Preserving
and Enhancing
the Utmost Value
Annual Report 2023
2
3
CONTENTS
ABOUT THE COMPANY
CEO Statement
Investment case
Business model
Key results
Geographic reach
Group structure
Healthcare services
Patient path
Technology and digitalization
STRATEGIC
REPORT
Market overview
Strategy
Operating results
Financial performance
6
8
10
12
14
16
18
20
22
26
30
32
43
SUSTAINABLE
DEVELOPMENT
Sustainable development approach
Stakeholder engagement
HR management
Occupational health and safety
Environmental protection
CORPORATE
GOVERNANCE
Chairman’s Statement
Corporate governance system
Risk management, internal
control and audit
Share capital
APPENDICES
Report and consolidated
financial statements
2023 key risks overview
Contacts
50
56
64
74
78
84
85
96
100
106
159
163
ABOUT THE REPORT
The Annual Report of MD MEDICAL GROUP INVESTMENTS PLC for 2023 (hereinafter referred
to as the Report) is designed to inform stakeholders about the strategy, operating and financial performance,
the corporate governance system and sustainability initiatives of MD MEDICAL GROUP INVESTMENTS PLC
and its subsidiaries (hereinafter collectively referred to as MD Medical Group, M&C, the Group, the Company,
or we). The Report contains data for the period from January 1 through December 31, 2023; it also covers
comparable data for previous periods and events after the reporting date.
The list of subsidiaries included in the Annual
Report and the Company’s shareholding in them
are disclosed in the notes to IFRS consolidated
financial statements for 2023.
The Company’s operating and financial
indicators disclosed in the Report are based
on IFRS consolidated financial statements for
2023 and on management reporting data.
Standards and guidelines used
• Bank of Russia Regulation No 714-P dated
March 27, 2020 (as amended on September
30, 2022) on Disclosing Information by
Securities Issuers.
• Bank of Russia Letter No. 06-52/2463 dated
April 10, 2014 on the Corporate Governance
Code.
Disclaimer
The Report has been prepared based on
information that, in the Company’s opinion,
is complete and accurate as at the date of
publication of the Report. In addition, the
Report contains forward-looking statements,
which are based on the current expectations
and assumptions of the Company’s
management. Forward-looking statements may
include financial projections, the Company’s
plans and strategy. Such statements involve
various risks and uncertainties that could
cause actual results to differ materially from
those stated herein. The Company does not
assume any obligation to update or revise
forward-looking statements if circumstances
change.
• Bank of Russia Information Letter No.
IN-06-28/49 dated July 12, 2021 on
Recommendations on Disclosure by Public
Joint-Stock Companies of Non-Financial
Information Pertaining to Their Activities.
• Methodological guidelines for sustainability
reporting set out in Order No. 764 of the
Ministry of Economic Development of the
Russian Federation dated November 1, 2023.
All financial and operating information
presented in the Report that has not been
prepared in accordance with IFRS is intended
solely for analytical purposes, and investors
should not consider such information,
separately or in any combination, as an
alternative to the analysis of the Group’s IFRS
consolidated financial statements.
ANNUAL REPORT 2023
CEO Statement
Investment case
Business model
Key results
Geographic reach
Group structure
Healthcare services
Patient path
Technology and digitalization
6
7
CEO STATEMENT
DEAR COLLEAGUES, PATIENTS,
SHAREHOLDERS AND PARTNERS!
I am proud to share the remarkable results of our Company
in 2023. Amid the recovery of pent-up demand for healthcare
services and the resurgence of reproductive behaviour, we hit
new highs by demonstrating impressive financial performance,
extending the network of our medical facilities, and expanding
our geography. Excellent results at the Group level were driven
by robust operational performance of our medical centres across
Russia.
In 2023, the Company’s revenue rose by 10% to RUB 27.6 billion,
while EBITDA increased by 16% to RUB 9.2 billion. Year after year,
we persistently demonstrate strong efficiency, with EBITDA margin
in 2023 having expanded by 2 p.p. to 33%.
I am pleased to note that women’s and children’s health services
showed consistently high revenue growth. The number of deliveries
surged by 15%, nearly reaching the milestone of 10,000.
Our fo c us on providing a wide range of medical services coupled
with the patients’ care for their health drove up the number
of out-patient treatments in Moscow and other regions by 11%.
Our business benefits greatly from both vertical and horizontal
diversification, which contribute to its reliability, resilience,
and ex cellent prospects. We continue to grow our network
of medical facilities. We opened a new large hospital on Moscow’s
Michurinsky Avenue in 2023 and launched a new MD GROUP Zilart
multifunctional family clinic in early 2024. This year, we plan to
keep growing by starting the construction of a multifunctional
hospital in Domodedovo and the Lapino-3 Nuclear Medical
Centre, and opening new clinics in Moscow and other regions.
All our achievements are down to the professionalism, respon-
sibility, and dedication of the people who work in the Company.
I refer to nearly 9,000 people, including around 3,500 doctors,
who constantly learn and upgrade their skills to meet the most
stringent demands of our patients.
I would like to take this opportunity to express my sincere
gratitude to all of you – our patients for their trust and loyalty,
our shareholders and investors for their support, and our
medical and management teams for their dedication and
professionalism. Together we are writing this story of success,
strengthening the health of people, improving the demographics,
and making a significant contribution to the development
of Russia’s healthcare industry.
Mark Kurcer,
Member of the Russian
Academy of Science,
Chief Executive Officer
We hit
new highs
by demonstrating
impressive
performance
PRESERVING AND ENHANCING
THE UTMOST VALUE
MD Medical Group is one of the leading companies on the Russian
private healthcare market with exceptional competencies in the field
of maternity services, reproductive medicine, women’s health
and pediatrics. A unique combination of the number of medical
institutions, extensive geography and a broad scope of medical
expertise.
> 15 years
on the private healthcare market
> 11 years
the Company’s securities have
been traded on the stock market
55
medical institutions
> 500,000
patients¹ per year
~ 3,500
highly professional doctors
1 MGIMO Med
medical university
HIGH STANDARTS
OF HEALTHCARE
THAT CREATE
VALUE
2023
High margins
and stable
financial
position
RUB 27.6 billion
Revenue
RUB 9.2 billion
EBITDA
33%
EBITDA margin
RUB 9 billion
Net cash position
1
Unique patients who have a unique ID and received at least one service during the selected period.
CONTENTSANNUAL REPORT 2023
8
INVESTMENT CASE
ABOUT THE COMPANY
9
INVESTMENT
CASE
Vertically integrated business model
Synergy from different
formats of institutions
ensuring capacity
utilization
In-house training
of medical personnel at
MGIMO–Med University
11
hospitals
44
clinics
Effective growth strategy
Securing the Company’s
foothold in its regions
of operation
Development in new regions
Development of new types
of medical services
Improvement of perfor-
mance and service quality
19%
CAGR
2012-2023
High healthcare quality standards; brand recognition
Highly qualified medical
personnel with extensive
experience
State-of-the-art medical
equipment from leading
producers
High level of digitalization
of healthcare services
~20%
of doctors
have a doctorate
or a PhD
Wide range of medical services
Lifelong support: from birth
and for the entire life
Number one in women’s
and children’s health
Competencies in the most
in-demand areas:
oncology, traumatology,
cardiology, surgery
78
medical
specialties
Wide geographical footprint
A unique company
with an extensive footprint
across Russia
Effective routing of patient
flows
High profit margins
on services both in Moscow
and in the regions
27
regions
32
cities
Flexible pricing
A flexible pricing policy depending on the region
and format of medical institutions
77%
of revenue comes
from individuals
Attractive market fundamentals
A fragmented market
with opportunities
for con solidation of assets
by large players
High barriers to entry
Government support
– Providing medical care
under CHI programs
– Medical licensing for
an unlimited period
0%
income tax rate
Professional management motivated
to drive the Company’s growth
Mark Kurtser, the
founder and CEO of
MD Medical Group,
a member of the Russian
Academy of Sciences
and a practicing physician
The management team
includes experienced
managers and doctors
holding academic degrees
50%
of managers
have a doctorate
or a PhD
in medical sciences
CONTENTSANNUAL REPORT 2023
10
BUSINESS MODEL
ABOUT THE COMPANY
11
VERTICAL INTEGRATION
BASED ON SCIENCE
AND EDUCATION
Effective growh
strategy
Strengthening market
position across the
regions of operation
Sustainable performance
supported by
diversification
Pursuing growth in
new Russian regions
Improving business
efficiency
By format of healthcare
By type of medical
services
Human life and health, happiness, well-being and confidence about the
future are our key values. We ensure the safety and comfort of our
patients and provide top-quality medical care.
Developing new
healthcare service
profiles
Achieving a high level
of brand loyalty
For more details, see p. 30
By geography
MISSION
To provide our patients with
top-quality medical services
and meet all their healthcare
needs from birth and throughout
their life
OUR VALUES
For patients
We always act in the best interests of the
patient. Patient care and compliance with the
best standards in healthcare are our highest
values
For employees
We create an environment for successful
professional and personal development for
each employee of the Company
For partners
For shareholders
In our relations with partners, we always
strive for mutually beneficial cooperation
and guarantee adherence to the principles of
integrity, fairness and professional ethics in our
partnerships
Our main strategic priorities include
respecting the rights and interests of our
shareholders, complying with the provisions
of the dividend policy, and increasing
shareholder value
2023 perfomance
For patients
For personnel
For partners
For shareholders
>19,000
IVF punctures
~10,000
deliveries
>146,000
in-patient days
>2 million
visits
RUB 11 billion
payroll
36 hours
of training per year
per employee
2,000
total number
of suppliers
RUB 5 billion
volume
of procurement2
83%
increase in market
capitalisation
RUB 9 billion
net cash position
up to 100%
of profit can be
used for dividend
payments
Contribution
to sustainable development
National development
goals and national projects
UN Sustainable Development Goals
(SDGs)
2
Procurement of medications, consumables and equipment.
Science
Scientific contribution
to the development
of medicine
Medicine
Providing a wide
range of medical
services
Women’s and children’s
health clinics
34
clinics
Types of services:
• Visits
• IVF
• Pregnancy management
• Pediatrics
Telemedicine
• Online consultations with
doctors in the form of
a text chat, a voice or
video call on the DOCTIS
platform
The Company operates in a diversified
format, offering a wide range of
flexibly priced medical services in
multidisciplinary clinical hospitals and
outpatient clinics.
Depending on the complexity of
treatment, we can refer our patients
from the clinics to our multidisciplinary
clinical hospitals. Furthermore, after
surgical interventions, patients can
receive rehabilitation treatment and
follow-up care in our outpatient centers.
This combination of different formats
of medical institutions ensuring their
capacity utilization enables us to
provide a high level of comfort and
quality of medical care for our patients,
and to achieve synergy, which has
a positive impact on our performance.
Education
MGIMO Med
Medical University
Our medical institutions
Multidisciplinary
clinics
10
clinics
Types of services:
• Visits
• Diagnostics
• Taking tests
• Immunization
Multidisciplinary hospitals /
Diagnostic centers
11
hospitals
Types of services:
• Visits
• IVF
• Deliveries
• Diagnostics
• Laboratory
services
• Surgery
• Oncology
• Inpatient
treatment
• Aesthetic
medicine
• Rehabilitation
CONTENTSANNUAL REPORT 2023 12
KEY RESULTS
ABOUT THE COMPANY
13
SUSTAINABLE GROWTH
REFLECTING AN EFFECTIVE
STRATEGY
The recovery in purchasing power
and the number of patient visits has
had a positive impact on the Company’s
financial and operating results.
MD Medical Group successfully develops
its business and invests in new tech-
nologies and projects, demonstrating
resilience and compe titiveness in
a changing market.
Operating indicators
Number of deliveries
+15%
2023/2022
7,446
7,759
8,397
8,576
IVF, number of punctures
9,891
+15%
18,004
2023/2022
15,264
15,526
16,862
19,326
Financial indicators
Revenue, RUB bln
+10%
2023/2022
25.2
25.2
27.6
19.1
16.2
EBITDA, RUB bln
+16%
2023/2022
31%
6.0
29%
4.6
EBITDA
EBITDA Margin
33%
8.3
31%
7.9
33%
9.2
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Net profit, RUB bln
+30% 2023/2022
4.3
2.8
Net debt (net cash position), RUB bln
7.8
3.5
2.9
1.9
6.1
6.03
×2
2023/2022
(3.9)
(9.0)
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Sustainability indicators
Headcount, people
+4%
2023/2022
Number of doctors, people
+5%
2023/2022
3,367
8,805
8,274
8,461
8,466
3,097
3,093
3,193
7,752
2,849
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Visits, ‘000 patients
+11%
2023/2022
1,745
1,614
1,859
1,905
2,123
Number of in-patient days
Specific electricity consumption, GJ / RUB mln4
Specific water consumption, m3 / RUB mln
-2%
2023/2022
117,514
79,689
152,621
150,020
146,342
-10%
6.34
2023/2022
5.75
4.39
4.76
4.30
-16%
12.90
2023/2022
11.59
10.99
11.31
9.49
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
3
4
Net profit adjusted for the impairment of past investments.
RUB mln of revenue.
CONTENTSANNUAL REPORT 2023 14
GEOGRAPHIC REACH
Saint-Peterburg
ABOUT THE COMPANY
15
Moscow
and Moscow Region
Yaroslavl
Kostroma
Tula
Vladimir
Ryazan
Nizhny Novgorod
Voronej
A UNIQUE HEALTHCARE
COMPANY WITH AN EXTENSIVE
FOOTPRINT IN THE REGIONS
MD Medical Group manages one of the largest private networks
of healthcare facilities in Russia. Today, patients from 7 federal
districts, 27 constituent entities and 32 cities of the Russian
Federation have access to medical care in 11 hospitals and
44 clinics of the Group.
Kazan
Perm
Rostov-on-Don
Krasnodar
Volgograd
Tolyatti
Samara
Novokuybyshevsk
Ufa
Yekaterinburg
Tyumen
Surgut
Nefteyugansk
55 medical institutions
institution 219 thousands m2
1 medical
total area of facilities
27 constituent entities
of the Russian Federation
32 cities
7 federal
districts
Omsk
Novosibirsk
Krasnoyarsk
Novokuznetsk
Barnaul
Area of facilities, m²
100,000
20,000
1,500
500
Outpatient clinics
Hospitals
City with over a million people
Irkutsk
Vladivostok
CONTENTSANNUAL REPORT 2023
16
GROUP STRUCTURE
ABOUT THE COMPANY
17
17
A NETWORK OF MEDICAL
INSTITUTIONS WITH A STRONG
SYNERGETIC EFFECT
Outpatient clinics and нospitals
proprty
rent
scheduled to open in 2024
outpatient
clinics
hospitals
893 m²
M&C
Saint Peterburg
801 m²
M&C
South-West
2,048 m²
M&C
Savelovskaya
50 m²
Diagnostic Center
M&C
Samara
416 m²
Children’s Clinic
M&C
Samara
473 m²
M&C
Tolyatti
822 m²
M&C
Yaroslavl
2,734 m²
M&C
Entuziastov Str.
Samara
5,256 m²
M&C
Serdechko
Novosibirsk
376 m²
M&C
Omsk
1,234 m²
NCRM⁶
M&C Novosibirsk
142 m²
M&C Odintsovo
465 m²
M&C
Khodynskoe Pole
160 m²
KCRM⁷
M&C Krasnoyarsk
712 m²
KCRM⁷
M&C Krasnoyarsk
770 m²
M&C
Kuntseto
800 m²
M&C
Perm
237 m²
M&C
Novokuybyshevsk
33,000 m²
M&C
Ufa
800 m²
M&C
Novokuznetsk
209 m²
M&C
Kostroma
27,600 m²
MD GROUP⁵
397 m²
M&C
Novogireevo
42,000 m²
Lapino-1
600 m²
M&C
Ircutsk
10,260 m²
Avicenna
Novosibirsk
1,400 m²
M&C
Ryazan
559 m²
BCRM⁸
M&C
Barnaul
343 m²
M&C
Voronezh
354 m²
M&C
Vladimir
44
11
Outpatient clinics
Hospitals
Outpatient clinics of MD Medical Group
provide high-quality medical examination
and treatment services at multidisciplinary
centers and centers for women’s and children’s
health.
In accordance with our business model,
out patient clinics are the starting point for
engagement with patients. This is where
patients receive an initial consultation;
subsequently, if necessary, they are referred
to our clinical hospitals, where we provide a full
range of clinical and diagnostic services in
various areas. In addition to a wide range of
me dical care services for women and children,
women’s centers provide IVF and pregnancy
management services; patients can sub se-
quently get admitted to the perinatal centers
of the Company’s clinical hospitals for delivery.
Multidisciplinary hospitals of MD Medical Group
offer a full range of inpatient and outpatient
medical services for all family members. Hos -
pitals have the necessary equipment for
all types of diagnostics, conservative
and surgical treatment.
In addition to a perinatal center and a fertility
and IVF center, which was initially a primary
focus area for the Company, the hospitals
have cardiology, surgery, urology, neurology,
traumatology and orthopedics centers,
as well as diagnostic and treatment, otor-
hinolaryngology and children’s centers,
and a department of aesthetic medicine
and rehabilitation.
175 m²
Moscow
Solncevo
1,460 m²
Moscow City
Business Center
175 m²
Domodedovo
550 m²
Surgut
420 m²
Chelyabinsk
200 m²
MD GROUP
Antireflux
Surgut
949 m²
MD GROUP
Biomeditsina
Surgut
541 m²
M&C
Tula
600 m²
M&C
Nizhny Novgorod
392 m²
M&C
Lefortovo
677 m²
M&C
Kazan
380 m²
M&C
Volgograd
360 m²
M&C
Krasnodar
195 m²
M&C
Butovo
407 m²
MD GROUP
Vira 15 Microdistrict
Nefteyugansk
560 m²
Khabarovsk
434 m²
M&C
Yekaterinburg
425 m²
MD GROUP
Vira 11 Microdistrict
Nefteyugansk
450 m²
Lipetsk
358 m²
M&C
Vladivostok
422 m²
M&C
Rostov-on-Don
450 m²
Oncological
Care Center
Mozhaysk
4,750 m²
M&C
Tyumen-2
235 m²
M&C
Mytishchi
455 m²
Kaliningrad
15,000 m²
IDK
Samara
15,000 m²
M&C
Tyumen
18,500 m²
Lapino-2
4,200 m²
Lapino-4
9,000 m²
MD GROUP
Lakhta
8,755 m²
MD GROUP
Michurinsky
452 m²
MD GROUP
Zilart
2006
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
5
6
Known as Perinatal Medical Center before.
Novosibirsk Center for Reproductive Medicine.
7
8
Krasnoyarsk Center for Reproductive Medicine.
Barnaul Center for Reproductive Medicine.
CONTENTSANNUAL REPORT 2023
18
HEALTHCARE SERVICES
ABOUT THE COMPANY
19
HEALTHCARE SERVICES
FOR EVERY NEED
Surgery
Neurosurgery
Surgical treatment in gynecology
Plastic surgery: reconstructive and cosmetic surgery
of any degree of complexity
Cardiovascular and endovascular surgery
Coloproctology
Abdominal surgery
Surgical urology
Surgical otolaryngology
Reproductive
medicine, obstetrics
and neonatology
Conservative and surgical treatment
in gynecology
Pregnancy planning:
• Comprehensive examinations
• Infertility treatment and IVF, including:
- ICSI
- IMSI
- PICSI
- Donor programs
Pregnancy:
• Management
• High-Risk Pregnancy Preservation Center
• Prenatal diagnosis
Delivery (types):
• With a partner
• Natural childbirth
• In an upright position
• Water birth
• «Home birth» in a hospital
• Surgical delivery
Neonatal intensive care unit
Premature infant care department
Fetal surgery
MD Medical Group provides a full range of medical care services.
Today we can offer services across 78 medical specialties,
including socially important areas such as oncology, cardiology,
traumatology and all types of surgery. We are ready to promptly
conduct high-quality diagnostics and prescribe optimal treatment
for cancer. Our professional cardiologists and cardiac surgeons
help prevent and manage cardiovascular diseases. The Company
provides a wide range of surgical diagnostic and treatment
procedures. We perform various types of surgery, including
minimally invasive procedures. In July 2023, the Company opened
a Neurosurgery Center at the Lapino Clinical Hospital, which
specializes in diagnostics and surgical treatment of lesions of the
central and peripheral nervous system.
At the same time, the Company is the undisputed leader in Russia
in the field of women’s health and pediatrics. We leverage the
highest level of qualification of our doctors, state-of-the-art
equipment, advanced medical technologies and high-quality
service to provide professional support to enable a safe delivery
even in complex cases. In May 2023, a Home Obstetrics Center was
opened at the Lapino Clinical Hospital, where special attention is
paid to the psychological and emotional state of a woman in labor,
and childbirth takes place in an environment which is as home-like
as possible.
We are proud to employ outstanding professionals with world-
class expertise and to provide our clients with top-quality services.
Diagnostics
Computer
tomography
Magnetic resonance
imaging
Multispiral computed
tomography
X-ray
Ultrasound
Functional diagnosis,
including endoscopic
ultrasound
Endoscopy,
including endoscopic
ultrasound
Laboratory tests
Сomprehensive
diagnostic programs
(check-ups)
Traumatology and orthopedics
Oncology
Endoprosthetics
Arthrosis treatment
Treatment of fractures
and injuries of varying
degrees of complexity
Osteopathic
manipulation
treatment (OMT)
Hallux valgus and flat
feet treatment
Arthritis treatment
Kinesio Taping®
Rehabilitation
Recovery after
childbirth
Physiotherapy
Recovery after injuries
and surgeries
Massage
Heat therapy and
hydrotherapy,
swimming pool
Kinesiotherapy
Thalassotherapy
Cosmetology
and skin care
Hirudotherapy
Colorectal oncology
Thoracoabdominal
oncology
Urologic oncology
Hepatic oncology
Endocrine oncology
Gynecologic oncology
Treatment of skin and
soft tissue cancer
Hematologic
oncology
Orthopedic oncology
Head and neck
oncology
Breast oncology
Drug treatment
• Hormone treatment
• Immunotherapy
• Targeted therapy
• Chemotherapy
More information about the
services of MD Medical Group
https://mamadeti.ru/services
All types of care: planned
and emergency, outpatient
and inpatient
A full range of medical
services:
• Allergology
• Gastroenterology
• Dermatology
• Hematology
• Immunology
• Cardiology
• Speech therapy
• Neurology
• Nephrology
• Otorhinolaryngology
• Ophthalmology
• Psychology
• Pulmonology
• Dentistry/Orthodontics
• Urology
• Physiotherapy
• Endocrinology
• Treatment of infections,
including coronavirus
Family medicine
Multidisciplinary
care for children
and adults
Auxiliary areas
Emergency care
Domiciliary care
Telemedicine
• Emergency and urgent care
for adults and children
• Hospitalization and patient
transportation
• Mobile intensive care units
• Professional therapeutic
care for adults and children
in a comfortable home
environment
• Taking samples and performing
laboratory tests at home
• Online consultations with
doctors in the form of a text
chat, a voice or video call on the
DOCTIS platform at
www.doctis.ru
CONTENTSANNUAL REPORT 2023 20
PATIENT PATH
ABOUT THE COMPANY
21
ALWAYS AVAILABLE
AND CLOSE TO THE PATIENT
1
3
4
Patients
Appointment
Visit
Call center
Messaging apps
Website
Mobile app
Outpatient
Inpatient
Telemedicine
Domiciliary care
>500,000
patients⁹ in 2023
21%
20%
59%
children
men
women
2
Introduction
Recommendations
from friends/doctors
SEO
SMM
Advertising
Healthcare
aggregators
Events
Open days
Birthing classes
⁹ Unique patients who have
a unique ID and received
at least one service during
the selected period.
5
Continuous
communication
Multidisciplinary
care
>2 million
outpatient visits
~10,000
deliveries
Access
to medical records
>19,000
IVF punctures
>146,000
in-patient days
Women’s health and reproductive medicine
Gynecology
IVF
Pregnancy management
Deliveries
Pediatrics
Diagnostics
Oncology
Cardiology
Traumatology and orthopedics
Surgery
Rehabilitation
Check-up
Family programs
Contracts for a period
from 1 month to 1 year
for any types of medical
services, including for the
entire family
Reminders
About upcoming appointments
About the expiration dates of contracts
About the deposit account balance
A chat with a doctor
Collecting feedback
from patients
CONTENTSANNUAL REPORT 2023 22
TECHNOLOGY AND DIGITALIZATION
ABOUT THE COMPANY
23
MODERN TECHNOLOGIES
THAT DRIVE
PROGRESS
Medical institutions of MD Medical Group use equipment that
meets high international standards and apply advanced diagnosis
and treatment techniques based on global best practice.
The Group constantly invests in automation,
the introduction of state-of-the-art control
systems and advanced equipment, striving
to be a leading private provider of medical
services.
The Company creates Competence Centers
applying advanced technology and focusing
on specific areas of medicine.
Digitalization in healthcare is an important
area. For instance, the Company is developing
telemedicine, introducing artificial intelligence
into diagnostic processes, and providing
patients with an opportunity to remotely
monitor their health.
2023
RUB 1.2 billion
invested in new equipment, technologies
and digitalization
~10,000
patients have used remote
medical services
4
new Competence
Centers opened
Women’s and children’s health
Center for Innovative Reproductive Technologies / IVF
Oncofertility
Neonatal intensive care and premature infant care unit
High-Risk Pregnancy Preservation Center
Stem cell bank
Fetal medicine
Fetal Spina Bifida Surgery
The operations are performed by a joint team
of highly qualified obstetricians-gynecologists,
neurosurgeons, and anesthesiologists.
Fetal Heart Disorder Surgery
The largest EmbryoScope
network in the country
A state-of-the-art technology which makes
it possible to monitor the development of the
embryo in real time to address the most
complex IVF challenges more effectively by
creating an optimal stable environment for the
development of embryos and increasing the
success rate of IVF procedure.
Surgery
Neurosurgery Center
Cardiac surgery
Endovascular surgery
Center for Reconstructive
Plastic Surgery
Neurosurgery Center
The new Center is equipped with a full range
of modern neurosurgical and diagnostic
equipment, which makes it possible to give an
accurate and timely diagnosis of disorders
in the nervous system and perform the most
complex surgeries.
Digitalization
Mobile application for
patients and doctors
At-home fetal monitor
Telemedicine
Business intelligence system
Remote patient monitoring
Patients are provided with equipment for
home use that enables them to monitor the
health of the fetus, measure blood sugar
levels and blood pressure, etc. The devices
constantly monitor the patient’s indicators,
which enables the doctor to detect health
problems in a timely manner.
Diagnostics
Magneticresonance imaging
Multislice computed tomography
Computed tomography
Ultrasound
Senographe Pristina 3D
SPECT/CT
A unique digital system for
thorough examination of
mammary glands to find
microscopic neoplasms.
The built-in tomosynthesis
function is designed to
detect malignancies at
the earliest stage, which
increases the chances of
complete healing.
Single-photon emission
computed tomography is
used to identify the primary
tumor and metastases in the
lymph nodes and to predict
chemosensitivity. This makes
it possible to determine the
stage of the disease and
plan further treatment.
SIGNA Architect 3T
MRI scanner
A new tomography scanner
with the gantry aperture of
70 cm and open architecture
guarantees the highest
quality of images with a wide
field of view due to excellent
magnetic field uniformity,
a powerful gradient system
and a 97-channel RF system.
