Regulation. According to the LIFE S.A. Name of. Category. be reported: publication. rights. type of issue. required. - Pre-emption.

Transcription

1 MED LIFE S.A. Sediul social: București, Calea Griviței, nr. 365, sector 1, România Codul de înregistrare fiscală: Număr de ordine în Registrul Comerţului: J40/3709/ /1996 Capital social subscris şi vărsat: RON CURRENT REPORT According to the Regulation CNVM No. 1/2006 No. 17/ Report date: Name of the issuing entity: MED LIFE S.A. Headquarters: Caleaa Griviței no. 365, district 1, Bucharest, Romania Telephone number/ fax: Sole registration code: Registration number in the Trade Registry: J40/3709/1996 Subscribed and paid-up market on which the issued securities are traded: Bucharest Stock Exchange, Premiumm Category share capital: 5,023,000 RON The regulated Important events to be reported: Approval by the Financial Supervisory Authority and publication of the Proportionate disclosure prospectus for the rights issue as a result of the share capital increase by Med Life S.A. with the observance of the pre-emption rights Read the Proportionate Disclosure Prospectus before subscribing! Med Life S.A. informs its investors that the Financial Supervisory Authority approved the Proportionate disclosure prospectus for the rights issue in respect of a maximum number of 2,600,000 new shares to be issued as a result of the share capital increase through cash contribution, by way decision no of (the "Proportionate Disclosure Prospectus"). The level of disclosure of the Proportionate Disclosure Prospectus is proportionate to this type of issue. The Proportionate Disclosure Prospectus, together with the other documents that Med Life S.A. is required to make available to the investors, are published on the websitee of Med Life S.A. at > Investors Relations. Key elements of the issue: - Maximum number of offered shares: 2,600,0000 new shares; - Pre-emption right exercise period: 16 November December 2017; - Number of Pre-emption Rights necessary to subscribe one new share: Pre-emption Rights; - Record date: The issue of new shares as a result of subscriptions in the Pre-emption right exercise period is addressed exclusively to the persons registered in the shareholders registry of Med Life S.A. as shareholders on the record date; - Maximum price per share (subscription price): 36 RON/new share;

2 - Final price per share: will be announced at the latest on the first Business Day following the last date of the subscription period and shall be less than or equal to the Maximum Price; - Private placement: the new shares not subscribed during the Pre-emption right exercise period shall be offered for subscription in a private placement exempted from the obligation to prepare and publish a prospectus; - Tradability: The Pre-emption Rights are not tradeable. After the closing of the exercise period for the pre-emption rights and of the private placement, Med Life S.A. will apply for the admission of the new shares allocated in the share capital increase to trading on the regulated market operated by the Bucharest Stock Exchange. The Proportionate Disclosure Prospectus is also available on the website of SSIF Tradeville S.A., and on the website of Bucharest Stock Exchange The approval stamp applied on the public offering prospectus does not represent a guarantee or any type of appraisal by the Financial Supervisory Authority as regards the opportunities, advantages or disadvantages, profits or risks involved by the transactions to be concluded following the acceptance of the public offer subject of the approval decision. The approval decision certifies only that the prospectus complies with the requirements of the law and of the norms adopted in its application. Mihail Marcu Chairman of the Board of Directors

3 IMPORTANT NOTICE IMPORTANT: You must read the following disclaimer before continuing. This Document is not a prospectus. This Document is an unofficial translation of the Prospectus approved by the FSA for the issue of new shares following the exercise of pre-emption rights under the share capital increase by contribution in cash of Med Life S.A. Neither Med Life S.A., nor SSIF Tradeville S.A. makes any representation as to the accuracy, completeness or reliability of the information included in this Document and Med Life S.A. cautions investors to take their investment decision exclusively based on the information included in this Document and any supplement to the Prospectus thereto, if published, as approved by the FSA in Romanian language. The following disclaimer applies to the electronic version of the English translation of the Prospectus attached to this notice (the "Document"), received via , accessed from an internet page or otherwise received as a result of electronic communication, and you are therefore advised to read this notice carefully before reading, accessing or making any other use of the attached Document. In accessing the Document, you agree to be bound by the following terms and conditions and in particular restrictions set out in the Prospectus, including any modifications to them from time to time, each time you receive any information from SSIF Tradeville S.A. (the "Manager"), Med Life S.A. ("MedLife" or the "Company") as a result of such access. You acknowledge that this electronic transmission and the delivery of the attached Document is confidential and intended only for you and you agree you will not forward, reproduce or publish this electronic transmission or the attached Document (or any copy of it or part thereof) in any manner whatsoever to any other person. The offer is structured as an offering of new shares which is only addressed to entitled shareholders according to the pre-emption rights they hold, during the subscription period 16 November December 2017 (the "Subscription Period"), according to art. 15 par. (10) of Regulation 1/2006 and art. 26 (a) of the Prospectus Regulation. As the case may be, the new shares that will not be subscribed during the Subscription Period shall be offered for subscription under a private placement, exempted from the obligation to prepare and publish a prospectus according to art. 16 par. (3) letter (a) of the Law on Issuers and Market Operations and art. 15 par. (1) of Regulation 1/2006 (the "Private Placement"). The Private Placement is not subject to the Document. The distribution of this Document and the offer and sale of new shares may be restricted by law in certain jurisdictions. Entitled shareholders must inform themselves about, and observe any such restrictions. Neither the Company, nor the Manager has taken any action that is liable to support initiation of any public offering of new shares, other than the offering to Romanian investors, in any jurisdiction where any formality for initiation of a public offering would be necessary to be carried out. This Document may not be used for, or in connection with, any offer to, or solicitation by, anyone in any jurisdiction or under any circumstances in which such offer or solicitation is not authorised or is unlawful. Further information with regard to restrictions on offers and sales of new shares is set forth in the Document under Subscription and Sale section. Neither the Company nor the Manager launches any offer to sell new shares or any invitation to participate in any offer to buy new shares to any person in any jurisdiction, unless such offer or invitation is permitted. THE NEW SHARES THAT WILL BE ISSUED FOLLOWING THE EXERCISE OF THE PRE-EMPTION RIGHTS BY SUBSCRIBING NEW SHARES UNDER THE OFFERING OR THE NEW SHARES THAT WILL BE SOLD BY MEANS OF A PRIVATE PLACEMENT ACCORDING TO THE CORPORATE APPROVALS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED ( SECURITIES ACT ). THE NEW SHARES WILL NOT BE REGISTERED WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR OUTSIDE THE UNITED STATES, EXCEPT IN "OFFSHORE TRANSACTIONS" IN RELIANCE ON REGULATION S OF SECURITIES ACT. FOR DETAILS ON THE RESTRICTIONS APPLICABLE TO THE COMMUNICATION OF OFFERING DOCUMENTS, THE OFFERING, SALES AND TRANSFERS DOCUMENTS IN CONNECTION TO THE NEW SHARES, AS WELL AS THOSE APPLICABLE TO THE DISTRIBUTION OF THIS ELECTRONIC DOCUMENT, SEE SELLING AND TRANSFER RESTRICTIONS SECTION.

4 ANY FORWARDING, REDISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. Confirmation of your representation: The attached Document is delivered to you at your request and on the basis that you have confirmed, and by accessing this Document you shall be deemed to have represented, to the Manager and the Company that (i) you are in Romania or (ii) you and the electronic mail address that you have provided are located outside United States (as defined in Regulation S under the Securities Act); or (iii) if you are acting as financial intermediary (as that term is used in Article 3(2) of the Prospectus Directive), the securities acquired by you as a financial intermediary in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, any person in circumstances which are not permitted; or (iv) you are outside the EEA (and the electronic mail addresses that you gave us and to which this document has been delivered are not located in such jurisdictions) or (v) you are a person into whose possession this document may lawfully be delivered in accordance with the laws of the jurisdiction in which you are located. In addition, by accessing this Document you have confirmed to the Manager and the Company, that (i) you have understood and agree to the terms set out herein, (ii) you consent to delivery by electronic transmission, (iii) you acknowledge that you will make your own assessment regarding any legal, taxation or other economic considerations with respect to your decision to purchase shares subject to the offering under the Document. THIS DOCUMENT HAS BEEN MADE AVAILABLE TO YOU IN AN ELECTRONIC FORM. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Company, the Manager, persons that control the Manager or any director, officer, employee or agent of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the document distributed to you in electronic format and the hard copy version. You are reminded that this Document has been delivered to you and you have accessed it on the basis that you are a person into whose possession this Document may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor are you authorized to deliver this document, electronically or otherwise, to any other person and in particular to any U.S. address. Restriction: Nothing in this electronic transmission constitutes an offer of securities for sale to persons other than the persons described in this Document and to whom it is directed and access has been limited so that it shall not constitute a general solicitation. If you have gained access to this transmission contrary to the foregoing restrictions, you will be unable to purchase any of the securities described therein. The Manager is acting exclusively for the Company and no one else in connection with the offer. It will not regard any other person (whether or not a recipient of this document) as its client in relation to the offer and will not be responsible to anyone other than the Company, in accordance with the specific contractual terms agreed between them, for providing the protections afforded to its clients nor for giving advice in relation to the offer or any transaction or arrangement referred to herein. YOU ARE RESPONSIBLE FOR PROTECTING AGAINST VIRUSES AND OTHER DESTRUCTIVE ITEMS. YOUR RECEIPT OF THE ELECTRONIC TRANSMISSION IS AT YOUR OWN RISK AND IT IS YOUR RESPONSIBILITY TO TAKE PRECAUTIONS TO ENSURE THAT IT IS FREE FROM VIRUSES AND OTHER ITEMS OF A DESTRUCTIVE NATURE.

