and other payables Cash flows used in operations Dividends received Net cash flows from operating activities Cash flows from investing activities Capital contributions to subsidiaries Acquisition of property, plant and equipment Acquisition of intangible assets Placing short-term bank deposits Proceeds from short-term bank deposits return Interest received Net cash flows (used in) / from investing activities Cash flows used in financing activities Finance expenses paid Payments of lease liabilities Dividends paid to owners of the Company Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of movements in exchange rates on cash held Cash and cash equivalents as at the end of the year Note 4 4 5 5 5 8 8 16.2 8 10 5 12 2022 RUB'000 2,558,425 5,024 5,845 (2,969,952) 1,825 (62,455) 103,521 155 70,000 (287,612) (263,605) 1,485 (161) (549,893) 3,654,657 3,104,764 (1,685,140) (9,830) (22,314) - - - (1,717,284) (769) (3,576) (636,794) (641,139) 746,341 759,616 (108,803) 1,397,154 The Notes on pages 89 to 106 are an integral part of these reports and financial statements. 2021 RUB'000 3,703,469 5,710 5,351 (3,993,512) 1,022 (5,949) 6,926 - 3,920 (273,063) 50,277 (1,917) (29,762) (254,465) 3,449,830 3,195,365 (768,460) (496) (13,458) (866,831) 1,648,623 5,769 5,147 (908) (2,940) (2,726,685) (2,730,533) 469,979 385,254 (95,617) 759,616 Страница 88 из 132 Notes to the financial statements For the year ended 31 December 2022 Incorporation and principal activities 1. MD Medical Group Investments Plc (the “Company”) was incorporated in Cyprus on 5 August 2010 as a private limited liability company under the provisions of the Cyprus Companies Law, Cap. 113. The Company is domiciled in Russia. In August 2012, following the special resolution passed by the shareholder, the Company was converted into a public limited liability company in accordance with the provisions of the Cyprus Companies Law, Cap. 113. Its Registered Office is at Dimitriou Karatasou 15, Anastasio Building, 6th floor, office 601, Strovolos, 2024, Nicosia, Cyprus. The principal activity of the Company is that of an investment holding company and, for that purpose, to acquire and hold controlling and other interests in the share or loan capital of any company or companies of any nature, but primarily in the healthcare industry. 2. Basis of preparation (a) Statement of compliance These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and the requirements of the Cyprus Companies Law, Cap.113. These are the separate financial statements of the Company. The Company has also prepared consolidated financial statements in accordance with IFRS as adopted by the EU for the Company and its subsidiaries (“the Group”). The consolidated financial statements are available at 15 Dimitriou Karatasou street, Anastasio Building, 6th floor, office 601, Strovolos, 2024 Nicosia, Cyprus. Users of these parent's separate financial statements should read them together with the Group's consolidated financial statements as at and for the year ended 31 December 2022 in order to obtain a proper understanding of the financial position the financial performance and the cash flows of the Company and the Group. (b) Basis of measurement These reports and financial statements have been prepared under the historical cost convention. (c) Functional and presentation currency These reports and financial statements are presented in Russian Rubles (RUB'000) which is the functional currency of the Company. Financial information presented in Russian Rubles has been rounded to the nearest thousand except where otherwise indicated. (d) Use of estimates and judgements Preparing these financial statements in accordance with IFRSs requires management to exercise their judgement to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are deemed reasonable based on knowledge available at that time. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed and where necessary revised on an ongoing basis. Revisions to estimates are recognised prospectively. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described below: Impairment of investments in subsidiaries The Company periodically evaluates the recoverability of investments in subsidiaries whenever indicators of impairment are present. Indicators of impairment include such items as declines in revenues, earnings or cash flows or material adverse changes in the economic or political stability of a particular country, which may indicate that the carrying amount of an asset is not recoverable. If facts and circumstances indicate that investments in subsidiaries may be impaired, the estimated future discounted cash flows associated with these subsidiaries would be compared to their carrying amounts to determine if a write down to fair value is necessary. As at the reporting date, there were no indicators of impairment. Measurement of fair values A number of the Company's accounting policies and disclosures require the measurement of fair values, for both financial and non financial assets and liabilities. Страница 89 из 132 When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level–1 quoted prices (unadjusted) in active markets for identical assets or liabilities. Level–2 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level–3 inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. 3. Significant accounting policies The accounting policies applied in these financial statements are consistent with those followed in the Company’s financial statements as at 31 December 2021 and for the year then ended. New standards and amendments applied for the first time in 2022 did not impact these financial statements of the Company. Subsidiary companies Subsidiaries are entities controlled by the Company. Control exists where the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognised as an expense in the period in which the impairment is identified. Dividend income Dividend income is recognised in the statement of profit or loss and other comprehensive income when the right to receive payment is established. Revenue Revenue represents the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised services to the customer excluding amounts collected on behalf of third parties (for example, value added tax). The Company transfers control over its services at a point in time. The Company recharges to subsidiaries IT, advertising, call center and other expenses, relating to services that are provided by third parties for the benefit of a number of subsidiaries. Recharging is made over time as the services are transferred by third parties to subsidiaries on the basis of a cost plus margin arrangement. Finance income Finance income includes interest income which is recognised as it accrues in profit or loss using the effective interest method. Finance expenses Finance expenses include bank charges and interest expense. Bank charges are recognised as expenses in the period in which they fall due and interest expense is recognised as it accrues in profit or loss using the effective interest method. The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to: the gross carrying amount of the financial asset; or the amortised cost of the financial liability In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer creditimpaired, then the calculation of interest income reverts to the gross basis. Foreign currency transactions Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at Страница 90 из 132 year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss under the category finance income or finance expenses. Tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in profit or loss 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 Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting 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 is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity. 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 Company intends to settle its current tax assets and liabilities on a net basis. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Dividends declared Interim dividend distributions to the Company's shareholders are recognised as a liability when it is both appropriately authorised and no longer at the Company’s discretion (i.e. when the Company has an obligation to pay). Final dividend distributions to the Company's shareholders are recognised in the Company's financial statements in the year in which they are approved by the Company's shareholder. Financial instruments Recognition The Company recognises financial assets and financial liabilities when, and only when, it becomes a party of the contractual provisions of the financial instrument. Trade receivables and debt securities issued are initially recognised when they are originated. Classification The Company classifies financial assets on the basis of both: the Company`s business model for managing financial assets, as well as the contractual cash flow characteristics of the financial assets. The Company’s financial assets comprise of trade and other receivables and cash and cash equivalents. They are non- derivative financial assets with fixed or determinable payments that are not quoted in an active market and for which there is no intention of trading the receivable. All of the Company's financial assets are measured at amortised cost. They are classified as current assets unless the Company has an unconditional responsibility to accept deferral of receipt for at least twelve months after the balance sheet date, in which case they are classified as non-current assets. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: it is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Страница 91 из 132 Financial assets – Business model assessment The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets how the performance of the portfolio is evaluated and reported to the Company’s management the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company’s continuing recognition of the assets. Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers: contingent events that would change the amount or timing of cash flows terms that may adjust the contractual coupon rate, including variable-rate features prepayment and extension features; and terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse features) A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition. The Company’s financial liabilities comprise of trade and other payables. They are classified as current liabilities unless there is an unconditional right to defer settlement for at least twelve months after the balance sheet date, in which case they are classified as long-term liabilities. Initial measurement Financial assets and financial liabilities are initially measured at fair value plus any directly attributable transaction costs. Subsequent measurement Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gain and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Страница 92 из 132 Trade and other receivables are amounts due from customers for services performed in the ordinary course of business and are stated after deducting the appropriate allowances for any impairment. For the purpose of the statement of cash flows, cash and cash equivalents include cash in hand, cash at bank and short term highly liquid investments with maturity of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Company in the management of its short-term investments. Financial liabilities at amortised cost: Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. Impairment of non-derivative financial assets At each balance sheet date the Company recognises a loss allowance for expected credit losses on financial assets measured at amortised cost. The loss allowance for financial assets at amortised cost is recognised in profit or loss in respondence with a balance sheet account reducing the carrying amount of the financial asset. Expected credit losses for counterparties, including banks, are determined based on historical data of relevant probability of default and loss given default. Impairment on cash and cash equivalents is measured on a 12-month expected loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. The Company measures loss allowances at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment, that includes forward-looking information. The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the debtor is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held). Credit-impaired financial assets At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data: significant financial difficulty of the debtor it is probable that the debtor will enter bankruptcy or other financial reorganisation; or the disappearance of an active market for a security because of financial difficulties An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss. Based on the analysis of the historical data the accounts receivable mainly represents by receivable from related parties and no provision is accrued. Derecognition of financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a “pass through” arrangement; or Страница 93 из 132 the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Any interest in such derecognised financial assets that is created or retained by the Company, is recognised as a separate asset or liability. Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. Offsetting financial instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position. Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Share capital Proceeds from the issue of ordinary shares are classified as equity. The difference between the issue price of the shares and their nominal value is taken to the share premium account. Incremental costs directly attributable to the issue of new shares are recognised as a deduction from share premium net of any tax effect. Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Comparatives Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current period. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included in liabilities. Leases At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases in which the Company is a lessee At commencement or on modification of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component. The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or Страница 94 из 132 before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The Company determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased. Lease payments included in the measurement of the lease liability comprise the following: fixed payments, including in-substance fixed payments variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date amounts expected to be payable under a residual value guarantee, and the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. The Company presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and equipment’ and lease liabilities in ‘trade and other payables’ in the statement of financial position. Short-term leases and leases of low-value assets The Company has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short- term leases, including IT equipment. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. COVID-19-related rent concessions The Company has applied COVID-19-Related Rent Concessions - Amendment to IFRS 16. The Company applies the practical expedient allowing it not to assess whether eligible rent concessions that are a direct consequence of the COVID-19 pandemic are lease modifications. The Company applies the practical expedient consistently to contracts with similar characteristics and in similar circumstances. For rent concessions in leases to which the Company chooses not to apply the practical expedient, or that do not qualify for the practical expedient, the Company assesses whether there is a lease modification. Leases in which the Company is a lessor The Company does not have significant contracts where it is a lessor. Standards issued but not yet effective: The following new and amended standards are not expected to have a significant impact on the Company’s financial statements. IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts Страница 95 из 132 Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) Definition of Accounting Estimates (Amendments to IAS 8) 4. Selling, general and administrative expenses Payroll and related social taxes Advertising Legal and professional expenses Independent auditors' remuneration IT support Depreciation Amortisation Call center services Other expenses Total selling, general and administrative expenses Note 9 10 2022 RUB'000 233,742 82,370 39,872 14,610 11,364 5,024 5,845 - 18,704 411,531 2021 RUB'000 229,267 71,186 37,205 20,129 8,873 5,710 5,351 3,660 24,371 405,752 During the year ended 31 December 2022 the remuneration of the independent auditors included an amount of RUB 14,512 thousand regarding audit services and an amount of RUB 98 thousand regarding tax services (the year ended 31 December 2021: RUB 19,359 thousand and RUB 770 thousand respectively). The number of employees as at 31 December 2022 was 65 (31 December 2021: 113). 5. Net finance (expenses) / income Finance income Bank interest received Finance expenses Bank charges Interest on leases Impairment of trade and other receivables Net foreign exchange transactions loss Net finance expenses 6. Income tax Current tax Deferred tax Charge for the year 2022 RUB'000 62,455 (769) (195) (861) (103,521) (42,891) 2022 RUB'000 - - - Reconciliation between profit before taxation and income tax expense: Accounting profit before tax Tax calculated at the applicable tax rates 2022 RUB'000 2,558,425 (511,685) 2021 RUB'000 5,949 (908) (114) - (6,926) (1,999) 2021 RUB'000 - - - 2021 RUB'000 3,703,469 (740,694) Страница 96 из 132 Tax effect of allowances and income not subject to tax Current-year losses for which no deferred tax asset is recognised Tax as per statement of comprehensive income - charge The corporation tax rate is 20% (2021: 20%). 2022 RUB'000 573,735 (62,050) - 2021 RUB'000 791,269 (50,575) - In 2015, the Company changed its tax residency from Cyprus to Russian and opened a branch in Moscow. As a result the Company is taxable under Russian Tax Code which impose corporation tax at the rate of 20%. As at 31 December 2022 deferred tax asset relating to tax losses carried forward in the amount of RUB 349,186 thousand (31 December 2021: RUB 287,136 thousand) has not been recognised in the financial statements since it is expected that no sufficient taxable profits will be available to allow it to be recovered. 7. Dividends On 26 October 2022 the Board of Directors recommended the payment of RUB 642,319 thousand as interim dividends which corresponds to RUB 8.55 per share. The dividends were paid on 29 November 2022. On 3 September 2021 the Board of Directors recommended the payment of RUB 1,352,249 thousand as interim dividends which corresponds to RUB 18 per share. The dividends were paid on 26 October 2021. On 19 March 2021 Board of Directors recommended the payment of RUB 1,427,375 thousand as final dividends for the year 2020 which corresponds to RUB 19 per share. The dividends were paid on 25 May 2021. 8. Investments in subsidiaries Balance at 1 January Capital contributions Disposal on investments in subsidiaries due to liquidation Impairment of investments in subsidiaries Decrease of investment Balance at 31 December 31 December 2022 RUB'000 11,245,257 1,685,140 (155) (70,000) - 12,860,242 The details of the subsidiaries are as follows: Name Country of incorporation Activities JSC MD PROJECT 2000 Russian Federation Russian Federation LLC Khaven Russian Federation LLC Velum Russian Federation LLC Capital Group Russian Federation LLC Clinic Mother and Child LLC Clinica Zdorovia LLC Ivamed LLC Dilamed LLC Mother and Child Perm Russian Federation Russian Federation Russian Federation Russian Federation Medical services Medical services Medical services Assistance services Holding of trademarks Medical services Medical services Medical services Medical services 31 December 2022 Effective holding, % 95 100 90 95 100 80 100 - 95 31 December 2021 RUB'000 10,497,717 763,920 - (3,920) (12,460) 11,245,257 31 December 2021 Effective holding, % 95 100 90 95 100 80 100 100 95 Страница 97 из 132 Name Country of incorporation Activities Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation LLC Mother and Child (Ufa) LLC Mother and Child Saint-Petersburg LLC MD PROJECT 2010 Russian Federation Russian Federation LLC Mother and Child Ugo-Zapad LLC MD Service LLC Mother and Child Nizhny Novgorod LLC Mother and Child Yekaterinburg LLC Mother and Child Tyumen JSC MK IDK LLC Apteka IDK LLC CSR LLC MD Assistance LLC Mother and Child Yaroslavl LLC Mother and Child Kostroma LLC Mother and Child Vladimir LLC Mother and Child Ryazan LLC Mother and Child Kazan JSC MC Avicenna Russian Federation LLC H&C Medical Group Russian Federation Russian Federation LLC Centre of Reproductive Medicine LLC Medica-2 LLC Krasnoyarskii center of Reproductive Medicine LLC Novosibirskii center of Reproductive Medicine LLC Omskii center of Reproductive Medicine LLC Barnaulskii center of Reproductive Medicine LLC Mother and Child Vladivostok LLC Mother and Child Volga LLC MD Finance LLC Mother and Child Krasnodar LLC Mother and Child Rostov-on-Don LLC MD Group Krasnogorsk LLC MD Belgorod LLC MD Lipetsk Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Russian Federation Dormant company Medical services Medical services Medical services Pharmaceutics retail Medical services Medical services Medical services Medical services Pharmaceutics retail Dormant company Assistance services Medical services Medical services Medical services Medical services Medical services Medical services Pharmaceutics retail Medical services Medical services Medical services Medical services Medical services Medical services Medical services Management company Management company Medical services Medical services Dormant company Medical services Medical services 31 December 2022 Effective holding, % 95 85 100 90 95 100 100 100 100 100 100 100 80 80 80 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 90 - - 31 December 2021 Effective holding, % 95 85 100 90 95 100 100 100 100 100 100 100 80 80 80 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 90 100 100 Страница 98 из 132 Name Country of incorporation Activities NFP MGIMO-MED LLC MD Group Holding JSC MD Medical Group LLC Siberia service company LLC TechMedCom LLC Service Hospital Company LLC Elleprof LLC Medtechnoservice Russian Federation Russian Federation Russian Federation Russian Federation Medical university Management company Management company Service company Russian Federation Russian Federation Service company Service company Russian Federation Russian Federation Service company Service company 31 December 2022 Effective holding, % 67 100 100 - - - - - 31 December 2021 Effective holding, % 67 - - - - - - - The Company made additional capital contributions to its subsidiary LLC Khaven totalling of RUB 900,000 thousand in July 2022 and RUB 665,000 thousand in August 2022. The Company made the capital contribution to its subsidiary CJSC MK IDK in the amount of RUB 20,000 thousand in April 2022 and RUB 30,000 thousand in May 2022. The capital contribution made in subsidiary LLC Mother and Child Yekaterinburg in the amount of RUB 70,000 thousand made during the year ended 31 December 2022 was impaired. The impairment is recognised in other expenses. The Company also made capital contributions in LLC MD Group Holding and LLC MD Assistance in the total amount of RUB 140,000 thousand made during the year ended 31 December 2022. The Company made additional capital contribution to its subsidiary LLC Khaven in the amount of RUB 650,000 thousand in September 2021. The Company made the capital contributions to its subsidiary CJSC MK IDK in the amount of RUB 50,000 thousand in January 2021 and RUB 60,000 thousand in May 2021. The capital contributions in LLC Dilamed in the amount of RUB 2,885 thousand, in LLC Mother and Child Yekaterinburg in the amount of RUB 1,000 thousand and in LLC FimedLab in the amount of RUB 35 thousand made during the year ended 31 December 2021 were impaired. The impairment is recognised in other expenses. The Company decreased capital contribution of it subsidiary LLC Mother and Child Kazan in the amount of RUB 12,460 thousand in March 2021. 9. Property, plant and equipment Note Plant and equipment RUB'000 Right-of-use of freehold buildings RUB'000 Initial cost Balance as at 1 January 2021 Additions Disposals Balance as at 31 December 2021 Additions Disposals Balance as at 31 December 2022 Depreciation Balance as at 1 January 2021 Depreciation during the year Accumulated depreciation on disposals Balance as at 31 December 2021 Depreciation during the year Accumulated depreciation on disposals Balance as at 31 December 2022 4 4 12,573 936 (1,299) 12,210 359 (223) 12,346 (5,734) (2,331) 859 (7,206) (2,171) 132 (9,245) 17,721 3,104 - 20,825 9,562 - 30,387 (14,858) (3,379) - (18,237) (2,853) - (21,090) Total RUB'000 30,294 4,040 (1,299) 33,035 9,921 (223) 42,733 (20,592) (5,710) 859 (25,443) (5,024) 132 (30,335) Страница 99 из 132 Carrying amounts Balance as at 1 January 2021 Balance as at 31 December 2021 Balance as at 31 December 2022 10. Intangible assets Initial cost Balance as at 1 January 2021 Additions Balance as at 31 December 2021 Additions Balance as at 31 December 2022 Amortisation Balance as at 1 January 2021 Amortisation during the year Balance as at 31 December 2021 Amortisation during the year Balance as at 31 December 2022 Carrying amounts Balance as at 1 January 2021 Balance as at 31 December 2021 Balance as at 31 December 2022 Note Plant and equipment RUB'000 6,839 5,004 3,101 Right-of-use of freehold buildings RUB'000 2,863 2,588 9,297 Note Software and website RUB'000 4 4 25,834 13,458 39,292 22,314 61,606 (18,811) (5,351) (24,162) (5,845) (30,007) 7,023 15,130 31,599 Total RUB'000 9,702 7,592 12,398 Total RUB'000 25,834 13,458 39,292 22,314 61,606 (18,811) (5,351) (24,162) (5,845) (30,007) 7,023 15,130 31,599 11. Trade and other receivables Receivables from subsidiary companies Other receivables Note 16.4 31 December 2022 197,623 31 December 2021 559,206 6,076 203,699 4,194 563,400 The fair value of trade and other receivables due within one year approximates to their carrying amount as presented above. The exposure of the Company to credit risk, currency risk and impairment losses in relation to trade and other receivables is reported in Note 17 of the financial statement. 12. Cash and cash equivalents and short-term deposits Current bank accounts Bank deposits with maturity less than 3 months Total cash and cash equivalents 31 December 2022 RUB'000 72,154 1,325,000 31 December 2021 RUB'000 730,616 29,000 1,397,154 759,616 Страница 100 из 132 Currency: USD RUB EUR 31 December 2022 RUB'000 62,940 1,334,214 - 1,397,154 31 December 2021 RUB'000 720,532 39,104 (20) 759,616 The exposure of the Company to credit risk, currency risk and impairment losses in relation to cash and cash equivalents is reported in Note 17 of the financial statements. 13. Share capital Number of shares 125,250,000 Nominal value USD 0.08 Share capital RUB'000 - 31 December 2021 RUB'000 10,020 75,125,010 0.08 180,585 6,010 Authorised 1 January / 31 December Issued and fully paid ordinary shares 1 January / 31 December 14. Share premium, reserves and retained earnings Share premium Share premium includes the total amount received in excess of the total nominal value of the new share capital issued. Incremental costs directly attributable to the issue of new shares are recognised as a deduction from equity (share premium) net of any tax effect. Retained earnings Retained earnings include accumulated profits and losses incurred by the Company. Other reserves Exchange differences relating to the translation of the net assets of the Company from its functional currency to the presentation currency before changing the functional currency from the United States Dollar to the Russian Ruble were recognised directly in other comprehensive income and accumulated in the other reserves. Other reserves also include the results of common control transactions recognised in equity and the ‘gains/loss’ from mergers. 