CONTENTSANNUAL REPORT 2023 STRATEGIC
REPORT
Market overview
Strategy
Operating results
Financial performance
26
STRATEGIC REPORT
27
MARKET OVERVIEW
Segments of the Russian healthcare market in 2023
State healthcare
Private healthcare
67%
This includes the compulsory health
insurance (CHI) system and direct
budget financing
33%
A large number of players and a low level
of consolidation. The segment includes
voluntary health insurance (VHI)
The Russian healthcare market is growing rapidly:
in 2023, its volume was estimated at RUB 4.1 trillion
(+RUB 180.3 billion, or +4.6% compared to 2022).
The strong performance was driven primarily
by the performance of the private segment
of the market (+RUB 136.9 billion).
Major trends in the medical services market included
a decrease in the share of public funding from 73%
in 2021 to 67% in 2023 and a corresponding increase
in the share of paid services from 27% to 33%.
The decrease in the share of public funding is due
to several factors: the growth of budget spending
on medical services is slowing down; the number
of hospitals and beds in public healthcare institutions
is decreasing, and the popularity of paid medical
services is growing.
Financing of the medical services market in Russia, RUB bln, %
2021
2022
2023
Change 2023/2022
State healthcare
Share
2,975.7
2,713.7
2,756.8
73%
69%
67%
Paid medical services, including VHI
1,096.8
1,218.9
1,355.8
Share
Total
Source: Federal State Statistics Service (Rosstat)
27%
31%
33%
4,072.5
3,932.6
4,112.9
1.6%
-2 p.p.
11.3%
2 p.p.
4.6%
Drivers of 2023 healthcare spendings increase:
• Increased fiscal spending in the healthcare sector
• A growing share of elderly people in Russia;
• Heightened attention from the government
to the treatment of complex diseases (primarily
cancer) and high-technology medical care;
• A growing number of private clinics;
• A 4.6% increase in real household income.
Obstetrics market in 2023
Moscow and
the Moscow
Region
193,413
4,631
Saint
Petersburg
Samara
Region
Republic of
Bashkortostan
Tyumen
Region¹
Novosibirsk
Region
Russia
1,264,938
48,073
35,512
24,179
26,022
17,195
2.4%
2.4%
4.9%
3.5%
4.6%
3.5%
0.8%
1,144
1,176
1,250
792
898
9,891
Number of deliveries
Number of deliveries in MD Medical Group
X%
Market share
Sources: Rosstat, the Company
In 2023, MD Medical Group’s share in the Russian
obstetrics market stood at 0.8%. In the regions
where the Company’s hospitals operate, the share
varies from 2.4% in Moscow and Saint Petersburg
to 4.9% in the Samara Region.
Infertility treatment is one of the core areas
of MD Medical Group’s business. The Company
is a leader in this segment of medical services:
the share of IVF punctures performed in our
institutions exceeds 18% of the total number
of Infertility treatment punctures in Russia.
PRIVATE HEALTHCARE
The private healthcare market is highly fragmented:
there are more than 200 players, while the share
of the five largest companies does not exceed
10%. Private medical institutions compete both
with each other and with public clinics and hospitals,
where equipment is being upgraded and the focus
on patient centricity is increasing.
Private companies enjoy a zero-income tax rate
and a zero-value-added tax on medical services.
Starting from 2020, medical institutions have been
using this benefit indefinitely. Previously, it had
been a temporary measure, but its validity period
was regularly extended.
Data as at year-end 2023 show that the number of medical institutions
in Russia totaled 64,600 (+2% compared to 2022), of which 53,600
were private (83%). At the same time, private medical companies
have the following competitive advantages:
High service standards
Patient comfort: availability of
appointments, prompt provision of
services, a personalized approach
Innovative treatment methods, rapid
introduction of new technologies
and techniques
¹
Excluding autonomous districts.
CONTENTSANNUAL REPORT 2023
28
STRATEGIC REPORT
29
Trends in the paid medical services market in Russia
Favorable trends for the market
Reduction in the share of public funding
of healthcare
Increase in the average age
of the population
Public funding does not fully cover the
population’s demand on medicine. This is
a long-term trend. In 2023, the share of
public funding decreased by another
2 percentage points. At the same time, the
overall decrease in the number of hospital
beds in public institutions increases the
demand for them in private medical
institutions.
Increased purchasing power
Household spending on paid medical
services increased by 11.2% in 2023. Real
household income increased by 4.6% in
2023. It can be expected that in 2024, the
upward trend in household spending on
paid medical services will continue, driven
primarily by pent-up demand due to the
COVID-19 pandemic (as the provision
of general physicians’ services was
suspended) and the turbulent year of 2022.
The demographic projection in the base-
line scenario suggests that the share of
people over working age (57 years for
women and 62 years for men) will increase
from 24.5% in 2023 to 27% in 2046. Elderly
people are more likely to visit medical
institutions. The demand is expected to
be especially high in the fields such as
cardiology, oncology and geriatrics.
Growing number of private companies
in the CHI system
The CHI system, which includes high-tech-
nology medical procedures, provides a
stable influx of patients and funds, and
helps to ensure the patient flow when
opening new medical institutions.
Unfavorable trends for the market
Decline in the number of women
of childbearing age and fertility
Sanctions
The trend has a negative impact
on business areas related to obstetrics,
gynecology, IVF and pediatrics. This trend
is expected to continue in the coming years.
In 2023, the number of births decreased by
2.9%.
Population decline
In 2023, the population continued
to decline: during the year, it decreased
by 243,800 people to 146.2 million people.
Sanctions have a negative impact
on the Russian economy, which adversely
affects the demand for medical services.
In addition, the sanctions have forced
companies to reorganize logistics
and search for suppliers of the necessary
products in friendly and neutral countries.
Changes in the exchange rate
A significant share of imports in the total
volume of procurement of medical
consumables, medications and equipment
means that medical institutions are
exposed to exchange rate fluctuations.
Source: Rosstat
The healthcare sector is non-cyclical. The demand
for medical services is stable, except for force
majeure events, such as the coronavirus pandemic.
Russian public healthcare companies have high
profitability and growth rates, which sets them apart
from foreign competitors. According to Sberbank,
between 2019 and 2023, the EBITDA margin of public
healthcare institutions in developed and emerging
markets averaged 15-20% and 20-25% respectively,
which is lower than the results of Russian companies.
The revenue growth rate over the same period
averaged about 5-10% for companies in developed
markets and 10-15% in emerging markets.
Private companies actively invest in cancer
treatment and implement federal projects
as part of the Healthcare National Project:
they open new centers and purchase foreign
equipment for diagnostics, radiotherapy
and chemotherapy
THE COMPANY’S POSITION ON THE MARKET
In 2023, MD Medical Group ranked second
among private healthcare institutions in Russia
in terms of revenue, surpassed only by MEDSI,
with the Company’s revenue totaling RUB 27.6 billion.
The revenue of the ten largest companies totals
10% of the cost of paid medical services. In 2023,
MD Medical Group accounted for 2% of the total
cost of paid medical services. It is important to note
that the highly fragmented commercial healthcare
market provides its leaders with opportunities for
rapid inorganic growth.
MD Medical Group has an established reputation
and is highly trusted due to top-quality medical
services, modern equipment and comprehensive
patient care. This is why the Company’s operating
indicators in terms of the number of deliveries
and IVF punctures performed grow year on year,
despite the downward demographic trend in the
country. An im portant strategic focus area for the
Company is to expand its footprint in the regions,
where the level of eco nomic development is broadly
com-parable to that in Moscow. Moreover, for some
types of medical services, the capacity utilization
rate of regional medical institutions is higher
than in Moscow clinics and hospitals.
CONTENTSANNUAL REPORT 2023 30
STRATEGY
STRATEGIC REPORT
31
Expanding our
geographical reach
Over the past 10 years, the number of MD Medical Group’s
medical institutions has increased from 12 to 55.
We continue to actively develop in the regions with high
demand and growth potential.
We select regions for the opening of new medical institutions
based on the population density, per capita income and the
availability of qualified medical personnel.
Developing new types
of medical services
Currently, MD Medical Group is a multidisciplinary medical
company that provides medical services for the entire family.
By expanding the range of healthcare services that we
provide, we are able to improve brand recognition and
patient loyalty, provide an important incentive for the
personnel and ensure the resilience of our operations amid
external uncertainty.
Projects implemented in 2023
• Opening of a clinic in Mytishchi (Moscow Region)
• Opening of a family clinic, MD GROUP Zilart,
in January 2024
• Acquisition and opening of a new multidisciplinary
hospital in Michurinsky Avenue
• Acquisition of four clinics in the Khanty-Mansi
Autonomous District – Yugra
Plans for 2024/2025
• Increasing the total number of medical
institutions to 77 over the next two years:
opening new medical institutions in Moscow
and the Moscow Region, in the Lipetsk,
Chelyabinsk and Kaliningrad Regions, in the
Khabarovsk Territory and the Khanty-Mansi
Autonomous District
Projects implemented in 2023
• Opening of the new Neurosurgery Center at the
Lapino Clinical Hospital
• Currently, 78 medical specialties are available to
our patients
• In 2023, medical services not related to women’s
and children’s health accounted for 43% of
revenue
Plans for 2024/2025
• Starting the construction of the Lapino-3
Nuclear Medicine Center to provide
comprehensive treatment of oncological
diseases
• Continuing the development of
multidisciplinary family clinics: opening an
outpatient center in the Moscow International
Business Center (MIBC Moscow City)
Improving service
quality and achieving
a high level of brand
loyalty
Our efforts are focused on ensuring high quality of medical
care.
Our marketing policy and the work of our customer service
are aimed at increasing brand loyalty.
To achieve this, we systematically analyze patients’ needs
and preferences and develop our marketing policy taking into
account all the features and aspects of today’s market.
Projects implemented in 2023
• Opening of the Home Obstetrics Center in Lapino
in order to make childbirth even more comfortable
for our patients
• Development of telemedicine
• Development of remote patient monitoring
Plans for 2024/2025
• Further development of home obstetrics in the
Group’s hospitals
• Launching a special loyalty program as an
additional driver of brand loyalty
Improving
performance
The Company focuses on improving profitability; this includes
increasing capacity utilization, as well as cost control and
efficient pricing.
Individuals generate 77% of the Group’s revenue, which
makes it possible to promptly price in inflation and other
social and economic changes.
Projects implemented in 2023
• Increase in the Group’s capacity utilization
in terms of the number of deliveries, IVF
punctures and visits
• The EBITDA margin increased from 31% in
2022 to 33% in 2023
Plans for 2024/2025
• Continuous cost minimization and following
a flexible pricing policy while maintaining the
quality of our services and patient satisfaction
• Improving logistics and increasing the degree
of centralization in procurement
Creating
shareholder value
As the first Russian public medical company, we focus on
achieving the best results that translate into long-term value
for our shareholders and investors.
We can only achieve this by providing our patients with
top-quality services, creating the best working conditions for
our employees and maintaining a high business reputation
among our target audiences.
Projects implemented in 2023
• RUB 3.6 billion invested in business development
in 2023
• Start of the redomiciliation to Russia
• Approval of the dividend policy by the Board of
Directors; the policy provides for allocating up
to 100% of the Group’s consolidated profit for
dividends
Plans for 2024/2025
• Strong revenue growth, including through
gradual ramp-up of new projects to capacity
• Initiating the approval of profit distribution for
dividends after completing the redomiciliation
process
CONTENTSANNUAL REPORT 2023 32
STRATEGIC REPORT
33
OPERATING
RESULTS
The Group operates in Russian Federation and
has one primary reporting segment: provision of
medical services. We make strategic decisions,
evaluate performance and make investments
based on the profitability analysis for the Group as
a whole, without grouping subsidiaries by location
or area of business.
At the same time, for the convenience of reviewing
and assessing the Company’s performance, we
traditionally single out operational indicators
and a number of financial indicators for the
main business formats by geography. Due to
diversification and flexible redistribution of
resources between them, the Group remains
resilient in any market environment. Our core
business areas include:
• Hospitals in Moscow and the Moscow Region;
• Outpatient clinics in Moscow
and the Moscow Region;
• Hospitals in the regions;
• Outpatient clinics in the regions.
To understand the impact of changes in operating
indicators on financial results, this section presents
revenue in relation to operational indicators*.
The Group’s operating results in 2023
2023 saw a recovery in purchasing power,
reproductive behavior and regular outpatient visits,
which had a positive impact on the operational
performance of MD Medical Group. Areas such
as women’s and children’s health demonstrated
consistently strong revenue growth.
The number of deliveries in 2023 increased by 15.3%
compared to 2022 and almost reached 10,000.
Moscow hospitals made the greatest contribution
to these results, with their capacity utilization rate
exceeding 60%. In addition, regional hospitals,
mainly those in Ufa and Novosibirsk, contributed
significantly to performance in this area.
In 2023, the number of IVF punctures increased by
14.6%. All of the Group’s institutions reported strong
results in this area.
MD Medical Group is
the leading provider
of IVF services in
Russia using new
treatment standards.
EmbryoScope2
equipment helps
increase the success
rate of the procedure
In 2023, the Company increased the number of
procedures performed using EmbryoScope devices.
Among other things, this resulted in a higher average
bill for IVF procedures in the Group.
The fact that our patients pay attention to their
health contributed to an increase in visits to medical
institutions both in Moscow and in the regions. In
2023, the number of visits across all of the Group’s
institutions increased by 11.4%, while the average bill
added 2.2%.
In 2023, the total number of in-patient days across
the Group decreased by 2.5%. This was due to the
weakening of the COVID-19 pandemic, the impact
of which remained significant in 2022. At the same
time, the average bill for in-patient days increased
by 3.6% due to an increase in the provision of
gynecological and pediatric care, as well as the
performance of complex surgeries.
* For more details, please refer to the «Financial perfomance», p. 43.
2
EmbryoScope is a state-of-the-art technology that makes it possible to monitor embryo development in real time. The system uses artificial
intelligence to select the best embryo for transfer.
Number of deliveries
Number of IVF punctures
8,576
55%
9,891
61%
+15.3%
2022
2023
Capacity utilization
19,326
53%
16,862
47%
+14.6%
2022
2023
Capacity utilization
Number of visits
Number of in-patient days
2,123,216
1,905,263
150,020
146,342
54%
+11.4%
50%
58%
-2.5%
56%
2022
2023
Capacity utilization
2022
2023
Capacity utilization
Average bill, RUB ‘000
Revenue structure
331.5
335.5
+1.2%
9%
12%
19%
256.9
278.2
+8.3%
33%
27%
Deliveries
In-patient days
IVF
Visits
Other revenue
Deliveries
IVF
Visits
3.4
3.5
+2.2%
In-patient days
59.9
62.1
+3.6%
2022
2023
CONTENTSANNUAL REPORT 2023 34
STRATEGIC REPORT
35
HOSPITALS IN MOSCOW AND THE MOSCOW REGION
Key events in 2023
Share of hospitals
in Moscow in 2023
Group's revenue
2023 revenue
structure
9.0%
Average bill
in 2023, RUB ‘000
22.9%
487.2
48.6%
16.8%
7.4%
300.5
43.9%
89.1
5.4
Visits
In-patient days
IVF
Deliveries
Other revenue
The Group owns five hospitals in Moscow and the Moscow Region:
• MD GROUP Clinical Hospital;
• MD GROUP Michurinsky Clinical Hospital;
• Lapino-1 Сlinical Hospital;
• Lapino-2 Oncology Center;
• Lapino-4 Infectious Center.
MD GROUP
MD GROUP
Michurinsky
Lapino-1
Lapino-2
Lapino-4
Number of beds
261
60
191
120
46
Area, m2
27,600
8,755
42,000
18,500
4,200
Focus
Multidisciplinary medical care
Oncology
Infectious
diseases
Capacity3
Deliveries
3,500
—
3,740
IVF punctures
3,600
2,000
1,600
—
—
—
—
In-patient days
38,000
12,000
28,500
40,000
16,800
Visits
355,000
231,000
640,000
156,000
24,000
3
Estimated maximum number of deliveries, IVF punctures, in-patient days and visits per year, respectively.
In November 2023, the Company opened a new
hospital in Michurinsky Avenue acquired in the
middle of the year. The new hospital offers a wide
range of services for the entire family, including
surgical and medical inpatient treatment for adults,
IVF, as well as functional diagnostics and outpatient
care for adults and children.
Treatment will also be provided under voluntary and
compulsory health insurance programs.
Investment in the project, including additional
investment in medical equipment and upgrade of
the building, totaled RUB 2.8 billion and was financed
from the Group’s own funds.
The hospital has been equipped with new state-
of-the-art medical equipment by the world’s
leading manufacturers, such as Karl Storz, General
Electric Healthcare, Samsung, Mindray and Fujifilm.
New services for patients in the Lapino Clinical Hospital
As the Company strives for continuous improvement and always focuses on patient
well-being and satisfaction, in 2023 it continued to diversify the types of services
provided at the Lapino Clinical Hospital.
• A new Neurosurgery Center can
provide diagnostics and surgical
treatment of lesions of the central
and peripheral nervous system caused
by injuries, tumors, disorders and
hereditary conditions.
• MD Medical Group is always up to date
and seeks to anticipate all patients’
needs as fully as possible, while
maintaining the highest standards in
the safety of medical care, comfort
and service quality. Accordingly, in
2023, a Home Obstetrics Center was
launched at the Lapino Clinical Hospital,
where a contract for delivery includes
birthing classes, and using the gentle
birth method assisted by an individual
midwife and a doula in a ward with
all the necessary medical equipment
integrated into a modern “home-like”
interior.
• The team of the Plastic Surgery
Center was enhanced. The Center also
specializes in helping patients after
cancer treatment and focuses not only
on aesthetic results but also on patient
health. Accordingly, plastic surgeons of
the Center also have valid certificates
of general surgeons, mammologists and
oncologists.
• The proven effectiveness of high-
technology products and the experience
of the hospital doctors in this area
made it possible to open a Center
for Biological (Immunosuppressive)
Therapy in June 2023. The Center
focuses on the treatment of systemic
diseases of any severity, with genetically
engineered biological therapy offering
numerous advantages compared to
conventional treatment methods.
• A High-Risk Pregnancy Preservation
Center was opened for patients with
a complicated pregnancy or with
a complicated medical history. Doctors
at the Center are ready to provide
professional assistance in treating the
disorder and preparing for the long-
awaited birth of a baby.
CONTENTSANNUAL REPORT 2023 36
STRATEGIC REPORT
37
Operating results in 2023
Number of deliveries
Number of IVF punctures
OUTPATIENT CLINICS IN MOSCOW
AND THE MOSCOW REGION
4,275
4,631
64%
+8.3%
59%
2022
2023
Capacity utilization
3,298
61%
2,741
53%
+20.3%
2022
2023
Capacity utilization
Number of visits
Number of in-patient days
530,890
573,703
67,566
66,099
48%
+8.1%
45%
55%
53%
-2.2%
2022
2023
Capacity utilization
2022
2023
Capacity utilization
Hospitals in Moscow and the Moscow Region
demonstrated traditionally strong performance.
An increase in the number of deliveries and IVF
cycles confirmed that demand for these services
among patients of MD GROUP and Lapino hospitals,
which are the leading private medical centers
specializing in women’s and children’s health in
Moscow and the Moscow Region, remained stable.
The increase in the number of deliveries and IVF
cycles was driven by greater interest in childbirth
and higher purchasing power due to the stabilization
of social and economic conditions in 2023.
An increase in visits to Moscow hospitals was
driven by demand for diagnostics, telemedicine,
gynecology and pediatrics in the reporting period,
and to the development of a new area, namely
neurosurgery, at the Lapino Clinical Hospital. The
average bill increased by 5.4%.
A decrease in the number of in-patient days
was mainly due to the weakening of the
COVID-19 pandemic in 2023; however, it was partially
offset by an increase in indicators in traumatology,
urology, internal medicine and gynecology, and the
development of neurosurgery at the Lapino Clinical
Hospital.
Share of clinics in Moscow
in 2023 Group's revenue
2023 revenue
structure
10.5%
Average bill
in 2023, RUB ‘000
283.0
10.4%
43.8%
45.7%
5.9
Visits
IVF
Other revenue
Outpatient clinics in Moscow
and the Moscow Region
The Group owns 11 outpatient clinics in Moscow
and the Moscow Region:
Number
Average area, m2
Total area, m2
11
580
6,347
Capacity4 (visits)
492,000
Capacity5 (IVF punctures)
5,600
• Moscow – eight clinics;
• Odintsovo;
• Mytishchi;
• Mozhaysk.
Key events in 2023 and after the reporting date
In January 2023, the Group opened the
Mother&Child Mytishchi outpatient medical center.
The center has a capacity of up to 24,000 visits per
year. Investments totaled about RUB 23 million.
In January 2024, a new medical center, MD GROUP
Zilart, with an area of 452 m2 was opened. The
center focuses on providing multidisciplinary
outpatient medical care for the entire family. The
new clinic has a capacity of more than 50,000 visits
per year. Total investment in the project exceeded
RUB 81 million. The development of family clinics
with a focus on providing a wide range of medical
services for all family members is part of the Group’s
strategy to scale up multidisciplinary patient care.
The Zilart residential complex has been chosen
because it is family-oriented, as well as due to
the scale of the living space, and well-developed
social, cultural and educational infrastructure not
only within the complex, but also in the Southern
Administrative District of Moscow as a whole.
4
5
Estimated maximum number of visits per year.
Estimated maximum number of IVF punctures per year.
CONTENTSANNUAL REPORT 2023 38
STRATEGIC REPORT
39
Operating results in 2023
Number of visits
Number of IVF punctures
209,955
222,872
45%
45%
+6.2%
2022
2023
Capacity utilization
4,467
80%
4,079
73%
+9.5%
2022
2023
Capacity utilization
An increase in the number of visits was driven by
demand for obstetrics and gynecology, as well as
pediatrics. Additional growth potential is related to
the capacity of new clinics in Butovo and Mytishchi,
which were opened in the second half of 2022 and in
early 2023 respectively and did not yet reach their
design capacity in the reporting period.
A larger number of IVF cycles and a 4.5% increase
in the average bill in this area were driven by overall
high demand for this service in the Group’s medical
institutions, as well as an increase in the number
of genetic tests and the use of new-generation
EmbryoScope equipment in Moscow clinics.
HOSPITALS IN THE REGIONS
Share of hospitals
in regions in 2023 Group's
revenue
2023 revenue
structure
8.9%
27.2%
14.1%
11.8%
Average bill
in 2023, RUB ‘000
23.7%
286.3
201.9
41.5%
40.2
2.4
Visits
In-patient days
IVF
Deliveries
Other revenue
The Group’s assets in the regions include hospitals in the following cities of Russia:
• Novosibirsk;
• Samara;
• Saint Petersburg;
• Tyumen (two facilities);
• Ufa.
MD
Novosibirsk
MD
Samara
MD
Lakhta
MD
Tyumen-1
MD
Tyumen-2
Number of beds
93
164
52
164
50
MD
Ufa
185
Area, m2
Focus
Capacity6
Deliveries
IVF punctures
In-patient days
Visits
10,260
15,000
9,000
15,000
4,750
33,000
Multidisciplinary medical care
1,370
1,916
1,825
1,550
1,600
1,200
—
1,600
—
—
2,190
1,600
21,900
30,000
8,030
30,660
18,250
25,900
408,000
216,000
72,000
246,000
60,000
290,800
New specialties
In the summer of 2023, a day hospital was
opened in the children’s department of the
clinical hospital in Ufa to provide young
patients with an opportunity to receive
all the necessary care during the day and
spend the night at home, in a familiar
environment.
The oncology center of the Avicenna
Mother and Child Multifunctional Clinical
Hospital in Novosibirsk launched a new
service: sentinel lymph node biopsy. This
is diagnostic surgery which is one of the
basic methods for diagnosing lymph node
lesions in breast cancer, melanoma and
other malignant neoplasms. This method
makes it possible to determine the stage
of the disease, assess the risk of malignant
cells spreading throughout the body and
perform surgery at the required scale.
The hospital in Samara has introduced
a new oncofertility technique: the hospital
has launched an OTO-IVM program, which
involves obtaining oocytes from ovarian
tissue and subsequent IVM (maturation
of the cells in the embryology laboratory
followed by their freezing or fertilization
and the freezing of resulting embryos). This
technique eliminates the need for drugs and
does not require postponing the treatment
of the underlying condition.
The hospital in Tyumen started providing
palliative care in 2023.
6
Estimated maximum number of deliveries, IVF punctures, in-patient days and visits per year, respectively.
CONTENTSANNUAL REPORT 2023 40
STRATEGIC REPORT
41
Operating results in 2023
Number of deliveries
Number of IVF punctures
5,260
2,902
3,098
4,301
51%
59%
+22.3%
2022
2023
Capacity utilization
52%
+6.8%
48%
2022
2023
Capacity utilization
Number of visits
Number of in-patient days
688,928
752,761
79,741
77,494
58%
+9.3%
54%
61%
-2.8%
58%
2022
2023
Capacity utilization
2022
2023
Capacity utilization
In 2023, the hospitals in the regions made
a significant contribution to the Group’s operating
results. This was due primarily to an increase in the
number of deliveries. There was also an increase in
visits to treatment and diagnostic centers and the
number of IVF procedures.
A significant increase in the number of deliveries
was due to the strong performance of the new
MD GROUP Lakhta hospital in Saint Petersburg, as
well as hospitals in Samara and Tyumen.
An increase in the number of IVF cycles was related
primarily to the strong performance of hospitals in
Tyumen and Novosibirsk. Furthermore, the growing
popularity of the hospital in Tyumen was reflected
in an influx of patients from the neighboring
regions, namely the Khanty-Mansi Autonomous
District and the Yamalo-Nenets Autonomous
District.
An increase in the number of hospital visits in the
regions was driven by demand for services related
to children’s and women’s health, diagnostics
and telemedicine in hospitals in Tyumen, Ufa and
Samara.
The MD GROUP Lakhta
hospital in Saint
Petersburg was opened
in 2022 and reached
a high occupancy rate
in 2023
A decrease in the number of in-patient days for
oncology was due to a reduction in compulsory
health insurance quotas, as well as a decrease
in the length of hospital stay when undergoing
medication treatment in accordance with the terms
of medical care provision under compulsory health
insurance programs in a number of regions.
OUTPATIENT CLINICS IN THE REGIONS
Share of clinics in regions
in 2023 Group's revenue
2023 revenue
structure
8.1%
Average bill
in 2023, RUB ‘000
264.1
13.7%
30.8%
2.0%
59.1%
27.3
2.0
Visits
In-patient days
IVF
Other revenue
The Group’s assets in the regions include 33 clinics in 26 cities of the Russian Federation:
1. Barnaul
2. Vladivostok
3. Vladimir
4. Volgograd
5. Voronezh
6. Yekaterinburg
Irkutsk
7.
8. Kazan
9. Kostroma
10. Krasnodar
11. Krasnoyarsk
12. Nefteyugansk
13. Nizhny Novgorod
14. Novokuznetsk
15. Novokuybyshevsk
16. Novosibirsk
17. Omsk
18. Perm
19. Rostov-on-Don
20. Ryazan
21. Samara
22. Saint Petersburg
23. Surgut
24. Togliatti
25. Tula
26. Yaroslavl
Outpatient clinics in the regions
Number
Average area, m2
Total area, m2
Capacity7 (visits)
Capacity8 (IVF punctures)
Capacity9 (in-patient days)
33
733
24,180
940,550
19,200
3,700
7
8
9
Maximum number of visits per year.
Maximum number of IVF punctures per year.
Maximum number of in-patient days per year.
CONTENTSANNUAL REPORT 2023 42
Key events in 2023
In September 2023, the Group acquired four clinics
in the Khanty-Mansi Autonomous District – Yugra.