5 MED LIFE S.A. (A joint stock company incorporated under the laws of Romania) Proportionate prospectus for the issue of new shares following the exercise of pre-emption rights under the share capital increase by contribution in cash of Med Life S.A. The Maximum Price for the exercise of the pre-emption right is: RON 36/New Share ( Maximum Price ) The rights issue is addressed exclusively to shareholders of Med Life S.A. and the level of information from this Prospectus is proportionate to this type of issue! This document has been approved by the Romanian Financial Supervisory Authority (the FSA ), which is the Romanian competent authority for the purposes of Directive 2003/71/EC, as amended (the Prospectus Directive ) and of the relevant implementing norms in Romania, as a prospectus proportionate (the Prospectus ) in accordance with Law no. 24/2017 on issuers of financial instruments and market operations ( Law on Issuers and Market Operations ), Regulation no. 1/2006 on issuers and operations with securities issued by the Romanian National Securities Commission (currently the FSA) ( Regulation no. 1/2006 ) and Commission Regulation (EC) No. 809/2004 of 29 April 2004 implementing the Prospectus Directive (the Prospectus Regulation ). This Prospectus concerns an offering ("Offering") initiated by Med Life S.A. of up to 2,600,000 new, ordinary, nominal and dematerialised shares with a face value of RON 0.25/share (the New Shares ), which shall be issued by means of an increase of the share capital of Med Life S.A., a joint stock company operating under a one-tier system and functioning according to the laws of Romania, with registered office in Romania, Bucharest, 365 Calea Grivitei, 1 st district, registered with the Romanian Trade Registry of Bucharest under number J40/3709/1996, having sole registration code (referred to as the Company or Med Life ). The Company s corporate bodies decided to increase the Company s share capital by contribution in cash paid up in RON, with a nominal value of RON 650,000, from the current value of RON 5,023,000 to the maximum value of RON 5,673,000 RON, by issuing up to 2,600,000 new, ordinary, nominal and dematerialised shares with a face value of RON 0.25/share ("Share Capital Increase") by granting the pre-emption right to the Company s shareholders registered in the Company s shareholders register as of the record date (the "Entitled Shareholders"). The existing total number of pre-emption rights is 20,092,000 (the "Pre-emption Rights"). To subscribe one New Share under the Offering it is necessary to hold Preemption Rights. The shares currently issued by the Company (the "Shares") are accepted to trading on the spot regulated market managed by Bursa de Valori București S.A. (Bucharest Stock Exchange - BSE), having the market symbol "M". Subsequent to the Offering, a request for the admission to trading of the New Shares issued under the Offering on the spot regulated market managed by BSE shall be filed. BSE is a regulated market within the European Economic Area ("EEA") for the purpose of the Directive 2004/39/EC, as amended (the "Markets in Financial Instruments Directive"). The present Prospectus shall be also used for the admission of all Shares newly issued within the Share Capital Increase to trading on the spot regulated market, equity sector, managed by BSE according to art. 47 par. (1) of the Law on Issuers and Market Operations and art. 89 par. (1) of Regulation 1/2006. The trading symbol of the New Shares, after their admission to trading, is "M". The Offering is structured as an offering of New Shares subscribed by the Entitled Shareholders according to the Pre-emption Rights they hold, during the subscription period 16 November December 2017 (the "Subscription Period"), according to art. 15 par. (10) of Regulation 1/2006 and art. 26 (a) of the Prospectus Regulation. As the case may be, the New Shares that were not subscribed during the Subscription Period shall be offered for subscription under a private placement, exempted from the obligation to prepare and publish a prospectus according to art. 16 par. (3) letter (a) of the Law on Issuers and Market Operations and art. 15 par. (1) of Regulation 1/2006 (the "Private Placement"). The Private Placement is not subject to the present Prospectus. The final issue price for a newly-issued share subscribed under the exercise of the pre-emption right, that shall be lower than or equal to the Maximum Price, shall be announced the latest on the first Business Day following the last day of the Subscription Period (the "Final Price"). The issue of New Shares under the Subscription Period is addressed exclusively to the Entitled Shareholders, and the level of information included in the Prospectus is proportionate to this type of issue. An investment in securities involves a high degree of risk. See Risk Factors chapter of the present Prospectus. THE APPROVAL VISA APPLIED ON THIS PROSPECTUS DOES NOT CONSTITUTE A GUARANTEE OR ANY KIND OF ASSESSMENT BY THE FSA OF THE OPPORTUNITY, ADVANTAGES OR DISADVANTAGES, PROFIT OR RISKS INVOLVED BY THE TRANSACTIONS TO BE CONCLUDED FOLLOWING THE ACCEPTANCE OF THE OFFERING SUBJECT OF THE APPROVAL DECISION; THE APPROVAL DECISION CERTIFIES ONLY THAT THE PROSPECTUS COMPLIES WITH THE REQUIREMENTS OF THE LAW AND OF THE NORMS ADOPTED IN ITS APPLICATION. Approved by FSA by Decision no of 15 November 2017 The date of this Prospectus is 15 November 2017

6 CONTENTS: SUMMARY... 3 RISK FACTORS IMPORTANT INFORMATION ABOUT THIS PROSPECTUS PRESENTATION OF FINANCIAL AND OTHER INFORMATION OVERVIEW OF THE OFFERING USE OF PROCEEDS DIVIDEND POLICY CAPITALISATION AND INDEBTEDNESS SELECTED FINANCIAL AND OPERATING INFORMATION ROMANIAN HEALTHCARE MARKET BUSINESS COMPANY MANAGEMENT MAIN SHAREHOLDERS DESCRIPTION OF SHARE CAPITAL AND CORPORATE STRUCTURE RELATED PARTIES TRANSACTIONS MATERIAL AGREEMENTS REGULATORY FRAMEWORK OF HEALTHCARE SECTOR IN ROMANIA TAXATION SUBSCRIPTION AND SALE LEGAL ASSISTANCE INDEPENDENT AUDITORS GENERAL INFORMATION DEFINITIONS AND GLOSSARY OF SELECTED TERMS

7 SUMMARY Summaries are made up of disclosure requirements known as Elements. These Elements are numbered in Sections A E (A.1 E.7) This summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, some Elements may be missing from the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention not applicable. Section A Introduction and warnings A.1 Warning. This summary should be read as an introduction to the prospectus (the Prospectus ); any decision to invest in the shares the offering of which is the subject matter of the Prospectus should be based on the full review of the Prospectus by the investor; where a claim relating to the information contained in the Prospectus is brought up before a court, the plaintiff investor might, under the domestic legislation of the Member States ( Member States ) of the European Economic Area ( EEA ), have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have prepared the summary, including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to assist investors when considering whether to invest in such shares. A.2 Consent by the issuer or person responsible for drawing up the prospectus to the use of the prospectus for subsequent resale or final placement of securities by financial intermediaries. B.1 The legal and commercial name of the issuer. B.2 The domicile and legal form of the issuer, the legislation Not applicable. Med Life S.A. (the Company or MedLife ) has not consented to the use of the Prospectus for subsequent resale or final placement of new shares by financial intermediaries. Section B Issuer The legal and commercial name of the company is Med Life S.A. The Company is a joint stock company, registered with the Romanian Trade Registry under number J40/3709/1996, having sole registration code The Company's registered seat is in Bucharest, 365 Calea Griviței, District 1, Romania. The Company operates in accordance with Romanian law and the articles of association of the Company 3

8 under which the issuer operates and its country of incorporation. B.3 A description of, and key factors relating to, the nature of the issuer s current operations and its principal activities, stating the main categories of products sold and/or services performed and identification of the principal markets in which the issuer competes. B.4a A description of the most significant recent trends affecting the issuer and the industries in which it operates. B.5 If the issuer is part of a group, a description of the group and the issuer s position within the group. (the Articles of Association ). The main activities of the group including the Company and the subsidiaries of the Company (the "Group") are carried out under six business lines, that represent a balanced portfolio of activities, covering all the key segments of the private medical services market, namely: Corporate: Corporate providing occupational and corporate healthcare plans, including health prevention packages ( HPP ); Clinics: providing ambulatory and diagnostic and imaging services; Hospitals: offering a complete service range, including generalist and specialist inpatient services; Laboratories: providing a wide range of biological medical tests; Pharmacies: located in certain Group facilities, offering patients both prescription and over-the-counter drugs, as well as other related healthcare products; Stomatology: providing a full range of dental services; The Group is market leader for its main business lines: Corporate (offering HPP packages), Clinics, Hospitals and Laboratories. Recently, the Company has developed its Stomatology business line by opening a separate clinic in 2015 and by purchasing, in 2016, the majority stake in Dent Estet group, the largest network of dental clinics in Romania. Also, the Group is also present in the Pharmacies business line by managing a number of pharmacies operating in its own clinics. The Group's sales depend on the demand for the healthcare services it provides, which, in turn, depends on broader trends in healthcare. The main drivers for the future development of the private healthcare services in Romania are: (i) Future intrinsic growth; (ii) Improving infrastructure to support demand; (iii) Growing affordability; (iv) Ageing population; (v) Market consolidation; (vi) Increasing confidence in private healthcare system; (vii) Deductibility of medical subscriptions. Until the date of the offering contemplated by this Prospectus (the "Offering"), as of the Prospectus Date, the Company is held by Mihail Marcu, Nicolae Marcu and Mihaela Gabriela Cristescu, holding together % of the Company's share capital, by the International Finance Corporation, member of the World Bank Group, with a 5% shareholding and by a number of shareholders individuals and legal entities with an aggregate shareholding of %. As of the Prospectus date, the Company holds, either directly or indirectly, shares in the following material companies that are part of the Group: Accipiens S.A., Genesys Medical Clinic SRL, Bactro SRL, RUR Medical S.A., Policlinica de Diagnostic Rapid S.A., Histo S.R.L., Medapt S.R.L., Policlinica de 4