15. Trade and other payables Accruals Lease payables Trade and other payables Non-current portion Current portion 31 December 2022 RUB'000 8,591 8,329 50,250 67,170 5,793 61,377 67,170 31 December 2021 RUB'000 22,507 2,724 45,433 70,664 - 70,664 70,664 The exposure of the Company to liquidity risk in relation to trade and other payables is reported in Note 17 of the financial statements. Страница 101 из 132 16. Related party transactions As at 31 December 2022, 67.9% of the Company’s issued share capital is owned by MD Medical Holding Limited, a company beneficially owned by the Director Dr. Mark Kurtser. The remaining 32.1% of the Company’s issued share capital is owned by Guarantee Nominee Limited, which holds the shares on behalf of the GDR holders. The following transactions were carried out with related parties: 16.1. Operations with key management personnel The remuneration of the members of the key management personnel and non-executive directors for the year ended 31 December 2022 was RUB 51,500 thousand (for the year ended 31 December 2021: RUB 52,163 thousand). The remuneration of the members of the key management personnel which remained unpaid as at 31 December 2022 was RUB 14,700 thousand (31 December 2021: RUB 7,550 thousand). 16.2. Transactions with subsidiary companies Dividend income 2022 RUB'000 2,969,952 2,969,952 2021 RUB'000 3,993,512 3,993,512 16.3. Revenue from subsidiaries for branch operations During the year the Company received revenue from recharging of expenses amounted to RUB 102,667 thousand (2021: RUB 98,886 thousand) which relates to licences, advertising, IT support and call center expenses recharged to its subsidiaries. The relevant expenses are presented in Note 4. 16.4. Receivables from / (Payables to) subsidiary companies Receivables from subsidiary companies - Dividend receivable Receivables from subsidiary companies - Trade receivables Payables to subsidiary companies - Other payables Note 11 11 2022 RUB'000 164,305 33,318 (14) 2021 RUB'000 543,682 15,524 (186) Receivables from and (payables to) related parties are unsecured, interest-free and receivable / (repayable) on demand. 16.5. Directors' interests The direct and indirect interests of the members of the Board in titles of the Company as at 31 December 2022, 31 December 2021 and as at the date of signing these financial statements are as follows: Name Mark Kurtser Kirill Dmitriev (resigned on 5 March 2022) Simon Rowlands (resigned on 9 March 2022) Vitaly Ustimenko Type of interest Indirect ownership of shares Indirect interest in shares Direct ownership of shares Direct ownership of shares Effective interest % 67.90 5.55 0.33 0.005 Indirect interest in shares by Kirill Dmitriev arises through his capacity as key management personnel of indirect shareholder. The calculation of effective interest is based on the total amount of issued and fully paid shares, including treasury shares acquired by the Company. Member of the Board of Directors Vitaly Ustimenko acquired GDRs on 27 May 2022 and 29 June 2022, as a result the share of his ownership increased from 0.0053% to 0.0054% of the Сompany's share capital. Страница 102 из 132 16.6. Dividends declared to related parties Dividends declared to the parent company MD Medical Holding Limited amounted to RUB 436,250 thousand for the year ended 31 December 2022 (31 December 2021: RUB 1,887,866 thousand). 17. Financial risk management Financial risk factor The Company is exposed to the following risks from its use of financial instruments: Credit risk Liquidity risk Market risk The Board of Directors has the overall responsibility for the establishment and supervision of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company to set appropriate risk limits and controls and monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in the Company's activities. (i) Credit risk Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date. Cash balances are held with various financial institutions. Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Trade and other receivables Cash and cash equivalents 31 December 2022 RUB'000 201,445 1,397,154 1,598,599 31 December 2021 RUB'000 560,898 759,616 1,320,514 The Company held cash and cash equivalents excluding cash in hand of RUB 1,397,154 thousand at 31 December 2022 (31 December 2021: RUB 759,616 thousand) which represents its maximum credit exposure on these assets. The Company maintains the majority of cash with the bank that is subject to sanctions. No rating from international rating agencies was available as at 31 December 2022. In accordance with the Russian rating agency AKRA the rating was ААА(RU). Number of banks 2 Total External credit rating ruAAA The carrying amounts as of 31 December 2021 and external ratings of 2021 were as follows: Number of banks 1 1 1 Total External credit rating Baa3 A2 A1 Carrying amount 1,397,154 1,397,154 Carrying amount 70,292 390,970 298,354 759,616 (ii) Liquidity risk Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Company has procedures to minimise such losses including maintaining sufficient cash and other highly liquid current assets. The following are the contractual maturities of financial liabilities including estimated interest payments: Страница 103 из 132 31 December 2022 Lease liabilities Trade and other payables 31 December 2021 Lease liabilities Trade and other payables Note Carrying amounts Contractual cash flows 2 months or less RUB'000 8,329 RUB'000 9,656 RUB'000 568 Between 2-12 months RUB'000 2,840 Between 1-2 years Between 2-5 years More than 5 years RUB'000 3,408 RUB'000 2,840 RUB'000 - 58,841 58,841 50,427 8,414 - - - 15 15 Note Carrying amounts Contractual cash flows 2 months or less Between 2-12 months Between 1-2 years Between 2-5 years More than 5 years RUB'000 RUB'000 RUB'000 RUB'000 RUB'000 RUB'000 RUB'000 15 2,724 2,800 560 2,240 15 67,940 67,940 59,525 8,414 - - - - - - (iii) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices may affect the Company's income or the value of its holdings of financial instruments. Interest rate risk Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company's management monitors the interest rate fluctuations on an ongoing basis and acts accordingly. As at the reporting date the interest rate profile of interest bearing financial instruments was as follows: Fixed rate instruments Financial assets Financial liabilities Note 12 15 2022 RUB'000 1,325,000 (8,329) 1,316,671 2021 RUB'000 29,000 (2,724) 26,276 The Company does not account for any fixed rate instruments at fair value through profit or loss and does not have any derivative financial instruments, therefore a change in interest rates at the reporting date would not affect profit or loss or equity. Currency risk Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's functional currency. The Company is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the United States Dollar. The Company's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly. Страница 104 из 132 The Company's exposure to foreign currency risk was as follows: 31 December 2022 31 December 2021 Assets Cash at bank Liabilities Trade and other payables and accruals Net exposure USD 62,940 - 62,940 EUR - (48) (48) USD 720,532 - 720,532 EUR (20) - (20) The following significant exchange rates applied during the year: Average rate 2022 68.5494 72.5259 85.5708 2021 73.6541 87.1877 101.3437 Reporting date spot rate 2022 70.3375 75.6553 84.7919 2021 74.2926 84.0695 100.0573 USD EUR GBP Sensitivity analysis A 10% stengthening of the Russian Ruble against the above currencies will result in the increase in profit and equity of RUB 6,289 thousand as at 31 December 2022 (31 December 2021: RUB 72,051 thousand). A 10% weakening of the Russian Ruble would have an opposite impact. Capital management The Company's objectives in managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns to owners and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure the Company may adjust the amount of dividends paid to shareholders, return capital to owners or issue of new shares. 18. Fair values As at 31 December 2022 and 31 December 2021 the Company had no financial assets or liabilities measured at fair value. The fair values of the Company's financial assets and liabilities approximate their carrying amounts at the reporting date. 19. Operating environment (a) Russian business environment The operations of the Company`s subsidiaries are primarily located in the Russian Federation. Consequently, the Company is exposed to the economic and financial markets of the Russian Federation, which display the characteristics of an emerging market. The legal, tax and regulatory frameworks continue development, but are subject to varying interpretations and frequent changes which contribute together with other legal and fiscal impediments to the challenges faced by entities operating in the Russian Federation. Starting in 2014, the United States of America, the European Union and some other countries have imposed and gradually expanded economic sanctions against a number of Russian individuals and legal entities. Since February 2022, after the recognition of the self-proclaimed Donetsk and Lugansk People's Republics and the start of a special military operation in Ukraine by the Russian Federation, the above countries have imposed additional tough sanctions against the Government of the Russian Federation, as well as large financial institutions, legal entities and individuals in Russia. In addition, restrictions were imposed on the supply of various goods and services to Russian enterprises. Also, in the context of the imposed sanctions, a number of large international companies from the United States, the European Union and other countries discontinued, significantly reduced or suspended their own activities in the Russian Federation, as well as doing business with Russian citizens and legal entities. Страница 105 из 132 Further to the sanctions the London Stock Exchange has suspended the admission to trading of the Company's instruments on 3 March 2022. In September 2022, partial mobilization was announced in the Russian Federation. Referendums were held in the recognized republics of Donetsk and Lugansk, as well as in the Zaporozhye and Kherson regions of Ukraine, which resulted in incorporation of the territories into the Russian Federation. As a result of these events further sanctions were imposed and there is a risk of increasing pressure on the Russian economy. In response to the above , the Government of the Russian Federation has introduced a set of measures, which are countersanctions, currency control measures, a number of key interest rate decisions and other special economic measures to ensure the security and maintain the stability of the Russian economy. The imposition and subsequent strengthening of sanctions and the partial mobilization resulted in elevated economic uncertainty, including reduced liquidity and high volatility in the capital markets, volatility of the Rouble exchange rate and the key interest rate, a decrease in foreign and domestic direct investments, difficulties in making payments for Russian Eurobond issuers, and also a significant reduction in the availability of sources of debt financing. In addition, Russian companies have virtually no access to the international stock market, the debt capital market and other development opportunities, which may lead to their increased dependence on the governmental support. The Russian economy is in the process of adaptation associated with the replacement of retiring export markets, a change in supply markets and technologies, as well as changes in logistics, supply and production chains. It is difficult to assess the consequences of the imposed and possible additional sanctions as well as partial mobilization, in the long term, however, these events can have a significant negative impact on the Russian economy. The wave-like nature of the spread of COVID-19 coronavirus infection continues to create additional uncertainty in the business environment. The financial statements reflect management’s assessment of the impact of the Russian business environment on the operations and the financial position of the Company. The future business environment may differ from management’s assessment. (b) Russian tax environment The taxation system in the Russian Federation continues to evolve and is characterised by frequent changes in legislation, official pronouncements and court decisions, which are sometimes contradictory and subject to varying interpretation by different tax authorities. The tax authorities have the power to impose fines and penalties for tax arrears. A tax year is generally open for review by the tax authorities during three subsequent calendar years. Currently the tax authorities are taking a more assertive and substance-based approach to their interpretation and enforcement of tax legislation. 