The acquisition of the clinics will enable the Group to
become a leading private healthcare provider in the
region and create an outpatient base for referring
patients for high-technology care at the Group’s
hospital in Tyumen. The transaction value totaled
RUB 349 million; it was financed from the Group’s
own funds.
Operating results in 2023
Number of visits
Number of IVF punctures
STRATEGIC REPORT
43
FINANCIAL PERFORMANCE
The financial results of MD Medical Group for 2023 reflect steady
business growth combined with high profitability. The overview
below is based on the Group’s consolidated IFRS financial
statements for 2023*.
8,463
44%
7,140
37%
+18.5%
2022
2023
Capacity utilization
573,880
61%
475,490
53%
+20.7%
2022
2023
Capacity utilization
Number of in-patient days
2,713
2,749
73%
74%
+1.3%
2022
2023
Capacity utilization
An increase in visits to clinics was driven by demand
for obstetrics and gynecology, diagnostics and
telemedicine. The greatest contribution to the results
of outpatient clinics in the regions was made by
the recently opened clinic in Yekaterinburg, as well
as clinics in Rostov-on-Don, Krasnodar and Saint
Petersburg.
The number of in-patient days increased by 1.3%.
A significant increase in the indicator was recorded
in Irkutsk, Samara and Novokuznetsk due to the
expansion of services covered by compulsory
health insurance which involve day hospital stay
(the increase was mainly due to an increase in the
number of minor gynecological surgeries).
An increase in the number of IVF cycles was due to
an increase in the number of IVF services provided
both on a commercial basis and under compulsory
health insurance programs, as well as the growing
popularity of clinics among patients living in nearby
regions.
Financial highlights, RUB mln, %
Revenue
Gross profit
Gross profit margin
EBITDA
EBITDA margin
Operating profit
Operating profit margin
Net profit
Net profit margin
Adjusted net profit10
Adjusted net profit margin
2023
27,631
11,292
40.9%
9,218
33.4%
7,509
27.2%
7,823
28.3%
7,823
28.3%
2022
25,222
9,793
38.8%
7,924
31.4%
4,969
19.7%
4,719
18.7%
6,005
23.8%
Change
9.6%
15.3%
2.1 p.p.
16.3%
2.0 p.p.
51.1%
7.5 p.p.
65.8%
9.6 p.p.
30.3%
4.5 p.p.
REVENUE
In 2023, the total revenue of MD Medical
Group increased by 9.6% to RUB 27,631 million.
The revenue growth was mainly due to stable
demand for services related to deliveries and IVF
both in Moscow and in the regions.
The revenue of Moscow hospitals increased
by 3.1% year on year, mainly due to an increase
in the number of IVF cycles and the number of visits
in areas such as obstetrics and gynecology,
pediatrics, diagnostics and telemedicine.
The 15.5% growth of revenue of regional hospitals
was driven by a significant increase in capacity
utilization of obstetrics departments of hospitals
in Saint Petersburg, Samara and Tyumen, and an
increase in bed occupancy rates in hospitals in
Novosibirsk (traumatology and pediatrics), Samara
(cardiology and pediatrics) and Lakhta (pediatrics
and gynecology), with a simultaneous increase
in the average bill for all types of medical services
provided in hospitals in the regions.
* For more details, please refer to Appendices, p. 106.
10 In 2022, adjustments include impairment of construction in progress, property, plant and equipment and goodwill totaling RUB 1,287 million.
CONTENTSANNUAL REPORT 2023 44
STRATEGIC REPORT
45
The revenue growth of outpatient clinics in Moscow
and in the regions was driven by both an increase
in the number of visits and a greater number of IVF
punctures and a higher average bill for them due to
an increase in the number of genetic tests and the
use of new treatment standards (EmbryoScope).
Revenue from areas not related to women’s and
children’s health accounted for 43.3% of the Group’s
total revenue.
Revenue by type of services
Woman’s
and children’s health
Surgery, cardiology,
traumatology
56.7%
11.2%
17.0%
Therapy
4.9%
Оncology
8.4%
Diagnostics
9.7%
Laboratory services
5.3%
Other medical revenue
1.9%
Other non-medical
revenue
1.9%
Revenue by institution, RUB mln
13,013
13,419
Woman’s
and children’s
health
21.2%
34.3%
IVF
Gynecology
Deliveries
Pediatrics
27.5%
6,506
7,514
2,630
2,885
3,057
3,780
2022
2023
Hospitals in Moscow
Hospitals in the regions
Clinics in Moscow
and the Moscow Region
Clinics in the regions
Revenue by geography
Revenue by type of payers
62.1%
59.0%
75.9%
76.8%
37.9%
41.0%
24.1%
23.2%
2022
2023
2022
2023
Moscow and the Moscow Region
Regions
Individuals
Insurance companies and legal entities
EXPENSES
Key expenses, RUB mln
40.1%
11,079
40.2%
10,132
20.3%
5,133
17.7%
4,902
Personnel11
Materials
Medical services
Functional expenses12
1.2%
1.2%
308
331
1.3%
336
1.8%
488
2022
2023
Percentage
of revenue
In the reporting period, the Company’s underlying
costs remained under strict control and decreased
by 2.3 p.p. year on year as a percentage of revenue
(60.8%).
The share of spending on medical services remained
stable due to gradual vertical integration of business
processes, including the opening of the Company’s
own laboratory and data center.
In 2023, changes in labor costs were in line with
revenue growth, and their share remained at the
previous level (40.1% of revenue).
The share of supplies expenses decreased by 2.6 p.p.
year on year to 17.7% of revenue amid a decrease
in material-intensive services in the Company’s
portfolio, such as COVID-19 treatment.
The share of functional expenses increased by
0.5 p.p. year on year to 1.8% of revenue, driven by
higher IT support costs amid the expansion of the
Group’s business.
PROFIT
Gross profit
In 2023, gross profit increased by 15.3% year on year
to RUB 11,292 million due to an increase in the volume
of medical services provided and the average bill
for them. The gross profit margin increased by
2.1 p.p. year on year to 40.9% due to revenue growth,
while supplies expenses as a percentage of revenue
decreased.
EBITDA
In 2023, EBITDA increased by 16.3% year on year to
RUB 9,218 million, while the EBITDA margin increased
by 2 p.p. year on year to 33.4% due to improvement
in the Company’s operating performance.
EBITDA, RUB mln
9.218
7.924
31.4%
33.4%
+16.3%
2022
2023
EBITDA Margin
11 Personnel costs include payroll and social contributions.
12 Functional expenses include marketing, IT, customer service, personnel training, and telecommunication services.
CONTENTSANNUAL REPORT 2023 46
STRATEGIC REPORT
47
Operating profit
In 2022, as part of an impairment test, the Company
recorded impairment losses* on past investments
amid deteriorating macroeconomic conditions.
As a result, in 2022, operating profit decreased
by 25.0% year on year. In 2023, impairment tests
of a number of assets did not necessitate the
recognition of any write-offs.
Net profit, RUB mln
7,823
6,005 13
23.8%
28.3%
+30.3%
DEBT PORTFOLIO
The Group’s debt, which comprises only liabilities
under lease agreements, increased by 47.2%
year on year to RUB 877 million at year-end
2023. Cash balance grew 2.2 times to RUB
9,894 million as at December 31, 2023 compared
to RUB 4,463 million as at December 31, 2022.
As at December 31, 2023, the Company had a net
cash position of RUB 9,017 million. The Company’s
debt is fully denominated in rubles. At year-end
2023, the net cash position to EBITDA ratio stood
at 1.0x.
2022
2023
Adjusted net profit margin, %
Net profit
In 2023, foreign exchange gain amounted to
RUB 20 million compared to a loss of RUB 105 million
a year earlier.
The net profit in 2023 increased by 65.8% to
RUB 7,823 million, with the net profit margin of 28.3%.
In 2022, the Company’s net profit adjusted for
the above-mentioned impairments amounted to
RUB 6,005 million, with the adjusted net profit
margin of 23.8%. Compared to the adjusted net
profit for the previous year, the net profit in
2023 increased by 30.3%, while the profitability
growth was 4.5 p.p.
WORKING CAPITAL
Changes in working capital, RUB mln
Net cash position, RUB mln
0.5x (3,866)
597
1.0x (9,017)
877
(4,463)
2022
(9,894)
2023
The volume of funds
increased 2.2 times
compared to 2022
Debt
Cash
Xx
(X)
Net cash position/EBITDA
Net cash position
8.2% (2,060)
8.0% (2,220)
INVESTMENT PROGRAM
1,212
1,147
1,086
1,297
Total capital expenditures in 2023 increased three
times compared to 2022 and reached RUB 3,580 mln.
Hospitals account for the largest share of capital
expenditures (70%).
In the reporting period, a new hospital acquired in
the third quarter of 2023, MD GROUP Michurinsky,
was launched in Moscow.
(1,972)
(2,447)
(2,385)
(2,218)
31.12.2022
31.12.2023
Stocks
Accounts receivable
Accounts payable
Contractual obligations
(X)
X%
Net working capital
Share of revenue
The Company has historically maintained
a negative net working capital as a source of
additional financing. At year-end 2023, net working
capital remained negative (RUB 2,220 mln) and
amounted to 8.0% of revenue.
A decrease in inventories was due to effective
procurement management, and monitoring
to maintain an optimal stock of materials and
medications.
* For more details, please refer to Appendices, p. 142.
13 Adjusted net profit
A slight increase in accounts receivable was due to
an increase in advance payments to suppliers of
medications and consumables.
An increase in contract liabilities was mainly due to
an increase in advance payments made by patients
for the Group’s medical services.
2023 capital expenditures structure
RUB 38 mln
1.0%
RUB 762 mln
21.3%
RUB 82 mln
2.3%
RUB
3,580
mln
MD GROUP Michurinsky
MD GROUP Zilart
Renovation and current projects
MD GROUP City
RUB 2,698 mln
75.4%
CONTENTSANNUAL REPORT 2023 SUSTAINABLE
DEVELOPMENT
Sustainable development approach
Stakeholder engagement
HR management
Occupational health and safety
Environmental protection
50
SUSTAINABLE DEVELOPMENT
51
SUSTAINABLE
DEVELOPMENT APPROACH
Sustainable development principles underpin the mission and
values of MD Medical Group. We are convinced that people’s health
is the foundation for a sustainable future on a global and national
scale.
OUR CONTRIBUTION TO SUSTAINABLE DEVELOPMENT
The contribution of MD Medical Group to sustainable
development is determined by both the nature of the
Company’s activities and its strategic goals, such as:
• Attracting and retaining the most qualified
personnel, supporting the professional
development of our specialists;
• Top-quality service provision;
• Use of advanced medical technologies and state-
of-the-art equipment;
• Attention to scientific achievements and
introduction of promising innovations;
• A flexible pricing policy that provides access to
high-quality medical services for people with
different income levels;
• Increasing the accessibility of our clinics,
including for people with disabilities.
The Company is a leader in Russia in
terms of the number of IVF punctures
performed. It applies modern
standards in pregnancy planning
and management, and successfully
leverages all the capabilities of
modern reproductive medicine.
Results in 2023:
• Over 19,000 IVF punctures were
performed;
• About 10,000 deliveries took place.
MD Medical Group is a major employer
in the medical industry. It creates
comfortable working conditions
and pays competitive salaries
to thousands of specialists. The
Company supports small and medium-
sized businesses by purchasing goods
and services from them.
Results in 2023:
• The headcount of the Group
totaled 8,805 people;
• The payroll increased by 9% to
RUB 11,079 million.
SUSTAINABILITY MANAGEMENT
Various aspects of sustainability management are distributed among various governing bodies of the
Company: the Board of Directors, the CEO and the relevant departments.
Contribution to the implementation of national projects and the achievement
of the UN Sustainable Development Goals (SDGs)
Sustainability governance structure
MD Medical Group provides high-
quality medical services that
meet international standards and
contributes to the reduction of
morbidity and mortality. Particular
attention is paid to the supply of
state-of-the-art equipment and
the digitalization of the Company’s
activities.
Results in 2023:
• More than 2 million visits and
146,000 in-patient days;
• RUB 1.2 billion invested in new
technologies, equipment
and digitalization.
The Company provides opportunities
for training and professional growth,
and contributes to the professional
development of medical specialists.
In addition, MD Medical Group is
continuously developing educational
activities at the medical MGIMO Med
University and runs modern specialist
training and residency programs.
• All clinics and hospitals of
MD Medical Group have
implemented a continuing medical
education (CME) system;
• MGIMO Med University has
developed one specialist training
program and four residency
programs, and 12 specialists
completed their residency in
2022/2023.
Board of Directors
Defines strategic priorities for sustainable development
Monitors the effectiveness of corporate governance
Approves internal regulations on sustainable development
Audit Committee
Remuneration Committee
Nomination Committee
Corporate Secretary
CEO
Manages the fulfilment of the
Company’s sustainability commitments
Supervises the work of the relevant departments
Internal Audit Department
Assesses the effectiveness
of sustainability risk management
Investigates potential violations
of business ethics and human rights
Directors and departments of the Management Company
Responsible for the implementation of sustainability initiatives
in the relevant areas at the operational level
Executives of medical institutions
Responsible for the implementation of environmental protection,
occupational safety and health, and HR management measures
at the level of individual clinics and hospitals
Medical Director
Legal Department
HR Department
Department
of Information
Technology
Customer service
Procurement Department
Single call center
Operational Security
and Information Security
Department
CONTENTSANNUAL REPORT 2023 52
SUSTAINABLE DEVELOPMENT
53
SUSTAINABILITY RISKS
MD Medical Group recognizes the importance
of sustainability risk management to promote
sustainable business development and effective
value creation for all stakeholders.
The timely identification and mitigation of
sustainability risks enables the Company to improve
operational efficiency, strengthen its reputation and
increase its contribution to the sustainable future of
the country’s population.
The Board of Directors, together with the relevant
departments, identifies the most significant
sustainability risks and decides on measures to
mitigate and compensate for the identified risks.
Approaches to sustainability risk management are
regularly reviewed.
The Company identifies five groups
of sustainability risks:
• Environmental risks;
• Social and HR risks;
• Human rights risks;
• Corruption risks;
• IT and cybersecurity risks.
Preventive measures are taken for all identified risks,
and the probability of risk events is low
Environmental risks
Risk
Risk management
Improper disposal
of hazardous waste
The Company is constantly improving the procedures for selecting waste disposal
contractors, who must have all the necessary competencies and permits.
The Group’s clinics and hospitals are monitored in terms of compliance with national
sanitary and epidemiological standards.
The Company provides its medical institutions with equipment for the disposal
of medical waste, which reduces disposal costs and the risk of epidemiological
contamination.
Personnel are regularly trained in waste disposal.
Social and HR risks
Risk
Risk management
Government restrictions
related to employment
The Company’s HR Department constantly monitors changes in legislation and
promptly responds to them.
Insufficient presence
in the regions
Deterioration of the Group’s
perception as an employer
Lack of qualified personnel
Employee records, including information on their qualification and certification, is
stored in the 1C: Payroll and HR Management integrated electronic system.
The Company is expanding its footprint in the regions by opening new clinics and
hospitals to increase the coverage and accessibility of its medical services.
Pricing in new institutions takes into account the income level of the population of
a specific region.
The Company provides services under CHI programs, including IVF.
The Company monitors the level of employee engagement and satisfaction by
conducting regular surveys. The Group’s institutions provide an environment for
unlocking and developing professional potential.
MD Medical Group continues to cooperate with leading medical universities to find
and retain young talented specialists.
The Company is expanding its geographical reach and is constantly seeking
opportunities to attract additional qualified personnel.
To maintain the competencies and improve the skills of employees, the Company
constantly runs in-house educational programs.
Conclusion of contracts
with unreliable or unverified
counterparties
Internal regulations governing the procurement process are constantly updated.
Contracts with counterparties are approved through an internal electronic
document management system, which minimizes the risks of cooperation with an
unscrupulous contractor or supplier.
Deterioration of the sanitary
and epidemiological situation
in institutions
The Company is constantly improving its internal safety guidelines and implements
measures to ensure employee safety.
Significant resources are allocated to replace faulty equipment, run occupational
safety and health training programs and provide personnel with modern personal
protective equipment.
Human rights risks
Risk
Risk management
Significant increase in energy
consumption and reduced energy
efficiency
All medical institutions have energy-saving equipment.
Energy-saving measures are implemented in accordance with internal regulations.
Discrimination in the workplace
The Company has zero tolerance to any form of discrimination. All potential cases of
discrimination are recorded and investigated.
Significant increase in water
consumption
Water supply infrastructure in all clinics and hospitals of the Group is monitored and
repaired in a timely manner.
Wage discrimination
The Company has a remuneration system based on transparent, clearly formulated
key performance indicators.
Increased paper use
The Company supports the transition to electronic document management, and
introduces digital and mobile tools for record keeping and stakeholder engagement.
Occurrence of forced labor
MD Medical Group’s principles of corporate culture include voluntary engagement
and encouragement. Coercion in any form is not permitted.
Improper disposal of defective or
unusable medical supplies
Procedures for the disposal of medical supplies have been standardized.
All medical supplies undergo testing and quality control.
CONTENTSANNUAL REPORT 2023 54
SUSTAINABLE DEVELOPMENT
55
Corruption risks
Risk
Risk management
Acts of corruption
The Company has implemented an electronic document management system to
minimize the risk of wrongdoing.
The Company conducts internal audits to ensure compliance with legal requirements.
The Company leverages the System to standardize
accounting processes, monitor compliance with
regulations and instructions, automate weekly and
monthly reports in presentation systems, analyze
databases in Excel with flexible settings for user
tasks (pivot tables, DAX queries for configuring files
for presentations, etc.).
Bribery of the Company’s employees
in the interests of third parties
The Company is implementing a procurement centralization program for all medical
institutions.
Mobile app for patients
A process for approving counterparties and financial control over payments
is centralized.
IT and cybersecurity risks
Risk
Risk management
Inadequate protection
of personal data
The Company has installed equipment for personal data encryption and protection
against hacking, including antivirus software. A Personal Data Processing Policy has
been developed.
Employees’ rights of access to patient treatment information and other information
are strictly separated.
All modifications to the Company’s digital systems are thoroughly tested. Server data
is backed up daily to enable quick recovery in the event of data loss.
Protection of critical IT
infrastructure
Documentation has been developed to protect critical infrastructure, including
emergency response plans.
Restrictions have been imposed on the installation of software and the use of
memory cards by employees. Equipment for personal data encryption and protection
against hacking has been installed.
DIGITALIZATION
Digitalization of healthcare in Russia is gaining
momentum and helps to address the challenges
facing today’s healthcare system. Matters related
to optimization and fundamental transformation of
the industry became especially relevant during the
pandemic, when the load on the healthcare system
increased significantly, necessitating the prompt
incorporation of modern IT solutions into medical
processes.
General trends towards the digitalization of life and
the use of gadgets, online applications and services
can also be observed in the healthcare industry.
The Company moves with the times and actively
transforms its operations through the adoption of
innovative technologies and the digitalization of
business processes.
Business Intelligence System (BI)
The system makes it possible to:
• Promptly (with an accuracy of up to one
business day) receive data on the key drivers
of performance of its institutions and make
management decisions based on them;
• Compare the performance of individual doctors
or departments, identify the flows of CHI/VHI/
commercial services, the contract base, doctors’
schedules, etc., including the comparison of data
with similar periods in previous years;
• Break down data from the regional level to the
level of services/patients/referrals.
The mobile app for patients has a number of
functions:
• Selecting the required specialist;
• Making an appointment;
• Synchronizing the appointment with the calendar
on the mobile device;
• Setting up and receiving notifications about
upcoming events;
• Managing children’s appointments;
• Paying for the appointment on the personal
account page;
• Viewing all contracts concluded after signing in to
the app, including the history of service provision;
• Viewing the full history of appointments and tests
since signing in to the mobile app, etc.
Mobile app for doctors
The mobile app enables doctors to:
• View a patient’s electronic medical records;
• View the doctor’s own schedule and the schedule
of other specialists;
• Make an appointment;
• Receive notifications when a patient arrives at
a hospital or clinic;
• Make changes to records;
• View corporate news, as well as a section
containing up-to-date knowledge from practicing
doctors;
• View up-to-date information on patient contracts.
Remote patient monitoring
The Company provides capabilities for daily remote
monitoring of pregnant women in order to detect
medical emergencies. Patients can be provided with
a device for at-home CTG-monitoring1, a personal
blood glucose meter, a personal blood pressure
monitor, etc.
A robotic system continuously monitors a patient’s
indicators, which enables a doctor to detect any
deterioration in a timely manner.
1
Fetal cardiotocography.
The attending physician receives notifications if:
• The patient has not transmitted the readings;
• The patient does not transmit the readings for
several days in a row;
• Monitoring has been suspended;
• The patient has not received the device;
• Monitoring has been completed;
• The patient has not returned the device to the
medical institution;
• The patient’s indicators require attention or
response.
The process is also supervised by the management
of the medical institution. The chief doctor can
supervise all their subordinates simultaneously. The
indicators of all patients under medical supervision
are shown on a single screen.
Patients who have stable indicators do not
communicate with the doctor outside scheduled
appointments. If the robot detects deviations from
stable indicators, it recommends the patients to
contact the doctor immediately or seek hospital
admission.
Telemedicine consultations
During a remote consultation, a doctor analyzes
a patient’s complaints and gives recommendations
based on the medical history. The doctor can give
a second opinion or interpret test results; in case of
acute pain, the doctor will tell the patient whether it
is necessary to attend a clinic or call an ambulance.
The attending physician can remotely adjust the
treatment if the diagnosis was established during
a visit to the clinic. A pediatrician will provide
consultations for child patients. After a remote
consultation, a medical report and prescriptions are
issued.
Integration with USHIS
The Company has implemented measures to enable
the transfer of structured electronic medical
documents (EMDs), including birth and death
certificates and the findings of neonatal screening
(large-scale examination of all newborns, which is
carried out to enable early detection and treatment
of hereditary and congenital diseases), to the
Uniform State Health Information System (USHIS)
and state health information systems of constituent
entities of the Russian Federation.
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SUSTAINABLE DEVELOPMENT
57
STAKEHOLDER
ENGAGEMENT
Open and transparent communication with stakeholders enables
MD Medical Group to understand and take into account the needs
and expectations of each stakeholder.
The Company identifies the following stakeholder groups:
Patients and their
families
These are the end users of the Company’s services and have
a direct interest in the quality and availability of medical services.
Employees
Suppliers
These include medical and administrative staff, as well as managers.
Employee involvement in the Company’s activities and the level of
employee motivation have a direct impact on service quality and the
operational efficiency of MD Medical Group.
Suppliers provide the Company with medical equipment, consumables,
medications and other goods and services necessary for providing
medical care.
Main channels of communication with stakeholders
Online channels
Internal channels
Direct communication
channels
Print media
Corporate websites: mamadeti.ru, mcclinics.ru, lapinomed.ru
Websites of individual medical institutions
Mobile app
Webinars
Intranet
Employee hotline
Corporate journal
Telegram channel
Patient hotline for matters related to service quality
Patient feedback
Responding to inquiries
Annual report
Promotional materials
Publications
Corporate journal
Stakeholder engagement
Stakeholder
Key needs
Key focus areas of engagement in 2023
• Quick and easy access to high-
• Provision of medical services
Patients and their
families
quality medical services
• Perception, service quality and patient satisfaction
• Remote patient monitoring and telemedicine
Shareholders and
investors
Shareholders and investors invest their funds in the Company and expect
it to be financially stable, to grow and to be effectively managed.
Employees
Government
agencies
Government agencies regulate medical activities.
Insurance companies
Their interests are closely linked to the interests of patients and
government agencies.
Suppliers
Media
Media coverage of the Company’s activities and related events may have
an impact on the Company’s reputation.
• Professional growth
• Career opportunities
• Good salary
• Search for highly qualified employees for the
Group’s new institutions
• Talent retention and talent pool development
• Developing a corporate training and onboarding
system
• Improving the employee incentive system
• Developing a mobile application and the launch of
a Telegram channel for employees
• Business resilience
• Supply of medications, consumables and equipment
• Procurement transparency
• Centralization of procurement processes
• Mitigation of sanctions risks by searching for new
suppliers
• Search for more affordable analogs of medical
products while maintaining their quality
• Seeking to conclude contracts with suppliers
without any intermediaries
• Building a sustainable supply chain
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SUSTAINABLE DEVELOPMENT
59
Stakeholder
Key needs
Key focus areas of engagement in 2023
• Transparent and open
information disclosure
• Business resilience
Shareholders and
investors
• Strong financial performance
• Increase in shareholder value
• The Company’s strategy
• Redomiciliation process
• Operating and financial results
• Dividend policy
• Capital expenditures, M&As, opening of new
institutions
• Private healthcare market, the Company’s
competitiveness
• Compliance with legal
• Compliance with legal requirements for the quality
Government
agencies
requirements
• Patient satisfaction
of medical services and supplies, medical personnel,
and environmental protection
• Provision of services under CHI programs
Insurance
companies
• Compliance with legal
requirements
• Patient satisfaction
• Compliance with legal requirements for the quality
of medical services and supplies, environmental
protection, and requirements for medical personnel
• Maintaining a high quality of medical services, no
patient complaints
• Willingness to cooperate
• Operating and financial results
Media
• Availability, transparency and
clarity of information about
the Company
• Redomiciliation process
• Prospects for the private healthcare market
in Russia
• Application of new technologies and digitalization
• Opening of new institutions
OUR PATIENTS
MD Medical Group is constantly improving service
quality based on patient feedback and exploration
of the best market practices. The Company focuses
on personalizing its services and using a human-
centered approach to the patient and the patient’s
family; at the same time, it automates and digitalizes
service provision processes to ensure that services
in its medical institutions meet the high standards
in healthcare and incorporate innovative treatment
techniques, and that the level of comfort in hospitals
is comparable to that of health resorts.
Our patients include people of different generations
with certain habits and expectations. They can
communicate with the Company using a wide range
of channels: a call center, a chat in a messaging app,
and the Company’s website. In addition, a mobile
app for patients provides access to the patient’s
electronic medical records and makes it possible
to track test results, view diagnoses, prescriptions
and recommendations after consulting doctors, and
perform various other useful actions.
The Company measures the Net Promoter Score
and conducts regular patient surveys to assess
their satisfaction with the appointment, politeness
of the personnel, the level of comfort in a medical
institution, the convenience of receiving results, the
waiting time for an appointment, the convenience
and availability of appointments, etc. All data is
collected and analyzed in a centralized manner
using information systems. Patient responses in
2023 enabled the Company to significantly improve
the format for providing test results, make services
in the mobile app more intuitive, and add new
payment methods.
MD Medical Group closely
monitors new preferences and
requests of its patients and
adjusts accordingly. Telemedicine
and remote patient monitoring
are gaining in popularity. In
2023, about 10,000 patients used
remote medical services
Currently, the Group’s medical institutions provide
at-home cardiotocography (CTG) monitors, blood
glucose meters and blood pressure monitors.
Continuous operation of the devices enables the
attending physician to notice negative changes in
a timely manner and receive notifications about the
transfer of readings by the patient, suspension or
completion of monitoring, return of the device, and
symptoms that require the doctor’s attention.
Telemedicine is another area of digitalization. It
offers a wide range of opportunities for patients.
During a remote consultation the doctor analyzes
the patient’s complaints and gives recommendations
based on the medical history, gives a second opinion,
and interprets test results; in case of acute pain, the
doctor tells the patient whether it is necessary to
attend a clinic or call an ambulance. The attending
physician can remotely adjust the treatment if the
diagnosis was established during a visit to the clinic.
After a remote consultation, the patient is given
a medical report and prescriptions.