9 B.6 In so far as is known, the name of any person who, directly or indirectly, has an interest in the issuer s capital or voting rights which is notifiable under the issuer s national law, together with the amount of each such person s interest. Whether the issuer s major shareholders have different voting rights if any. To the extent known to the issuer, state whether the issuer is directly or indirectly owned or controlled and by whom and describe the nature of such control. Diagnostic Rapid Medis S.R.L., Bahtco Invest S.A., Vital Test S.R.L., Biotest Med S.R.L., Centrul Medical SAMA S.A., Ultratest S.A., PharmaLife Med S.R.L., Biofarm Farmec S.R.L., Med Life Broker de Asigurare și Reasigurare S.R.L., Med Life Ocupational S.R.L., Prima Medical S.R.L., Diamed Center S.R.L., Stem Cells Bank S.A., Dent Estet Clinic S.A., Aspen Laborator Dentar S.R.L., Dent A Porter S.R.L., Dentestet Kids S.R.L, Dentist 4 Kids S.R.L., Green Dental Clinic S.R.L., Almina Trading S.A., Anima Specialty Medical Services S.R.L., Anima Promovare și Vânzări S.R.L., Valdi Medica S.R.L. and Centrul Medical Panduri S.A.. As of the date of the Prospectus, the following shareholders held interests in the Company in excess of the shareholding thresholds that are subject to a notification obligation pursuant to the capital market requirements: International Finance Corporation, member of the World Bank Group 1,004,600 shares, representing 5% of the Company s share capital and voting rights; Mihaela Gabriela Cristescu 3,028,892 shares, representing % of the Company s share capital and voting rights; Mihail Marcu 4,219,320 shares, representing 21% of the Company s share capital and voting rights; Nicolae Marcu shares, representing 15% of the Company s share capital and voting rights; Pursuant to Law no. 24/2017 on issuers of financial instruments and market operations, if, as a result of acquisition or selling operations of shares or as a result of any other operations with shares of an issuer, the voting rights of a person reach, exceed or fall below under one of the thresholds of 5%, 10%, 15%, 20%, 25%, 33%, 50% or 75% of the total voting rights, the respective must immediately inform the Company regarding the held voting rights, no later than 4 trading days from the date when the respective person (i) finds out about the acquisition or sale or the possibility to exercise voting rights or, depending on the context, he should have found out about it, regardless of the date on which the acquisition, sale or possibility to exercise the voting rights enters into force or (ii) is informed about an event that modifies the voting rights' structure. Mihaela Gabriela Cristescu, Mihail Marcu and Nicolae Marcu (the Marcu Family ) exercise control over the Company, as a result of holding the majority of shares and voting rights in the Company. Despite the control exercised by the Marcu Family over the Company, the Romanian applicable legislation and the Articles of Association prohibit these shareholders from exercising their control power in an abusive manner. All of the Company's shareholders have equal voting rights. 5

10 B.7 Selected historical key financial information regarding the issuer, presented for each financial year of the period covered by the historical financial information, and any subsequent interim financial period accompanied by comparative data from the same period in the prior financial year except that the requirement for comparative balance sheet information is satisfied by presenting the year-end balance sheet information. This should be accompanied by a narrative description of significant change to the issuer s financial condition and operating results during The financial information presented below is extracted from the Group s audited financial statements as of and for the financial years ended on 31 December 2015 and 2016 (the "Annual Financial Statements") and from the Group s unaudited interim financial statements as of and for the 9-month period ending on 30 September 2017 (the "Interim Financial Statements") that are included in the Prospectus (the "Financial Statements") Operating results for the financial years ended on 31 December 2015 and 31 December 2016, respectively The following table contains the Group s consolidated statement of profit and loss and other comprehensive income items for the financial year ended on 31 December 2015 and 31 December 2016, respectively Year ended on 31 December Audited Audited All amounts are in RON, unless specified otherwise Sales 390,978, ,986,790 Other operating income 4,591,826 5,468,590 Operating income 395,570, ,455,380 Operating expenses (366,579,247) (488,901,027) Operating profit 28,991,476 19,554,353 Net finance cost (11,270,696) (13,336,592) Other financial expenses (4,722,017) (5,048,649) Financial result (15,992,713) (18,385,241) Result before taxes 12,998,763 1,169,112 Income tax expense (3,093,994) (2,411,102) Net result 9,904,769 (1,241,990) Attributable to: Owners of the Group 8,580,871 (5,109,958) Non-controlling interests 1,323,898 3,867,968 Other comprehensive income items that will not be reclassified to profit or loss Gain/Loss on revaluation of properties - 3,398,211 Corrections related to prior years (391,949) - Deferred tax on other comprehensive income 62,335 components (543,714) Total other comprehensive income (329,614) 2,854,497 attributable to: Owners of the Group (329,614) 5,439,256 Non-controlling interests - (2,584,759) Total other comprehensive income 9,575,155 1,612,507 attributable to: Owners of the Group 8,251, ,298 Non-controlling interests 1,323,898 1,283,209 Source: Audited Consolidated Financial Statements for year ended 31 December 2016 Net result 9,904,769 (1,241,990) Income tax expense 3,093,994 2,411,102 Net financial result 15,992,713 18,385,241 Depreciation 26,748,141 35,122,887 6

11 or subsequent to the period covered by the historical key financial information. EBITDA 55,739,617 54,677,239 Source: Company's Statements Operating results for the 9-month period ended on 30 September 2017 The following table contains the Group s interim consolidated statement of profit and loss, unaudited, for 9-month period ended on 30 September 2017, as compared to 30 September 2016: 9 months ended on 30 September unaudited Unaudited, reviewed Sales Other operating income Operating income Operating expenses ( ) ( ) Operating profit Net finance cost ( ) ( ) Other financial expenses ( ) Financial result ( ) ( ) Result before taxes Income tax expense ( ) ( ) Net result Attributable to: Owners of the Group ( ) Non-controlling interests Other comprehensive income items that will not be reclassified to profit or loss Gain/Loss on revaluation of properties - - Corrections related to prior years - - Deferred tax on other comprehensive income - components - Total other comprehensive income - - attributable to: Owners of the Group - - Non-controlling interests - - Total other comprehensive income 9,559,813 43,138 attributable to: Owners of the Group ( ) Non-controlling interests Source: Unaudited and reviewed Interim Consolidated Financial Statements for period ended 30 September 2016, Unaudited Interim Consolidated Financial Statements for period ended 30 September 2017 Cash flows for the financial years ended on 31 December 2015 and 2016 The following table contains a summary of the Group s consolidated cash flows statement for the period ended on 31 December 2015 and 2016: Cash flow from operating 7 Year ended 31 December 2015 Audited 2016 Audited

12 activities Profit / Loss before tax 12,998,763 1,169,112 Adjustments for: Depreciation 26,748,141 36,093,805 Disposal of subsidiaries - 714,750 Interest expense 11,270,696 13,336,592 Interest revenues (385,938) (454,439) Allowance for doubtful debts and receivables written-off 214,477 8,175,200 Write off and allowance of other current assets 109,041 Financial discounts 2,804,052 3,052,445 Gain related to impairment of non-current assets - (970,918) Unrealized exchange gain / loss 2,357,932 2,608,677 Other non-monetary gains (3,300,000) (3,300,000) Net gain on disposal of property (57,292) - Operating cash flow before working capital changes 52,650,831 60,534,265 Increase in accounts receivable (3,242,399) (11,152,764) Increase in inventories (3,390,778) (2,974,751) Increase in prepayments (422,694) (446,269) Increase in accounts payable 9,447,452 12,787,223 Cash generated from operations 55,042,412 58,747,704 Income tax paid (2,470,547) (2,945,862) Interest paid (11,316,966) (13,144,091) Interest received 385, ,439 Net cash flow from operating activities 41,640,837 43,112,190 Cash flow from investing activities Investments in business combinations (3,107,334) (32,993,008) Purchase of intangible assets (1,831,817) (4,038,544) Purchase of property, plant and equipment (23,194,914) (28,035,141) Proceeds from sale of business combinations - 45,000 Proceeds from sale of fixed assets 57,292 - Net cash used in investing activities (28,076,773) (65,021,693) Cash flow from financing activities Share capital contribution (noncontrolling interest) - 137,030 Increase in loans 1,633,867 73,824,643 Payment of loans (13,110,964) (30,629,749) Payments of financial leasing (3,788,829) (6,602,067) 8

13 Net cash generated by/ (used in) financing activity ( ) Net increase/ (decrease) in cash and cash equivalents ( ) Cash and cash equivalents opening balance Cash and cash equivalents closing balance Source: Audited Consolidated Financial Statements for the year ended 31 December 2016 Cash flows for the 9 months period ended on 30 September 2017 The following table contains a summary of the Group s cash flows for the 9-month period ended on 30 September 2017, as compared to the 9-month period ended on 30 September 2016: 9 Month ended September 30, Unaudited Unaudited, reviewed Net income/(loss) before taxes 14,562,678 1,426,084 Adjustments for Depreciation 29,196,756 27,420,605 Loss from sale of subsidiaries - 714,751 Interest revenue (394,023) (330,270) Interest expense 10,645,670 10,567,686 Allowance for doubtful debts and receivables written-off - 8,105,210 Written off from stock depreciation - 109,041 Financial Discounts - 2,299,177 Other non-monetary gains (2,300,697) - Unrealized exchange gain / loss 4,483,869 (2,384,314) Bargain gain (729,165) - Operating cash flow before working capital changes 55,465,088 47,927,970 Decrease / (increase) in accounts receivable (12,663,485) (14,765,408 ) Decrease / (increase) in inventories 1,454, ,907 Decrease / (increase) in prepayments (906,510) (998,009) Increase / (decrease) in accounts payable (4,291,775) 6,068,946 Cash generated from operations 39,057,683 38,917,406 Income Tax Paid (3,793,807) (2,485,772) Interest Paid (8,593,988) (8,935,922) Interest received 394, ,270 Net cash from / (used in) operating activities 27,063,911 27,825,982 Investment in business combination (33,524,953) (24,696,156 ) Purchase of intangible assets (940,809) (2,618,330) Purchase of property, plant and equipment (34,203,333) (16,899,878 ) Proceed from sale business combination - 45,000 Net cash used in investing activities (68,669,095) (44,169,364 ) Cash flow from financing activities Share capital contribution (non-controlling interest) - 137,030 Increase in Loans 64,909,066 49,184,795 9