20. Events after the reporting period No significant events occurred after the reporting period. Страница 106 из 132 CORPORATE SOCIAL RESPONSIBILITY Our focus on caring expands far beyond the daily business operations of our clinics and hospitals. As a responsible corporate citizen, the Group aims to regularly contribute to the communities of medical professionals, local patients and people in need, by utilising its resources, time and expertise. Our Mission Our deep commitment to CSR is not just a requirement for a major listed company and employer. Rather, it reflects our strong belief that creating value for our stakeholders is critical for the long-term sustainable growth of MD Medical Group. Our People We invest heavily in training and educating our staff, creating opportunities for them to learn from the best medical practitioners in the world. Many of them have worked with the Group since its creation, and we recognise and reward this dedication by creating an environment that encourages professional and personal growth. Our Profession Above all, we recognise that one of the most important roles we can play as a leading healthcare company in Russia is to contribute our resources, time, expertise and know-how to raise the overall standard of the healthcare profession in Russia. We regularly hold open-access webinars for doctors and patients across the country where we address key issues in women’s and children’s health, thereby helping to raise the quality of medical services provided to patients all over the country. Our Technology We aim to maximise efficiency and minimise patient stress by constantly updating our technology and using the most innovative procedures. For example, several years ago the Company started performing foetal surgery to correct spina bifida during pregnancy while the baby is inside the womb. We also use endovascular methods to correct congenital heart defects of newborns. Our Communities As we continuously expand our network throughout Russia and often bring unique services to new regions, we not only provide people with high-quality and easily accessible healthcare but also encourage every employee to contribute to their own communities. Key CSR activities in 2022 Educational events Multiple conferences and master classes for held for our employees in 2022. These were held at the MDMG hospitals and other locations. Among others, such conferences were held in Lapino, Ufa, Samara and Volgograd. Fertility doctors, gynecologists and regional specialists came together to exchange knowledge and experience, further building on the expertise of our staff. Charity events We constantly support various organisations that help children with special needs. The Samara hospital regularly provides financial help to the Samara hospice and the local association of doctors. In 2022, in particular, the clinical hospital ‘AVICENNA’ continued its diverse charitable work in the Novosibirsk Region. This work included benefactor work with the Novosibirsk City Public Organisation for families with children with disabilities ‘Ray of Light’. In addition, ‘AVICENNA’ has been an important partner for a concert series for pregnant women, ‘Waiting for a Miracle’of the Novosibirsk State Philharmonic. This event is aimed at popularising the topic of motherhood and the importance of musical culture in the upbringing of the younger generation. Annual Christmas and New Year events Traditionally, on the eve of the New Year and Christmas, we organise various events for children. Last year was no exception, with a Christmas tree and sweet gifts waiting for our little patients. Additionally, we usually organise a Wish Tree, in which the Group and its employees collect gifts for children with disabilities across various regions. This year, the clinical hospital “AVICENNA” provided donations for the purchasing of New Year’s gifts for struggling families in the villages of Beloborodovo Страница 107 из 132 and Vakhrushevo in the Novosibirsk Regions. On 28 December, a New Year's performance was held, where Santa Claus and Snow Maiden gave gifts to the children. Donor’s Day in Ufa Donor’s Day in March 2022 in the MDMG Ufa. Together with the blood service of the Republic of Bashkortostan, an action was held in the hospital. More than 100 people volunteered and donated blood. Sustainable development Sustainable development at MD Medical Group goes beyond individual activities. It is an organisation-wide culture that reflects the fundamental identity of MD Medical Group as both innovative and socially responsible. Since 2017, sustainable development has had its own section of the Annual Report and is prepared in accordance with the GRI Standards 2021 (Core option) and the 2014/95/EU directive. Here we outline key benchmarks and activity results of our hospitals and clinics in sustainable development, with a focus on their social and environmental performance. The key indicators we track each year are electricity use, heating, and water consumption. The information provided in this section covers the period 1 January to 31 December 2022. The clinics and hospitals that contributed information to this sustainability report did so according to the IFRS 10 requirements unless stated otherwise. Identifying material topics Material topics were identified for the previous year’s annual report in a robust, coherent manner, and the same approach was taken with regards to the MD Medical Group’s Annual Report 2022. Benchmarking against major companies in the industry has upheld this approach. As a result, the matrix of material topics utilised in 2021 was continued in 2022. The material topics that feature in this graph are disclosed in the sustainable development section and are referred to elsewhere within the Annual Report 2022. The sustainable development section discloses one material topic, Quality of Service Provision, that is not covered by the GRI Standards but is considered essential at MD Medical Group. Both internal and external stakeholders identified this topic as highly important since it reflects the level of customer satisfaction. Ensuring patients receive the highest quality of care is a key priority for MD Medical Group. Therefore, the report discloses several indicators that MD Medical Group included in its previous Annual Reports, including Development and extension of the list of services (MD1), Annual capacity of the hospitals (MD2), Development of hi-tech medical care (MD3), Highly- qualified personnel (MD4), Dialogue with patients (MD5). Interaction with stakeholders All MD Medical Group business functions were analysed to identify key stakeholders for this Annual Report. Medical health care practices were benchmarked, and the Company’s internal and external impacts were evaluated. The following stakeholder list, as defined in previous annual reports, continues to apply: Patients and their families Employees Suppliers Shareholders and investors Government authorities In addition, MD Medical Group adds the following category of stakeholder, whose interests are broadly aligned with those of the other two stakeholder groups – patients and authorities: Insurers. MD Medical Group regularly interacts with all stakeholders to improve the effectiveness of its business activities and to ensure the quality of provided services is under constant scrutiny. Страница 108 из 132 Stakeholder needs analysis for MD Medical Group Main communication channels Our patients The Company adheres to the highest standards of service to provide our patients with state-of-the-art treatment. Patient service Patients are at the heart of everything that MD Medical Group does. We are committed to continuously improving the service we provide to patients: from the quality of medical care they receive to the user experience on the website, and the ease of confirming, changing, booking, or cancelling appointments. Страница 109 из 132 We pay special attention to increasing the accessibility of clinics. All of our new facilities are being built as a barrier-free environment. There are no steps or other obstacles that hinder movement. Older facilities, which were not originally built with these principles in mind, have been upgraded to provide easier access for people with reduced mobility. In addition, all the clinics and hospitals of MD Medical Group are equipped with Braille signs. To increase the financial availability of our services, we work both on a commercial basis and under the programme of Mandatory Health Insurance (MHI). Medical assistance under the MHI programme is provided in 44 clinics, including 9 in- patient clinical hospitals providing high-tech medical care. In 2022, 167,428 patients were treated under the MHI programme. Infertility is also treated with the help of assisted reproductive technologies (IVF) under the MHI programme. In 2022, 12,994 patients underwent IVF cycles within this framework. In 2022, our oncological clinics received additional support from the MHI Fund. In total, 13,226 patients received treatment for cancer under the MHI programmes. We constantly update our equipment and improve the skills of our personnel so that our patients receive the best treatment. In 2022, we achieved this through several different means. Firstly, we optimised the methodology used for recording laboratory tests, resulting in significantly increased accuracy and speed of data processing. In addition, we are always looking to improve the expertise of our staff. More detailed information on this can be found in the section on ‘Our People’. Today, as all of our hospitals are developed as large multifunctional centres, we continue to introduce advanced treatments for patients of all ages in various fields of medicine. Patient engagement To increase patient engagement, we are using Digital Medical Operations (Doctis) telemedicine consultation platform. As of January 2023, more than 1,500 doctors were connected to Doctis. The online format has stayed popular even after changes to consultations during the COVID-19 pandemic, allowing patients to stay in touch with their doctors. The introduction of telemedicine consultations, among other things, made it possible to provide some medical services remotely, e.g., to patients planning IVF cycles. As a medical provider, we understand that patient engagement plays a critical role in improving health outcomes and enhancing the overall patient experience. We believe that patient engagement is a key driver of quality healthcare, and we are committed to promoting it across all aspects of our organisation. In 2022, we managed to improve our systems of patient engagement though: Establishing a full-fledged exchange of information about patients obtained through telemedicine Improving our system of work with patients, including conducting mass surveys and questionnaires Strengthening the work of the call centre by optimising its headcount, providing ongoing training and establishing key performance indicators to be used by staff MD Medical Group continues to take a data-driven approach to its website, constantly reviewing it for changes that can be made and improvements that can positively impact user experience. A comprehensive approach is taken to assessing and responding to patient feedback, ensuring all internal parties are involved. Feedback mechanisms that monitor patients’ perception of the quality of service provided by MD Medical Group have been in place since 2017. Central to this is the customer satisfaction score (CSAT) for consultations over the telephone and hotline performance, which seeks customer input on: Speed and convenience of a consultation Completeness and comprehensiveness Politeness of an employee during a consultation These indicators are recorded and analysed regularly, as a patient might leave their feedback at any stage of a consultation process. Страница 110 из 132 Patients can also use the hotline to share their feedback on services received at MD Medical Group, by filling out a form on the website, sending an email to quality@mcclinics.ru or via the contact centre. In 2020, MD Medical Group rolled out the strategy that underpins our robust and responsive feedback and enquiry processing system. The successful achievement of key strategy goals has been maintained from previous year, with patient communication improving year-to-year. Our people Employee engagement MD Medical Group’s market-leading status relies on the outstanding professionals who make up our staff. We invest in our employees and offer diverse opportunities for professional development for all members of staff, whatever their role within the Company. Our people are essential in driving our ongoing success. MD Medical Group’s employees are highly qualified and talented in all fields: from medically qualified healthcare professionals to management and administrative support teams. They work hard to ensure the long-term success of our business. In return, we provide our staff with a comfortable and supportive working environment, competitive wages and social packages, as well as broad possibilities for further professional growth. Our HR Policy focuses on: Retaining existing staff and searching for new highly skilled employees Developing our personnel management system Selecting talented students and inviting them to study with residence at our facilities Creating opportunities for personal and career growth Constantly monitoring and adopting the best available technologies Regularly updating our equipment so it remains state-of-the-art Ensuring our best employees are in key positions to maximise potential and stimulate internal growth Providing better working conditions to ensure low staff turnover Providing incentive programmes for employees Offering training programmes in a range of fields, as part of our corporate education system As an employer, MD Medical Group prioritises further professional development for all its employees. Key company values, such as transparency, innovation and adherence to best practices, in the real world mean that we carry out regular training sessions for employees in clinics across the country. These training sessions help ensure that at each MD Medical Group location patients and staff can expect the same high-quality level of operation. MD Medical Group’s HR management structure reflects features of the industry, specific aspects of key business functions, type of facilities and geographic location of hospitals and clinics. The Company’s corporate culture and business goals are also reflected in the HR management structure, presented in the chart below. HR Management structure Страница 111 из 132 Personnel management at MD Medical Group focuses on: Attracting high-qualified, talented, and motivated professionals into the workforce Developing a talent pool of qualified medical professionals and managers Offering them a supportive, inclusive environment in which they can further develop their skills Incentivising and motivating staff to grow their skills and achieve more Adopting lean management practices and processes across the Group Providing continuous access to further professional education for staff in all areas at MD Medical Group Ensuring all members of staff are valued equally and have equal opportunities to speak up about issues that affect them in their workplace Motivating members of the team to perform at their best at all times while with MD Medical Group is an essential feature of the Group’s HR management landscape. MD Medical Group has a bonus system in place, including: Monthly performance bonus (70/30 system) Bonus for achieving KPIs Awards for individual achievements Incentive payments for the qualification category State and