In 2023, legal requirements for the provision of paid
medical services2 were clarified. Accordingly, the
Company approved a new version of the Regulations
on the Procedure and Conditions for the Provision
of Paid Medical Services in Clinics and Hospitals, and
made appropriate amendments to the templates of
contracts for the provision of paid medical services
to patients. In addition, information provided on the
websites of medical institutions and in the “consumer
corners” in clinics and hospitals was updated
following a revision of the list of information about a
medical organization and its services to be provided
in accordance with legal requirements.
Providing information to patients
Information provided to the patient
Way of providing information
Qualification of medical personnel
Origin of medications, their certification
and confirmation of safety
Possible positive and negative effects of procedures,
the use of equipment and medications
Safety rules for procedures, the use of equipment and
medications
Information on the qualification of medical personnel is
available on the websites of the Group’s medical institutions,
feedback aggregators such as ProDoctorov, and in the
mobile application for patients. The information is regularly
updated.
The entire path of a medication from production or import
into the country to its use by the patient can be traced
using services such as Monitoring of Medicines Movement
and Chestny ZNAK (“Label of Integrity”).
The information is provided in the form of consent to
the procedure and is explained orally. Information about
examinations and surgeries is available on the websites of
medical institutions. If necessary, reminders about how to
prepare for examinations and surgeries are sent to patients.
Other information relevant to patients’ health
and safety
Each medical institution has a “consumer corner”, and the
website contains a legal FAQ page.
2
Decree No. 736 of the Government of the Russian Federation dated May 11, 2023 on Approval of the Rules for the Provision of Paid Medical
Services by Medical Organizations, Introduction of Amendments to Certain Regulations of the Government of the Russian Federation and
Invalidation of Decree No. 1006 of the Government of the Russian Federation dated October 4, 2012.
CONTENTSANNUAL REPORT 2023 60
SUSTAINABLE DEVELOPMENT
61
In 2023, MD Medical Group recorded no instances
of non-compliance with laws on advertising medical
services, patient consent to services and provision of
information to patients
PERSONAL DATA PROTECTION
The Company strictly complies with legal
requirements3 for the use and protection of
personal data and takes the necessary measures to
ensure the security and confidentiality of personal
information of its patients and employees. State-
of-the-art technologies and procedures are used
to prevent unauthorized access, data leaks, and
other threats. The team of the Operational Security
and Information Security Department constantly
monitors and analyzes cybersecurity risks in order
to ensure maximum protection of personal data.
When processing personal data, the Company
adheres to the following principles:
• Ensuring a lawful and fair basis for processing;
• Prohibiting the disclosure of personal data and
their transfer to third parties without the citizen’s
consent (unless otherwise stipulated by Russian
law);
• Defining specific legitimate purposes prior to the
collection and processing of personal data;
The Company has developed a set of regulations
to protect the personal data of its patients and
employees: the Personal Data Processing Policy,
Instructions on Password and Anti-Virus Protection,
the Regulations on Data Backup, etc. Each medical
institution has appointed an employee responsible
for the security of personal data, and encryption
equipment has been installed for secure data
transmission. On-site inspections are regularly
carried out in the institutions to ensure that
documentation containing personal data of patients
and employees is not freely accessible.
• Collecting only those personal data that are
necessary and sufficient for the stated purpose;
• Destroying or anonymizing personal data after
the purpose has been achieved or if it is no longer
necessary to achieve this purpose.
MEMBERSHIP IN ASSOCIATIONS
Membership in industry associations is an important
aspect of stakeholder engagement for the
Company. It enables MD Medical Group to establish
and maintain contact with other industry players,
share experience and knowledge, and shape the
development of healthcare policies and standards.
The Group’s doctors are members of:
• The Russian Academy of Sciences;
• The Russian Association of Perinatal Medicine
Specialists;
• The European Society of Cardiology;
• The Russian Society of Cardiology;
• The Moscow Scientific Society of
Anesthesiologists and Reanimatologists;
• The European Society of Anesthesiology (ESA);
• The Russian Scientific Society of Endovascular
Therapies.
3
Federal Law No. 152-FZ of July 27, 2006 on Personal Data, Federal Law No. 149-FZ of July 27, 2006 on Information, Information Technology
and Information Protection, Decree No. 1119 of the Government of the Russian Federation of November 1, 2012 on Approval of Requirements
for the Protection of Personal Data during Their Processing in Personal Data Information Systems, and other laws and regulations.
CHARITABLE AND SOCIAL INITIATIVES
MD Medical Group supports charitable and social
projects in the regions of its operation.
The activities of IDK (which runs a hospital and
clinics in Samara) serve as an excellent illustration
of social projects of the Group’s subsidiaries. The
company has provided assistance to a local hospice
for 15 years, contributing to the development of
palliative care in the region. In addition, since 2012,
IDK has provided assistance to the Samara Regional
Association of Doctors in introducing new unique
medical technologies for diagnosis and treatment
into medical practice. The Company’s spending on
charitable initiatives in the Samara Region totaled
about RUB 800,000.
Traditionally, on New Year’s Eve and Christmas Day,
the Company organizes various events for children,
such as New Year’s performances and Christmas
trees.
The Company runs the Tree of Wishes project,
as part of which employees of MD Medical Group
in different regions collect gifts for children with
disabilities and those in difficult situations.
SUPPLY CHAIN DEVELOPMENT
Supply management in MD Medical Group is aimed
at meeting the Company’s needs for equipment,
medications and consumables that satisfy the
necessary criteria for quality, reliability and price in
full and on time.
• Zero tolerance for corruption and any abuse in
procurement.
Apart from centralization, the Procurement
Department has two key tasks:
Basic principles of procurement:
• Information transparency;
• Equality, no discrimination or unreasonable
restrictions on competition for bidders;
• Priority of quality and high technology of
purchased goods and services to ensure the
comfort and safety of patients;
• Cost-effective spending on goods, work and
services for the Company; implementing cost
reduction measures;
• Searching for cheaper analogs of medications
and medical equipment while maintaining the
quality of goods, and regularly revising the terms
of existing contracts with suppliers;
• Concluding contracts directly with manufacturers
of goods or services, without intermediaries that
increase the cost of the contract with the supplier.
Centralized procurement
Centralization of procurement is an important
aspect of supply chain management in the Company.
Every year the Procurement Department compiles
a list of categories of goods the procurement of
which will be centralized; as a result, uniform quality
standards are applied with regard to equipment,
medications and materials in all medical institutions
of MD Medical Group. In addition, the centralization
of procurement processes makes it possible to
secure the most favorable terms of delivery due to
a significant number of items in the purchase order.
In 2023, the share of centralized procurement in the
total volume exceeded 70%.
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SUSTAINABLE DEVELOPMENT
63
Procurement of medications, consumables and equipment in 2023
Occupational health and safety requirements for contractors
In 2023, the Company updated the list of standards
establishing requirements for the management
of fire safety and occupational safety and
health matters at all stages of cooperation with
contractors, which made it possible to improve
control and compliance of contractors with safety
requirements during construction and repairs. In
the field of occupational safety and health, the
terms of contacts concluded by the Company
with contractors are focused on the prevention
of injuries and violations of occupational safety
and health rules. All hazardous work performed by
contractors must be carried out in accordance with
the requirements of the relevant regulations. Work
permits (or certificates of clearance) and work plans
(flow charts, instructions) must contain occupational
safety and health requirements that must be met
when organizing and performing the work.
Prior to commencing the work, contractors’
employees receive introductory and targeted
occupational safety and health briefings, including
on safety measures set out in work plans. In the
event of non-compliance with health and safety
requirements the Company may impose fines on the
contractor.
Local suppliers
MD Medical Group is actively developing mutually
beneficial relations with manufacturing enterprises
in the regions of its operation. The Company
cooperates with Russian suppliers and contractors,
and uses materials and equipment made in Russia,
which stimulates the development of the regional
economy.
In 2023, the share of medications purchased by
MD Medical Group from Russian suppliers increased
by 5 p.p. and reached 33%. The share of Russian
manufacturers in the procurement of the equipment
and consumables in 2023 stood at 10% and 19%
respectively.
Key goals of development
of a sustainable supply chain
Compliance of key suppliers and
contractors with key sustainability
requirements
No engagement with those counterparties
that have committed gross violations of
sustainable development principles
Establishing long-term relationships with the
most responsible contractors
Total procurement volume, RUB mln
Number of suppliers
2,068
209
1,996
1,173
935
369
Medication
Consumables
Equipment
Total
4,999
1,751
The Company attaches special importance to the
quality of supplier engagement and maintains close
cooperation with suppliers. MD Medical Group is one
of the first companies in Russia to directly conclude
contracts with the largest manufacturers of medical
equipment and consumables: Karl Storz, Olympus,
Fujifilm, Mindray, Samsung, General Electric, Philips,
Vitrolife, Abbott, etc.
The Procurement Department monitors prices on the
market and tests a new range of medical products,
taking into account sanctions against Russian
companies. Continuous monitoring enables the
Company to detect changes in the market in a timely
manner and replenish its stocks while selecting and
testing new products that will match the high quality
of medical services that it provides.
Procurement structure in 2023
19%
40%
41%
Medications
Consumables
Equipment
Sustainable supply chain
MD Medical Group incorporates sustainable
development principles into its procurement
activities, recognizing their importance in terms of
the smooth operation of medical institutions and
ensuring the highest quality of services provided to
patients.
The Company’s engagement with suppliers
and contractors on sustainable development
aspects is aimed at ensuring their compliance
with the established fire safety, industrial safety,
occupational safety and health, waste and natural
resource management requirements.
Mechanisms for developing a sustainable supply
chain include the following:
• Ensuring equal access to participation in
procurement procedures for any legal entities
which meet the requirements of the Regulations
on Procurement, regardless of their legal form,
form of ownership, location or status;
• Establishing the criteria for evaluation of bids
from potential bidders to prevent discrimination
against them;
• Conducting preliminary selection of suppliers,
holding round-table discussions with suppliers;
• Establishing requirements for bidders regarding
the absence of a conflict of interest between
a bidder and the customer;
• Including an anti-corruption clause in contracts
with major suppliers, which stipulates the
obligation of the parties to the contract to
conduct the relevant inspections and provides
grounds for the termination of the contract or
other penalties if the party violates the anti-
corruption clause;
• The possibility of establishing an additional
criterion for competitive bidding, namely the
existence and degree of implementation of
a quality management system that meets the
requirements of the GOST R ISO 9001-2015 or ISO
9001:2015 standards.
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SUSTAINABLE DEVELOPMENT
65
HR MANAGEMENT
MD Medical Group is proud of its highly qualified
specialists. Their outstanding professional qualities
enable the Company to remain a leader in the Russian
private healthcare market.
The Company seeks to create a comfortable
and friendly environment for employees in order
to enable them to fully focus on their work and provide
the best possible services to patients of the Group’s
medical institutions.
The Company has adopted a number of internal
regulations that ensure transparency and fairness
of HR management processes, equal opportunities
for all employees, and uniform personnel management
rules and procedures.
PERSONNEL POLICY
The main objectives of the Company’s
HR policy are as follows:
• Providing the Company with personnel to enable
further development;
• Forming a talent pool of the best doctors
and supporting talent development;
• Forming and developing a corporate training
and onboarding system;
• Improving the employee incentive system.
Recruitment, retention
and development
of highly qualified
personnel is one
of the main priorities
of MD Medical Group
None of the personnel
audits conducted
by the State Labor
Inspectorate, the Federal
Service for the Oversight
of Consumer Protection
and Welfare (Rospot-
rebnadzor) and the Federal
Com-pulsory Medical
Insurance Fund during
the reporting period
identified any material
findings
Progress towards HR policy objectives
in 2023
In 2023, the Company opened new clinics and one
clinical hospital in Moscow, as well as clinics
in the Khanty-Mansi Autonomous District. All new
institutions were provided with highly qualified
specialists and integrated into a single personnel
record system.
In order to streamline the management structure,
the management of some clinics in Moscow
and the Moscow Region was handed over to clinical
hospitals. Steps were taken to standardize
the customer service structure.
In order to ensure that employees receive timely
and relevant information about current events
in the Company, a special Telegram channel
was launched for them in 2023.
Key results of the year
in HR management
2023
8,805 people
Total headcount
at year-end 2023
RUB 11,079 million
Payroll
All planned personnel development
activities were carried out
All personnel audits by supervisory
authorities identified no material
findings
A Telegram channel
for employees was launched
The Group’s new medical facilities
are provided with qualified
personnel
Current internal regulations on HR management
General internal regulations
• Staff handbooks
• Department Regulations or Job Description
• Regulations on Employee Remuneration
• Regulations on Compliance with Qualification
Requirements for Medical and Pharmaceutical
Workers
• Regulations on Business Travel
• Regulations on Remote Work
• Information System User Manual
Protection of personal data and confidential
information
• Regulations on Personal Data Processing
• Regulations on Insider Information
• List of Confidential Information
• Confidentiality Obligation
• Instructions on the Handling of Confidential
Information
• Instructions on Setting Password Protection
and Assigning Access Privileges
Corporate ethics
Taxation and financing
• Code of Corporate Ethics and Employee
Conduct
• Procedure for Obtaining Preferential Tax
Treatment
• Regulations on the Use of Targeted Funding
from the LCHIF4 Allocated to the Group’s
Clinics and Hospitals
4 Local Compulsory Health Insurance Fund.
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SUSTAINABLE DEVELOPMENT
67
HR management structure
CEO
First Deputy Managing Director
Regional HR Director
HR Director
Center
Volga
Ural
Siberia
HR Managers at the Group’s
medical institution
Employees of the Management Company
Employees of the Group’s institutions
The HR management structure of MD Medical
Group reflects the special features of the industry
and the corporate culture of the Company; it takes
into account the key business functions, types
of institutions and their location, and supports well-
coordinated and consistent management decision-
making.
HR specialists closely cooperate with other divisions
and the Company’s executives. Performance
evaluation criteria for the HR Department include
the availability of the necessary personnel, as well
as the fulfillment of corporate tasks, such as timely
confirmation of employee certificates, etc.
PERSONNEL CHARACTERISTICS
All of the Group’s
medical institutions
have an integrated
HR information
system that
provides real-time
quantitative data
and enables informed
HR management
decisions.
General personnel characteristics
Total headcount at year end, people
Personnel structure by category, people
8,805
7,992
8,461
8,446
7,756
7,713
2,549
2,402
8
2,473
24
2
2,817
3,093
2,863
2,941
3,193
3,367
2021
2022
2023
2021
2022
2023
Total headcount
Full-time equivalent
(FTE)
Administrative staff
Professors
Junior medical staff
and nursing staff
Doctors
Personnel structure by age, people
Personnel structure by gender
2,124
2,244
2,465
19%
17%
17%
5,068
5,028
5,122
81%
83%
83%
1,269
1,194
1,218
2021
2022
2023
Over 50
Aged 30 to 50
Under 30
2021
2022
2023
Men
Women
New hires, people5
Staff turnover
Total number
1,661
1,512
1,598
2021
2022
2023
24.1%
Structure by gender
Women
Men
Structure by age
Under 30
Aged 30 to 50
Over 50
Structure by region of operation
Center
Ural
Siberia
Volga
1,400
1,304
1,396
22.3%
261
208
202
22.8%
2021
2022
2023
527
844
290
863
341
225
232
436
778
298
766
333
208
205
497
731
370
769
343
224
262
5
The data only include personnel at the principal place of employment, excluding external part-time employment.
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SUSTAINABLE DEVELOPMENT
69
Professional characteristics of medical personnel
STAFF INCENTIVES
To address medical tasks of any complexity,
MD Medical Group recruits doctors with a high level
of education and experience who have the necessary
skills and knowledge in their field. Compliance
with high corporate standards, professional
achievements, recommendations and certificates
are taken into account.
Distribution of doctors by region of operation in 2023, people
1,852
945
570
Moscow
Moscow Region
Other regions
The team of MD Medical Group
includes two corresponding
members and three
academicians of the Russian
Academy of Sciences
Number of doctors, people
Number of doctors with an academic degree, people
3,367
3,193
3,093
61
583
68
560
70
544
2021
2022
2023
2021
2022
2023
Medical personnel by specialization, presented as full-time equivalent (FTE), people
PhD
Doctors of Sciences
1,272
388
252
259
123
56
64
Obstetrician
Reproductive
medicine
Pediatrician
Oncologist
Surgeon
Cardiologist
Other specialties
The Company provides its employees
with com petitive salaries and benefits and offers
ample opportunities for professional development.
MD Medical Group has implemented a robust
staff incentive system, which includes monetary
and non-monetary tools and methods
for incentivizing and rewarding employees.
The key elements of the incentive system include
a system of key performance indicators (KPIs).
Employees have individual KPIs that are linked
to their responsibilities and tasks. The achievement
of these KPIs may be rewarded with bonuses
or other incentives.
The main staff incentive tools include:
• Monthly performance bonuses (the “70/30”
system);
• Bonuses for achieving KPI targets
(on a quarterly or annual basis);
• Bonuses for individual achievements and
performance of particularly important work;
• Incentive payments for qualifications;
• Incentive payments in the relevant field of work
(reproductive medicine, gynecology, embryology);
• Government and departmental awards, diplomas.
Payroll, RUB mln
Payroll structure
11,079
10,132
9,526
26%
23%
21%
24%
50%
26%
26%
51%
53%
2021
2022
2023
2021
2022
2023
Administrative staff
Junior medical staff
and nursing staff
Doctors
Social support
The Company attaches great importance to social
support for its employees, providing comfortable
working conditions and supporting employee health
and well-being.
The Company’s employees and their relatives
receive discounts on the services of MD Medical
Group’s me dical institutions. The Company provides
financial support in special circumstances (the birth
of a baby, an anniversary, a death, etc.). Doctors
of MD Medical Group are nominated by the Company
for government awards, which entitle them to certain
benefits.
MD Medical Group is one of the few private medical
companies participating in the state pension prog-
ram. Those health professionals for whom
the Com pany is the principal place of work have
privileges related to the length of medical work
experience (i.e. they are entitled to early retirement).
Every year, on Medical Worker’s Day, the Group’s
companies hold corporate outings, sporting
and other events for employees.
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SUSTAINABLE DEVELOPMENT
71
TRAINING AND PROFESSIONAL DEVELOPMENT
Professional development programs for employees implemented in 2023
As an employer, MD Medical Group prioritizes
the professional development of its employees.
The Company runs training programs and training
sessions to support personnel development
and strengthen commitment to corporate values,
such as transparency, innovation and the application
of best practices. Continuing education ensures
that patients and personnel can expect a consistently
high level of quality and work organization in each
institution of MD Medical Group.
Advanced training for medical personnel
is provided:
• As part of the continuing medical education
(CME) system, which covers all essential medical
personnel;
• As required or upon expiry of the current
documents of employees confirming their
qualification;
• As part of specialized professional
development programs.
In 2023, as part of the CME system, the Company
held lecture courses and developed the education
system: educational programs and distance
learning management were centralized; new
programs were launched, including in the field
of pharmaceutics and the prevention of healthcare-
associated infections (HAIs), in accordance
with new requirements of the Ministry of Health.
In the reporting year, the Company continued to run
its Talent Pool program, which involves providing
management training in all areas of activities
of the Group’s Management Company: management
of a medical organization, legal aspects, healthcare
quality control, financial management, operational
safety, HR management, procurement management
and IT. As part of the program, managers were
trained for the Group’s new medical institutions.
During the reporting year, more than 20 lectures
were held for future managers of various levels
under this program.
Doctors and nursing staff
receive at least 36 hours
of training per person
per year
Events for
nursing staff
Events
for doctors
Events hosted
by the Lapino Medical Cluster
A Group-wide course of 30 online
lectures. The course was run by
a third-party provider.
A Group-wide course of 26 face-to-
face and online lectures. The course
was run by MD Medical Group.
The course covered a wide range of
medical fields: nurse training, infection
prevention, patient care, etc.
Each lecture was attended by more
than 650 people.
The course was completed
by 863 people.
In 2023, Lapino hosted four science
conferences, which offered its parti-
cipants an opportunity to share their
experience, make new acquaintances
and improve their professional
know-ledge. The conferences were
focused on reproductive medicine and
the functioning of the human immune
system.
Personnel training programs
are managed by the HR Director
The Company actively cooperates with leading medical
universities to find and attract talented specialists:
it holds presentations and open days, and participates
in job fairs.
The Company runs a two-year residency program.
To qualify for the program, sixth-year students
of medical universities take part in a competition
consisting of tests, essays and interviews. As a result
of the selection process, a group of promising students
is formed, whose education is funded by MD Medical
Group. Participants of the program undergo training
and do an internship in the MD GROUP Clinical Hospital
and the Lapino Medical Cluster. After completing
their residency, they are hired by the Group’s
medical institutions.
In 2024, both traditional annual educational
programs and additional accreditation training
for certain categories of employees will be
im plemented. The Company plans to re vise
the organization of training for employees
with university degrees under a professional
retraining program titled “Organization
of Healthcare and Public Health”,
and to update onboarding programs.
A unique personnel training opportunity
at MGIMO Med University
In addition to developing medical competencies and expanding the geographical footprint
of its medical institutions, MD Medical Group provides continuing education at MGIMO Med
University established by the Company jointly with MGIMO in 2021. Mark Kurtser is the rector
of the university.
MGIMO Med University provides training
at the sites of the Lapino and MD GROUP
Michurinsky multidisciplinary clinical
hospitals, which have state-of-the-art
medical facilities, and at the MGIMO campus
in Odintsovo. Thus, students have an
opportunity to study the relevant disciplines
at leading medical and research institutions
of Moscow and the Moscow Region.
Given the need for new-generation
healthcare professionals, MGIMO Med
University focuses on an individual approach
to training, with a limited enrollment
of no more than 50 students per course.
Together with in-depth study of English
and a curriculum based on the experience
of leading international and Russian medical
universities, these are the distinctive
features of the university.
Further development of the project will
involve both the launch of residency pro-
grams focused on new areas and the co-
verage of other levels of training, including
additional professional education. Extensive
practical experience and the results of re-
search conducted by MD Medical Group
will underpin the development of training
programs for future specialists.
CONTENTSANNUAL REPORT 2023 72
SUSTAINABLE DEVELOPMENT
73
BUSINESS ETHICS AND HUMAN RIGHTS
In 2014, MD Medical Group adopted the Code of Corporate Ethics
and Employee Conduct. Its principles include creating a stimulating,
creative and non-discriminatory working environment for all employees
and partners, and respecting social diversity and the dignity
of every person.
The Company recognizes, respects and observes
human rights enshrined in Russian law, as well
as in fundamental international documents,
such as the UN Declarations and the ILO Conventions.
Furthermore, MD Medical Group:
• Supports equal opportunities for all employees
and job candidates in terms of recruitment,
ac cess to training, remuneration, social security,
internal mobility and professional development;
• Prohibits any behavior that may be
humiliating:no employee should be subjected
to any kind of harassment;
• Has zero tolerance to any form of modern
slavery, forced and child labor;
• Prohibits discrimination in any form on any
grounds, including gender, age, origin, religion,
political opinion, sexual orientation, appearance,
health, disability, and trade union membership.
Any employee acting in good faith may report
their concerns or suspicions about potentially
illegal or unethical practices related to human
rights and employee conduct under the established
procedure to:
• Their immediate supervisor;
• The director of the department
in the Management Company whose area
of responsibility includes the relevant issue;
• The Head of Internal Audit;
• The CEO;
• The Chair of the Audit Committee;
• The Chairman of the Board of Directors.
The Company strives to create a comfortable working environment for all
employees, including people with disabilities. At year-end 2023,
MD Medical Group employs 60 people with disabilities.
The Internal Audit Department investigates any al-
legations and, if necessary, seeks assistance from
other units not directly involved in the investigation.
No disciplinary or punitive measures are taken
against employees, provided that they act in good
faith, even if the reported information is proved to
be inaccurate or no further action is taken. If the
violation is confirmed, appropriate actions are taken
to remedy the situation, and disciplinary measures
may be taken, up to and including legal proceedings.
In the reporting year, there
were no cases of discrimination
in MD Medical Group
CONTENTSANNUAL REPORT 2023 74
SUSTAINABLE DEVELOPMENT
75
OCCUPATIONAL HEALTH AND SAFETY
OHS principles of MD Medical Group
The occupational health and safety (OHS) management system of MD Medical Group is based on current legal
requirements and incorporates the best industry practices. The Company is constantly developing the relevant
competencies of its personnel by running training programs and maintaining an occupational health and
safety culture.
Insurance
Providing employees
with insurance against
workplace accidents
and occupational
diseases
Safety
Protecting the lives and
health of employees
and maintaining their
ability to work
Payments and
compensations
Calculating and paying
hazard pay
The medical institutions of MD Medical Group take active
steps to prevent workplace injuries and create a safe and
healthy work environment for all employees. The Company’s
main targets in the field of occupational health and safety
include the “zero injuries” principle and prevention of
occupational diseases.
The approaches to occupational health and safety used by the employees of MD Medical Group’s medical
institutions are governed by the following internal regulations:
• Occupational health and safety policies of the
Group’s subsidiaries;
• Job descriptions, which define the roles, rights and
responsibilities of each employee;
• Regulations on the occupational health and
safety system, which contain requirements and
recommendations to ensure the health and safety
of employees;
• Staff handbooks, which establish the procedure
for hiring and dismissal, the rights and obligations
of employees, working hours and rest periods;
• Orders and instructions of the management
containing decisions on operational OHS issues;
• OHS instructions describing the actions that
employees are required to take in case of danger.
Working conditions
Guaranteeing employees’ rights
to safe working conditions in
accordance with the established
occupational health and safety
management system
Rehabilitation
If necessary, providing medical,
social and occupational rehabilitation
services for employees affected by
accidents or occupational diseases
In accordance with the current legislation, the
head of the Company is responsible for the overall
management of occupational health and safety.
At the same time, each of the Group’s medical
institutions has managers that oversees OHS issues.
Its functions include monitoring compliance with
the current labor law and with the instructions of
supervisory authorities in all medical institutions
of the Group, approving internal OHS documents,
organizing measures to prevent injuries and reduce
morbidity among employees, incentivizing or taking
disciplinary action against employees for actions
related to occupational health and safety, etc.
In 2023, MD Medical Group was developing
cooperation between its divisions and institutions
in the sphere of occupational health and safety,
both in terms of sharing experience and in terms
of coordination in the event of an emergency.
MD Medical Group is gradually tightening control
over compliance with OHS requirements at all levels;
it introduces new and safer work practices and
cooperates with other organizations and industry
associations. Special emphasis is placed on OHS
training and development for employees. More than
RUB 22 million was allocated for OHS measures
in 2023.
In 2023, there were no injuries in the medical institutions
of MD Medical Group
CONTENTSANNUAL REPORT 2023 76
SUSTAINABLE DEVELOPMENT
77
Occupational Health and Safety Management System
Workplace safety
The Occupational Health and Safety Management
System (OHSMS) of MD Medical Group includes
a number of measures and procedures aimed at
ensuring the safety and protecting the health
of employees: personnel education and training,
providing employees with personal protective
equipment, monitoring the condition of equipment
and the working environment, conducting regular
inspections and audits. In addition, the OHSMS helps
the Company to comply with legal requirements and
standards in the field of occupational health and
safety and, consequently, avoid the imposition of
fines and sanctions by regulatory authorities.