14 Payment of loans (8,091,396) (23,839,051 ) Net of Lease increase/(payments) (13,116,775) (3,957,886) Dividends paid to NCI (423,390) - Net cash from used in financing activities 43,277,505 21,524,888 Net change in cash and cash equivalents 1,672,321 5,181,506 Cash and cash equivalents beginning of the period 20,701,850 5,881,496 Cash and cash equivalents end of the period 22,374,171 11,063,002 Source: Unaudited and reviewed Interim Consolidated Financial Statements for period ended 30 September 2016, Unaudited Interim Consolidated Financial Statements for period ended 30 September

15 B.8 Selected key pro forma financial information, identified as such. Not applicable. The Prospectus does not include pro forma financial information. 11

16 B.9 Where a profit forecast or estimate is made, state the figure. B.10 A description of the nature of any qualifications in the audit report on the historical financial information. B.11 If the issuer s working capital is not sufficient for the issuer s present requirements, an explanation should be included. C.1 A description of the type and the class of the securities being offered and/or admitted to trading, including any security identification number. C.2 Currency of the securities issue. Not applicable Deloitte Audit SRL ("Deloitte"), an independent audit company, audited the Annual Financial Statements and issued an unqualified audit opinion in connection therewith. Deloitte has not reviewed and has not audited the Interim Financial Statements. The management of the Company is of the opinion that the Company has sufficient working capital for its needs for at least 12 months following the date of publication of the Prospectus. Section C Securities The Offering consists in an offering by the Company of up to 2,600,000 new ordinary, nominal and dematerialised shares, having a face value of RON 0.25/share ("New Shares"), which shall be issued under an increase of the Company s share capital (the Share Capital Increase ) with granting of pre-emption right (the Offering ). The Offering is addressed exclusively to the Company s shareholders regietered in the Company s shareholder register as of the record date (the Entitled Shareholders ) according to the pre-emption rights they hold. In order to subscribe a New Share, it is necessary to hold preemption rights. An Entitled Shareholder may subscribe a maximum number of New Shares calculated by dividing the number of pre-emption rights held by the respective Entitled Shareholder as of the record date related to the Share Capital Increase by the number of the pre-emption rights necessary to subscribe a New Share ( ). In case such a division generates fractions of New Shares that may be subscribed, the maximum number of New Shares shall be rounded down to the lower integer. The New Shares shall be accepted to trading on the spot regulated market managed by Bucharest Stock Exchange ( BSE ). The identification numbers and the trading symbols of the New Shares shall be: ISIN: ROMEDLACNOR6 CFI: ESVUFR BSE trading symbol: M The currency of the New Shares is RON. 83

17 C.3 The number of shares issued and fully paid and issued but not fully paid. The par value per share, or that the shares have no par value. C.4 A description of the rights attached to the securities. C.5 A description of any restrictions on the free transferability of the securities. C.6 An indication as to whether the securities offered are or will be the object of an application for admission to trading on a regulated market and the identity of As of the Prospectus date, the number of issued shares, representing the issued, subscribed and paid-up share capital of the Company consists of 20,092,000 shares, each being fully paid up and having a face value of RON 0.25/share. All holders of Shares issued by the Company have the same rights, with the material rights set forth below: the pre-emption right of the shareholders; the right to vote and participate in the GSM; the right to receive dividends in accordance with resolutions of the GSM; the right to information; the right to withdraw from the Company; the right to challenge the decisions of the GSM; liquidation-related rights; and other rights provided under the Company s Articles of Association, Law no. 31/1990 (the Companies Law ), Law no. 24/2017 on issuers of financial instruments and market operations (the Law on Issuers and Market Operations ) and other laws and regulations in force. The New Shares may be subscribed exclusively by the Entitled Shareholders. The pre-emption rights related to the New Shares are not tradable. The New Shares that are not subscribed during the period for exercising the pre-emption rights (the "Subscription Period") shall be offered under a private placement, by an offer exempted from the obligation to publish an offering prospectus, according to the provisions of art. 16 par. (3) letter (a) of the Law on Issuers and Market Operations and art. 15 par. (1) of NSC Regulation 1/2006 (the "Private Placement"). The Private Placement is not subject to the present Prospectus. The Company will publish a current report regarding the number of New Shares which will be subject of the Private Placement and, also, a current report regarding the number of New Shares which will be sold in the Private Placement. The intention is to have the New Shares admitted to trading on the spot regulated market managed by the BSE around 12 January

18 all the regulated markets where the securities are or are to be traded. C.7 A description of dividend policy. D.1 Key information on the key risks that are specific to the issuer or its industry. The Board of Directors is focused on creating value for the Company's shareholders. To sustain the Group's current pace of growth in terms of profitability, the Group needs both internal and external resources. Thus, the Board of Directors, committed to further expand the Group's profitability to the benefit of the shareholders, intends to propose not to distribute dividends to the shareholders for as long as the growth of the Group is according to historical performance. In case the Board of Directors will propose the distribution of dividends in the future, it will take into account certain matters, such as general business conditions, the Group's financial results, investment requirements, as well as contractual and legal restrictions on the payment of dividends or any other factors as the Board of Directors may deem relevant. Profits not required for the Company's growth plans or not encumbered by contractual, legal or other restrictions are expected to be distributed to the shareholders, unless it is needed for any other corporate purpose including investments in profit creating opportunities. Section D Risks Risks Relating to the Group's Business and Industry The Group may not be able to expand its business in line with its strategy or realise its revenue and growth targets The Group conducts its business in a highly regulated and evolving environment in Romania, which triggers significant compliance costs The Group's senior management team is critical to performance The Group's activities depend to a large extent on its medical staff and on the ability of the Group to attract and retain qualified personnel A surge of infections or of other risks that are typical to the provision of healthcare could impact on the Group's reputation and flow of patients The Group competes with other state and private healthcare providers Difficulties or delays in the acquisition of other companies in healthcare services or in the integration of the companies already acquired, or the historic liabilities of such companies, as well as their low performance within the Group, could slow down the Group's future growth The strength of the Group's brand and reputation are determinants of the Group's success The industry in which the Group is active evolves rapidly with new technological advances The Group is dependent on the demand for healthcare services, which are affected by demographic, technological and macroeconomic factors Failure to provide a consistently high quality of medical care to patients may have adverse effects on the Group's business The Group derives a portion of its sales from contracts with public authorities 85

19 The exercise of special minorities' rights in certain Group subsidiaries may make the growth of those subsidiaries difficult The Group has contracted indebtedness, and is subject to strict obligations and financial covenants in its loan agreements The improvement of State-funded healthcare in public medical units could temper the Group's growth and reduce the Group's sales Rise of the health insurance business can affect the corporate sales of the Group The Group may fail to deal with clinical waste in accordance with applicable regulations or generally be in breach of medical, health and safety or environmental obligations The Group is subject to personal data protection legislation and failures to adequately protect the personal data of its patients could expose the Group to liability Activity disruptions, inadequate contingency plans or crisis management, failures of the Group's IT systems or loss of data could have a material adverse effect on the Group's business The Group is reliant on medical supplies for the provision of high quality healthcare and the lack of availability of supplies, or increases of supply cost, could impact on the Group's business Provision of the healthcare services is regulated by strict regulatory and authorisation requirements. Any failure of such requirements could have severe consequences for the business of the Group Disputes and litigation could subject the Group to liability that could impact on the Group's reputation and indirectly its business The premises of certain of the Group's medical units are leased and the termination of the lease agreements, for cause or at term, or the Group's inability to extend them in a cost-effective manner, may trigger the closure of those medical units The properties owned or leased by the Group may be subject to restitution claims by former owners, claiming that the respective properties were abusively seized by the Romanian State during the communist period The Group's ownership rights over certain constructions may be subject to claims by competent authorities and/or persons that have incurred damages caused by such constructions being built PDR's Brașov hospital is located on a land in connection with which the acquisition of the ownership right is at risk of nullity Certain properties used by the Group entities on the basis of lease or concession agreements concluded with state entities may be subject to nullity claims Lack of registration of the lease agreements/ concession agreements in the Land Registry may allow a potential purchaser of the property to disregard such agreements The Group may face difficulties in obtaining financing for its expansion 86

20 D.3 Key information on the key risks that are specific to the securities. The Marcu Family will continue to have significant influence over the Company after the Offering, and its interests may not be aligned with those of the other shareholders of the Company The Group is exposed to changes in taxes Tax authorities could make an adverse assessment in relation to certain services and establish additional tax liabilities for the Group The Group is exposed to exchange rate fluctuation risks Country-Specific and Regional Risks Investing in developing markets, including Romania, entails certain macro-economic risks, which may be greater than risks inherent in more developed markets The value of investments in Romania, including the value of the Shares, could be adversely affected by political and economic uncertainty Global and regional events may adversely affect the Romanian economy A slow-down of the estimated growth of the Romanian economy could impact on the Group's sales or results Accessing international financing to temper a potential resurgence of the financial crisis in Romania could be subject to implementation of austerity measures that could impact the Romanian economy and affect the Group's business The limited predictability of the Romanian legal system, the bureaucracy, corruption and inconsistent treatment by authorities can be detrimental to the Group's activity Failure to satisfy EU membership requirements could lead to sanctions applied to Romania that could have an indirect effect on the Group's business Decrease of Romania's credit rating, or other events affecting Romania's overall creditworthiness, can affect the Group's ability to access the financing required to grow its business The Romanian Leu can be subject to high levels of volatility in exchange rates and inflation Trust in the Romanian healthcare system remains low Romania does not have an adequate plan for recovery in case of disasters Risks relating to the Shares and the Offering Impossibility to maintain the Shares to trading on the Bucharest Stock Exchange Fluctuations of the market price of the Shares or liquidity may impact the performance of an investment in the Shares The Company may not be able to distribute dividends in the future due to insufficient profits or to various legal or contractual constraints Subsequent sales of a significant number of Shares by the Company's major shareholders could bring down the price of the Shares Pre-emption rights of shareholders may not be available in the case of 87