medical community awards and diplomas MD Medical Group’s corporate culture is based on positive engagement and encouragement. The compulsion of any kind is not permitted. Key principles of our corporate culture are set out in the MD Medical Group Code of Corporate Ethics and Employee Conduct. Any employee who has suspicions of potentially illegal or unethical activities may report to their immediate supervisor, the head of department, or the head of the Internal Audit Department. The most complex cases are reported to the CEO, the Chairman of the Audit Committee, or the Chairman of the Board of Directors. Страница 112 из 132 Personnel figures (as of 31 December 2022) Figures for hires, turnover and parental leave do not represent external staff 1. Total number of employees Headcount Full-time equivalent (FTE) 2. Employees by employment type Total Women Men 3. Employees by gender Women Men 4. Personnel structure Doctors Other medical staff Professors Administrative staff 5. Employees by age younger than 30 from 30 to 50 older than 50 6. Payroll structure Doctors Other medical staff Other staff 7. Staff hires by gender Men Women 8. Staff turnover by gender Men Women 9. Staff hires by age group younger than 30 from 30 to 50 older than 50 10. Staff turnover by age group 2022 8,466 7,713 Full-time 6,465 5,593 872 2022 83% 17% 2022 3,193 2,863 8 2,402 2022 1,194 5,028 2,244 2022 51% 26% 23% 2022 208 1,304 2022 309 1,270 2022 436 778 298 2022 2021 8,461 7,756 2022 Part-time 2,001 1,393 608 2021 81% 19% 2021 3,093 2,817 2 2,549 2021 1,269 5,068 2,124 2021 50% 24% 26% 2021 261 1,400 2021 224 1,202 2021 527 844 290 2021 Страница 113 из 132 younger than 30 from 30 to 50 older than 50 11. Staff on maternity and/or parental leave at year end Men Women 12. Total number of doctors Doctors, total Doctors, presented as full-time equivalent (FTE) 13. Doctors by speciality (FTE, as of 31 December 2022) Obstetrician Reproductologist Pediatrician Oncologist Surgeon Cardiologist Other speciality 14. Doctor's qualifications (as of 31 December 2022) PhD Professors Professional development 346 848 385 2022 2 428 2022 3,193 2,305 2022 360 255 259 51 111 42 1,226 2022 544 70 360 756 310 2021 - 434 2021 3,093 2,286 2021 347 245 259 50 67 42 1,277 2021 583 61 As an employer, MD Medical Group prioritises further professional development for all its employees. Key company values such as transparency, innovation and adherence to best practices in the real world mean that we carry out regular training sessions for employees in clinics across the country. These training sessions help ensure that at each MD Medical Group location, patients and staff can expect the same high-quality level of operation. We are always striving to improve an already exceptional level of knowledge that our doctors and other staff have. All the training and courses are fully paid for by the Company. Over the last ten years, our physicians have completed residency training in OBGYN, neonatology and oncology. Competition for residency training is widely announced each year, resulting in more than 100 applications from participants across all country regions. The competition takes place in several stages; the finalists are carefully selected and trained at the clinical facilities of the Lapino Central Hospital and the MD Medical Group Central Hospital. In 2022, nine participants won the competition and entered the programme, and five participants graduated. Upon completion of their residency, doctors are employed by the Group’s clinics and hospitals, including those in the regions. In this way, by training doctors from their student benches, we maintain continuity in the level of qualification and quality of medical care inherent in the Group. Continuous training and professional development of doctors and nursing staff take place both offline and online. On a regular basis throughout the year, leading specialists give lectures to doctors, share their experience and highlight current trends in medicine. At MD Medical Group, staff are encouraged to learn from each other. In 2022, among our training programmes we have provided staff with: Страница 114 из 132 7 lectures for nurses with more than 250 participants each, on the topics of professional errors and responsibilities of the nursing staff, conducting sterilisation work according to new sanitary regulations, early rehabilitation of patients, observation and monitoring of patients with arterial hypertension, amongst others 2 offline conferences for nurses on the hospital grounds in Novosibirsk 45 lectures for doctors on OBGYN, reproductive medicine, surgery, oncology and other areas Online conference for all Group clinics and hospitals with the participation of Michel Oden, on the topic of ‘Careful Health’ 2 offline conferences in the Lapino Clinical Hospital, a conference of the Moscow Society of Geneticists and a conference on ‘Laboratory trends in reproduction. The art of choosing the best’ Ffull-time training course with master classes (14 days) on ultrasound diagnostics in obstetrics, in the MD Medical Group Clinical Hospital 11 offline conferences on current issues in reproductive medicine at the Ufa Clinical Hospitals Several international scientific and practical conferences on OBGYN, urology, paediatrics, including the international annual scientific-practical conference ‘Controversial issues of Reproductive Medicine: Polycystic ovary syndrome (PCOS)’ Masterclasses in hospitals on OBGYN, reproductive medicine and surgery, including topics like laparoscopic treatment of diastasis recti and surgical tactics during cesarean sections Several All-Russian scientific-practical conferences held at the Samara sites on diverse topics, including: legal and clinical aspects of pregnancy management, working with patients in the embryological laboratory and more 4 offline conferences at the St. Petersburg hospital grounds on placenta accreta in the scar on the uterus after cesarean section, integration conference of perinatal specialists ‘Natural childbirth’ and more In addition, MD Medical Group provided: Career development courses Short-term advanced thematic training Interaction between healthcare professionals in Moscow and those in other regions to ensure a consistently high quality of care at all MD Medical Group facilities Participation in international forums, conferences, exhibitions, where possible, and training centre support for improving soft skills and knowledge acquisition across different areas and competencies Human resource changes MD Medical Group is always looking to ensure that its HR policies and processes are kept up to date with best practices, and are improved year-to-year. The Company maintains several targets related to the topic of human resources; these include: Ensuring the enterprise has personnel considering the prospects for further development Formation and development of a reserve of top doctors (personnel potential) Development and implementation of proprietary personnel training programmes to improve their qualifications (training for medical and administrative personnel) Regulation of working conditions in accordance with market needs, optimising staff motivation and ensuring retention of professionals Development and maintenance of effective communication systems between management and other employees, departments and divisions Several changes to the personnel management structure were implemented during the reporting period. One of these consisted of the creation of four deputies within the management structure, allocated based on scope of activity. Such deputies were assigned to the Medical Director, the Operations Director, the Financial Director and to the CEO. Страница 115 из 132 The client service area of personnel management was transitioned towards a medical department structure, allowing the Group to expand this area and to provide more comprehensive support. Alongside this transition, MD Medical Group has begun to shift IT services to outsourcing, freeing up resources and gaining exposure to IT talent. Building on targets set in the previous reporting year, we have managed to successfully improve our HR processes. This was done alongside the Group hospital additions in Lakhta and Tyumen-2, as well as clinics in Butovo, Mytishchi and Yekaterinburg. In 2022, we increased the number of areas in our residency programme, including OBGYN, oncology, anaesthesiology, surgery and therapy. Additionally, the Group successfully centralised its distance learning programmes in nurse training and OBGYN. The Continuous Medical Education (CME) programme includes the centralisation of programmes and educational institutions for distance learning in the following areas: obstetrics, pediatrics, ultrasound diagnosis, neonatology, general medical practice, therapy, allergology and immunology, dermatology and venereology and endocrinology. These topic areas are being developed with the participation of employees of the MD Medical Group. MD Medical Group is constantly seeking to continue offering various opportunities for professional development and acquisition of relevant knowledge and qualifications. We are aiming to provide: More than 14 lectures for doctors for 60 minutes each More than 30 lectures for nursing staff for 60 minutes each More than 12 lectures for junior medical staff for 120 minutes each Comprehensive training of all medical personnel in the ISMP programmes MD Medical Group assigns particular focus to ensuring that our staff are continuously up-to-date on their qualifications and expertise. In 2022, we continued to maintain that all employees, whose work requires professional training, have undergone the necessary preparation. This includes training on labour protection and industrial safety programmes. Occupational health and safety MD Medical Group is committed to providing a safe and healthy working environment for all its employees. The organisation's system of occupational safety is based on a comprehensive approach that involves various measures; these include: Legal measures for occupational safety involve creating a system of legal norms establishing standards for safe and healthy working conditions and legal means to ensure compliance. This system of legal norms is based on the Russian Constitution and includes laws, sub-legal normative acts, as well as local normative acts in force in the organisation. Social-economic measures for occupational safety include government incentives for employers to improve labour protection, establishment of compensation and benefits for work in hazardous working conditions, mandatory social insurance and compensation payouts for work-related illnesses and injuries. Organisational-technical measures for occupational safety include implementing a system for occupational safety management (SOSM10) – a unified complex of interrelated and interacting elements that establish the policy and goals in the area of labour safety within the organisation and procedures for achieving those goals. Sanitary-hygienic measures for occupational safety are carried out with the aim to reduce the impact on workers of harmful and dangerous production factors, with the aim of providing favourable working conditions and preventing occupational illnesses. Medical preventive measures for occupational safety include organising preliminary and periodic medical exams, mandatory psychiatric evaluations of employees and the provision of milk. Rehabilitation measures for occupational safety include implementing a set of interventions aimed at restoring the health and working ability of employees who have suffered from an accident at work or occupational illness. As a medical healthcare provider, we understand the importance of creating a safe and healthy working environment for our employees. Occupational safety principles provide the framework for creating and maintaining this environment. By 10 System for Occupation Safety Management Страница 116 из 132 establishing and adhering to these principles, we ensure that our employees are protected from harm and that our organisation is in compliance with applicable laws and regulations. Principles for occupational safety help us to identify and mitigate potential hazards, implement effective safety training and protocols, and provide the necessary resources to support our employees' physical and mental well-being. Ultimately, having strong principles for occupational safety not only protects our employees but also contributes to our organisation's overall success by minimising the risks of accidents, injuries and work-related illnesses. The main governing occupational safety principles of MD Medical Group include the following: Ensuring the preservation of life, health and working capacity of workers in the course of work activity Guaranteeing workers' rights to safe and healthy working conditions in accordance with standards established by the organisation through the assessment of the system for occupational safety management (SOSM) Determining and paying compensation for work in hazardous working conditions, providing milk to employees working in hazardous conditions, according to SOSM Providing social insurance for workers from workplace accidents and occupational diseases Offering medical, social and professional rehabilitation of workers affected by workplace accidents and occupational diseases, if necessary Occupational safety management system At MD Medical Group, we recognise the importance of implementing a system for occupational safety management (SOSM). The benefits of having a SOSM are numerous and include creating a comprehensive approach to occupational safety, establishing clear policies and procedures, identifying and mitigating potential hazard and more. By implementing such a system, we are better equipped to protect our employees, reduce the risk of accidents and work-related illnesses, and ensure our long-term success. More specifically, the SOSM is utilised in order to solve the following tasks: 1. Selection of professionals with documented and confirmed qualifications 2. Training of personnel in innovative working methods 3. Training of employees in management positions at occupational health and safety training