Measures taken by the Company as part of the OHSMS include the following:
Legal measures
Developing internal regulations based
on the requirements of legislation and
international standards
Medical preventive measures
Organizing preliminary and periodic
medical examinations, and a mandatory
psychiatric examination of employees
Rehabilitation measures
A set of measures aimed at restoring the
health and performance of employees who
were injured as a result of a workplace
accident or got an occupational disease
Social and economic measures
Providing hazard pay and benefits for
hazardous working conditions, compulsory
insurance, paying compensation in the
event of an occupational disease or injury,
and other government requirements
Sanitary and hygienic measures
Reducing the impact of occupational
hazards on employees, providing favorable
working conditions and preventing
occupational diseases
OHSMS mechanisms include the following:
Training personnel in innovative work
practices;
Training managers in occupational health
and safety in specialized training centers
and issuing certificates upon completion of
training;
Ensuring process safety and safe operation
of buildings of the Group’s clinics and
hospitals;
Creating favorable sanitary and
epidemiological conditions in accordance
with regulations;
Holding regular occupational health and
safety briefings (introductory, initial,
targeted, and unscheduled ones);
Safe use of equipment and tools, as
well as their disposal in accordance with
regulations;
Providing an optimal work and rest
schedule;
Providing personnel with personal
protective equipment;
Assessing occupational safety risks.
Employees in the healthcare sector are often
exposed to hazardous substances and biological
hazards and use complex equipment; accordingly,
ensuring workplace safety is critical. To do so,
MD Medical Group uses the following mechanisms:
• Conducting regular safety briefings and training
sessions for all employees (at least once every six
months and on a quarterly basis for employees
working in hazardous conditions);
• Conducting preliminary and periodic medical
examinations and submitting the relevant
reports to the Federal Service for the
Oversight of Consumer Protection and Welfare
(Rospotrebnadzor);
• Developing safe routes for movement on the
premises of medical institutions and separating
personnel and patient flows, as well as providing
transport for employees;
• Installing safety signs in medical institutions in
accordance with GOST 12.4.026-2015;
• Providing personal and collective protective
equipment for employees working in hazardous
conditions; purchasing, storing, issuing and
keeping a record of personal protective
equipment;
• Testing equipment used in manufacturing
processes and medical activities to assess
compliance with safety requirements before
commissioning;
• Applying a system of work permits for high-risk
work, with a similar procedure established for
counterparties subject to additional safety
requirements.
In 2023, an assessment of working conditions and
occupational risks was carried out in a number of
MD Medical Group’s medical institutions. Following
the assessment, monthly hazard pay amounting
to 4% of the salary was introduced for employees
exposed to occupational hazards.
Occupational health and safety training
The Company has developed effective occupational
health and safety training programs. In accordance
with Article 225 of the Labor Code of the Russian
Federation, medical and non-medical employees
regularly undergo additional training in occupational
health and safety; after completing the training,
they are required to undergo the relevant testing
once every three years. Non-medical personnel must
undergo annual first-aid training.
In 2023, training was provided
in the following areas:
• General matters related to occupational
health and safety and the functioning of the
occupational health and safety management
system;
• Safe working practices and techniques for
employees exposed to occupational hazards
identified as part of a special assessment of
working conditions and occupational risks;
Number of employees trained in occupational health
and safety, people
• Safe methods and techniques for performing
high-risk work subject to additional requirements
in accordance with national OHS regulations;
2,199
1,813
1,762
• Providing first aid to the injured;
• Use of personal protective equipment.
2021
2022
2023
CONTENTSANNUAL REPORT 2023 78
SUSTAINABLE DEVELOPMENT
79
ENVIRONMENTAL PROTECTION
Energy consumption, GJ
ENVIRONMENTAL MANAGEMENT
The environmental policy of MD Medical Group
takes into account the nature and scale of the
environmental impact of the Company’s activities.
It is aimed at continuous improvement, prevention
of environmental pollution, and environmental
compliance.
MD Medical Group respects the human right to
a favorable environment, and seeks to take into
account environmental aspects and public opinion
when planning its activities.
The Company reduces the negative impact of its
business and other activities on the environment in
accordance with environmental protection standards
through the use of the best available technologies
taking into account economic and social factors.
MD Medical Group’s principles, approaches and
initiatives in the field of environmental protection
comply with the requirements of Russian legislation.
The Group’s medical institutions are supervised by
Rospotrebnadzor and the Ministry of Health, and
regularly report to these authorities.
ENERGY CONSUMPTION
Power supply to clinics and hospitals of MD Medical
Group is provided by municipal power supply
companies; some medical institutions have gas-fired
boiler houses providing heating and hot water
supply.
The Company complies with Federal Law No. 35-FZ
on the Electric Power Industry, decrees of the
Government of the Russian Federation, orders and
other regulations governing electricity and heat
consumption.
Improving energy efficiency in MD Medical Group’s
institutions is a prerequisite for improving the quality
of medical care and reducing energy costs. The
Company’s approaches to energy efficiency include
the use of energy-saving technologies, energy
consumption monitoring, and energy consumption
metering and analysis. Medical institutions
implement the following measures to improve the
efficiency of electricity use:
The management system of MD Medical
Group complies with the requirements of ISO
14001:2004 “Environmental Management Systems”
and ISO 50001:2011 “Energy Management Systems”.
Each medical institution has appointed employees
responsible for energy conservation, efficient water
management and waste management.
MD Medical Group is not
a significant emitter of
greenhouse gases or pollutants
into the atmosphere, and does
not have a significant impact on
biodiversity in the regions where
it operates. In 2023, the Company
did not violate environmental laws.
• Using an automatic lighting control system with
automatic time adjustment to turn outdoor
lighting on and off;
• Turning off the main lighting in corridors and halls
during non-working hours, leaving only emergency
lighting;
• Switching to the use of LED lights (classes A, A+
and A++);
• Disconnecting electrical appliances and
equipment that are not in use;
• Optimizing the operation of the ventilation and air
conditioning system;
• Raising awareness of energy conservation
matters among employees.
2021
2022
2023
Electricity consumption, including
121,126
120,052
118,600
in hospitals
in clinics
110,519
10,607
109,301
108,654
10,751
9,946
Heat consumption, including
322,100
333,998
334,515
in hospitals
in clinics
290,077
296,578
285,632
32,023
37,420
48,883
Total energy consumption, including
443,226
454,050
453,115
in hospitals
in clinics
400,596
405,879
394,286
42,630
48,171
58,829
Total energy consumption, GJ
Gasoline consumption, l
443,226
400,596
454,050
453,115
405,879
394,286
137,028
119,878
91,114
71,937
88,159
65,412
19,177
22,747
17,204
42,630
48,171
58,829
2021
2022
2023
Hospitals
Clinics
2021
2022
2023
Hospitals
Clinics
Diesel fuel consumption, l
135,729
81,689
54,040
72,329
33,339
38,990
51,196
18,637
32,559
The Company uses an auto-
correction lighting control
system and other energy-
saving technologies
2021
2022
2023
Hospitals
Clinics
CONTENTSANNUAL REPORT 2023 80
SUSTAINABLE DEVELOPMENT
81
WATER CONSUMPTION
Efficient water consumption enables MD Medical
Group to reduce water supply costs and improve
the environment in the cities where it operates. Cold
and hot water for the Group’s medical institutions
is supplied from municipal water supply systems;
some clinics and hospitals can use storage boilers
to ensure uninterrupted hot water supply. The
Lapino Medical Cluster obtains its water supply from
artesian wells. In addition, internal water supply
systems in the Group’s institution comprise a local
water treatment system.
Wastewater is discharged through an internal
sewerage system into municipal sewers. The Lapino
Medical Cluster, where wastewater is discharged
into a tributary of the Medvenka River after
treatment, is an exception. Treated wastewater
from Lapino is regularly tested in the laboratories of
Rospotrebnadzor and the Ministry of Ecology and
Nature Management of the Moscow Region, and
the Cluster’s treatment system undergoes regular
maintenance. All medical institutions of MD Medical
Group comply with Russian laws and standards
governing water consumption and use.
In order to improve the efficiency of water use,
the Group’s clinics and hospitals arrange regular
maintenance of plumbing fixtures and flushing of
utility systems, detect faults in a timely manner and
eliminate them, and inform personnel about the
need to monitor and, where possible, reduce water
consumption.
Touchless faucets are installed in medical
institutions, which helps to reduce water
consumption and the risk of infectious diseases.
Effective methods for irrigation of adjacent
landscaped areas are used.
Water consumption, m3
285,082
251,734
276,888
245,776
33,348
31,112
261,984
242,114
19,870
2021
2022
2023
Hospitals
Clinics
WASTE MANAGEMENT
Proper waste disposal and reduction of waste
generation are a priority of MD Medical Group.
The Group’s clinics and hospitals comply with
national laws, sanitary and epidemiological rules
and standards, and develop their own regulations
on waste management, such as process control
programs, waste management schemes, and
instructions on waste management.
The Group’s institutions may produce various
types of waste in accordance with the classification
provided in SanPiN 2.1.3684-21:
• Class A (non-hazardous waste, similar to municipal
solid waste);
• Class B (epidemiologically hazardous waste);
• Class C (extremely epidemiologically hazardous
waste);
• Class D (hazard class I–IV toxic hazardous waste);
• Class E (radioactive waste), not produced in 2023.
Medical waste disposal in the Group’s institutions
may be managed and monitored by chief engineers,
chief/senior nurses or other designated responsible
persons.
Hazardous waste is processed and disposed of
either by the institutions themselves using special
equipment, or by specialized contractors. If a clinic
or hospital handles hazardous waste on its own,
such waste undergoes decontamination processes
to make it safe. The institution may subsequently
dispose of this waste as municipal solid waste. In
most cases, contractors dispose of non-hazardous
waste and incinerate hazardous waste.
The waste management policy of MD Medical Group
is aimed at waste generation prevention, waste
recycling and reuse. Measures to reduce waste
generation include implementing lean manufacturing
principles, optimizing the use of materials, and
reducing waste at the planning and procurement
stages.
Waste generation, tonnes
4,784
4,522
3,786
3,525
3,970
3,590
380
261
262
2021
2022
2023
Hospitals
Clinics
Waste management in the hospitals of MD Medical Group, tonnes
Non-hazardous waste, including
waste burial
disposal
Hazardous waste, including
waste burial
disposal
2021
3,259
3,259
0
266
0
266
Waste management in the clinics of MD Medical Group, tonnes
Non-hazardous waste, including
waste burial
disposal
Hazardous waste, including
waste burial
disposal
2021
183
165
18
78
13
65
2022
4,190
4,190
0
333
0
333
2022
175
159
16
87
14
73
2023
3,316
3,316
0
274
0
274
2023
305
245
60
75
8
67
The Lapino and MD GROUP Clinical Hospitals are equipped
with ECODAS T300 automatic medical waste treatment
systems designed for the shredding and sterilization
of infectious waste in a single completely closed and
automated stainless steel system. After processing, the
final product is reduced in volume by up to 80% and is
safe and suitable for recycling or disposal as conventional
municipal solid waste. The systems can process up to 400
kg per day of class B waste into class A waste.
ECODAS T300 systems
can process up to 400 kg
of Class B waste into
Class A every day
CONTENTSANNUAL REPORT 2023 CORPORATE
GOVERNANCE
Chairman’s Statement
Corporate governance system
Risk management,
internal control and audit
Share capital
84
CORPORATE GOVERNANCE
85
CHAIRMAN’S
STATEMENT
DEAR SHAREHOLDERS
AND INVESTORS,
The past year marked an important stage in terms of further
development and improvement of our corporate governance
system.
Major corporate events included the delisting of the Company’s
GDRs from the London Stock Exchange in June 2023. We made
this decision after a prolonged suspension of trading, which
made it impossible for investors to carry out transactions in
our GDRs on that platform. At the same time, I would like to
emphasize that the Company’s GDRs continue to be traded on
the regulated market of the Moscow Exchange.
In the reporting year, we initiated a procedure to change the
Company’s jurisdiction from Cyprus to Russia. This process is
aimed at streamlining the governance structure, improving
communication with Russian regulators and enhancing our
performance. The decision on redomiciliation also reflects the
need to remove constraints imposed by the current corporate
structure of MD Medical Group. Among other things, the
completion of this process will enable the Company to resume
dividend payments.
The next logical step was a primary listing status on the Moscow
Exchange obtained in November 2023, which reflects our
strategic decision to focus on expanding our presence on capital
markets in Russia and stimulate interest from Russian investors.
To obtain the primary listing status, the Company registered
a prospectus for its existing GDRs with the Bank of Russia.
December 2023 saw the approval of a new dividend policy,
which stipulates dividend payments totaling up to 100% of net
profit, including accumulated earnings. The adoption of the
new policy reflects the Company’s commitment to fair and
transparent profit distribution among our shareholders. We are
convinced that this decision will demonstrate the commitment of
MD Medical Group to best corporate governance practices and
will strengthen the trust of our shareholders and partners.
In conclusion, I would like to emphasize that we will continue
active work to improve our corporate governance practices and
increase transparency and the efficiency of decision-making.
We believe that these efforts will help to enhance the Company’s
investment profile and support the further development of our
business.
Vladimir Mekler
Chairman of the Board
of Directors
One of the
significant
corporate events
was the delisting
of the Company’s
GDR from the
London Stock
Exchange
CORPORATE GOVERNANCE
SYSTEM
An efficient, transparent and responsible corporate governance
system of MD Medical Group helps to balance shareholder
interests and contributes to the Company’s long-term success.
It defines the governance structure, as well as the principles
underlying decision-making and interaction between various
stakeholders.
The Company has adopted a number of internal
regulations, both as part of preparation for an
IPO on the London Stock Exchange in 2012 and as
part of the process of obtaining primary listing for
the Company’s depositary receipts on the Moscow
Exchange in 2023. These include the following:
Rules for Securities Included in the First-Level
Quotation List of the Moscow Exchange. The
Company has always adhered to high standards of
compliance with corporate governance rules and
continues to use this approach while trading on the
Moscow Exchange.
The Policy on Appointment to the Board of Directors
and the Board Committees;
• The Information Disclosure Policy;
• The Continuing Obligations Policy;
• The Anti-Fraud Policy;
• The Regulations on Insider Information;
• The Regulations on the Audit Committee;
• The Regulations on the Nomination Committee;
• The Regulations on the Remuneration Committee;
• The Regulations on the Corporate Secretary;
• The Regulations on Internal Audit;
• The Regulations on the Dividend Policy*.
Improving the corporate
governance system
MD Medical Group seeks to develop its corporate
governance system in line with best Russian and
international practice.
In 2023, the Company obtained the primary listing
status for its depositary receipts on the Moscow
Exchange after registering the relevant prospectus
with the Bank of Russia. As part of preparation
and implementation of this project, the Company
closely cooperated with the Moscow Exchange to
ensure compliance of its corporate documents and
procedures with the requirements of the Listing
* The Company’s key corporate documents are available on the website.
Compliance with the recommendations
of the Corporate Governance Code
of the Bank of Russia
The Company is in the process of changing its place
of incorporation (redomiciliation); at the time of
publication of the Report, it is not yet a Russian legal
entity. Accordingly, the Company does not report on
compliance with the principles and recommendations
of the Corporate Governance Code recommended
for use by the Bank of Russia. At the same time,
the Company intends to carry out an internal
assessment of its corporate governance practices
following the change of its place of incorporation.
Before the start of the redomiciliation process,
MD Medical Group viewed the UK stock market
as its primary market; accordingly, the Company
was guided primarily by the provisions of the UK
Corporate Governance Code. Thus, the Company’s
corporate governance system is based on the legal
standards and corporate governance principles of
Russia, Cyprus and the UK.
The Company complies with the key corporate
governance principles set out in the Corporate
Governance Code of the Bank of Russia. The
depositary receipts of MD Medical Group have been
registered and accepted for trading by the Bank of
Russia and included in the First-Level Quotation List
of the Moscow Exchange, which would have been
impossible without the Company’s adherence to best
corporate governance practices.
CONTENTSANNUAL REPORT 2023 86
CORPORATE GOVERNANCE
87
Corporate governance structure of the Company at year-end 2023
Administrative reporting lines
Functonal reporting lines
General Meeting
of Shareholders
External Auditor
CEO
Board of Directors
Audit Committee
Internal
Audit Department
Corporate Secretary
Remuneration Committee
Nomination Committee
GENERAL MEETING
OF SHAREHOLDERS
The General Meeting of Shareholders is the key
governing body of MD Medical Group. It represents
the interests of all shareholders and adopts
resolutions on matters related to the Company’s
strategic development, profit distribution,
appointment of members of the Board of Directors
and other important matters.
General Meetings of Shareholders held in 2023
Meeting format
and date
Quorum
Resolutions adopted
The Company’s Articles of
Association do not provide for the
holding of General Meetings of
Shareholders by absentee vote
Meeting format
and date
Quorum
Resolutions adopted
EGM
08/31/2023
75.0%
• Amendments to the Company’s Articles of Association;
• Removal of the Company from the Register of the Cyprus Department of
the Registrar of Companies, relocation of the Company’s registered office to
the SAR of Oktyabrsky Island (Kaliningrad Region, Russian Federation) and
registration as a going concern in accordance with the legal regime of the
Russian Federation without liquidation or reorganization;
• Approval of actions required for the implementation of the above resolution;
• Review and approval of the Company’s separate interim financial statements
for the period ended June 30, 2023.
BOARD OF DIRECTORS
The Board on Directors, acting for and on behalf
of all shareholders, formulates the development
strategy of MD Medical Group, which is aimed at
increasing the Company’s market capitalization and
enhancing its investment potential.
The Board of Directors is tasked with promoting the
growth of the Company’s assets and ensuring the
achievement of target returns, as well as protecting
the rights and legitimate interests of shareholders,
exercising control over executive management
bodies, and ensuring the completeness, reliability and
objectivity of publicly available information about the
Company’s activities.
In addition, the Board of Directors is involved in the
functioning of the risk management and internal
audit system, establishes key benchmarks for the
Company’s long-term performance, and plays a key
role in detecting and resolving internal conflicts.
Five out of six members of
the Board of Directors are
independent directors
EGM
01/23/2023
AGM
04/26/2023
72.7%
72.6%
• Appointment of GAC Auditors Ltd as auditor of the Company’s separate
financial statements for 2022.
• Approval of the Company’s consolidated financial statements for 2022, the
directors’ report and the independent auditor’s report;
• Appointment of GAC Auditors Ltd as auditor of the Company’s separate
financial statements for 2023. Appointment of Kept JSC as auditor of the
Company’s interim and annual consolidated financial statements for 2023.
Determination of the amount of auditor remuneration for the next year;
• Approval of the nomination of Sergey Kalugin, Tatiana Lukina and Vitaly
Ustimenko as independent non-executive directors of the Company.
Key objectives of the Board of Directors:
To protect the legitimate rights and
interests of shareholders
To promote the growth of the Company’s
assets and maintain business profitability
To exercise control over executive
management bodies
To formulate the Company’s
development strategy
To ensure the completeness, reliability and
objectivity of publicly available information
about the Company’s activities
CONTENTSANNUAL REPORT 2023 88
CORPORATE GOVERNANCE
89
Composition of the Board of Directors
as at December 31, 2023
Chairman of the Board of Directors, Independent Director, Chairman of the
Nomination Committee, member of the Remuneration Committee
Year of election to the Board of Directors: 2015
Chairman of the Board of Directors since June 2016
Shareholding: none
Education:
University degree; Lomonosov Moscow State University, degree in Jurisprudence
Work experience:
Vladimir Mekler
Since 2012, Vladimir Mekler has been the senior and managing partner of Mekler & Partners,
specializing in corporate law. Between 2003 and 2010, he was the Vice Chairman of the Presidium
of the Moscow City Bar Association. Vladimir Mekler has been a member of the Moscow City Bar
since 1980.
Mark Kurtser
Executive Director
Year of election to the Board of Directors: 2012
Shareholding: 67.9%
Education:
University degree; Pirogov 2nd Moscow State Medical Institute, degree in General Medicine, Doctor
of Medical Sciences
Work experience:
Mark Kurtser began his career at the Department of Obstetrics and Gynecology of the Pirogov
Russian National Research Medical University, where he progressed from assistant to associate
professor of the Department. Between 1994 and 2012, he headed the Center for Family Planning
and Reproduction, the largest OB/GYN clinic in Moscow. Between 2003 and 2013, Mark Kurtser
was the Chief Obstetrician-Gynecologist of the Moscow Healthcare Department. Mark Kurtser
continues to be actively involved in the activities of MD Medical Group as an executive and
a medical practitioner. He is also the rector of MGIMO Med, a medical university established by the
Company jointly with the Moscow State Institute of International Relations (MGIMO).
Senior Independent Director, Chairman of the Remuneration Committee,
member of the Audit Committee and the Nomination Committee
Year of election to the Board of Directors: 2022
Shareholding: none
Education:
University degree; Lomonosov Moscow State University, degree in Political Economy
Work experience:
Sergey Kalugin has extensive experience in organizing corporate digital transformation. In
2017 and 2018, he held the post of Deputy Minister of Digital Development, Communications and
Mass Media of the Russian Federation, supervising the Smart City and Digital Health. Between
2013 and 2017, he was the President of PJSC Rostelecom. In this role, he was responsible for
infrastructure upgrades, improvement of the quality of customer service and the adoption of
a new strategy that kick-started the company’s digital transformation.
Sergey Kalugin
Independent Director, Chair of the Audit Committee,
member of the Remuneration Committee
Year of election to the Board of Directors: 2019
Shareholding: none
Education:
University degree; Financial University under the Government of the Russian Federation, degree in
Finance, Business Valuation and Reorganization Management, PhD in Economics
Work experience:
Tatiana Lukina has 20 years of experience in finance, business restructuring and project
management across a wide range of industries.
Tatiana’s career began at KPMG, where she has worked for 10 years participating in and leading
(projects focused on audit, capital market transactions, debt restructuring, and M&A services).
Later, she worked for ALFA Group and participated in the boards and committees of ALFA Bank and
Rosvodokanal. In 2015 and 2016 Tatiana took part in the preparation for the IPO at OZON.ru. Between
2016 and 2022, Tatiana Lukina worked as the CFO at GAME INSIGHT, a developer of mobile games.
In 2022 and 2023, Tatiana held the position of CFO of Dyninno (travel, financial technology and
entertainment sectors). Since 2023, Tatiana has worked as the Managing Director of Vero Wealth
Management LLC in the Middle East.
Tatiana Lukina
Independent Director, member of the Nomination Committee
Independent Director, member of the Audit Committee
Year of election to the Board of Directors: 2023
Shareholding: none
Education:
University degree; Lomonosov Moscow State University, degree in Journalism; Dowling College
(US), degree in Banking and International Financial Systems
Work experience:
Yury Kudimov has 29 years of experience in economics, finance and investment. Between 1995 and
2003, he held the post of First Deputy Chairman of the Board of the National Reserve Bank; in
2004, he headed the bank as President and Chairman of the Board. Between 2009 and 2014, as
CEO of Investment Company of Vnesheconombank LLC, Yury Kudimov oversaw the establishment
of a new investment division of the bank, VEB Capital. Currently, Yury Kudimov holds the position
of President of Pangeo Capital, a private equity investment and advisory group focused on mid-
cap companies in private capital markets in Russia, Europe and the Americas.
Yury Kudimov
Year of election to the Board of Directors: 2015
Shareholding: 0.0054%
Education:
University degree; Financial University under the Government of the Russian Federation, degree in
Finance and Lending, PhD in Economics
Work experience:
Between 2012 and 2016, Vitaly Ustimenko was the Chief Financial Officer of the Group. He has
20 years of experience in finance and investment, including eight years as a CFO. He has worked for
companies such as Inventure Partners, Solnechnye Producty, Russian Helicopters and Deloitte. Vitaly
Ustimenko is currently the CFO of Skillbox, an online education company in Russia.
Vitaly Ustimenko
CONTENTSANNUAL REPORT 2023 90
CORPORATE GOVERNANCE
91
Corporate Secretary
The Corporate Secretary coordinates the Company’s
actions to protect the rights and interests of
shareholders, supports the performance of the
Board of Directors, and ensures interaction with
shareholders. The Corporate Secretary is appointed
by the Board of Directors, and the procedure
governing its activities is set out in the Regulations
on the Corporate Secretary.
The main functions of the Corporate
Secretary are the following:
• ensuring that the Company’s executive bodies and
employees comply with the requirements of the
applicable laws, the Articles of Association and
other internal documents of the Company that
guarantee exercising the rights and legitimate
interests of shareholders;
• ensuring observance of the rights and property
interests of shareholders, assisting shareholders
in exercising their rights, maintaining a balance of
interests between participants in corporate legal
relations;
• developing the corporate governance practice
of MD Medical Group to meet the interests of its
shareholders and other stakeholders;
• advising the Company’s officers and shareholders,
as well as members of the Board of Directors, on
corporate law and governance issues;
• supervising the preparation and organization of
General Meetings of Shareholders;
• ensuring compliance with the established rules
and procedures for preparing and holding
meetings of the Board of Directors and managing
the preparation of resolutions of the Board of
Directors.
Structure of the Board of Directors as of 31 December 2023
Status of members of the Board of Directors
Time in office on the Board of Directors
17%
17%
Executive
directors
Independent
directors
83%
33%
50%
< 3 years
3–8 years
> 8 years
Age of members of the Board of Directors
Composition of the Board of Directors by gender
50%
33%
17%
40–50 years
50–60 years
Over 60 years
Men
Women
17%
83%
Darya Aleksandrova
Corporate Secretary
Education: Higher. Lomonosov Moscow State University, majoring in Jurisprudence;
Lomonosov Moscow State University, majoring in Linguistics
Darya Aleksandrova joined the Company in 2018
Experience: Darya Aleksandrova joined the Group as Head of Corporate Governance. Prior to joining the
Group, Ms. Aleksandrova worked at Rosgosstrakh insurance company, where her responsibilities included
corporate governance. She was also the Corporate Secretary of the Board of Directors. Ms. Aleksandrova
continues to act as Head of Corporate Governance of the Group.
Competencies of Members of the Board of Directors
Strategy
Finance
and audit
Risk
management
Legal
issues
Medicine
Customer
service
Personnel
IT
R&D
Vladimir Mekler
Mark Kurtser
Vitaly Ustimenko
Tatiana Lukina
Sergey Kalugin
Yury Kudimov
Key matters considered by the Board of Directors in 2023:
• Reviewing quarterly operating
and financial results;
• Approving financial statements;
• Reviewing the status of investment projects and
the project on redomiciliation of the holding
company;
• Terminating the listing of the Company’s
depositary receipts on London Stock Exchange;
• Approving transactions related to the acquisition
of clinics in Surgut and Nefteyugansk, and
approval of the acquisition of a building for
opening a hospital in Michurinsky Avenue
in Moscow;
• Recognizing some of the members of the Board
of Directors as independent;
• Approving the prospectus of the Company’s
depositary receipts for registration with the Bank
of Russia;
• Convening general meetings of shareholders and
approving the agendas of such meetings;
• Approving internal corporate documents.
In 2023, the Board of Directors
held 8 meetings where
39 matters were discussed
CONTENTSANNUAL REPORT 2023 92
CORPORATE GOVERNANCE
93
Participation in meetings of the Board of Directors and Committees in 2023
Attendance in meetings of the Board of Directors
Attendance in meetings of the Committees
Total
In-person
By phone
or online1
Audit
Committee
Nomination
Committee
Remuneration
Committee
Vladimir Mekler
Mark Kurtser
Vitaly Ustimenko
Tatiana Lukina
Sergey Kalugin
Yury Kudimov2
Board Committees
Composition of Board Committees in 2023
Director
Status
Audit Committee
Nomination
Committee
Remuneration
Committee
Vladimir Mekler
Independent
Chairman
Mark Kurtser
Executive Director
Vitaly Ustimenko
Independent
Tatiana Lukina
Independent
Chairman
Sergey Kalugin
Independent
Yury Kudimov
Independent
Chairman
Audit Committee
The Audit Committee of the Board of Directors is
responsible for:
• Reliability and correctness of information
disclosure in financial statements and external
financial communication;
• Maintaining an effective internal control system,
including financial, operational and compliance
control and the risk management system;
• Preparing recommendations for shareholders
for approval in general meetings regarding the
appointment, reappointment and dismissal of
external auditors;
• Approving remuneration and terms of
employment of external auditors in respect of
audit services rendered;
• Auditing, including monitoring and review of
external auditors’ activities, independence and
objectivity;
• Developing and implementing policies on
non-audit services provided by external auditors;
• Monitoring compliance with corporate governance
laws, regulations and standards;
• Monitoring and assessing performance of the
internal auditor.