21 certain shareholdersexchange rate variations may have an adverse impact on the value of non-romanian holders of Shares E.1 The total net proceeds and an estimate of the total expenses of the issue/offer, including estimated expenses charged to the investor by the issuer or the offeror. E.2a Reasons for the offer, use of proceeds, estimated net amount of the proceeds. E.3 A description of the terms and conditions of the offer. The Price of the New Shares shall be announced after the expiry of the Subscription Period Section E Offering The gross proceeds obtained by the Company further to the Share Capital Increase will be of approximately RON 93,600,000 (assuming that all the New Shares will be subscribed for the maximum price of RON 36 (the "Maximum Price")). The total net proceeds obtained by the Company further to the Share Capital Increase after deducting the fees, rates and charges related to the Share Capital Increase will be of approximately RON 91,600,000 (assuming that all the New Shares will be subscribed for the Maximum Price of RON 36). The total fees, rates and charges payable by the Company in connection with the Share Capital Increase are expected to be of approximately RON 2,000,000 (assuming that all the New Shares will be subscribed for the Maximum Price of RON 36). No commissions, fees or expenses in connection with the Share Capital Increase will be charged to investors by the Company. The proceeds obtained by the Company from the Offering will be used for securing the implementation of the Company s growth and development plans, by continuing to expand the offer of services and the geographical coverage. The proceeds obtained will secure a financing source (partial) for organic growth and for possible future acquisitions. A maximum number of 2,600,000 ordinary, nominal and dematerialised New Shares with a face value of RON 0.25/share that will be issued under the Share Capital Increase by granting the pre-emption right, as approved by the decision of the Board of Directors no. 1 of 11 October 2017, together with the decision of the Company s extraordinary general shareholders meeting no. 1 of 13 September The Offering is structured as an offering of New Shares subscribed by the Entitled Shareholders according to the pre-emption rights they hold, during the subscription period 16 November December 2017 (the Subscription Period ) based on art. 15 par. (10) of Regulation 1/2006 and art. 26 (a) of the Prospectus Regulation. As the case may be, the New Shares that are not subscribed during the Subscription Period shall be offered for subscription under a private placement exempted from the obligation to prepare and publish a prospectus according to art. 16 par. (3) letter (a) of the Law on Issuers and Market Operations and art. 15 par. (1) of NSC Regulation 1/2006 (the "Private Placement"). The Private Placement is not subject to the present Prospectus. The total number of the pre-emption rights is equal to the number of the shares issued by the Company and registered in the Company s shareholders register as of the record date related to the Share Capital Increase, namely 20,092,000 pre-emption rights (the Pre-emption Rights ). Each Entitled 88

22 Shareholder is assigned a number of Pre-emption Rights equal to the number of shares held as of the record date related to the Share Capital Increase. For the subscription of a New Shares, Pre-emption rights are needed. The Manager of the Offering is the financial investment services company Tradeville S.A., organised and functioning according to the laws of Romania, authorised for the provision of financial investment services by FSA (former NSC) Decision no. 2225/ , registered in the FSA Register under no. PJR01/ of , registered in the Trade Registry under no. J40/5868/1996, sole registration code RO , with registered office in Bucharest, 2nd district, Carol I Blvd., International Business Center Modern, 10th floor, Romania. ("Tradeville" or the "Manager"). The period during which the Entitled Shareholders may subscribe New Shares by exercising the Pre-emption Rights will be of one month, starting on 16 November 2017 until 18 December The shares are accepted to trading on the spot regulated market managed by BSE under the market symbol "M". The newly issued Shares that will be subscribed under the Share Capital Increase will be accepted to trading on the spot regulated market managed by BSE after the closing of the Offering and, as the case may be, of the Private Placement. The market managed by BSE represents a regulated market in EEA for the purpose of the Directive on Markets of Financial Instruments. The identification numbers and the trading symbols of the New Shares shall be: ISIN: ROMEDLACNOR6 CFI: ESVUFR BSE trading symbol: M Allocation Date shall be the last day of the Subscription Period. The intermediation method is the best efforts method. The Maximum Price is RON 36 per New Share. The final Price of the New Shares offered for subscription under the exercise of the pre-emption right shall be lower than or equal to the Maximum Price and shall be made public the latest on the Business Day following the last day of the Subscription Period, namely the latest on ("Final Price") and will be published on the internet page of MedLife at as well as on the internet page of BSE at In case the Final Price is lower than the Maximum Price, the Entitled Shareholders that subscribed New Shares during the Subscription Period shall be repaid the amounts representing the difference between the Maximum Price and the Final Price for each share validly subscribed during the Subscription Period. 89

23 E.4 A description of any interest that is material to the issue/offer including conflicting interests. Other than resulting from the circumstances disclosed in the Element B.6, there are no other interests (including conflicting interests) that could have a material impact on the Offering. The Manager and/or its respective affiliates have provided in the past, and may provide in the future, from time to time, investment, financial advisory and commercial banking services to the Group in their ordinary course of business for which they could or might receive specific fees and commissions. E.5 Name of the person or entity offering to sell the security. Lock-up agreements: the parties involved; and indication of the period of the lock-up. E.6 The amount and percentage of immediate dilution resulting from the offer. In the case of a subscription offer to existing equity holders, the amount and percentage of immediate dilution if they do not subscribe to the new offer. E.7 Estimated expenses charged to the investor by the issuer or offeror. The New Shares shall be offered for subscription by the Company. There are no Lock-up Contracts. The Offering is carried out by observing the pre-emption right of the Entitled Shareholders by exercising the Pre-emption Rights. As a consequence, if all the shareholders registered in the shareholders register as of the record date related to the Share Capital Increase would fully exercise the subscription right, no shareholder would be diluted. The Entitled Shareholders that do not subscribe under the Offering will register an immediate dilution of % of their shareholding after the Share Capital Increase. Not applicable. The Company shall not charge any fee, rate or other charges to investors in connection with the Offering or their participation therein. 90

24 RISK FACTORS An investment in securities involves a high degree of risk. You should carefully consider the following information about these risks, together with the information contained elsewhere in this Prospectus, before deciding whether to subscribe New Shares. Any of the following risks, individually or together, could have a material adverse effect on the Group's business, financial condition and results of operations, and the trading price of the Shares, and you could lose all or part of your investment. The Company described the risks and uncertainties that it believes are material, but these risks and uncertainties may not be the only ones the Group faces. Additional risks and uncertainties, including those of which the Group is currently not aware or which it deems immaterial, could have the effects set forth above. Prospective investors should be aware that the value of the Shares and any income from them may fail to materialise or decline and that investors may lose all or part of their initial investment. Thus, potential investors should apply special care when assessing the risks involved and should decide, individually, if such an investment is appropriate considering these risks. Risks Relating to the Group's Business and Industry The Group may not be able to expand its business in line with its strategy or realise its revenue and growth targets The key directions of the Group's growth strategy are organic development and acquisitions-based expansion. The Group may however not be able to expand its healthcare business in accordance with its plans, or the growth strategy pursued by the Group may not generate the expected benefits. Either growth direction puts significant demand on the Group's management, operational and financial resources. The Group may not be efficient in managing these resources, which can affect in turn the Group's ability to carry out effectively its usual business and medical activities. Past experience suggests that the Group's current asset base might continue to grow before reaching maturity; if such growth should not occur, the Group may not achieve its expectations of sales and profit. Greenfield openings of healthcare facilities or developments of the existing facilities can generate substantial capital requirements, or incur cost overruns, or may be completed with delays, any of these leading to an increase of costs, or loss of profit, for the Group. Furthermore, the organic growth of the Group's Corporate business line relies heavily on the efforts of the Group's sales teams, which identify and access new business opportunities in this line, while also maintain the relations with the existing corporate clients. There can be no guarantee that the activity of the sales teams within the Group can continue to yield positive results in the future and contribute to the Group's growth. The Group is mainly interested in expanding both by acquiring companies operating in new business lines or existing business lines in which the Group is already present and that it intends to develop, and companies operating in geographic areas where the Group is or is not already present. The Group may find it difficult to identify acquisition targets which meet its expectations and match its strategic objectives. Owing to competitors pursuing similar expansion strategies, a lack of acquisition opportunities or the prices at which they can be purchased can limit the Group's possibilities to develop through acquisitions or the benefits of acquisitions. The Group evaluates both acquisitions and organic growth opportunities based on sets of criteria and commercial assumptions concerning, inter alia, valuations, profitability, growth, demand for services, or interest rates payable by the Group, as well as based on the Group's projections in relation to anticipated costs savings, synergies, or cross-selling opportunities. The Group's determinations with respect to certain acquisitions or to its organic growth may eventually prove incorrect or inaccurate, due to matters not known by the Group or outside of the Group's control, and could ultimately cause the Group not to achieve the targeted results, returns on investment, or other intended benefits. 91