centres, 4. with the issuance of occupational health and safety certificates; 5. Systematic briefings on occupational health and safety (introductory, primary on the job, targeted, unscheduled) 6. Safe use of equipment, inventory, and auxiliary elements, as well as their disposal according to regulatory documents 7. Creation of safe technological processes and operating conditions for buildings and structures on the enterprise property 8. Creation of sanitary and epidemiological conditions in accordance with rules and regulations 9. Ensurance ofan optimal work and rest regime 10. Provision of personnel with personal protective equipment (PPE) 11. Organisation and conduct of professional risk assessment in production Ensuring workplace safety By prioritising the safety of our employees, we not only create a healthy work environment, but we also reduce the risk of workplace accidents and injuries. We believe that by taking preventative actions, we can create a safer and healthier work environment for our employees, which ultimately benefits everyone involved. Some of the key activities taken by the Group on workplace safety include: Carrying out regular briefings and safety training for all employees (at least once every six months, and quarterly for employees working in hazardous conditions) Страница 117 из 132 Holding pre-shift, pre-employment and periodic medical examinations, with verification of final reports by authorised organisations (Rospotrebnadzor), as per Order of the Ministry of Health of Russia No. 29 dated 28 January 2021 Developing safe routes for movement on the organisation’s property, with separate personnel and patient movement, and provision of transportation for employees Installing and labelling safety signs throughout the organisation’s property, in accordance with GOST 12.4.026-2015 Providing individual and collective protective equipment for employees working in hazardous working conditions; procurement, issuance, storage and accounting of PPE, according to Order of the Ministry of Health and Social Development of the Russian Federation No. 777 from 1 September 2010. Testing the equipment implemented in production processes and medical activities in the context of commissioning, for compliance with safety requirements Carrying out high-risk work, fire hazard work and work at heights is carried out through the permit-admission system. Work by ‘external’ entities in the organisation is also carried out through the permit-admission system and with the necessary training Staff training Providing our staff with the most up-to-date, comprehensive training on health and safety is a top priority for MD Medical Group. Medical and non-medical employees at MD Medical Group are offered courses in occupational safety and related areas as specified under Article 225 of the Russian Federation Labour Code. Every three years each employee must pass the relevant occupational safety test, and each year non-medical staff members must complete first-aid courses. To guarantee that MD Medical Group facilities are safe for patients, staff and third parties, the following training is also provided on-site: fire-safety, heating and energy supply systems, servicing high-pressure equipment, safe lift usage and maintenance, gas and water heating system safety. In 2022, training was provided to 456 technical service personnel as part of MD Medical Group, in such areas as: Occupational health and safety for managers and specialists within the organisation Fundamentals of industrial safety Operation of dangerous production facilities using steam pipelines and hot water Operation of dangerous production facilities using vessels under excess pressure Road safety Boiler operator General issues of occupational health and safety and the function of the SOSM Fire safety and many more Moving forward, we will continue to prioritise occupational health and safety training for all our staff to ensure the highest level of workplace safety. Supply chain development Effective supply chain management is essential to patient safety and the economic stability of MD Medical Group’s operations. The Group benefits from a robust and resilient supply chain. At its core is the analysis of material and equipment demand at all facilities. MD Medical Group’s core values of good faith, transparency, impartiality and fairness permeate all dealings with suppliers and other stakeholders in the supply chain. In supplier selection, particular emphasis is placed on a candidate’s experience and the quality of the product or service they offer. Successful candidates must be able to demonstrate a significant and successful track record in providing medical products and services, particularly for international-level private medical facilities. They must also share the same values, principles and work ethics as MD Medical Group. In 2022, MD Medical Group cooperated with over 1,500 supply companies, among which 210 provide medications, 1,138 are suppliers of consumables, and 350 are suppliers of medical equipment. This year, we have managed to reduce the number of supply companies used by the Group by more than 50%, further consolidating our supply chain. The total number Страница 118 из 132 of companies involved in the supply chain in every area is kept to under two (as the diagram explains). The Procurement Department seeks to reduce the number of entities in the supply chain to ensure maximum efficiency and is primarily focused on major distributors able to meet MD Medical Group’s complex needs. Centralisation plays an important role in supply chain management at MD Medical Group. Every year the Procurement Department establishes a list of procurement categories that will be handled centrally. Suppliers are identified and selected in a transparent selection process, which ensures a continuum of high-quality care between the different locations in MD Medical Group’s structure. The working environment, conditions and equipment are therefore brought up to a shared level across all MD Medical Group’s entities. In addition to centralisation, supply chain management goals are: To identify alternative materials which would deliver the same high quality at a lower price point To conclude supply contracts directly with producers to exclude middle parties that would inflate the costs of any purchase contract Procurement The purchase of medications and medical equipment is carried out under this centralised approach. The goal here is to ensure competing producers are invited to participate in any single opportunity to supply the Group. This means MD Medical Group actively seeks to stimulate competition for each supply opportunity and is always open to new entities. As this is a fast-growing area, in which innovative products appear on the market regularly, it is essential to MD Medical Group’s standing as an innovation driver in its field that it is open to adopting these innovations at its centres. Before adopting them, rigorous performance and quality reviews are carried out. MD Medical Group also works directly with producers to gain access to the latest unique developments which are not already on the market, but which meet specific and identified needs. Supply chain of medications and equipment Supply chain of medical expendables Страница 119 из 132 In 2022, MD Medical Group collaborated with more than 1,500 suppliers. The Procurement Department aims to reduce the number of levels in the supply chain to a maximum of two for maximum efficiency. It primarily focuses on large distributors that can meet the complex needs of MD Medical Group. Suppliers by category (2022), % Consumables 67 Medications 12 Equipment 21 Total 1,698 In 2022, MD Medical Group has continued to act according to its unified procurement regulation, which was developed and approved during the previous reporting period. This regulation defines a unified procedure for all procurement activities, the rights and obligations of their participants, the scope of responsibility and more. The regulation goals are: Replenishing the material and technical base necessary to ensure its functioning in a timely manner Improving the required quality of supplies and efficiency in the use of funds Ensuring transparency of procurement procedures and objectivity of decisions made Ensuring the mandatory requirements of an open tender, preventing a conflict of interest among procurement participants Following the change in intensity of the COVID-19 pandemic, MD Medical Group has been able to begin transitioning towards a lower level of medication purchasing. During the previous reporting period, the volume of purchases was increased by 50% compared to 2020. This decrease in volume can similarly be seen in the Groups significant reduction of total suppliers compared to last year. Centralised procurement procedures cover 92% of the volume. Meanwhile, 100% of purchases are made locally, which makes it possible to significantly improve the operation of the supply chain by monitoring the fulfilment of contractual obligations. The sum of procurement of domestic medicines and medical supplies is approximately RUB 700 mln per year, which amounts to approximately 15% of all procurement in these categories. Direct contracts are also signed with Pfizer, Biocad, Medisorb, Pharmasyntez. Meanwhile, 66% of consumables were purchased through centralised purchasing procedures. Last year, MD Medical Group became one of the first companies in Russia to sign direct contracts with major manufacturers of medical equipment and consumables, including Johnson & Johnson and Medtronic. MD Medical Group assigns particular importance on the quality of its contracts with counterparties and suppliers, carrying forward these important relationships with manufacturers into 2022. Additionally, recent partnerships have also been expanded with B. Braun, Karl Storz, Olympus, Origio, Roche, Beckman Coulter, Abbott and others. Sustainable development risk management As a responsible company, we recognise the importance of managing sustainability risks in order to protect our business and create value for our stakeholders. Through managing sustainability risks, we are able to improve our operational efficiency, enhance our reputation and contribute to a more sustainable future for all. In line with a clearly defined and robust long-term strategy, MD Medical Group acts to minimise such risks. It achieves this by regularly reviewing its risk management approaches. Corporate governance and effective management are essential elements in MD Medical Group’s continued success. The Board of Directors is committed to upholding the highest standards in all interaction with stakeholders. Alongside the Board of Directors, the Group identifies the most significant risks to the Company, discusses the current methodology for compensating identified risks, and decides on the need for any additional measures. During this reporting period, MD Medical Group has identified five types of sustainable development risk, related to its business operations and the broader healthcare sector. These general risks are: Environmental impact risks Social and employment risks Human rights risks Corruption and bribery risks Security and IT risks Страница 120 из 132 MD Medical Group has implemented targeted preventive measures regarding all identified risks, and notes that there is a low likelihood that any of these risks will transpire as real events. Environment Risk Incorrect hazardous waste disposal MD Medical Group continuously Mitigation improves its procedure for selecting contractors, who are required to have all the necessary resources and skills to dispose of hazardous medical wastes in a proper way. MD Medical Group monitors compliance with sanitary and epidemiological standards in its hospitals and clinics. The Group equips clinical hospitals with installations for disposing of medical waste, which reduces the risk of epidemiological infection and the costs of disposal. The Group monitors and ensures the timely completion of staff training. MD Medical Group is aware of the importance of using a modern high- performance power supply system. MD Medical Group applies a number of energy-saving measures in accordance with internal standards and procedures. Energy saving equipment is installed and operational at all Group’s facilities. MD Medical Group closely monitors the condition of water and heat supply pipelines. MD Medical Group fulfils the requirements of the official Electronic Government programme in Russia focused on supporting the shift to electronic external document flow. MD Medical Group actively develops online, digital and mobile forms of record keeping and information exchange with key stakeholders. MD Medical Group monitors compliance with standard operating procedures for medical product disposal across its hospitals and clinics. MD Medical Group is continuously looking at its medical products and equipment to ensure it is working as intended. Substantial increase in energy consumption and decrease in energy efficiency Substantial increase in water consumption Increase in paper consumption Incorrect disposal of defective or unsuitable medical products Key results in 2022 Automated the process of monitoring the timely completion of staff training. Installed waste disposal facilities in the clinical hospitals MD Group Lakhta in St. Petersburg and Tyumen-2, both of which opened in 2022. Replaced fluorescent lamp fixtures with LED fixtures in the Lapino medical cluster and in several out-patient clinics. Drilled our own well in the Lapino medical cluster, which helped reduce water consumption. Increased the share of electronic document circulation both with external contractors and within the organisation. Implemented control over printer usage, while having the ability to compare usage between different departments and organisations. Communicated an internal order on the rules for disposing of unused and defective medications to responsible employees. Kept logs to document the disposal of medications. Installed waste disposal facilities in the clinical hospitals MD Group Lakhta in St. Petersburg and Tyumen-2, both of which opened in 2022. Страница 121 из 132 Employment and social issues