1
2
Meetings in absentia (by poll) are not held.
Yury Kudimov was elected in September 2023. The first meeting after the election was held in December 2023.
The Audit Committee participates in control and
management of internal audit. The key objective
of the Audit Committee is to identify problems and
opportunities for improving the internal control
system. If such problems or opportunities are
identified, the Committee shall make recommendations
for the Board of Directors necessary for solving the
problems or making improvements.
The Audit Committee is responsible for monitoring and
analyzing the effectiveness of the Company’s internal
audit service. The Committee may, at the request or
on behalf of the head of the internal audit service,
investigate any activity of the Group that is of interest
or concern for the Committee.
Nomination Committee
Meetings of the Nomination Committee are held at
least once a year. The Committee is responsible for
making recommendations on the appointment of
executive and non-executive directors, as well as
CEO, First Deputy CEO and Chief Financial Officer of
the Company.
The main objective of the Nomination Committee
is to manage the appointment of members of the
governing bodies, ensure balanced composition
of the Board of Directors and the necessary
qualification of directors. In addition, the Nomination
Committee makes recommendations on the
composition of the Audit Committee and the
Remuneration Committee.
Remuneration Committee
The Remuneration Committee meets at least
once a year and is responsible for making
recommendations to the Board of Directors
regarding the remuneration of all executive directors
and the Chairman of the Board of Directors.
The main objective of the Remuneration Committee
is to determine the policy and structure of
remuneration for Executive Directors, Chairman
of the Board of Directors and senior managers, as
well as the specific remuneration for each Executive
Director, Chairman of the Board of Directors and
any compensation payments.
Remuneration for members
of the Board of Directors
The Company has no approved policy related
to remuneration for members of the Board of
Directors, and remuneration for each member of the
Board of Directors is set on an individual basis.
Key issues considered
Committees in 2023
Audit Committee:
Quarterly reports of the
internal auditor;
External auditor’s reports for
2022 and 6M 2023.
Nomination Committee:
Recommendations to the Board of
Directors on appointing directors
and recognizing individual directors
as independent.
Remuneration Committee:
Recommendations to the Board of
Directors on changes in the amount
of remuneration for individual
directors and bonuses for senior
managers based on the results of
2022.
Total remuneration for members
of the Board of Directors
Year
2021
2022
2023
Remuneration paid to members
of the Board of Directors in 2023
Director
Sergey Kalugin
Vitaly Ustimenko
Tatiana Lukina
Yury Kudimov
RUB ‘000
(before-tax)
6,388
5,888
6,944
RUB ‘000
(before-tax)
4,000
1,222
1,222
500
CONTENTSANNUAL REPORT 2023 94
MANAGEMENT
Mark Kurtser, Member of the Russian Academy of Science
Company founder, CEO
Education: Higher. The 2nd Moscow Order of Lenin State Medical Institute named after N.I. Pirogov,
majoring in General Medicine, residency in Obstetrics and Gynecology.
Work experience: Mr. Kurtser began his career at the Department of Obstetrics and Gynecology of
Pirogov Russian National Research Medical University, where he took positions from an assistant to an
associate professor of the Department. From 1994 to 2012, he headed the Center for Family Planning and
Reproduction, the largest state hospital with focus on obstetrics and gynecology 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 MD Medical Group both as CEO and the
practicing physician.
Alexander Kotov
First Deputy CEO
Education: Higher. Kutafin Moscow State Law University (MSAL), majoring in Jurisprudence, a PhD in
Pedagogy Mr. Kotov is an adviser in social management and personnel work at the Russian Presidential
Academy of National Economy and Public Administration.
Mr. Kotov joined the Company in 2022.
Work experience: Alexander Kotov 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, Mr. Kotov held senior positions in public authorities.
Iya Lukyanova
Chief Financial Officer
Education: Higher. Saratov Socio-Economic Institute, majoring in Finance and Credit.
Ms. Lukyanova joined the Company in 2015.
Work experience: Iya Lukyanova joined the Group as Chief Accountant of MD Medical Group. In 2019, she
was appointed Deputy Chief Financial Officer, where she was in charge of finance, as well as automation
and digital transformation projects. Since 2022, Ms. Lukyanova has held the position of Chief Financial
Officer. She is responsible for finance, corporate and legal matters and IR at MD Medical Group. Prior to
joining the Group, Iya Lukyanova worked at OSG Records Management as a financial manager for Russia.
Ms. Lukyanova is a member of the self-regulating organization of auditors Association “Sodruzhestvo”.
Pavel Rudnikov
Chief Operating Officer
Education: Higher. State University of Management, majoring in Taxes and Taxation.
He has DipIFR diploma.
Pavel Rudnikov joined the Company in 2018.
Work experience: Pavel Rudnikov joined the Group as Head of Financial Control and Treasury. In 2020,
he was appointed Financial Director of Lapino Clinical Hospital, where he was responsible for financial
management, projects on reporting automation and financial control strengthening. Prior to joining
the Group, Pavel worked at Rusagro Group, where his duties included preparation of IFRS financial
statements.
CORPORATE GOVERNANCE
95
Natalia Butkevich, PhD
Medical Director, Head of clinical hospitals
Education: Higher. The 2nd Moscow Order of Lenin State Medical Institute named after N.I. Pirogov,
majoring in General Medicine; residency in Internal Medicine/Physician, postgraduate studies in
Cardiology.
Natalia Butkevich joined the Company in 2018.
Work experience: Natalia Butkevich joined the Group as Head of the Department of Medical Prevention
for Adults. From 2018 to 2022, she was Head of the Out-patient Treatment Department, as well as
Deputy Director of clinical hospitals of MD Medical Group. In 2022, she was appointed Medical Director,
Head of clinical hospitals. Ms. Butkevich has more than 40 years of experience in medicine. She is an
Honored Doctor of the Russian Federation.
Boris Konoplev
General Director of the Lapino Clinical Hospital
Education: University degree; Pirogov Russian National Research Medical University, degree in General
Medicine, residency in Obstetrics and Gynecology.
Mr. Konoplev joined the Company in 2010.
Work experience: Boris Konoplev joined the Group as an obstetrician-gynecologist at the MD GROUP
hospital. Between 2012 and 2017, he held the positions of Head of the Obstetric Physiological Department
and Chief Physician of the Mother and Child hospital in Ufa. In 2017, he was appointed Head of Clinical
Hospitals of the Company. Since 2021, he has been the CEO of the Lapino Medical Cluster. Boris Konoplev
is a practicing obstetrician-gynecologist and has received extensive training in leading European clinics.
Yulia Kutakova, PhD
Medical Director for Organizational and Scientific-Educational Work
Education: Higher. Pirogov Russian National Research Medical University, majoring in Pediatrics;
residency and postgraduate studies in Obstetrics and Gynecology.
Ms. Kutakova joined the Company in 2012.
Work experience: Yulia Kutakova has more than 11 years of practice in obstetrics and gynecology.
Prior to joining MD Medical Group, she held the position of Chief of Maternity in the Organizational
and Tutorial Department of the Moscow Healthcare Department.
Natalia Yakunina, PhD
Medical Director, Head of out-patient clinics
Education: Higher. Turkmen State Medical Institute, majoring in General Medicine, residency in Obstetrics
and Gynecology.
Ms. Yakunina joined the Company in 2011.
Work experience: Prior to joining the Group, since 2008, she had held the position of Chief Obstetrician
and Gynecologist of the Central District of Moscow. In the Сompany, Ms. Yakunina has been Chief
Doctor of MD Yugo-Zapad clinic and MD Savelovskaya clinic in Moscow. Currently, she is Chief Doctor
of MD GROUP Michurinsky Multifunctional Hospital.
CONTENTSANNUAL REPORT 2023 96
CORPORATE GOVERNANCE
97
RISK MANAGEMENT,
INTERNAL CONTROL
AND AUDIT
Assessing the effectiveness of internal control and audit procedures
The Internal Audit Department submits a report
to the Audit Committee on a quarterly basis.
After a review by the Committee, the report is
supplemented with comments and suggestions, and
risk owners receive appropriate recommendations.
Internal control practices are assessed twice a year
in the course of preparing the auditor’s report
on the consolidated financial statements, which is
prepared by an external auditor.
The risk management and internal control system of MD Medical
Group complies with the requirements of Russian legislation and
is aligned with the nature and scale of the Company’s business.
Internal control functions are distributed among the governing
bodies of MD Medical Group.
INTERNAL AUDIT
Internal audit helps to assess the performance of
the risk management, internal control and corporate
governance system.
The Company has established the Internal Audit
Department. The Head of Internal Audit reports to
the Board of Directors on the performance of duties.
The responsibilities of the Head of Internal Audit and
employees of the Internal Audit Department include:
• Developing a flexible annual audit plan and
submitting this plan to the Board of Directors for
review and approval;
• Implementing the approved annual audit plan;
• Ensuring the availability of professional auditors
with sufficient knowledge, skills, experience and
professional certifications;
• Providing management consulting services,
including facilitation, process development,
training and other advisory services;
• Providing periodic reports summarizing the
audit findings to the Board of Directors and the
management;
• Informing the Board of Directors about new
trends and successful internal audit practices;
• Providing assistance in the investigation of serious
allegations of fraud within the Company and
reporting the findings to the management and the
Board of Directors;
• Reviewing the work of external auditors and
regulators in order to ensure optimal audit
coverage of the Company at a reasonable overall
cost.
The internal audit procedures of
MD Medical Group are governed
by the Company’s Regulations on
Internal Audit
EXTERNAL AUDIT
An external auditor is selected on a competitive
basis in an open and transparent manner. Important
factors taken into account in the selection of the
external auditor include the auditor’s performance in
previous periods, the experience and qualification of
the team, and the auditor’s independence.
After the selection is completed, the choice of
auditor and the amount of remuneration are agreed
with the Audit Committee, which submits agreed
recommendations for review by the Board of
Directors. If the Board of Directors agrees with the
choice made by the Audit Committee, the candidate
for appointment as external auditor is approved at
the General Meeting of Shareholders.
Remuneration of external auditors, RUB ‘000
22,964
23,777
19,924
The General Meeting of Shareholders also
authorizes the Board of Directors to determine the
remuneration for the external auditor.
In 2023, the General Meeting of Shareholders
approved Kept JSC as the external auditor of
the Company’s interim condensed consolidated
financial statements and the annual consolidated
financial statements for 2023, and approved GAC
Auditors Ltd as the auditor of the Company’s
separate financial statements for 2023. The most of
remuneration stated below relates to Kept’s audit
services.
Audit of the financial statements
Tax services
124
89
2021
2022
2023
RISK MANAGEMENT
The Company thoroughly identifies and manages
material potential risks to support long-term
sustainable development of its business.
The risk identification process involves conducting
detailed interviews with process owners (potential
risk owners) and related functions. The findings
of the interviews may be supplemented with
quantitative and qualitative information from the
Company’s information systems.
The assessment of the identified risk is carried
out jointly with the process owners based on
the probability of risk materialization and the
probability of residual risk materialization after
mitigation measures. Further steps to mitigate the
negative impact of risks are also discussed with the
process owners.
CONTENTSANNUAL REPORT 2023 98
CORPORATE GOVERNANCE
99
Risk assessment and management process
ANTI-CORRUPTION MEASURES
MD Medical Group continuously improves its risk
management system, which makes it possible to
quickly identify potential risks to the Company’s
activities and find the most effective ways to reduce
them.
Conducting interviews with process owners
Assessment of key risks*
Potentially supplementing the interview findings with data
from information systems
The Company identifies the following key risk groups:
• Medical risks;
• Operational risks;
• Production risks;
• Financial risks;
• Legal risks;
• Marketing risks;
• Cybersecurity risks.
Assessing the probability and impact of materialization
of the identified risk
Developing mitigation measures
Assessing the probability of residual risk materialization
Discussing further measures to mitigate the negative
impact with risk owners
y
t
i
l
i
b
a
b
o
r
P
h
g
H
i
i
m
u
d
e
M
w
o
L
Medical risks
R1
Risk of misdiagnosis
Operational risks
R2
R3
Risk of reduced patient flow
Risk of a mismatch between the number of employees
and the Company’s needs
Production risks
R4
Risk of inefficient use of fixed assets and materials
R3
R4
R5
R2
R7
R10
R11
R6
R5
R6
Risk of reducing of the quality of service
Risk of improper planning of procurement volume
R12
R14
R15
Financial risks
R13
R1
R8
R9
R7
R8
R9
Risk of an increase in accounts receivable
Risk associated with investment project review
Risk of revision of the zero tax rate
R10
Risk of an increase in the purchase cost of materials
Legal risks
R11
Risk of improper execution of medical records or failure
to submit reports to government regulators
Insignificant
Moderate
Significant
Marketing risks
Impact
R12
R13
Risk of ineffectiveness of contextual advertising
Risk of penalties for unlabeled advertisements
Cybersecurity risks
R12
R13
Personal data protection risk
Risk associated with the protection of critical
information infrastructure (CII) facilities
* For more details, please refer to Appendices, p. 159.
MD Medical Group has zero tolerance for any forms of bribery and
corruption and for employees’ attempts to abuse their position.
The Company takes steps to promote a culture of zero tolerance
for corruption, and to maintain an atmosphere of mutual respect,
integrity and trust in the team.
The Anti-Corruption Policy of MD Medical Group
complies with the laws and other regulations of the
Russian Federation applicable to the Company.
The CEO is responsible for implementing the Anti-
Corruption Policy.
The Company has adopted the Anti-Corruption Policy,
which defines the key principles and requirements aimed
at preventing corruption and ensuring compliance of
MD Medical Group employees with the applicable anti-
corruption legislation.
In 2023, the Anti-Corruption Action Plan for 2024-2029 was developed, including the prevention of petty
corruption. In accordance with this plan, an anti-corruption commission has been formed in each medical
institution, which has the following responsibilities:
1. Monitoring the proper use of allocated funds;
6. Reviewing procurement in accordance with the
2. Promoting an environment of zero tolerance for
bribery and vested interests detrimental to the
Company’s interests in the team;
3.
Informing the team about existing anti-corruption
regulations;
4. Ensuring that employees are informed about the
provisions of the anti-corruption legislation of the
Russian Federation;
5. Organizing and conducting anti-corruption
training of employees;
existing legislation;
7. Reviewing and leveraging the experience of other
institutions, executive bodies, ministries and
agencies in preventing corruption;
8. Recording and investigating citizens’ reports of
potential cases of corruption;
9. Reporting instances of corruption to law
enforcement agencies, and other tasks.
CONTENTSANNUAL REPORT 2023 100
CORPORATE GOVERNANCE
101
SHARE CAPITAL
SHARE CAPITAL STRUCTURE
As at the end of December 2023, the authorized
share capital of MD Medical Group totaled
USD 6 010,000.8, divided into 75,125,010 ordinary
shares with a par value of USD 0.08 each. The
Company did not issue bonds.
Changes in the price and trading volume of MD MedicalGroup’s GDRs in 2023
+83%
907
724
67,643
850
834
775
750
32.1% of MD Medical Group’s shares are free-float,
while the remaining 67.9% of shares are held by Mark
Kurtser. The Company has no treasury or quasi-
treasury shares.
481
464
424
538
540
28,673
595
643
24,549
22,766
Event after the reporting period
In February 2024, the Extraordinary General Meeting of
Shareholders resolved that the Company’s authorized share
capital will be converted after the date of registration the
Company as IPJSC, following the results of redomiciliation,
into RUB 538,550,161.6872, divided into 75,125,010 ordinary
shares with a par value of RUB 7.16872 each
Since November 9, 2020, the Company’s GDRs have
been traded on the Moscow Exchange in Russian
rubles. One GDR corresponds to one ordinary share.
On November 7, 2023, the Company obtained the
primary listing status on the Moscow Exchange. At
year-end 2023, the Group’s market capitalization on
the Moscow Exchange totaled RUB 58.2 billion.
The Company’s shares were traded on the London
Stock Exchange under the ticker symbol MDMG in
the form of global depositary receipts (GDRs) since
October 12, 2012. Due to a prolonged suspension of
trading in the Company’s GDRs on the London Stock
Exchange preventing investors from trading in the
securities, on May 23, 2023, the Company decided to
delist its GDRs. The Company’s GDRs were delisted
from the London Stock Exchange on June 22, 2023.
Since August 8, 2023, RCS Issuer Services S.AR.L has
been the Company’s new depository.
Price of the Company’s GDRs in 2023
RUB 432
Minimum
RUB 945
Maximum
RUB 657
Average
RUB 775
Year-end price
1,181
5,134
2,025
3,946
3,973
6,277
4,134
3,718
January
February
March
April
May
June
July
August September October November
December
Trading volume, pcs.
GDR price, RUB
11,732
REDOMICILIATION
The Company is in the process of redomiciliation
from the Republic of Cyprus to the Special
Administrative Region (SAR) on Oktyabrsky Island
in the Kaliningrad Region in order to register as an
operating company under the legal regime of the
Russian Federation. This will help the Company to
remove the restrictions imposed by the current
corporate structure of MD Medical Group, mitigate
geopolitical risks, return to the matter of dividend
payments and become even more transparent for
the investor community. Following the Company’s
registration in Russia, the shareholder register
will be transferred to the Russian registrar, and
compulsory conversion of GDRs into shares will
be carried out automatically under a standard
procedure.
For more information, see the
«Redomiciliation Q&A» section
on the website
INVESTOR RELATIONS
Strengthening investor relations is one of MD Medical
Group’s priorities. Since the listing on the London
Stock Exchange in 2012, we have focused on active
and effective engagement with the investment
community. Our main goal is to maintain the highest
standards of transparency and disclosure in line with
industry best practices, thereby building up trust
and confidence among our investors and analysts.
MD Medical Group strives for maximum transparency
and efficiency in communication with shareholders,
investors and analysts. The Company adheres to the
schedule of information disclosure in accordance
with the calendar published on the website in the
“Investors” section, and regularly provides updates
on its operating and financial results (on a quarterly
and semi-annual basis respectively). In addition,
the Company promptly discloses information about
major events in the Group, such as the opening of
new medical institutions, mergers and acquisitions,
important decisions of the Board of Directors and
the General Meeting of Shareholders, redomiciliation
and other events. MD Medical Group discloses
information on the website of the Interfax Corporate
Information Disclosure Center.
CONTENTSANNUAL REPORT 2023 102
CORPORATE GOVERNANCE
103
In 2023, representatives of MD Medical Group
management held the Analyst Day at the Group’s
flagship Lapino Clinical Hospital and two live
broadcasts for the investment community in
cooperation with professional market participants,
SberCIB and Finam. In early 2024, the Company took
part in a live broadcast hosted by Smartlab. The
broadcasts featuring the Company’s representatives
in 2023 and early 2024 garnered a total of
18,000 online views.
As part of the Analyst Day at the Lapino Clinical
Hospital, a presentation was given by the CEO of the
Company Mark Kurtser; the meeting was attended
by analysts from leading banks and investment
platforms, who asked the Company’s executives
questions and were given a tour of the premises of
the Lapino Clinical Hospital, accompanied by the CEO
of the hospital and leading doctors.
The Analyst Day and live broadcasts organized by
professional market participants made it possible to
answer the main questions from investors, including
with regard to the redomiciliation process, dividend
payment plans, changes in the key indicators, cost
control and the Company’s investment activities.
In 2024, the Company’s IR strategy
will focus on:
• Providing comprehensive coverage of the
Company’s performance by posting materials
containing an analysis of results on the website;
conducting conference calls;
• Expanding the coverage of analytics, which
was significantly reduced due to geopolitical
uncertainty in 2022 and 2023;
• Active engagement with investors through events
organized by both the issuer and professional
market participants;
• Increasing the availability and openness of
information for investors on the Company’s
corporate website.
For more details on
upcoming IR events, see the
«Events Calendar» section
on the website
DIVIDEND POLICY
On December 15, 2023, MD Medical Group
approved a new dividend policy, which stipulates
the possibility of recommending to shareholders
the allocation of up to 100% of the Company’s net
profit, including accumulated profit (if any), based
on the Company’s consolidated financial statements
under International Financial Reporting Standards
(IFRS) for dividend payment.
The payment of dividends will depend on a number
of factors, including cash flow, dividends received
by the Company from its subsidiaries, the Group’s
capital investment needs, as well as the capital
market environment, development objectives or
other objectives of the Group, provided that the net
debt-to-EBITDA ratio does not exceed 3.
The last dividend payment was made in November
2022, when MD Medical Group paid interim dividends
on its GDRs for the six months of 2022 totaling
RUB 642 million, or RUB 8.55 per GDR.
The Dividend Policy of MD Medical Group stipulates
the possibility of allocating up to 100% of net profit for
dividends
Due to the restrictions imposed by the previous corporate
structure, the Company did not pay dividends 2021,
2022 or 2023 and intends to resume payments after
completing the redomiciliation process
Dividend report
Period
Date of decision on dividend
payment
Record date
Total dividends,
RUB ‘000
Dividend per GDR,
RUB
6M 2022
6M 2021
10/26/2022
11/07/2022
642,319
09/03/2021
09/24/2021
1,352,250
2020
04/22/2021
05/05/2021
1,427,375
6M 2020
09/04/2020
09/18/2020
736,225
2019
2018
2017
09/03/2020
09/16/2020
1,389,813
04/23/2019
05/24/2019
800,081
04/17/2018
04/25/2018
450,750
8.55
18.00
19.00
9.80
18.50
10.65
6.00
Dividend payments of MD Medical Group
18.5
1,390
28.8
2,164
18.0
1,352
10.7
800
6.0
451
8.6
642
2017
2018
2019
2020
2021
2022
Total dividends, RUB '000
Dividend per GDR, RUB
CONTENTSANNUAL REPORT 2023 APPENDICES
Report and consolidated financial
statements
2023 key risks overview
Contact us
106
APPENDICES
107
OFFICERS, PROFESSIONAL ADVISORS
AND REGISTERED OFFICE
Board of Directors
Vladimir Mekler – Chairman
Mark Kurtser
Vitaly Ustimenko
Tatiana Lukina
Sergey Kalugin (appointed in March 2022)
Yury Kudimov (appointed in September 2023)
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
REPORT
AND CONSOLIDATED
FINANCIAL STATEMENTS
MD MEDICAL GROUP INVESTMENTS PLC
For the year ended 31 December 2023
Contents
Officers, Professional Advisors and Registered Office
Management Report
Directors’ Responsibility Statement
Independent Auditors’ Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
107
108
113
114
118
119
120
122
124
CONTENTSANNUAL REPORT 2023 108
APPENDICES
109
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 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 2023.
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 5 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 2023 and its financial position at that
date are set out in the consolidated statement
of profit or loss and other comprehensive income
on page 118 and in the consolidated statement of
financial position on page 119 of these consolidated
financial statements. Profit for the year ended
31 December 2023 amounted to RUB 7,822,651
thousand (for the year ended 31 December 2022:
RUB4,718,800 thousand). The total assets of the
Group as at 31 December 2023 were RUB41,336,558
thousand (31 December 2022: RUB33,162,389
thousand) and the net assets were RUB34,553,661
thousand (31 December 2022: RUB26,963,262
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.
No dividends were declared to be paid in the
reporting period.
On 26 October 2022 the Board of Directors
recommended the payment of RUB642,319 thousand
as interim dividends which corresponds to RUB8,55
per share. The dividends were paid on 29 November
2022.
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 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.
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 of Directors of the Company as at
31 December 2023, 31 December 2022 and as at
the date of signing these consolidated financial
statements are as follows:
Name
Type of interest
Effective
interest %
Mark
Kurtser
Direct ownership
of shares
Vitaly
Ustimenko
Direct ownership
of shares
67.90
0.005
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.
CONTENTSANNUAL REPORT 2023 110
APPENDICES
111
Future developments
The board committees
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.
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.
Yury Kudimov was appointed as an independent
non-executive director of the Board of Director on 8
September 2023. 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 113.
Refer to Note 22 of these consolidated financial
statements for the remuneration of the directors
and other key management personnel.
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 Ms. Tatiana
Lukina since 6 December 2019, Mr. Kirill Dmitriev
and Mr. Simon Rowlands were the other members.
Following the resignation of Mr. Kirill Dmitriev and Mr.
Simon Rowlands 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; and
• 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.
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 9 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.
CONTENTSANNUAL REPORT 2023 112
APPENDICES
113
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 legal 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 2023 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.
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.
The Board of Directors’ confirmations
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 confirms that, to the best of
its knowledge:
Further, the Board of Directors confirms that, to the
best of its knowledge:
(a) the consolidated financial statements, which are
presented on pages 124 to 162, 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.
1. adequate accounting records have been
maintained which disclose with reasonable
accuracy the financial position of the Group and
explain its transactions;
2. 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,
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
Vladimir Mekler
Chairman of the Board of Directors
Mark Kurtser
Managing Director, member of the Board of Directors
Moscow, 29 March 2024
Moscow, 29 March 2024
CONTENTSANNUAL REPORT 2023 114
APPENDICES
115
INDEPENDENT AUDITORS’
REPORT
JSC «Kept»
Naberezhnaya Tower Complex, Block C
10 Presnenskaya Naberezhnaya
Moscow, Russia 123112
Telephone +7 (495) 937 4477
Fax +7 (495) 937 4499
To the Shareholders of MD MEDICAL GROUP INVESTMENTS PLC
Opinion
Basis for 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 2023, the
consolidated statements of profit or loss and other
comprehensive income, changes in equity and cash
flows for the year then ended, and notes, including
material accounting policy information 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 2023, and its consolidated
financial performance and its consolidated cash
flows for the year then ended in accordance with
Inter-national Financial Reporting Standards, as
adopted by the European Union (IFRS-EU).
We conducted our audit in accordance with
Inter-national Standards on Auditing (ISAs). Our
respon-sibilities under those standards are further
described in the Auditors’ Responsibilities for the
Audit of the Сonsolidated 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
Please refer to the Note 14 in the consolidated financial statements.
The key audit matter
How the matter was addressed in our audit
Goodwill is material to the consolidated financial
statements. We consider impairment of goodwill
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.
Our audit procedures included:
• assessment of whether the cash generating units 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 involved our own valuation specialists to assist us in evaluating the
appropriateness of the weighted-average cost of capital (discount
rate), assessment of the methodology applied in discounted cash flows’
models and general reasonableness of the key inputs for the models,
such as EBITDA margin and CAPEX in post-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 5 in the consolidated financial statements.
The key audit matter
How the matter was addressed in our audit
Revenue is a material amount consisting of a high
volume of individually low value transactions.
The Group uses special Medialog system to
calculate revenue, where revenue data is auto-
matically 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.
Our audit procedures in this area included, among others, the following
ones.
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.
CONTENTSANNUAL REPORT 2023 116
APPENDICES
117
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 the Audit Committee of the Board of Directors
for the Сonsolidated 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.
The Audit Committee of the Board of Directors
is responsible for overseeing the Group’s financial
reporting process.