25 The implementation of the Group's growth plans may require increased funding; it cannot be excluded that the Group may have difficulties in attracting future funding to finance its growth. If funding will be available at a higher cost, or if the costs of current funding would unexpectedly increase due to interest or exchange rates fluctuations, this would increase the cost of funding the Group s growth, which in turn will affect the Group's ability to pursue its growth plans. Failure to expand the Group's business in accordance with its strategy may have a material adverse effect on the Group's business, financial condition and results of operations. The Group conducts its business in a highly regulated and evolving environment in Romania, which generates significant compliance costs The healthcare industry in Romania is highly regulated, which impacts on the many aspects of the Group's business and operations, including matters such as the ability to provide medical services, the quality of medical services, the qualifications of medical staff and their ongoing obligations, the rules for accessing public financing in healthcare services, the pricing of services, the confidentiality and handling of personal data of patients, or mandatory insurance policies for the operation of the Group s business. The Group s activities are dimensioned to account for the applicable regulatory requirements, with a corresponding high compliance cost. Therefore, changes in the healthcare regulatory framework, including the introduction of new licensing or accreditation requirements or healthcare quality standards, different from the ones already implemented by the Group, could lead to an increase in the general compliance costs for the Group, on both short and long terms, or to an increase in the Group's operating costs, or could have as an indirect result the decrease of demand for the Group's services or limitation of the prices the Group can charge for its services. Changes in the legislation and regulations can furthermore affect the Group's business by limiting or restraining the Group's ability to carry out its business at the existing premises, to increase efficiency or the scope of its services, or to serve higher numbers of patients. Changes in the regulatory framework may be generated by political or economic factors or decisions. The Group cannot predict what changes could be introduced to the regulatory and legislative frameworks in the future, nor can it estimate the extent to which its business, financial condition and results of operations might be affected. Furthermore, failure by the Group to satisfy the regulatory requirements applicable to its business could lead to various administrative, civil or criminal sanctions, which could trigger an increase in the Group s costs and potentially affecting the Group's, or the brand's image and reputation which may, in turn, have an impact on the Group's business, financial condition and results of operations. In addition, the failure to observe regulatory requirements could entitle the Group's contractual parties to exercise certain contractual rights, which may limit, restrain, or otherwise slow down the Group's activities or its ability to pursue and implement its strategic goals of growth, as well as it could generate additional costs for the Group. Any such change in the regulatory environment might impact on the Group's business, financial condition and results of operations. The Group's senior management team is critical to performance The Group's constant growth and success rely to a significant degree on the leadership, skills, efforts and industry knowledge of the Group's top management team and on the relationships that the team creates in the industry in which the Group carries out business. There can be no assurance that the Group's top management will continue working for the Group over the period for which they were appointed or that their term will be renewed. In case a member would leave the team, the Group could face difficulties in attracting suitably qualified new senior management team members holding the appropriate professional qualifications or in ensuring that replacements can take up the responsibilities of the departed individuals in time to prevent an adverse impact on the proper functioning of 92

26 the Company s management bodies or on the Group's ability to implement its growth strategy. In case any of the senior management team members leaves office, this could have a material adverse effect on the Group's business, results or operations. The Group's activities largely depend on its medical staff and on the ability of the Group to attract and retain qualified personnel At the core of the Group's business lies the performance of a healthcare act by the medical staff employed by the Group. Patients tend to return to the Group's facilities and to refer the Group's services to their peers mainly if they are satisfied with the services provided by medical staff at the Group's facilities. The Group's ability to recruit, train and retain an appropriate number of experienced physicians, nurses, technicians and other healthcare professionals capable of delivering a satisfactory healthcare act is therefore key to the Group's continuous success. The factors that physicians consider important in deciding where they will work include their compensation package, the reputation of the employer, the quality of equipment and facilities and the quality and number of supporting staff. The Group hires or collaborates with an increasing number of medical professionals, amounting to approximately 2,300 doctors and 1,500 nurses as of 30 September 2017, while the turnover of medical staff is higher than 10% year-on-year. There can be no assurance that experienced physicians, nurses and other medical staff will choose to work for or continue to work for the Group; furthermore, there can be no assurance that the Group will manage to find, recruit and retain experienced physicians, nurses and other medical staff to replace leavers. The Group competes with other healthcare providers located in Romania and (to an extent) elsewhere in Europe to recruit and retain qualified physicians and other healthcare professionals. In Romania, this competition is particularly high in certain areas, which find it hard to attract and retain physicians as the movement of physicians and other medical personnel towards often better equipped facilities in Bucharest and the other regional centres (especially university centres) leaves a more limited numbers of physicians available in the rest of the country for recruitment. Departures of Romanian physicians and other medical staff to foreign states (predominantly other European Union states) also reduce the available pool of qualified practitioners. To the extent the Group s development plans require the recruitment and retention of larger number of practitioners, the availability of satisfactory medical personnel, in general, and in particular in specific regions the Group may target, may limit its capacity to execute its plans. Furthermore, the wages in the public healthcare sector have been increased in October 2015 by 25%, which has put additional pressure on the private healthcare worker wages, including on the Group. In November 2016 the Romanian Parliament approved a law increasing the wages for certain public sectors workers including healthcare, for certain categories of medical personnel, by up to 25% starting 1 st of December Furthermore, as of 1 st of July 2017, the Framework Law no. 153/2017 on the salaries of personnel paid from public funds became applicable, stipulating a significant increase of the basic salaries for the medical personnel working in the public sector starting on 1 st of January Although the law provides for a limitation of the gains, compensations, additions, bonuses, awards and allowances and of other rights that may be granted to medical personnel of up to 30% of the value of the basic salaries, such limitations will not have a major impact on the planned salary increases in the long term. The Group expects that this recent increase will lead to demands for wage increases by the Group's medical staff. Competition for and shortage of qualified medical staff, as well as frequent and substantial increases in the wages of the public healthcare sector, can increase the pressure on the wages that the Group must pay. If this increase of costs cannot be transferred to the prices charged by the Group for the medical services provided, such an increase of the costs would decrease the Group's margins. 93

27 The failure by the Group to successfully attract and retain qualified medical personnel at acceptable costs could cause difficulties for the Group to operate efficiently or reach its growth and profitability targets, which ultimately may affect the Group's business, financial condition and results of operations. A surge of infections or of other risks that are typical to the provision of healthcare could impact on the Group's reputation and flow of patients The Group's activities involve treatment of patients with a variety of infectious diseases. Healthy or uninfected people may contract, during their stay at or visits to the Group's facilities, serious communicable diseases, including what is typically know as hospital-acquired infections ("HAI"). There is little data available on the epidemiology of nosocomial infections or the prevalence or incidents of multidrug resistant organisms in Romania, mainly due to the lack of attention and resources to combat HAI. Although the Group has implemented and pursues strict observance of infection control procedures, such procedures may not be sufficient to counter an increasing trend of multi-drug resistant organisms and the prevalence of HAI in healthcare facilities in Romania, in general, may pose risks to the Group's healthcare facilities. HAI could infect both the patients and the Group's employees and significantly reduce the treatment and care capacity of the Group's medical facilities. In addition to claims for damages, the proliferation of HAI in the Group's medical facilities can have as a consequence not only claims for indemnities raised against the Group, but also the limitation of the Group's activities, damages to MedLife's brand and reputation, which could have a material adverse effect on the Group's business, financial condition and results of operations. The Group competes with other state and private healthcare providers The Group faces competition from local, regional and national healthcare providers, both from the private and public sectors. The Group's ability to succeed varies by location and depends on a number of factors, including the number of competitors in a specific location or region, the availability from its competitors of the same healthcare services offered by the Group in that particular location or region, alternative healthcare providers' local reputation, the level of excellence of the Group's healthcare units in those locations or regions, the Group's marketing efforts in such locations or regions, the availability, absolute and relative, to the Group and its competitors of public healthcare funding, the Group's ability to hire, train and retain committed and experienced medical staff, and the patients' satisfaction with the Group or its competitors. At a national level, the Group competes with state-owned healthcare facilities in all its business lines. Competition is strongest in Bucharest, where the Group and several of its private competitors with similar service offerings have their strongest footprint, but may also be strong in many other locations or regions of the country. The Group's main private competitors may expand as well and develop or deepen a national presence and thus increase competition for the Group's service offerings in other locations in the country. In certain locations or regions, the Group's competitors, especially local businesses, may be more established than the Group in terms of healthcare units, medical staff, specialties, service quality or availability, local reputation or dependability, all of which can limit the Group's growth in such locations or regions, overall or for specific types of services. Furthermore, the Group's competitors can consolidate, develop alliances or adopt predatory pricing policies to capture market share. In time, the Group may also face competition from international healthcare companies with substantially greater resources, either directly through establishment of healthcare venues in Romania as greenfield developments or through acquisitions, or indirectly by attracting patients from Romania into foreign locations. Failure to successfully compete with public and private healthcare providers could result in the diminution of the Group's business, a slower increase of or a reduction in the number of corporate contracts entered into by the Group, reduction of prices or demand for the Group's services, at a local or wider level, which could lead in turn to a decrease of the Group's business, financial condition and results of operations. 94