Risk Statutory restrictions related to employment Mitigation MD Medical Group monitors changes in relevant legislation and reacts promptly. Key results in 2022 Continuously monitored changes in legislation. Insufficient availability of Company’s care services facilities Deterioration of the Group’s relations with staff Insufficient availability of staff necessary to fulfil medical obligations The Group monitors our staff's professional qualifications and records them in the 1C SPM (Salary and Personnel Management) information system to keep track of this information. MD Medical Group is expanding the geography of its presence, opening new facilities to boost accessibility and expand patient reach. MD Medical Group’s price points in each new location are selected factoring in the income level of the local population. The Group is committed to meeting the requirements of the federal IVF programme under obligatory health insurance policies. MD Medical Group monitors employee engagement and satisfaction levels in regular surveys and creates conditions for the development and realisation of its employees’ professional potential. Employee development and retention were clear focus areas in the period under review. MD Medical Group continued to cooperate actively with department heads in leading universities on recruitment drives. MD Medical Group has continued to develop the continuous medical education it offers its people – in particular training in Moscow for regional employees. MD Medical Group is expanding the geography of its presence, opening new facilities and exposing itself to additional talent for hiring. MD Medical Group is constantly looking for opportunities to hire personnel with relevant expertise. Internal educational and training programmes are constantly being provided to employees in order to maintain competencies and improve skills. Continued to successfully diversify both the range of services we provide and the geography of our presence. During this year, we have launched two clinical hospitals in St. Petersburg and Tyumen, while also entering the market of the Sverdlovsk Region for the first time. Strengthened our position in Moscow and the Moscow regional market by opening two medical centres in Butovo and Mytishchi. Improved the quality of the recruitment process, as well as working conditions and communication within the Group. Opened MGIMO-Med Medical University as a future personnel base, where acting doctors train students in the Lapino medical cluster. Opened the MGIMO-MED Medical University, improving our ability to train personnel. Initiating contracts with unreliable or unverified counterparties MD Medical Group closely monitors the various counterparties with which it may enter into contract with. Established system for conducting internal accreditation of tender winners in accordance with the regulation on procurement activities. Страница 122 из 132 Risk Mitigation Key results in 2022 The Group constantly updates its internal policies on procurement strategies, including those on internal accreditation of tender winners. Contract approvals are processed through an internal electronic document management system, which minimises the risk of entering into a contract with an unverified counterparty. MD Medical Group is constantly improving its internal safety guidelines and measures to ensure the safety of our staff. The Company dedicates significant resources to replacing faulty equipment, running safety training programmes for its employees and on industry-leading PPE. Maintained the procurement policy where contracts for an amount exceeding RUB 500,000 for clinics, and RUB 1 mln for hospitals, undergo additional verification measures by financial control employees. Provided its healthcare professionals and essential workers with personal protective equipment that meet the standards required. Carried out extensive training programmes relating to H&S and the prevention of disease spread. Implemented internal policies and regulations to reduce the risk of pathological situations and to be in line with governing regulations and best practices. Mitigation Key results in 2022 MD Medical Group does not tolerate any form of discrimination and any incidents are to be recorded. There were no recorded cases of discrimination within the Company in 2022. Risk of deteriorating epidemiological situation and increased disease transmission between staff Human rights Risk Discrimination Work under compulsion Remuneration discrimination MD Medical Group’s corporate culture and ethics are based on positive engagement and encouragement. Compulsion of any kind is not permitted. MD Medical Group has a strict policy on bonuses and rewards as performance based, corresponding to clearly set and agreed KPIs. Continued to monitor and enhance our anti-discrimination policies, to ensure that our employees come to no harm from such issues. Continuously assessed whether our corporate culture reflects modern working practices and that it does not negatively impact our employees Continued to utilise our specific remuneration policy, ensuring that employees are aware of how it functions. Corruption and bribery risks Risk Risk of corrupt actions and payments to government authorities Mitigation MD Medical Group carries out the setup of its own information systems, equips organisations with equipment and manages the necessary document flow. The Company also hires qualified personnel and trains them in accordance with legal requirements. The Group conducts internal audits to ensure compliance with legislation. Key results in 2022 Approved the updated version of the MD Medical Group Anti-Corruption Policy. In 2022, over 120 employees received training on anti-corruption measures. Страница 123 из 132 Risk Risk of bribery of the Group’s employees for the benefit of third parties Mitigation Key results in 2022 MD Medical Group implements a centralised purchasing process for all medical institutions within the Group. Increased the level of centralisation in the procurement processes managed by the Company. Security and it Risk Inadequate protection of personal data The Company has implemented a process for approving counterparties and contracts, as well as financial control over payments. Implemented a control system for the use of materials and medications in accordance with the treatment provided. This helps facilitate the monitoring of the appropriateness of purchases and write- offs. Mitigation MD Medical Group has installed equipment for encrypting collected personal data and protecting our organisation from network attacks. Key results in 2022 Transferred our server storage to a data processing centre and network protection was added to server hardware to prevent external attacks. The Company has strictly separate user access rights to financial information and patient treatment information. Data is backed up every day to a physical medium, which minimises the risk of data loss. Internal policies for personal data protection are regulated. Antivirus software is installed. All modifications undergo rigorous testing, and server data is backed up daily for quick recovery. Protection of critical IT infrastructure MD Medical Group has installed equipment for encrypting collected personal data and protecting our organisation from network attacks. MD Medical Group has implemented restrictions on the installation of programmes by users and the use of memory cards. The Company has developed documentation on protecting critical infrastructure, to put in place contingency plans. Regulatory documents have been implemented: policies and instructions for users on the protection of personal data, instructions on password and antivirus protection, and more. Developed an internal policy for the protection of personal data, which employees become familiar with when they are employed. The data processing centre and server of Lapino Hospital are equipped with protective network shielding. Equipment has been installed in organisations for encrypting incoming and outgoing traffic. Objects of critical infrastructure have been classified, and the data has been submitted to the Federal Service for Technical and Export Control of Russia (FSTEC). Environmental management Reducing environmental impact is essential for MD Medical Group for several business-critical reasons. This has many benefits, as it allows more resources to be re-focused on the Group’s core business, enabling increased reinvestment in its healthcare facilities across the Russian Federation and benefitting patients and local communities. Additionally, good environmental management goes hand in hand with MD Medical Group’s stated commitment to being an innovative leader in healthcare. Lastly, it shows the communities, where MD Medical Group has a presence, that it is dedicated to being a good partner in all respects. Страница 124 из 132 The compliance with applicable federal, regional and local environmental legislation is as essential to MD Medical Group’s successful operations as is its compliance with other rules, regulations and benchmarked best practices. The Company’s management system meets the international requirement ISO 14001-2004 Environmental Management Systems and ISO 50001:2011 Energy Management Systems. Energy efficiency Heating at MD Medical Group facilities primarily draws on the electricity supply. However, clinics and hospitals are also equipped with diesel generators to serve as backup power supply units in case of unforeseen electricity outages. Common energy saving practices among both clinics and hospitals include ensuring, wherever possible, energy efficient settings on general (non-medically critical) equipment and devices are used such as air-conditioning and motion responsive lighting. In addition, clinics adopt halogen and fluorescent lamps with LED energy-saving light sources. By adopting energy-saving practices MD Medical Group ensures more resources are directed to those operationally critical areas, and supports the communities in which it has operations by setting an example for other entities of responsible resource and facilities management. Electricity consumption by MD Medical Group’s clinics and hospitals, GJ (gigajoule) Clinics Hospital Total 2022 10,751 109,301 120,053 Heating energy consumption by MD Medical Groups clinics and hospitals, GJ Clinics Hospital Total 2022 37,420 296,578 333,998 Total energy consumption by MD Medical Groups clinics and hospitals, GJ Clinics Hospital Total 2022 48,172 405,879 454,051 Fuel consumption by MD Medical Group’s clinics and hospitals, litres Petrol, litres Clinics Hospital Total Diesel, litres Clinics Hospital Total 2022 19,177 71,937 91,114 2022 38,990 33,339 72,329 202111 10,607 110,519 110,519 20219 32,023 290,077 322,100 20219 42,630 400,597 443,226 20219 17,204 119,878 119,878 20219 54,040 81,689 135,729 11 Adjustments in 2021 are associated with a change in the methodology change,% 1.4 (1.1) 8.6 change,% 16.9 2.2 3.7 change,% 13.0 1.3 2.4 change,% 11.5 (40.0) (24.0) change,% 38.6 (59.2) (46.7) Страница 125 из 132 Rational water consumption MD Medical Group clinics and hospitals receive water from municipal water supply systems, which meets State Standard GOST Р 51232–98 (2002). Efficient water use is a key component in MD Medical Group’s approach towards sustainable operations. The Company is dedicated to improving its water management system as shown by the individual facilities. Waste management in hospitals Water consumption by MD Medical Group, cubic metres Clinics Hospital Total Waste management 2022 33,348 251,734 285,082 202112 31,112 245,776 276,888 change,% 7.2 2.4 3.0 MD Medical Group takes a responsible approach to managing medical waste, following the applicable legislation. The waste disposal procedures and practices in place in MD Medical Group hospitals and clinics fall under the Sanitary and Epidemiological Requirements for Treating Medical Waste (SanPin 2.1.7.2790-10). Waste is categorised as hazardous or non-hazardous, and subject to treatment as defined below. The continued effect of the COVID-19 pandemic and resulting medical practice changes, such as the introduction of additional protective measures for staff and patients, meant that all medical facilities saw a greater volume of waste. Hazardous waste is either treated in-house and disposed of using special equipment, or this is done by external contractors. Where this is handled in-house, hazardous waste undergoes decontamination processes to remove harmful substances or render them inert, until it becomes non-hazardous, whereupon it is processed as non-hazardous waste. External contractors use landfills for non-hazardous waste or incineration for hazardous waste. Waste by disposal method (hospitals), metric tonnes Non-hazardous Landfill Bulk incineration Hazardous Landfill Bulk incineration Total 2022 4,190 4,190 - 333 - 333 4,522 202110 3,259 3,259 - 266 - 266 3,525 change,% 28.5 28.5 - 24.9 - 24.9 28.3 12 Adjustments in 2021 are associated with a change in the methodology Страница 126 из 132 Waste by disposal method (clinics), metric tonnes Non-hazardous Landfill Bulk incineration Hazardous Landfill Bulk incineration Total 2022 175 159 16 87 14 73 262 202110 183 165 18 78 13 65 261 change,% (4.2) (3.7) (8.7) 12.3 5.8 13.6 0.7 ANNEXES Annex 1: GRI index disclosure GRI content index Statement of use GRI 1 used MD Medical Group has reported the information cited in this GRI content index for the period 31 December 2021 to 31 December 2022 with reference to the GRI Standards. GRI 1: Foundation 2021 GRI standard Disclosure Location GRI 2: General Disclosures 2021 2-1 Organizational details 2-4 Restatements of information Management report There were no restatements in the reporting period 2-6 Activities, value chain and other business relationships 2-7 Employees 2-9 Governance structure and composition 2-10 Nomination and selection of the highest governance body 2-11 Chair of the highest governance body 2-17 Collective knowledge of the highest governance body 2-19 Remuneration policies 2-22 Statement on sustainable development strategy 2-27 Compliance with laws and regulations 2-28 Membership associations 2-29 Approach to stakeholder engagement 