Auditors’ Responsibilities for the Audit of the Сonsolidated 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 au-ditors’ 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.
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 miss-
tatement of the consolidated financial state-
ments, 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
acc-ounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of mana-
gement’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
con-solidated financial statements represent the
underlying transactions and events in a manner
that achieves fair presentation.
• Plan and perform the group audit to obtain
sufficient appropriate audit evidence regarding
the financial information of the entities or
business units within the Group as a basis
for forming an opinion on the group financial
statements. We are responsible for the direction,
supervision and review of the audit work
per-formed for purposes of the group audit.
We remain solely responsible for our audit opinion.
• We communicate with the Audit Committee of
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 also provide the Audit Committee of the
Board of Directors with a statement that we have
com-plied with relevant ethical requirements
regarding independence, and communicate
with it all rela-tionships 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 the
Audit Committee of the Board of Directors, 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 ELENA GENRIKHOVNA
Principal registration number of the entry in the Register
JSC «Kept»
of Auditors and Audit Organizations No. 22006023423, acts on
Principal registration number of the entry in the Register
behalf of the audit organization based on the power of attorney
of Auditors and Audit Organizations No. 12006020351
No. 3/23 as of 17 February 2023
Moscow, Russia
29 March 2024
CONTENTSANNUAL REPORT 2023 118
APPENDICES
119
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2023
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 31 December 2023
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 gain / (loss)
Net finance income / (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
Note
5
6
7
2023
RUB’000
2022
RUB’000
27,631,241
25,222,056
(16,338,986)
(15,428,617)
11,292,255
9,793,439
79,218
36,141
(3,766,850)
(3,513,145)
13, 14
-
(1,286,574)
(95,348)
(60,510)
7,509,275
4,969,351
608,865
355,825
(202,696)
(494,039)
19,539
(104,751)
425,708
(242,965)
7,934,983
4,726,386
9
9
9
9
10
(112,332)
(7,586)
7,822,651
4,718,800
7,822,651
4,718,800
7,629,721
4,560,217
192,930
158,583
7,822,651
4,718,800
7,629,721
4,560,217
192,930
158,583
7,822,651
4,718,800
Note
31 December 2023
RUB’000
31 December 2022
RUB’000
ASSETS
Property, plant and equipment
Intangible assets
Trade, other receivables and deferred expenses
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
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
26,920,420
2,179,278
246,980
29,346,678
1,085,591
1,010,318
9,893,971
11,989,880
41,336,558
180,585
5,243,319
(655,352)
29,611,754
34,380,306
173,355
34,553,661
735,724
592,045
380,763
1,708,532
141,246
2,980,130
1,952,989
5,074,365
6,782,897
41,336,558
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
On 29 March 2024 the Board of Directors of MD Medical Group Investments Plc approved and authorised
these consolidated financial statements for issue.
Earnings per share (RUB)
11
101.56
60.70
The Notes on pages 124 to 158 are an integral part of these consolidated financial statements.
The Notes on pages 124 to 158 are an integral part of these consolidated financial statements.
Vladimir Mekler
Chairman of the Board
of Directors
Mark Kurtser
Managing Director
Iya Lukyanova
Chief Financial Officer
CONTENTSANNUAL REPORT 2023 120
APPENDICES
121
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
For the year ended 31 December 2023
Balance at 1 January 2023
180,585
5,243,319
(655,352)
21,982,033
26,750,585
Attributable to owners of the Company
Attributable to owners of the Company
Note
Share capital
RUB’000
Share premium
RUB’000
Reserves
RUB’000
Retained earnings
RUB’000
Total
RUB’000
Profit and total comprehensive income for the year
CONTRIBUTIONS AND DISTRIBUTIONS
Dividends declared
12
Total contributions and distributions
-
-
-
-
-
-
-
-
-
Non-controlling
interests
RUB’000
212,677
192,930
Total equity
RUB’000
26,963,262
7,822,651
7,629 ,721
7,629,721
-
-
-
-
(232,252)
(232,252)
(232,252)
(232,252)
Balance at 31 December 2023
180,585
5,243,319
(655,352)
29,611,754
34,380,306
173,355
34,553,661
Share premium is not available for distribution.
For the year ended 31 December 2022
Attributable to owners of the Company
Attributable to owners of the Company
Note
Share capital
RUB’000
Share premium
RUB’000
Reserves
RUB’000
Retained earnings
RUB’000
Total
RUB’000
Non-controlling
interests
RUB’000
Balance at 1 January 2022
180,585
5,243,319
(655,352)
18,064,135
22,832,687
Profit and total comprehensive income for the year
CONTRIBUTIONS AND DISTRIBUTIONS
Dividends declared
12
Total contributions and distributions
-
-
-
-
-
-
-
-
-
4,560,217
4,560,217
(642 319)
(642,319)
(642,319)
(642,319)
264,505
158,583
(210,411)
(210,411)
Total equity
RUB’000
23,097,192
4,718,800
(852,730)
(852,730)
Balance at 31 December 2022
180,585
5,243,319
(655,352)
21,982,033
26,750,585
212,677
26,963,262
Share premium is not available for distribution.
The Notes on pages 124 to 158 are an integral part of these consolidated financial statements.
CONTENTSANNUAL REPORT 2023 Profit for the year
Adjustments for:
Depreciation
Amortisation
122
APPENDICES
123
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023
CASH FLOWS FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Note
2023
RUB’000
2022
RUB’000
Note
2023
RUB’000
2022
RUB’000
7,822,651
4,718,800
Acquisition/construction of property, plant and equipment
(3,528,298)
(1,098,983)
Proceeds from sale of property, plant and equipment
6,756
62,796
13
14
1,650,349
1,616,547
Acquisition of intangible assets
58,180
51,109
Business acquisitions, net of cash acquired
Loss / (gain) from the sale of property, plant and equipment
7,753
(22,317)
Bank interest received
Write-off of property, plant and equipment
21,567
815
Net cash flows used in investing activities
Impairment loss
Finance income
Finance expenses (excluding impairment)
Impairment of trade and other receivables
Net foreign exchange transactions (gain) / loss
Income tax expense
Decrease / (increase) in inventories
Increase in trade and other receivables
Increase / (decrease) in trade and other payables
Increase / (decrease) in contract liabilities
Cash flows from operations
Tax paid
Net cash flows from operating activities
13. 14
-
1,286,574
9
9
9
9
10
(608,865)
(355,825)
182,831
400,207
19,865
(19,539)
112,332
93,832
104,751
7,586
9,247,124
7,902,079
127,750
(47,393)
(149,896)
(35,292)
22,377
(55,420)
245,744
(17,632)
9,493,099
7,746,342
(115,053)
(12,624)
9,378,046
7,733,718
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
4
9
19
19
16
16
(51,577)
(70,017)
(310,182)
-
567,560
257,760
(3,315,741)
(848,444)
-
(4,805,599)
(167,638)
(150,743)
(19,460)
(262,088)
-
342,717
(203,718)
(166,634)
-
(636,794)
(259,177)
(224,807)
(649,993)
(5 903,948)
5,412,312
981,326
4,462,740
3,589,623
18,919
(108,209)
9,893,971
4,462,740
The Notes on pages 124 to 158 are an integral part of these consolidated financial statements.
The Notes on pages 124 to 158 are an integral part of these consolidated financial statements.
CONTENTSANNUAL REPORT 2023 124
APPENDICES
125
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the year ended 31 December 2023
1. Incorporation
and principal activities
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
5 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
Country
of incorporation
Activities
31 December
2023
Effective
holding %
31 December
2022
Effective
holding %
JSC MD PROJECT 2000
Russian Federation
Medical services
LLC KHAVEN
LLC VELUM
Russian Federation
Medical services
Russian Federation
Medical services
LLC Capital Group
Russian Federation
Assistance services
LLC Klinika MAT’ i DITYA
Russian Federation
Holding of
trademarks
LLC Clinica ZDOROVIA
Russian Federation
Medical services
IVAMED Ltd
Russian Federation
Medical services
LLC Mother and child Perm
Russian Federation
Medical services
LLC Clinic Mother and child
Russian Federation
Dormant company
LLC Mother and child Saint
Petersburg
Russian Federation
Medical services
LLC MD Project 2010
Russian Federation
Medical services
LLC Mother
and child Ugo-Zapad
Russian Federation
Medical services
LLC MD service
Russian Federation
Pharmaceutics retail
LLC Mat’ i ditia Nizhny Novgorod
Russian Federation
Medical services
LLC Mat’ i ditia Yekaterinburg
Russian Federation
Medical services
LLC Mother and child Tyumen
Russian Federation
Medical services
JSC Medicinskaya kompaniya IDK
Russian Federation
Medical services
LLC Apteka IDK
Russian Federation
Pharmaceutics retail
LLC Centr semejnoj reprodukcii
Russian Federation
Dormant company
LLC MD Assistance
Russian Federation
Assistance services
LLC Mother and child Yaroslavl
Russian Federation
Medical services
95
100
90
95
100
80
100
95
95
85
100
90
95
100
100
100
100
100
100
–
80
95
100
90
95
100
80
100
95
95
85
100
90
95
100
100
100
100
100
100
100
80
Name
Country
of incorporation
Activities
31 December
2023
Effective
holding %
31 December
2022
Effective
holding %
LLC Mat’ i ditya Kostroma
Russian Federation
Medical services
LLC Mat’ i ditya Vladimir
Russian Federation
Medical services
LLC Mat’ i ditia Ryazan’
Russian Federation
Medical services
LLC Mat’ i ditya Kazan’
Russian Federation
Medical services
JSC Medicinskij centr AVICENNA
Russian Federation
Medical services
Ltd.Co. H&C Medical Group
Russian Federation
Pharmaceutics retail
LLC Reproductive Medicine Centre
Russian Federation
Medical services
LLC Omskij centr
reproduktivnoj mediciny
Russian Federation
Medical services
LLC MEDICA-2
Russian Federation
Medical services
Krasnoyarsk Center
for Reproductive Medicine, Ltd
LLC Novosibirskii center
of Reproductive Medicine
LLC Barnaul’skij centr
reproduktivnoj mediciny
Russian Federation
Medical services
Russian Federation
Medical services
Russian Federation
Medical services
LLC Mat’ iditya Vladivostok
Russian Federation
Medical services
LLC Mother and child Volga
Russian Federation
LLC MD Finans
Russian Federation
Management
company
Management
company
LLC Mother and child Krasnodar
Russian Federation
Medical services
LLC Mother and
child Rostov-on-Don
Russian Federation
Medical services
LLC MD Group Krasnogorsk
Russian Federation
Dormant
MGIMO-MED
Russian Federation
Medical university
LLC MD Group Holding
Russian Federation
JSC MD MEDICAL GROUP
Russian Federation
Management
company
Management
company
LLC Mother and child Khabarovsk
Russian Federation
Medical services
LLC Mother and child Chelyabinsk
Russian Federation
Medical services
LLC Mother and child Lipetsk
Russian Federation
Medical services
LLC Antireflux-Surgut
Russian Federation
Medical services
LLC VIRA-CENTER
Russian Federation
Medical services
LLC MC Biologicheskaya Medicina
Russian Federation
Medical services
LLC SSK
Russian Federation
Service company
LLC TekhMedKom
Russian Federation
Service company
LLC Servisnaya gospital’naya
kompaniya
Russian Federation
Service company
LLC ELLE PROF
Russian Federation
Service company
LLC MedTekhnoServis
Russian Federation
Service company
80
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
67
100
100
80
100
100
75
100
100
–
–
–
–
–
80
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
67
100
100
–
–
–
–
–
–
–
–
–
–
–
CONTENTSANNUAL REPORT 2023 126
APPENDICES
127
As at 31 December 2023, 67.9% of the Company’s
share capital is owned by Dr. Mark Kurtser, beneficiar
owner as well (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 RCS Issuer Services S.AR.L,
which holds the shares on behalf of the GDR holders
(31 December 2022: Guarantee Nominee Limited).
The companies LLC MD Assistance and LLC MD
Group Krasnogorsk were liquidated in July 2023.
During the year, the group set up new companies
LLC Mother and child Khabarovsk, LLC Mother and
child Chelyabinsk and LLC Mother and child Lipetsk.
In September 2023 the Group acquired 100% shares
in two companies (VIRA-CENTER LLC and LLC MC
Biologicheskaya Medicina) and 75% share in one
company (LLC Antireflux-Surgut) from a third party.
Refer to Note 4 of these consolidated financial
statements.
Further to the sanctions (refer to Note 25(b)) the
London Stock Exchange (the “LSE”) has suspended
the admission to trading of the Group`s instruments
on 3 March 2022. On 22 June 2023 the Group’s
GDRs were cancelled from the FCA’s official list and
admission to trading on the LSE. The Group changed
the depositary bank that administers the Groups’s
GDR program to RCS Issuer Services S.AR.L. with the
relevant agreement effective as of 8 August 2023.
On 7 November 2023 the Bank of Russia registered
the prospectus of the Company’s Global Depositary
Receipts (hereinafter – the “GDRs”) and admit the
existing GDRs to public circulation in the Russian
Federation. Herewith the Company has finalized
the procedure of changing the listing status on the
Moscow Exchange to primary.
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).
(b) Basis of measurement
These consolidated financial statements were
approved by the Board of Directors and were
authorised for issue on 29 March 2024.
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.
The consideration transferred does not include
amounts related to the settlement of pre-existing
relationships. Such amounts are generally
recognised in profit or loss.
• 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 2023 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 2022 except for
those reflected in Notes 13, 14.
3. Material 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 2022 and for the year
then ended.
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.
New standards and amendments applied for the
first time in 2023 did not impact these consolidated
financial statements of the Group.
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.
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.
CONTENTSANNUAL REPORT 2023 128
Transactions eliminated on consolidation
Revenue
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.
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.
Type of product/service
Nature, timing of satisfaction of performance obligations, significant
payment terms
Rendering of services (except storage
of stem cells and long term contracts
described below)
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
Storage of stem cells
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.
Rendering of services
(long-term contracts)
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 credit-
impaired, then the calculation of interest income
reverts to the gross basis.
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.
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).
APPENDICES
129
Years
50
10-20
5-10
Freehold buildings
Leasehold improvements
Plant and equipment
No depreciation is provided on land.
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.
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
Property, plant and equipment
(i) Goodwill
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.
The annual depreciation rates for the current and
comparative periods are based on the following
estimations of useful lives:
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.
CONTENTSANNUAL REPORT 2023 130
APPENDICES
131
(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.
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.
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.
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.
CONTENTSANNUAL REPORT 2023 132
APPENDICES
133
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 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.
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 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 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 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 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.
New standards and interpretations
not yet adopted:
A number of new standards are effective for annual
periods beginning after 1 January 2023 and earlier
application is permitted; however, the Group has
not early adopted the new or amended standards in
preparing these consolidated financial statements.
Moreover, these standards are not expected to have
a significant impact on the Group’s consolidated
financial statements:
– 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.
– Classification of Liabilities as Current or
Non-Current and Non-current Liabilities with
Covenants (Amendments to IAS 1);
– Lease Liability in a Sale and Leaseback
(Amendments to IFRS 16).
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.
4. Business acquisition
On 18 and 25 September 2023, the Group
acquired 100% of capital of VIRA-CENTER LLC,
LLC MC Biologicheskaya Medicina and 75% on LLC
Antireflux-Surgut, companies located in Surgut
and Nefteyugansk and specialising in the medical
services, to expand the geography of services
provided by the Group.
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.
NCI is recognised as short-term obligation based
on Charter of LLC Antireflux-Surgut, as the Group
has contractual obligation to acquire the minority
shareholder’s share in case of his withdrawal from
the Company.
The fair values of the identifiable assets and
liabilities of acquired companies as at the date of
acquisition were:
CONTENTSANNUAL REPORT 2023 134
APPENDICES
135
ASSETS
Inventories
Trade and other receivables
Intangible assets
Property, plant and equipment
Right-of-use of buildings and plant and equipment
Other non-current assets
Cash and cash equivalents
LIABILITIES
Other non-current liabilities
Trade and other payables
Accruals
Total identifiable net assets at fair value
Share acquired
Short-term obligation, reflecting NCI measured
at proportional share
Share in net assets acquired
Purchase consideration
Goodwill arising on acquisition
Cash flows on acquisition:
LLC MC
Biologicheskaya
Medicina
RUB’000
VIRA-CENTER
LLC
RUB’000
LLC Antireflux-
Surgut
RUB’000
465
6,253
46,159
45,162
31,848
109
24,747
3
7,431
788
90,738
6,546
776
12,747
720
1,155
–
2,859
14,944
23
1,637
From the date of acquisition, new acquired
companies contributed RUB101,405 thousand of
revenue and RUB2,420 thousand of profit before tax.
If the combination had taken place at the beginning
of the year, revenue would have been higher by
RUB277,996 thousand and profit before tax would
have been higher by RUB16,919 thousand.
Transaction costs of RUB2,225 thousand were
expensed and are included in administrative
expenses.
The gross amount of trade receivables is
RUB14,838 thousand. However, none of the trade
receivables have been impaired and it is expected
that the full contractual amounts can be collected.
The goodwill of RUB157,236 thousand comprises
the value of expected synergies arising from
the acquisition and customer lists, which are not
separately recognised. The customer lists didn't
meet the criteria for recognition as an intangible
asset under IAS 38.
154,743
119,029
21,338
5. Revenue
(26,864)
(36,287)
(3,981)
(6,501)
(10,316)
(5,564)
(13,099)
(1,619)
(1,028)
(67,132)
(22,381)
(15,746)
87,611
100%
–
87,611
142,992
55,381
96,648
100%
–
96,648
166,595
69,947
5,592
75%
1 864
5,592
37,500
31,908
In vitro fertilisation (IVF)
Therapy, surgery and other in-patient medical services
Deliveries
Obstetrics and gynaecology out-patient treatments
Diagnostic centre and other out-patient medical services
Oncology
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
2023
RUB’000
5,377,626
4,451,324
3,318,226
2,847,576
2,677,237
2,312,125
1,818,111
1,727,923
1,456,318
940,549
297,499
187,153
219,574
2022
RUB’000
4,331,930
4,643,136
2,843,344
2,399,259
2,321,624
2,480,842
1,983,791
1,637,982
1,224,345
714,102
280,706
170,442
190,553
Net cash acquired with the subsidiary (included in cash flows
from investing activities)
24,747
12,747
1,637
Cash paid
Transaction costs
(142,992)
(166,595)
(37,500)
(917)
(1068)
(240)
Net cash flow on acquisition
(119,162)
(154,917)
(36,103)
Total revenue from contracts with customers
27,631,241
25,222,056
CONTENTSANNUAL REPORT 2023
136
APPENDICES
137
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 (77% of total revenue. 2022: 76%); 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 the long-term contract
is recognised at the point of time when the services
are provided; the revenue from the storage of stem
cells and the long-term contract is recognised over
the time of the contract.
The contract liabilities primarily relate to the
advance consideration received from patients.
The amount of RUB782,757 thousand that was
recognised in short-term contract liabilities at
the beginning of the year was recognised as
revenue during the year ended 31 December
2023 (31 December 2022: RUB808,532 thousand).
The amount of RUB43,125 thousand was returned
to the patients during the year ended 31 December
2023 (31 December 2022: RUB60,529 thousand).
6. Cost of sales
Payroll and related social taxes
Materials and supplies used
Depreciation
Medical services
Energy and utilities
Property tax
Repair and maintenance
Other expenses
Total cost of sales
2023
RUB’000
9,088,164
4,805,283
1,450,277
330,834
307,958
188,044
132,937
35,489
2022
RUB’000
8,104,750
5,031,519
1,402,538
308,087
282,059
176,071
96,973
26,620
7. Selling, general and administrative expenses
Payroll and related social taxes
Utilities and materials
Other professional services
IT support
Depreciation
Advertising
Commission fees
Acquiring and encashment
Other expenses
Amortisation
Communication costs
Independent auditors’ remuneration
Learning and development
2023
RUB’000
1,990,686
308,099
289,128
203,079
200,072
188,109
186,983
173,810
78,516
58,180
46,750
23,777
19,661
2022
RUB’000
2,036,089
305,540
174,443
77,933
214,009
211,196
118,270
159,461
81,958
51,109
45,631
19,924
17,582
Total selling, general and administrative expenses
3,766,850
3,513,145
8. Staff Costs
Wages and salaries
2023
RUB’000
8,752,808
2,326,042
2022
RUB’000
8,050,193
2,090,646
16,338,986
15,428,617
Social insurance contributions and other taxes
Total staff costs
11,078,850
10,140,839
The number of employees as at 31,December 2023,was 8,805,(31,December 2022: 8,466).
CONTENTSANNUAL REPORT 2023 138
APPENDICES
139
9. Net finance expenses
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
Interest on leases
Other interest expenses
Other finance expenses
Bank charges
Note
2023
RUB’000
2022
RUB’000
608,865
–
257,760
98,065
608,865
355,825
–
(228,607)
(66,590)
(60,702)
(36,079)
(19,460)
(19,865)
(60,177)
(51,881)
(38,783)
(20,759)
(93,832)
Impairment of trade and other receivables
15
Finance expenses
Net foreign exchange transactions gain / (loss)
Net finance income / (expenses)
(202,696)
(494,039)
19,539
425,708
(104,751)
(242,965)
10. Income tax
Reconciliation between profit before tax and income tax expense:
Profit before tax
2023
RUB’000
7,934,983
2022
RUB’000
4,726,386
Less profit before tax of non-taxable subsidiaries
(8,062,095)
(5,048,713)
Loss before tax excluding not-taxable subsidiaries
Tax using the Group’s domestic tax rate
Effect of subsidiaries taxable at lower tax rates
Windfall tax
Non-deductible expenses
Current-year losses for which no deferred tax asset is recognised
Total income tax expense
(127,112)
25,422
12
(103,675)
(19,111)
(14,980)
(112,332)
(322,327)
64,465
586
–
(10,138)
(62,500)
(7,586)
As at 31 December 2023, there were temporary
differences (before calculating tax effect) of
RUB15,684,100 thousand (31 December 2022:
RUB11,486,136 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.
All entities of the Group are the tax resident of
Russian Federation.
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 2023 deferred tax assets
relating to tax losses carried forward in the amount
of RUB410,765 thousand (31 December 2022:
RUB395,785 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.
11. Earnings per share
Basic and fully diluted earnings attributable to the owners of the Company (RUB’000)
7,629,721
4,560,217
Weighted average number of ordinary shares in issue during the year
75,125,010
75,125,010
Basic and fully diluted earnings per share (RUB)
101.56
60.70
2023
2022
12. Dividends
No dividends were declared to be paid in the
reporting period.
On 26 October 2022 the Board of Directors
recommended the payment of RUB642,319 thousand
as interim dividends which corresponds to
RUB8,55 per share. The dividends were paid on
29 November 2022.
CONTENTSANNUAL REPORT 2023 140
APPENDICES
141
13. Property, plant and equipment
Freehold land
and buildings
RUB’000
Property under
construction
RUB’000
Plant
and equipment
RUB’000
Right-of-use of freehold land,
buildings and plant
and equipment
RUB’000
INITIAL COST
Balance as at 1 January 2022
Additions
Disposals
Impairment loss
Transfer from construction in progress
Balance as at 31 December 2022
Additions
Disposals
Acquisitions through business
combinations
Transfer from construction in progress
Balance as at 31 December 2023
DEPRECIATION
Balance as at 1 January 2022
Depreciation during the year
Accumulated depreciation on disposals
Balance as at 31 December 2022
Depreciation during the year
Accumulated depreciation on disposals
Balance as at 31 December 2023
CARRYING AMOUNTS
Balance as at 1 January 2022
Balance as at 31 December 2022
Balance as at 31 December 2023
22,075,363
49,429
(33,911)
(1,000,015)
2,527,195
23,618,061
45,507
(20,902)
56,544
2,280,622
25,979,832
(2,687,537)
(502,409)
7,381
(3,182,565)
(522,831)
1,987
(3,703,409)
19,387,826
20,435,496
22,276,423
2,456,245
981,538
(815)
(85,525)
(3,192,038)
159,405
3,554,934
–
–
(3,481,596)
232,743
–
–
–
–
–
–
–
2,456,245
159,405
232,743
9,976,786
151,059
(83,205)
–
664,843
10,709,483
99,183
(149,078)
82,215
1,029,648
11,771,451
(6,417,317)
(978,440)
69,256
(7,326,501)
(977,980)
131,917
(8,172,564)
3,559,469
3,382,982
3,598,887
1,001,108
65,758
(54,705)
–
–
1,012,161
235,810
(93,944)
53,338
171,326
1,378,691
(334,250)
(135,698)
7,821
(462,127)
(149,538)
45,341
(566,324)
666,858
550,034
812,367
Total
RUB’000
35,509,502
1,247,784
(172,636)
(1,085,540)
–
35,499,110
3,935,434
(263,924)
192,097
–
39,362,717
(9,439,104)
(1,616,547)
84,458
(10 971 193)
(1,650,349)
179,245
(12,442,297)
26,070,398
24,527,917
26,920,420
CONTENTSANNUAL REPORT 2023
142
APPENDICES
143
On 17 July 2023 the Group completed the acquisition
of a ready for service hospital in Moscow. The invest-
ment amounted to RUB2,625,718 thousand, including
RUB2,190,000 thousand for building and RUB435,718
thousand for equipment.
Once the impairment loss was recognised,
the recoverable amount equaled the carrying
amount. Therefore, any adverse movement in a key
assumption would have led to further impairment.
As at 31 December 2022 and as at 31 December
2023 the Group considered whether there were
indicators of additional impairment or reversal
there of and concluded that there were none.
Impairment loss of construction documentation
in Saint-Petersburg
During the year ended 31 December 2022 the Group
recognized an impairment of previously acquired
construction documentation in the amount
of RUB85,525 thousand as the Group revised
its plans on construction of a clinic in Saint-
Petersburg that made the documentation no longer
usable. The impairment loss was allocated
to construction in progress.
Impairment testing of other CGUs
On 30 June 2022 and 30 September 2023 the Group
performed the annual 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 performed for a number of CGUs.
No additional impairment loss was identified.
No reasonably possible change in key assumptions
will cause an impairment. As at 31 December 2023
the Group considered whether there were indicators
of additional impairment thereof and concluded
that there were none. As a result the Group did not
recignise any additional impairment other than
mentioned above.
Impairment loss of Ufa hospital’s property,
plant and equipment
As at 30 June 2022, due to macroeconomic
con ditions, 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 cash-
generating unit (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 (RUB2,936,892 thousand)
exceeded its recoverable amount (RUB1,936,877
thousand) and an impairment loss of RUB1,000,015
thousand was recognised. 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 revenue growth rate estimated
by management.
Estimated EBITDA was based on expectations of
future outcomes taking into account past ex pe-
rience, 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.
14. Intangible assets
Initial cost
Goodwill
RUB’000
Patents and
trademarks
RUB’000
Software
and website
RUB’000
Total
RUB’000
Balance as at 1 January 2022
2,032,320
564,812
311,538
2 908,670
Additions
Impairment loss
Balance as at 31 December 2022
Acquisitions through business combinations
Additions
-
(201,034)
1,831,286
157,236
-
–
–
564,812
46,159
–
70,017
70,017
–
(201,034)
381,555
2,777,653
788
73,456
204,183
73,456
Balance as at 31 December 2023
1,988,522
610,971
455,799
3,055,292
Amortisation
Balance as at 1 January 2022
Amortisation during the year
Balance as at 31 December 2022
Amortisation during the year
Balance as at 31 December 2023
Carrying amounts
Balance as at 1 January 2022
Balance as at 31 December 2022
Balance as at 31 December 2023
–
–
–
–
–
(564,810)
(201,915)
(766,725)
(2)
(51,107)
(51,109)
(564,812)
(253,022)
(817,834)
(6,441)
(51,739)
(58,180)
(571,253)
(304,761)
(876,014)
2,032,320
1,831,286
1,988,522
2
–
109,623
128,533
2,141,945
1,959,819
39,718
151,038
2,179,278
Goodwill is allocated to each CGU, which is defined as an individual subsidiary or group of subsidiaries acquired
operating as one business in one particular location.