28 Difficulties or delays in the acquisition of other companies in the medical services area or in the integration of already acquired companies, or their historic liabilities, as well as their low performance within the Group, could slow the Group's future growth The Group's future growth strategy includes creating additional economic value by acquisition of other companies that either carry out business complementary to, or expand the Group's business. The Group has a history of acquisitions followed by the integration of the acquired companies into the Group's operations. The Group evaluates potential acquisition opportunities in the ordinary course of business, including those that could be material in size and scope. Expansion by acquisitions involves a number of specific risks, including: the demand on management level resources in connection with the execution of the acquisition and its post-acquisition integration and management; the integration of different corporate cultures, practices and methodologies; the incorporation of the acquired business lines into the Group's service offering; difficulties in maintaining relationships with key management and medical staff and patients of acquired businesses; increasing pressure on the Group's operational systems; and possible adverse effects on the Group's reported operating results generated by the costs of acquisition and integration of the acquired companies, as well as by the financial impact of the acquired business' results on the Group. By such acquisitions, the Group may become responsible for paying unexpected liabilities that the Group failed or was unable to discover in the course of performing due diligence reviews. This applies to historical acquisitions and future acquisitions. It cannot be excluded that authorities, in particular tax authorities, reach different conclusions than the Group, or its consultants, during the due diligence reviews and impose additional tax liabilities on the acquired companies, which would impact the value and benefits of that acquisition. Furthermore, it is uncertain whether the provisions included in the historical acquisition documentation or those that will be included in the future acquisition documentation regarding the compensation of the Group for various violations could be enforceable, of if the Group may obtain the compensation included in the documentation. Also, it is not sure if the amount received as compensation will be sufficient including to the extent of the liability for the compensation commitment or the compensation period to fully cover the possible damages related to the liability for the acquired companies. Any of these liabilities, individually or in aggregate, could have a material adverse effect on the Group's business, financial condition and results of operations. Successful management of growth by acquisition is conditional upon the ability of the Group to integrate the acquisitions without unforeseen costs, delays or other problems. The costs of such integration could have a material adverse effect on the Group's operating results and financial condition. Although the Group conducts a reasonably prudent level of investigation, based on its own standards, on the targeted and acquired companies, the risk of the actual condition and of the future performance of the acquired companies remains. The Group accepts that it may not be able to assess the exact scope of the liabilities of the acquired companies and their operations. In addition, the Group acknowledges that the integration of the acquisitions may, depending on their size or the combined scale of successive acquisitions, be dependent on the increase of the operational capacity of the Group to support the newly acquired businesses. The Group may have difficulties in adapting its operational capabilities to growth and enhancing the Group's operational ability, for instance in adapting adequate information technology platforms or the additional medical management systems that may be required. Furthermore, the Group may not realize all of the cost savings and synergies expected to achieve from acquisitions due to a variety of risks, including, but not limited to, difficulties in integrating the acquisition 95

29 into the Group s shared services, higher than expected employee turnover, severance or retention costs, higher than expected overhead expenses, delays in the anticipated timing of activities related to any cost-saving plans and other unexpected costs associated with operating the Group's business. Although the Group has developed and used the tools proven successful for the past integration of its acquisitions, such as offering former owners a minority stake and/or a management position in the integrated business, such instruments may not always be successful or the previous owners may not always decide to continue in the integrated business, which may result into a slower integration process and potentially additional costs for integration. If the Group is unable to achieve the cost savings or synergies that are expected from acquisitions, it could adversely affect the Group's business, financial condition and results of operations. The strength of the Group's brand and reputation are determinants to the Group's success A client's ability to recognize a brand and have trust in the brand's ability to service the client s needs is essential in the purchase decision-making process. This is particularly true in healthcare and that is why the Group is heavily dependent on its brands. During the 9-month period ended on 30 September 2017, the Group maintained a high level of marketing and public relation expenses in order to support the increase in cash receipts, as well as to increase brand awareness on a national level, considering the Group s intention to expand outside Bucharest and to develop the Group s brand awareness. The Group's future growth is also dependent on its ability to maintain a reputation for quality healthcare services. Factors such as poor clinical outcomes, health and safety incidents, negative press or patient or employees' dissatisfaction may have a significant impact on quality ratings and public perception of the Group's services, which in turn could lead to a loss of patient referrals or in the number of new or repeat patients. Although the Group pays particular care in selecting its healthcare professionals and medical staff, there is also a risk that patients could be harmed by one or more of the Group's employees or collaborators, either by negligence or by accident. A serious incident could result in negative publicity for the Group, regulatory action and court claims for malpractice against the Group. The Group may not rule out that future events, such as incidents of malpractice or outbursts of infection among patients, may weaken or damage the Group's reputation and brand and result in adverse publicity, which may in turn have a material adverse effect on the Group's business, financial condition and results of operations. The industry in which the Group is active evolves rapidly with new technological advances The Group's reputation for quality healthcare services also depends on the Group's ability to hire and further develop and train medical specialists and to provide medical services using state of the art technology and new medical techniques. Medical technologies such as laparoscopic surgeries, improved monitoring systems and advanced scanning equipment have allow patients to spend less time in surgery and enjoy speedier recoveries. Generally, the use of advanced medical technologies is beneficial for both patients, and healthcare facility itself which may achieve better outcomes, improve its reputation and charge higher fees for the use of such advanced techniques. The investments of the Group s competitors, including State institutions, in new technologies and medical techniques force the Group to constantly assess its capacity to match the current rapid technological advances and investments in the market. Investments in medical equipment and committing further costs for the maintenance of the equipment are significant. Upgrading the Group's facilities with future technological advances could be costly and it is not certain that the Group will be able to transfer the costs, or part of them, to the prices charged to its patients, which can put pressure on the Group's results or business. 96

30 If the Group is unable to implement new medical technologies and techniques, it may lose patients to competitors and the Group's medical practitioners may choose to leave the Group for better equipped competitors, which may have a material adverse effect on the Group's business, financial condition and results of operations. The Group is dependent on the demand for healthcare services, which are affected by demographic, technological and macroeconomic factors The Group's sales depend on the demand for the healthcare services it provides, which, in turn, depend on broader trends in healthcare. An aging population, an increase in the type of available medical services, as well as more accessible medical services have led to an increasing demand for healthcare services. If these trends do not continue or if demand would decline due to, for example, alternative methods of treatment, such as medication replacing the need for surgery, this could have an adverse effect on the demand for healthcare services provided by the Group. Demand for the Group's healthcare services could also be negatively affected by a downturn in the global, European or Romanian economy. Publicly financed health care services represented 13% of the Group's sales in A downturn in the economy might contract public spending on healthcare and this may impact the profit obtained by the Group from the provision of publicly financed healthcare services. Further, economic downturns could also affect the demand for privately financed healthcare, if, for example, employers scale back the scope of services they offer to their employees (such as private health insurance or health prevention packages) or individuals become less willing or able to pay for private healthcare services. Any decline in the demand for healthcare services can result in a decline in the Group's sales, due to the factors mentioned above or other factors could have a material adverse effect on the Group's business, financial condition or results of operation. Failure to provide a consistently high quality of medical care to patients may have adverse effects on the Group's business Demand for services offered by the Group depends substantially on the quality, real and perceived, of patient care provided in the Group's medical units. Therefore, the Group constantly focuses on improving patient care quality and standardizing the quality level throughout the Group's units. However, the quality of medical care services in Romania has proved in the recent years to be one of the lowest in Europe. Currently there is no legal framework in Romania to set out objective criteria to monitor the quality of care by reference to patient satisfaction. Law no. 95/2006 on health reform, as amended and supplemented (the "Health Reform Law") provides that the Ministry of Health and the National Health Insurance House (the "NHIH") are responsible for establishing quality criteria for care, provided to insured persons and all health care providers who have signed contracts with the district health insurance houses must adhere to these criteria. These criteria include, for example, the average time per consultation, share of referrals to specialist care in the total number of consultations (for primary care) and percentage of patients referred to other hospitals (for inpatient care), percentage of operations performed in surgical wards, the rate of nosocomial infections for hospitals and ISO-certification for laboratories. Consequently, monitoring of quality mainly focuses on the volume of services rather than patient satisfaction. Any shortcoming in providing patients with constant high quality services may significantly affect demand for the Group's services, which may have a material adverse effect on the Group's business, financial condition and results of operations. 97

31 The Group derives a portion of its sales from contracts with public authorities Overall, the Group derived 13% of its 2016 sales from contracts with public authorities, a level broadly similar with previous years. While the Group's Stomatology business line does not generate any sales from contracts with or reimbursements by public authorities, other business lines, such as Hospitals, Clinics and Laboratories have sales volumes with public authorities which are an important part of the line's total sales. For example, the Pharmacies business line has the largest exposure to State funding, which represented 40% of the line's sales in The Group s growth plans include further expansion outside of Bucharest, where the number of existing NHIH insured patients could be larger, as well as developing laboratory operations under a new brand that may generate higher levels of NHIH contracts in its mix as compared to the current laboratory client mix. Further, the allocation formula in its Hospitals business line should result in increasing amounts of available allocations in nominal terms for all its hospitals and any new development of a hospital should generate an increase in the number of contracts concluded with NHIH. As a result, the Group expects that the nominal amount of sales from contracts with the NHIH will increase as the scale of its business grows and that the percentage those sales represent in the total sales will also increase in future. An increase in the funding from the NHIH will increase MedLife's reliance on State insured persons which may restrict the Group's freedom to determine the nature of services offered to its clients, the way those services are delivered and the pricing of those services, which may have a significant impact on the Group's business, financial condition and results of operations. There can be no assurance that the Group will be able to maintain the current sales volumes to public authorities, or that the sales volumes, in general, will increase in the future. Furthermore, the Group is required to accept, in the relationship with public authorities, set prices for medical services. If treatment costs for the Group increase, this could have an impact on the Group's margins and the ability of the Group to continue servicing the NHIH, which may ultimately have an impact on the Group's business, financial condition and results of operations. The exercise of special minorities' rights in certain Group subsidiaries may make the growth of those subsidiaries difficult MedLife's acquisition strategy involves retaining, in certain cases, the selling shareholders as minority shareholders and managers in the acquired companies. Such rights granted to former owners of the companies acquired could restrict MedLife s ability to sell or to pledge security interests over the shares issued by the acquired company, forcing MedLife to provide the minority shareholders with the right to participate in any sale by MedLife of its shares in the acquired company or, in case of Dent Estet, provides the minorities of the acquired company with the right to sell their shares to the Company in certain circumstances. According to the provisions of the acquisition agreements and constitutive documents of the subsidiaries, most corporate decisions are taken with simple majority votes, enabling the Group to control those decisions. Still, certain decisions made by the shareholders/partners of the subsidiaries, such as the ones pertaining to current or future acquisitions are or may be adopted by the Company only based on the favourable vote of one or more minority shareholders or, in case of decisions made by the management of the respective subsidiary, based on the favourable vote of a director appointed by a minority shareholder. Such decisions include, inter alia, the appointment of financial auditors, share capital increases and decreases, certain operational decisions, issuance of bonds, entry into transactions related to assets of the respective subsidiary, transactions with related parties, including the Group. If a minority shareholder decides to oppose such decisions when such decisions could be key to the development of those subsidiaries, the Group would not be able to carry out those measures, which could ultimately impact the Group's business, financial condition and results of operations. 98