2-30 Collective bargaining agreements 3-1 Process to determine material topics 3-2 List of material topics GRI 3: Material Topics 2021 GRI 203: Indirect Economic Impacts 2016 203-1 Infrastructure investments and services supported Delivering a comprehensive hi-tech medical service, Supply chain development Our People, Annex 3 Corporate governance report, Annex 2 Corporate governance report Board of Directors Corporate governance report – Board of Directors information Remuneration Committee Sustainable Development Annex 4,6,7 Corporate governance report - Membership in associations Our Patients, Sustainable development – Interaction with Stakeholders There are no collective bargaining agreements within the organisation Sustainable development – Identifying material topics Sustainable development – Identifying material topics Expanding a leading nationwide network GRI 204: Procurement Practices 2016 204-1 Proportion of spending on local suppliers Supply chain development Страница 127 из 132 GRI 205: Anti-corruption 2016 205-2 Communication and GRI standard GRI 206: Anti-competitive Behavior 2016 GRI 302: Energy 2016 GRI 303: Water and Effluents 2018 GRI 306: Waste 2020 GRI 401: Employment 2016 GRI 403: Occupational Health and Safety 2018 GRI 404: Training and Education 2016 GRI 405: Diversity and Equal Opportunity 2016 GRI 406: Non-discrimination 2016 GRI 417: Marketing and Labeling 2016 GRI 418: Customer Privacy 2016 training about anti-corruption policies and procedures 205-3 Confirmed incidents of corruption and actions taken Disclosure 206-1 Legal actions for anti- competitive behavior, anti-trust, and monopoly practices 302-1 Energy consumption within the organization 303-5 Water consumption 306-1 Waste generation and significant waste-related impacts 306-3 Waste generated 401-1 New employee hires and employee turnover 401-2 Benefits provided to full- time employees that are not provided to temporary or part- time employees 401-3 Parental leave 403-1 Occupational health and safety management system 403-5 Worker training on occupational health and safety 404-2 Programs for upgrading employee skills and transition assistance programs 405-1 Diversity of governance bodies and employees 406-1 Incidents of discrimination and corrective actions taken 417-1 Requirements for product and service information and labeling 417-2 Incidents of non- compliance concerning product and service information and labeling 417-3 Incidents of non- compliance concerning marketing communications 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data Corporate governance report – Anti-corruption measures There were no confirmed incidents of corruption Location There were no such legal actions Environmental management – Energy efficiency Environmental management – Rational water consumption Environmental management – Waste management Environmental management – Waste management Our People – Personnel figures Medical personnel working in another commercial structure as their primary job are not guaranteed privileged medical seniority (early retirement) Our People – Personnel figures Occupational safety management system Occupational Health and Safety – Staff training Our People – Professional development, Occupational Health and Safety – Staff training Annex 2, Our People – Personnel figures, Board of Directors information There were no incidents of discrimination in the reporting period Annex 7 There were no such incidents There were no such incidents There were no complaints Annex 2: Information on the gender, age and diversity of the Board of Directors as of 31 December 2022 Currently the Board of Directors consists of 80% men and 20% women, namely Tatiana Lukina. Tatiana is the Group’s independent non-executive directors since December 2019. The Board of Directors also contains two ethnic minority members on the basis of nationality, through Mark Kurzer and Vadim Mekler. Страница 128 из 132 The Board composition currently contains Tatiana Lukina as a non-executive director, additionally there are two other women in C-Suite positions within the Group. These are: Iya Lukyanova as Chief Financial Officer and Elena Balashova as Chief Operating Officer. Age composition: 30–50 years of age — 40% Over 50 years of age — 60% Annex 3: Information on staff 2022 Female Male 2021 Female Male 2022 Full-time employment External part-time 2021 Full-time employment External part-time MD Medical Centre MD Medical Ural MD Medical Siberia MD Medical Volga 3,775 852 3,691 1,238 213 1,178 1,020 271 1,062 953 144 962 921 MD Medical Centre 204 MD Medical Ural 293 MD Medical Siberia 150 MD Medical Volga 3,393 1,234 3,441 1,171 1,208 243 1,147 235 958 333 1,016 339 906 191 912 200 Total 6,986 1,480 6,893 1,568 Total 6,465 2,001 6,516 1,945 Annex 4: Sanpin 2.1.7.2790-10 sanitary and epidemiological requirements for treating medical waste SanPin 2.1.7.2790-10 Sanitary and Epidemiological Requirements for Treating Medical Waste is a regulatory legal act registered by the Ministry of Justice of the Russian Federation on 17 February 2011 (registration number: 19871). According to this document, there are five major classes of medical waste: Class A (А) – epidemiologically non-hazardous waste close in composition to municipal solid waste (packaging, paper, cardboard, etc.) Class B (Б) – epidemiologically hazardous waste. This class includes human blood and blood products as well as other biological liquids Class V (В) – extremely epidemiologically hazardous waste (materials that were in contact with patients with infectious diseases) Class G (Г) – toxicologically hazardous waste of classes from 1 to 4. This class includes medicines, diagnostics, and disinfectants that cannot be used, namely those medical supplies that have been damaged or expired Class D (Д) – radioactive waste Страница 129 из 132 Annex 5: Main methods for obtaining information Most of the data is originated from the clinics’ and hospitals’ own records of actual water use, energy and fuel consumption. However, for several clinics and hospitals some indicators were calculated, due to the fact that a number of facilities are located in rented premises; and because of the lack of detailed accounting data or non-relevance of such information for decision-making by the MD Medical Group or stakeholders. It should be noted that there were changes made to the methodology for the recording of data, resulting in adjusted values for the year 2021. All calculations were made by applying some of the following indicators: Water consumption – average water consumption per square metre for clinics and hospitals Electricity and heating – the amount of money spent on utilities and average heating energy consumption per square metre for clinics. Regional tariffs were used for the calculations. The share of data on water, energy and fuel consumption, obtained from calculations was insignificant in the overall dataset Electricity, GL Clinics Hospitals Lapino medical culster MD Group hospital MD Group Lakhta Samara Novosibirsk Tyumen medical cluster Ufa Heating, GL Clinics Hospitals Lapino medical culster MD Group hospital MD Group Lakhta Samara Novosibirsk Tyumen medical cluster Ufa Petrol Clinics Hospitals Lapino medical culster MD Group hospital MD Group Lakhta Samara Novosibirsk Tyumen medical cluster Ufa 2022 10,751 109,301 39,123 16,452 3,637 10,860 9,127 13,980 16,123 2022 37,420 296,578 139,072 23,704 4,921 23,638 11,321 39,340 54,583 2022 19,177 71,937 - 17,380 3,258 32,863 15,989 - 2,447 13 Adjustments in 2021 are associated with a change in the methodology 202113 10,607 110,519 43,145 16,769 - 11,159 9,963 12,522 16,961 202111 32,023 290,077 145,581 22,354 - 21,238 12,627 34,262 54,017 202112 17,204 119,878 45,521 22,087 - 30,500 17,023 - 4,747 change,% 1.4 (1.1) (9.3) (1.9) - (2.7) (8.4) 11.6 (4.9) change,% 16.9 2.2 (4.5) 6.0 - 11.3 (10.3) 14.8 1.0 change,% 11.5 (40.0) (100.0) (21.3) - 7.7 (6.1) - (48.5) Страница 130 из 132 Diesel Clinics Hospitals Lapino medical culster MD Group hospital MD Group Lakhta Samara Novosibirsk Tyumen medical cluster Ufa 2022 38,990 33,339 2,500 11,351 1,000 3,160 11,228 4,100 - 202112 54,040 81,689 47,016 19,340 - 3,000 10,631 1,200 503 change,% (27.8) (59.2) (94.7) (41.3) - 5.3 5.6 241.7 - Annex 6: Patient consent and legislative compliance The matter of acquiring informed patient consent is a fundamental issue for all medical service providers. MD Medical Group closely monitors its systems for presenting relevant information to its patients regarding the provision of medical service to ensure that their decisions are informed. MD Medical Group maintains complete compliance with established regulations regarding patient consent. In accordance with Federal Law No. 323-FL dated 21 November 2011, ‘On the Basics of Protecting the Health of Citizens in the Russian Federation’ (hereinafter referred to as Law No. 323-FL), the necessary prior condition for medical intervention is the provision of informed consent (hereinafter referred to as IC) by the citizen or their legal representative for medical intervention based on full information provided by the medical worker in an accessible form about the purposes, methods of providing medical assistance, the associated risks, possible options for medical intervention, its consequences, and the expected results of providing medical assistance (part 1, article 20 of Law No. 323-FL). Informed voluntary consent for medical intervention or refusal of medical intervention is contained in the medical documentation of the citizen and is made in the form of a document on a paper carrier, signed by the citizen, one of the parents, or another legal representative, a medical worker, or is formed in the form of an electronic document, signed by the citizen, one of the parents, or another legal representative using a strengthened qualified electronic signature or a simple electronic signature through the use of a unified system of identification and authentication, and also by a medical worker using a strengthened qualified electronic signature.(Chapter 7, Article 20 of Federal Law No. 323-FL). Order of the Russian Ministry of Health No. 1051n dated 12 November 2021 establishes the procedure for giving informed consent for medical intervention and refusal of medical intervention, as well as the forms of informed consent for medical intervention and refusal of medical intervention. According to this Order, citizens give informed consent when choosing a doctor and medical organisation for primary medical assistance. Additionally, in accordance with Article 22 of Federal Law 323, everyone has the right to receive in a form accessible to them, information on their health available in any medical organisation, including information on the results of a medical examination, the presence of illness, the established diagnosis, and the forecast of the development of the illness, methods of providing medical assistance, the risks associated with them, possible forms of medical intervention, its consequences and the results of providing medical assistance. MD Medical Group ensures compliance with the relevant law requirements as follows: 1. Informed consent in the form approved by Order of the Ministry of Health of the Russian Federation No. 1051n dated 12 November 2021 is signed by each patient (their legal representative) who visits the Company's medical organisation and is an annex to the contract for paid medical services. The same informed consent is signed by the patient upon their initial visit for medical assistance under Mandatory Health Insurance (MHI). The Company has developed an additional form of Informed Consent, providing a list and description of medical interventions that patients give consent for during initial visits, for the purpose of providing information to patients in an accessible form. 2. In the Group, lawyers and leading medical specialists developed informed consents for various medical interventions by medical profiles (obstetrics, VRT, anaesthesia and transfusiology, HIV, etc.), containing information on the objectives, methods of providing medical assistance, related risks, potential benefits, alternative treatments and potential consequences of refusal. Страница 131 из 132 The informed consents are reviewed and updated regularly in accordance with changes in medical practices and legislation. The medical organisations in the Group ensure that patients receive accurate and understandable information about the medical intervention and their rights to make informed decisions. Annex 7: Approach to medical service advertising The requirements for advertising medical services are contained in Article 24 FL ‘On advertising’, according to which it should not contain references to specific cases of curing of diseases, improvement of human health as a result of the application of the object of advertising; contain expressions of gratitude of individuals in connection with the use of the object of advertising; create an idea of the benefits of the object of advertising by reference to the fact of conducting research, that are mandatory for the state registration of the object of advertising; contain allegations or assumptions about the presence of certain diseases or health disorders among consumers. Advertising should be accompanied by a warning about the presence of contraindications to their application and use, as well as the need to familiarise oneself with the instructions for use or to receive expert advice. In advertisements broadcast on radio programmes, such a warning should last at least three seconds; in advertisements for television programmes and for film and video services – at least five seconds and must be allocated at least seven percent of the frame area, and in advertising distributed by other means – at least five percent of the advertising area (advertising space). Fulfilment of these requirements is controlled by the organisation of the Heads of Marketing and Advertising of medical organisations MD Medical Group, as well as by the Director of Marketing and Advertising of MD Medical Group. Contracts for advertising are approved by lawyers of MD Medical Group. Страница 132 из 132
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