JSC Medicinskij centr AVICENNA
ARTMed Group (Centres of Reproductive Medicine, located in Krasnoyarsk, Omsk,
Novosibirsk and Barnaul)
JSC Medicinskaya kompaniya IDK
LLC Reproductive Medicine Centre
LLC MEDICA-2
Subsidiaries acquired in 2011
LLC VIRA-CENTER
LLC MC Biologicheskaya Medicina
LLC Antireflux-Surgut
31 December
2023
RUB’000
31 December
2022
RUB’000
1,055,593
1,055,593
360,154
360,154
211,303
142,193
47,216
14,827
69,947
55,381
31,908
211,303
142,193
47,216
14,827
–
–
–
1,988,522
1,831,286
CONTENTSANNUAL REPORT 2023
144
APPENDICES
145
Impairment loss of LLC Medica-2
Impairment test of other subsidiaries
15. Trade, other receivables and deferred expenses
.The discount rate and terminal growth rate as at 30
June 2022 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 Medicinskaya kompaniya 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 as at 30 June
2022. No reasonably possible change in key
assumptions will cause impairment.
The Group performed impairment tests with
respect to goodwill in above mentioned subsidiaries
as at 30 September 2023. The revenue growth
rate was 4%-4.5% and EBITDA margin for JSC MC
Avicenna, ARTMed Group (Centres of Reproductive
Medicine, located in Krasnoyarsk, Omsk, Novosibirsk
and Barnaul), JSC Medicinskaya kompaniya
IDK and other was 33.8%-34.5%, 39.0%-40.3%
and 30.6%-34.6% respectively for the 5.25 years
projection period. The discount rate was 20.9%.
As a result of this analysis no impairment was
identified. No reasonably possible change in key
assumptions will cause an impairment.
СThe Group performed an impairment test with
respect to goodwill in regional clinic LLC Medica-2
as at30 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 (RUB323,112 thousand) was determined
to be higher than its recoverable amount
(RUB122,078 thousand) and an impairment loss
of RUB201,034 thousand was recognized during
the year ended 31 December 2022.
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.
In 2023 the Group decided to perform annual
impairment testing of goodwill as at 30 September
2023. The EBITDA margin was assessed as 25.9%-
26.0% and the revenue growth rate was 4%-6.1%
for the 5.25 years projection period. The discount
rate was 20.9%.
The recoverable amount of the 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 recoverable
amount of the CGU was determined to be higher
than its carrying amount and an no impairment loss
was recognized during the year ended 31 December
2023.
Trade receivables net of impairment provision
CAPEX prepayments
Advances paid to suppliers
Interest receivable
Deferred expenses
Other receivables
Non-current portion
Current portion
31 December 2023
RUB’000
31 December 2022
RUB’000
741,499
246,980
147,262
41,433
6,928
73,196
734,938
87,928
113,013
128
7,884
55,868
1,257,298
999,759
246,980
1,010,318
1,257,298
87,928
911,831
999,759
Ageing analysis of trade receivables:
Not past due
Past due
Gross amount
31 December 2023
RUB’000
Impairment
31 December 2023
RUB’000
Gross amount
31 December 2022
RUB’000
Impairment
31 December 2022
RUB’000
632,817
353,654
986,471
(19,109)
(225,863)
(244,972)
594,321
375,662
969,983
(1,028)
(234,017)
(235,045)
In addition to the bad debt provision accrued
as at 31 December 2023 the accounts receivable
in the amount of RUB9,533 thousand were writ-
ten-off during the year ended 31 December
2023 (year ended 31 December 2022:
RUB118 thousand).
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 2023.
Ageing
Status
Weighted-
average
loss rate
2023
Gross
carrying
amount 2023
RUB’000
Loss
allowance
2023
RUB’000
Gross
carrying
amount 2022
RUB’000
Loss
allowance
2022
RUB’000
0-30 days
31-60 days
61-90 days
past due
past due
past due
more than 91 days
past due
TOTAL
11%
32%
43%
76%
58,339
13,585
6,467
244,415
322,806
(6,541)
(4,297)
(2,779)
(185,637)
(199,254)
46,081
7,986
7,115
243,736
304,918
(8,436)
(2,633)
(3,159)
(180,321)
(194,549)
CONTENTSANNUAL REPORT 2023 146
APPENDICES
147
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 2023.
Ageing
Status
Weighted-
average
loss rate
Gross
carrying
amount 2023
RUB’000
Loss
allowance
2023
RUB’000
Gross
carrying
amount 2022
RUB’000
Loss
allowance
2022
RUB’000
0-30 days
not past due
31-60 days
61-90 days
past due
past due
more than 91 days
past due
57%
67%
83%
90%
33,493
8,167
4,281
(19,109)
(5,438)
(3,562)
7,636
5,993
3,142
(1,028)
(1,188)
(875)
18,400
(16,498)
61,609
(36,031)
TOTAL
64,341
(44,607)
78,380
(39,122)
Based on the analysis of the historical data
for accounts receivable from related parties
amounted to RUB112,101 thousand no provision
is accrued. For accounts receivable from insurance
companies amounted to RUB487,223 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 RUB1,111 thousand was accrued
as at 31 December 2023 (31 December 2022:
RUB1,373 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
Current bank accounts and cash in hand
Bank deposits with maturity less than 3 months
TOTAL CASH AND CASH EQUIVALENTS
Currency:
RUB
USD
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.
31 December 2023
RUB’000
31 December 2022
RUB’000
847,026
9,046,945
9,893,971
901,000
3,561,740
4,462,740
31 December 2023
RUB’000
31 December 2022
RUB’000
9,867,188
26,783
9,893,971
4,399,794
62,946
4,462,740
17. Share capital
Number of
shares
Nominal value
USD
Share capital
RUB’000
Share capital
RUB’000
Authorised
Issued and fully paid ordinary shares
1 January / 31 December
125,250,000
75,125,010
0.08
0.08
–
180,585
10,020
6,010
18. Share premium, reserves and retained earnings
Share premium
Reserves
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.
Reserves include negative common control
transactions reserve in the amount of
RUB682,873 thousand and positive capital
contribution reserve in the amount of
RUB27,521 thousand.
Retained earnings
Retained earnings include accumulated profits
and losses incurred by the Group.
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 con si-
deration paid for their acquisition.
There were no changes during 2023.
19. Loans and borrowings
Long-term liabilities
Lease liabilities
Short-term liabilities
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 2023
RUB’000
31 December 2022
RUB’000
735,724
489,200
141,246
876,970
106,426
595,626
31 December 2023
RUB’000
31 December 2022
RUB’000
141,246
495,710
240,014
876,970
106,426
379,761
109,439
595,626
CONTENTSANNUAL REPORT 2023 148
APPENDICES
149
During the year ended 31 December 2022, the Group
fully repaid all its existing credit facilities by settling
outstanding obligations ahead of schedule.
No property, plant and equipment was held
as collateral for the bank loans as at 31 December
2023.
20. Contract liabilities
The terms and debt repayment schedule of lease
liabilities are as follows:
Maturity
Currency
31 December 2023,
RUB’000
31 December 2022,
RUB’000
Current lease liabilities
2024
Non-current lease liabilities
2025-2033
RUB
RUB
141,246
735,724
876,970
106,426
489,200
595,626
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
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
31 December 2023
31 December 2022
Bank loans
RUB’000
Lease
liabilities
RUB’000
Bank loans
RUB’000
Lease
liabilities
RUB’000
–
–
–
–
–
–
–
–
–
–
–
595,626
4,818,321
694,712
–
(4,805,599)
–
(106,936)
(60,702)
–
–
(98,862)
(51,881)
–
(241,329)
–
(167,638)
(5,046,928)
(150,743)
460,474
(72,194)
–
–
60,702
228,607
448,982
228,607
65,758
(65,982)
51,881
51,657
876,970
–
595,626
Patient advances
including:
Contract liabilities after more than one year
Contract liabilities within one year
31 December 2023
RUB’000
31 December 2022
RUB’000
2,333,752
2,051,929
380,763
1,952,989
468,505
1,583,424
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 the long-term contract 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
Accruals
Trade payables
Taxes payable
Payables to employees
CAPEX payables
Income tax liability
Other payables
Non-current portion
Current portion
31 December 2023
RUB’000
31 December 2022
RUB’000
786,151
745,734
633,772
591,956
583,556
157,463
4,823
68,720
923,279
702,537
517,270
814,083
462,884
66,575
3,142
61,802
3,572,175
3,551,572
592,045
2,980,130
3,572,175
729,173
2,822,399
3,551,572
The group received the right to postpone a portion
of social insurance payments (included in taxes
payable) for 2 years due to Governmental Decree
#776 on 29 April 2022. The Group settled 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.
CONTENTSANNUAL REPORT 2023
150
APPENDICES
151
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
2023 was RUB119,606 thousand (for the year ended
31 December 2022: RUB122,164 thousand).
The remuneration of the members of the key
management personnel which remained unpaid as
at 31 December 2023 was RUB39,982 thousand (31
December 2022: RUB24,977 thousand).
31 December 2023
31 December 2022
Type of transactions with
related party:
Income
Expenses /
Purchases
Medical services
Agent fees
Non-exclusive concession services
Purchase of medical supply
Purchase of intangible assets
Type of transactions with
related party:
Medical services
Non-exclusive concession services
Medical materials
594,535
–
1,800
–
–
60,661
83,848
–
222,228
4,041
Income
395,949
–
1,671
–
–
Expenses /
Purchases
51,383
59,138
–
189,954
14,173
31 December 2023
31 December 2022
Receivables
Payables
Receivables
Payables
111,608
493
–
12,140
–
2,567
67,479
396
–
6,759
–
15,719
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
No dividends were declared for the year ended
31 December 2023 (dividends declared to the
parent company MD Medical Holding Limited
during the year ended 31 December 2022:
RUB436,250 thousand).
22.2. Directors’ interests
The direct and indirect interests of the
members of the Board of Directors of the
Company as at 31 December 2023, 31 December
2022 and as at the date of signing these
consolidated financial statements are as follows:
Name
Type
of interest
Effective
interest %
Mark Kurtser
Vitaly Ustimenko
Direct ownership
of shares
Direct ownership
of shares
67.90
0.005
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.
23. Financial risk management
(1) 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:
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 esta-
blished 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.
Trade and other receivables
850,083
792,817
Cash and cash equivalents excluding cash in hand
9,882,695
4,451,895
10,732,778
5,244,712
31 December 2023
RUB’000
31 December 2022
RUB’000
Trade and other
receivables
Cash and cash equivalents
and short-term bank deposits
The Group’s exposure to credit risk is influenced
mainly by the individual characteristics of each
customer. The Group has no significant con cen-
tration 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.
The Group held cash and cash equivalents
excluding cash in hand of RUB9,882,695 thousand
as at 31 December 2023 (31 December 2022:
RUB4,451,895 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 2023. In accordance with the Russian
rating agency AKRA the rating was ААА(RU).
Number of banks
External credit rating
3
2
Total
ruAAA
others
Carrying amount
2023
Carrying amount
2022
9,864,687
18,008
9,882,695
4,376,840
75,055
4,451,895
CONTENTSANNUAL REPORT 2023 152
APPENDICES
153
(2) Liquidity risk
Liquidity risk is the risk that arises
when the maturity of assets and liabilities does
not match. An un matched 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 2023
Lease liabilities
CAPEX payables
Trade payables
Other payables and accrued expenses
31 December 2022
Lease liabilities
CAPEX payables
Trade payables
Other payables and accrued expenses
Note
19
21
21
21
Note
19
21
21
21
Carrying
amounts
RUB’000
Contractual
cash flows
RUB’000
2 months
or less
RUB’000
Between
2-12 months
RUB’000
Between
1-2 years
RUB’000
Between
2-5 years
RUB’000
More than
5 years
RUB’000
876,970
1,169,471
35,121
177,816
191,590
453,065
311,879
157,463
157,463
56,940
100,523
633,772
633,772
633,772
–
–
–
–
–
–
–
2,776,117
3,031,798
1,495,071
683,767
144,282
467,542
241,136
4,444,322
4,992,504
2,220,904
962,106
335,872
920,607
553,015
Carrying
amounts
RUB’000
Contractual
cash flows
RUB’000
2 months
or less
RUB’000
Between
2-12 months
RUB’000
Between
1-2 years
RUB’000
Between
2-5 years
RUB’000
More than
5 years
RUB’000
595,626
735,399
27,429
135,392
144,233
292,381
135,964
66,575
66,575
14,094
52,481
517,270
517,270
517,270
–
–
–
–
–
–
–
2,964,585
3,283,014
1,018,786
1,217,162
195,521
429,877
421,668
4,144,056
4,602,258
1,577,579
1,405,035
339,754
722,258
557,632
CONTENTSANNUAL REPORT 2023 154
APPENDICES
155
(3) Market risk
Interest rate risk
The following significant exchange rates applied during the year:
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 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
ma nagement 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:
USD
EUR
CNY
GBP
Average rate
Reporting date spot rate
2023
85,2466
92,2406
11,9846
2022
68,5494
72,5259
10,2916
2023
89,6883
99,1919
12,5762
106,0900
85,5708
114,5320
2022
70,3375
75,6553
9,8949
84,7919
Sensitivity analysis
Capital management
Fixed rate instruments
Financial assets
Financial liabilities
Total
31 December
2023
RUB’000
31 December
2022
RUB’000
9,046,945
(876,970)
8,169,975
3,561,740
(595,626)
2,966,114
A 10% weakening of the Russian Ruble against
the above currencies will result in the decrease
in profit and equity of RUB3,172 thousand as
at 31 December 2023 (31 December 2022: increase
in the amount of RUB3,369 thousand). A 10%
stre ngthening of the Russian Ruble would have
an opposite impact.
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 Chinese Yuan, the United States Dollar
and the Euro. The Group’s management monitors
the exchange rate fluctuations on an ongoing basis
and acts accordingly.
The Group’s exposure to foreign currency risk was
as folows:
31 December 2023
31 December 2022
Financial liabilities
Less: cash and cash equivalents
Net debt
Total equity
CNY
USD
EUR
USD
EUR
Net debt to equity ratio
16,564
10,219
–
62,946
–
Assets
Cash at bank
Liabilities
CAPEX payables
Trade and other payables and accruals
(16,564)
–
–
(33,491)
(5,943)
(2,501)
(23,515)
(2,207)
(3,491)
(48)
Net exposure
–
(23,272)
(8,444)
35,940
(2,255)
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.
Note
19
16
31 December
2023
RUB’000
31 December
2022
RUB’000
876,970
595,626
(9,893,971)
(4,462,740)
(9,017,001)
(3,867,114)
34,553,661
26,963,262
-26.10%
-14.34%
24. Fair values
As at 31 December 2023 and 31 December 2022
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.
CONTENTSANNUAL REPORT 2023
156
APPENDICES
157
25. Operating environment
(a) Insurance
The insurance industry in the Russian Federation
is in a developing state and many forms of insurance
protection common in other parts of the world
are not yet generally available. Moreover, medical
clinics are not required to insure their performance
in Russian Federation. There is a draft Law regarding
obligatory insurance of medical clinics as from 2013.
The Law has not yet been enacted.
The Group does not have full coverage for its plant
facilities, business interruption, or third party
liability in respect of property or environmental
damage arising from accidents on Group property
or relating to Group operations. Until the Group
obtains adequate insurance coverage, there is a risk
that the loss or destruction of certain assets could
have a material adverse effect on the Group’s
operations and 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
mar kets of the Russian Federation, which display
the characteristics of an emerging market.
The legal, tax and regulatory frameworks
continue development, but are subject to vary-
ing 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 start of a special military operation in Ukraine
by the Russian Federation and the incorporation
of the territories of republics of Donetsk and
Lugansk, as well as Zaporozhye and Kherson regions
into the Russian Federation after referendums
in the second half of 2022, 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 particular, restrictions
were imposed on the export and import of goods,
including capping the price of certain types
of raw materials, restrictions were introduced
on the provision of certain types of services
to Russian enterprises, the assets of a number of
Russian individuals and legal entities were blocked,
a ban on maintaining correspondent accounts was
established, certain large banks were disconnected
from the SWIFT international financial messaging
system, and other restrictive measures were
implemented. Also, in the context of the imposed
sanctions, a number of large international
com panies 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.
In response to the increasing pressure on the Russian
economy, the Government of the Russian Federation
and Central Bank of the Russian Federation have
introduced a set of measures, which are counter-
sanctions, 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,
financial sector and citizens.
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 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 Rus s ian business environment on the opera-
tions and the financial position of the Group.
The manage ment believes the described above will
not negatively effect the business, including financial
position. The future business environment may differ
from management’s assessment.
(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
contr adictory and subject to varying
interpretation by different tax authorities.
Taxes are subject to review and investigation by
a number of authorities, which have the authority
to impose severe fines, penalties and interest
charges. A tax year generally remains open
for review by the tax authorities during the three
subsequent calendar years. The legitimacy
of for ming tax losses formed in previous tax periods
may be checked in the period(s) when the tax
base is reduced by the amount of such losses.
Recent events within the Russian Federation suggest
that the tax authorities are taking a more assertive
and substance-based position in 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
2023
RUB’000
4,354,257
1,758,244
87,912
140,000
5%
2022
RUB’000
3,740,660
1,413,073
70,654
102,500
5%
31 December
2023
RUB’000
31 December
2022
RUB’000
1 746,735
922,085
(306,746)
(876,892)
1,485,182
74,259
99,096
173,355
2,963,704
657,396
(346,889)
(739,146)
2,535,065
126,753
85,924
212,677
CONTENTSANNUAL REPORT 2023 158
APPENDICES
159
27. Capital commitments
29. Events after the reporting period
Capital commitments mostly comprise
of the obligations under construction and
equipment purchase contracts in the amount
of RUB1,144,426 thousand as at 31 December
2023 (31 December 2022: RUB681,311 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.
A multifunctional family medical centre MD Group
Zilart in Moscow was opened on 25 January 2024.
In February 2024 the Group acquired a plot of land
for Domodedovo hospital construction.
An Extraordinary General Meeting of shareholders
was held on 20 February 2024 where the decision
to proceed with the redomiciliation of the Company
to Russia was approved. On 26 March 2024 the
Board of Directors approved the Prospectus for
shares and the resolution on issuance of shares
of MD Medical Group IPJSC from the date of the
registration of the Company as an IPJSC. The
number of shares issued is not planned to be
changed.
No other significant events occurred after
the reporting period.
2023 KEY RISKS
OVERVIEW
Name and brief
description of
the risk
Medical risks
Risk owner
Risk management
Risk management results in 2023
Risk of misdiagnosis
Probability:
Impact:
Hospital Group
management
HR management
Operational risks
Risk of reduced
patient flow
Hospital Group
management
• Maintaining the required
• The number of interregional councils
qualification of personnel,
training with the accrual
of points for continuing
medical education
• Registration of attestation
certificates, integrated
into the HR management
program
for complex cases of patient
treatment was increased
• A task force was established
to undergo voluntary certification
of the Federal Service for Surveillance
in Healthcare (Roszdravnadzor)
for quality and safety control
of medical activities
• Analytics of changes in patients’
laboratory test results were added
• The Rubricator of Clinical Guidelines
was developed and implemented.
This is a methodological framework
for each practicing health professional
• A mechanism for initiating a consul-
tation with a chief specialist
for treatment of seriously-ill
patients was developed
• Expanding the range of medical
• New areas of medicine were launched:
services provided
Probability:
Impact:
Customer Service
• Routing of patients between
Marketing
Department
the Group’s medical institutions
• Conducting «open days»,
campaigns and other events
to inform and engage patients
• Placing targeted and contextual
advertising
• Concluding contracts
with insurance companies
Hospital Group
management
HR management
• Analysis of data on the number
of employees and the payroll
by service area. Comparison
of data from various institutions
Risk of mismatch
between the number
of employees
and the Company’s
needs
Probability:
Impact:
– Neurosurgery Center
– Immunobiological Therapy Center
– High Risk Pregnancy Preservation
Center
– Home Obstetrics Center
• Equipment for complex medical
procedures was purchased
• Integration with «NaPopravku» service
was carried out, which will provide
additional patient flow
• Redeployment of health professionals in
several medical institutions was carried
out
• A project to create a talent pool
for new clinics, hospitals and treatment
areas was launched
• Wages were indexed
Probability:
Impact:
Probable
Moderate
Unlikely
Significant
Insignificant
CONTENTSANNUAL REPORT 2023 160
Name and brief
description of the
risk
Production risks
Risk owner
Risk management
Risk management results in 2023
Risk of inefficient use
of fixed assets and
durable materials
Information
Technology
Directorate
• Correct inventorying of
• A tool for creating a QR code for
equipment using specialized IT
systems
fixed assets was configured, with the
possibility to use thermal printers
Probability:
Impact:
• Inventorying of fixed assets with
the application of barcodes that
help to correctly identify them
• A report on the correctness of fixed
assets inventorying was drawn up
Risk of incorrect
assessment of the
quality of service
Probability:
Impact:
Customer Service
• Conducting a patient survey,
Marketing
Department
collecting feedback in the mobile
application and on the website
• Recording feedback from
patients in the CRM system
• Developing an action plan based
on patient feedback
• A program for assessing the quality of
customer service employees’ work was
developed
• Regulations and instructions for
responding to patient feedback for all
branches were created
Risk of incorrect
planning of the
procurement volume
Procurement
Department
Probability:
Impact:
• Estimating the procurement
• Medicines were moved and
volume based on consumption
statistics, information on branch
needs, current stock balances
and goods in transit
consumables were distributed between
the warehouses of medical institutions
in order to optimize the use of
materials with a low turnover rate
• Inventory turnover reporting
Financial risks
Risk of increase in
accounts receivable
Finance
Directorate
Probability:
Impact:
Risk associated
with the analysis of
investment projects
Probability:
Impact:
Finance
Directorate
Information
Technology
Directorate
• Automation of renewal and payment
for services related to storage of
biomaterials via a mobile application
was developed and implemented
• The function for creating a link to pay
bills for patients who do not use the
mobile application or patients’ relatives
was introduced
• The performance of implemented
investment projects was assessed
• Monitoring and implementing
compensatory measures to
reduce accounts receivable
• Maintaining detailed reports on
accounts receivable
• Implementing automation for
the exchange of invoices with
insurance companies under VHI
programs
• Complying with the adopted
regulated procedure for
conducting investment activities,
which determines the rules for
initiating and running investment
projects
• Assessing the performance of
implemented investment projects
Name and brief
description of the
risk
Risk of changes
in the zero tax rate
Probability:
Impact:
Risk of an increase
in the cost
of purchasing
materials
Probability:
Impact:
APPENDICES
161
Risk owner
Risk management
Risk management results in 2023
HR management
Financial Control
Division
• Monitoring the availability
of at least 50% of medical
personnel
• Monitoring the availability
and validity of the required
employee certificates
• Ensuring profit control by source
Profit from non-medical services
should not exceed 10%
• The necessary control was carried out.
The Group’s medical institutions submit
relevant reports on a regular (monthly)
basis
Procurement
Department
• Compliance
with the Pro curement
Regulations
• Procurement was carried out
in accordance with the Company’s
Procurement Regulations
• Centralization of procurement
• Conducting bidding procedures
to obtain optimal procurement
conditions
• Selecting analogs of medicines
and medical consumables
• Revising the terms of supply
with existing suppliers on the
basis of commercial proposals
received
• Creating material reserves
to eliminate downtime
in the provision of medical
services
Legal risks
Risk of improper
execution of medical
documents or failure
to submit reports
to state regulators
Probability:
Impact:
Hospital Group
management
Customer Service
Information
Technology
Directorate
• Compliance with legal
• A uniform electronic format
requirements for documentation
and reporting
• Timely transfer of structured
electronic medical documents
to the Unified State Health
Information System (EGISZ)
• Use of approved medical
document forms
for standardized forms of medical
documents was developed
and implemented for all entities
of the Group
• Reports for checking the quality
of electronic medical document
filling out were drawn up
• The directory of services provided
to patients was adjusted to comply
with the approved Nomenclature
of Medical Services of the Ministry
of Health of the Russian Federation
Marketing risks
Risk of contextual
advertising
ineffectiveness
Probability:
Impact:
Marketing
Department
• Analysis of contextual
• Two audits of contextual advertising
advertising effectiveness
is based on data on patient
appointments and visits
• Testing the effectiveness of new
advertising campaigns
effectiveness were conducted
Probability:
Impact:
Probable
Moderate
Unlikely
Significant
Insignificant
Probability:
Impact:
Probable
Moderate
Unlikely
Significant
Insignificant
CONTENTSANNUAL REPORT 2023 APPENDICES
163
CONTACT US
MD Medical Group Investments plc.
Registered office in Russia:
Moscow Exchange:
Moscow, 24 Sevastopolskiy Avenue, building 1
Tel.: +7 (495) 937 39 02
Email: info@mcclinics.ru
Moscow, 13 Bolshoy Kislovsky Lane
Tel.: +7 (495) 733 95 07
Email: equities@moex.com
Contact details for investors:
Independent Auditor
Lapino-1 Clinical Hospital
Moscow Region, Odintsovsky District,
Lapino village, 111 1st Uspenskoe Highway
Tel.: +7 (495) 139 87 40
Email: ir@mcclinics.ru
Kept JSC
Moscow, Naberezhnaya Tower complex, Block C,
10 Presnenskaya Embankment
Tel.: +7 495 937 44 77
Email: moscow@kept.ru
162
Name and brief
description of the
risk
Risk owner
Risk management
Risk management results in 2023
Risk of penalties
in case of a lack
of advertising labeling
Marketing
Department
• Compliance with the requi-
• Regulations and instructions
rements of the law on Internet
advertising labeling
on labeling for all marketing divisions
were drawn up
Probabylity:
Impact:
Cybersecurity risks
Risk related
to personal
data protection
Probability:
Impact:
• A methodology for self-labeling
of advertisements was developed
Department
of Information
Security
• Compliance with personal data
• Existing institutions are equipped
protection legislation
• Implementing the Regulations,
Policy and user instructions
on personal data protection
with encryption equipment
for protected data transmission
• Encryption equipment for new
institutions was procured
• Familiarizing employees with
the Regulations on Personal
Data Protection in Employment
• A new IT solution was implemented
to ensure the protection of Internet
access
• Appointing employees
responsible for the safety
of personal data, separation
of levels of employee access
to personal data depending
on the position
• Equipping the data center
and servers with a firewall
Department
of Information
Security
Risk associated
with the protection
of critical information
infrastructure
(CII) facilities
Probability:
Impact:
• Compliance with legislation
in the field of CII security
• Developing documentation
for the protection of CII facilities
• Classifying CII facilities
and tran sferring relevant
data to the Federal Service
for Technical and Export Control
• Equipping the data center
and servers with a firewall
• Secure network interaction
with the Na t ional Cyber Monitoring
Center was established in order
to promptly obtain information
on cyberattacks on critical
infrastructure facilities occurring
in the Russian Federation
• Forms for notification of identified CII
facilities were developed
Probability:
Impact:
Probable
Moderate
Unlikely
Significant
Insignificant
CONTENTSANNUAL REPORT 2023