32 The exercise of the rights provided to minority shareholders relating to their shares/holdings held in the Company s branches and corporate governance rules may prevent MedLife from disposing of the shares/holdings in such companies, or may place a financial burden on the Group or may restrict the ability of the Group to develop the subsidiary, which may ultimately have an impact on the Group's business, financial condition and results of operations. The Group has contracted indebtedness, and is subject to strict obligations and financial covenants in its loan agreements The Group has contracted financing via a series of loan agreements entered into with the International Finance Corporation, member of the World Bank Group (which is also one of the Company's shareholders), and with various banks, amounting at 30 September 2017 to a total due of RON 291,961,447. On 30 September 2016, the Group has entered into a new credit facility with the International Finance Corporation, member of the World Bank Group, in the amount of EUR 10,000,000. On 30 September 2016, no drawings were made under the facility. To secure these loans, the Group provided security interests over most of its assets. These loan agreements are further described in the section " Material Contracts" below. The Group's loan agreements contain a number of restrictive covenants on the Group s operation, including restrictions on the Group's ability to take actions that may be in the Group's best interest in the longer term, particularly in connection to future acquisitions. Such restrictions include: (i) pledge of guarantees, (ii) set-up of joint ventures, (iii) granting loans to subsidiaries, (iv) merger or consolidation with other entities, (v) transfer or sale of assets, and (vi) dividend distribution. Other covenants include restrictions in Group on incurring capital expenditure, contracting financial debt or entry into lease agreements and transactions with derivatives. All these restrictions and actions are subject to a number of exceptions and qualifications, which may be conditional upon lender's consent. In addition, under its loan agreements, the Group is subject to various financial covenants that require the Group to comply with, among other things, a maximum leverage ratio, a projected cash flow cover, a liabilities to equity ratio and a debt service coverage ratio. There can be no guarantee that the Group will be able to continue to comply with the covenants under its loan agreements, and failure to comply may result in defaults. The failure to comply with the obligations included in the loan agreements can result in, among other things, incurring costs associated with curing defaults, obligations to provide additional security, acceleration of payments, together with the penalties and accrued interest, cross-defaults under other agreements, which may result in additional payment obligations for the Group, limitation of future borrowing ability, or damages. The occurrence of any such event can have a material adverse effect on the Group's business, results or financial condition. The improvement of state-funded healthcare in public medical units could temper the Group's growth and reduce the Group's sales To address low funding and inefficient use of public resources that affect the Romanian public healthcare system, the authorities have proposed a series of reforms, including clearing State payment arrears in the health sector, increasing the sustainability of pharmaceutical spending, implementing e-health solutions, improving the funding of the health system and devising a strategy to shift resources from hospital based care towards preventive and primary care. The Government is also planning to develop a retention strategy for medical staff although no specific proposals have been brought forward as yet. Another strategic focus is to shift care from hospitals into the community, as community services in Romania are among the least developed care settings. Modernization of the health infrastructure and healthcare and medical assistance network at the regional level is also among the main objectives of the reform. A working 99

33 group has been established at the Ministry of Health seeking to support the development of new policies, the revision of existing legislation and elaboration of standards, norms and practice guidelines necessary for the development of a countrywide community care system. With the establishment of the National Authority for Quality Management in Health Care in 2015, there is an expectation that a national strategy for quality assurance in healthcare will be developed and that the accreditation process will be expended to include healthcare providers other than hospitals. Further efforts are aimed at enhancing the transparency of the healthcare system, as acknowledged in the Ministry of Health's National Health Strategy. The implementation of all such reforms not only will grant Romania access to the EU structural funding for healthcare, but may also turn the State funded public healthcare medical units into strong competitors to the private healthcare providers, such as the Group. An increase in the public healthcare system quality is likely to affect the patients' flow in the Group's facilities, which may have a material adverse effect on the Group's business, financial condition and results of operations. Rise of the health insurance business can affect the corporate sales of the Group Currently, health insurance is one of the most dynamic segments of the insurance business in Romania, as employers become interested in attracting and retaining professionals by including private health insurance in their offer of employee benefit packages. According to a study made by the Romanian Financial Supervisory Authority, spending on private health insurance in Romania in 2014 represented only 0.01% of the GDP, which is 80 times lower than the European average (0.8% of the GDP). In the 2016 PMR Report, it is estimated that the health insurance market amounted to EUR 22.5 million in 2015, while the overall private medical services market in Romania was estimated at EUR 1,913 million in In order to identify measures needed to be taken for the development of the private insurance market in Romania, the Romanian Financial Supervisory Authority has organized a working group which analysed the current obstacles and proposed a set of short to long term measures aimed at expanding this market, such as: application of tax deduction for persons acquiring private insurance, extension of private insurance to public healthcare units (which is expected, among other, to increase the public hospital funding as well as the doctors' income and encourage competition between private and public healthcare units), and in the long term reforming the entire health insurance system by narrowing the scope of the basic package provided under the statutory healthcare insurance scheme and identifying a series of medical services that may be privately insured. The Group obtains a large part of its sales (23% of total sales for the nine months ended on 30 September 2017) from the sale of health prevention packages (the "HPP"), which are often confused with health insurance. The health prevention packages often cover initial access and assessment of medical conditions. Additional treatments and services such as laboratory, hospital treatment and pharmacy sales are provided on a fee-for-service basis outside the HPP. By contrast, private health insurance offers a defined scope of medical services that address a claim covered by the insurance. Although addressing distinct areas of the medical spectrum, the growth in the private health insurance market could affect the corporate HPP sales of the Group as corporates decide to spend increasing amounts for their employee benefit budget on health insurance rather than on HPP. This shift in spending may have a material adverse effect on the Group's business, financial condition and results of operations. The Group may fail to deal with clinical waste in accordance with applicable regulations or generally be in breach of medical, health and safety or environmental obligations As part of the Group s normal business activities, it produces and stores clinical waste, which may produce harmful effects to the environment or human health. The prevention, separation, storage, treatment and transportation of such waste are strictly regulated in Romania. The Group deals with the clinical waste and the selective waste collection system internally, in its medical facilities, in accordance with the law, and 100

34 outsources the transportation and elimination of clinical waste. Any failure by the Group to collect clinical waste selectively and to store it properly, or failure by a service provider to comply with the regulations applicable to clinical waste transportation and elimination could trigger sanctions or fines for the Group, which could affect the Group s brand, reputation, business or financial condition. More generally, the Group s business is subject to laws and regulations relating to the environment and public health. If applicable laws and regulations were to become more stringent, the Group could incur additional compliance costs which could in turn adversely affect its business and operations. Similarly, any failure by the Group to observe the legal or regulatory requirements could generate significant costs for the Group, or damage to its reputation, and could thus have a material adverse effect on the Group's business, financial condition and results of operations. Health and safety risks are inherent in the services that the Group provides, being constantly present in its facilities. A health and safety incident may have particularly serious consequences on the patients present at the Group's facilities, who may be dependent persons and therefore highly vulnerable. The Group s activities are exposed to general risks relating to health and safety, such as food and water quality, as well as fire safety. Furthermore, the Group is also exposed to the risk that patients may cause harm to themselves, to other patients or to the Group s employees. The occurrence of any of the above health and safety risks could have a significant material adverse effect on the Group s image and reputation. Failure to comply with applicable regulations could also result in the Group s liability for or even the suspension of its licences, permits or registration certificates. Any of these consequences may have a material adverse impact on the Group's business, financial condition and results of operations. The Group is subject to personal data protection legislation and failures to adequately protect the personal data of its patients could expose the Group to liability The Group processes its patients personal data as part of its business, including by transfers of personal data between the various Group companies in the course of the centralised processing of data. In the event that such processing of data, including by way of transfers of personal data, would be considered during inspections by authorities as being unlawful, sanctions or fines may be applied to the Group. Furthermore, there is a risk that personal data could become public in the event of a security breach at the Group's facilities or its electronic data bases. If such a breach were to occur, the Group could face liability under data protection laws, sanctions or fines from the relevant authorities, could suffer reputational damage with the Group s patients, physicians or other collaborators and could suffer damage to its brands. Any of these could have a material adverse effect on the Group s business, results of operations, financial performance or prospects. In particular, under the new personal data protection regime to become effective in the European Union in 2018, fines for infringements of the data protection regulations will become very material, with levels of up to the higher of 4% of annual worldwide turnover and EUR 20 million (e.g. for breach of requirements relating to international transfers or the basic principles for processing, such as conditions for consent). In this case, infringements of data protection regulations at Group level would represent a significant risk for the Group and could have, by the application of fines, a material adverse effect on the Group's business, results and operations. Activity disruptions, inadequate contingency plans or crisis management, failures of the Group's IT systems or loss of data could have a material adverse effect on the Group's business Incidents resulting in interruptions in the proper functioning of its facilities or equipment, or delays, or otherwise triggering the inability of the Group's staff to carry out medical services, the loss or corruption of data, including patient data, or the cessation of systems, or generally causing disruptions to the Group's activities can still occur. In such cases, impossibility to restore functional capacity or to recover lost data 101

35 could prolong and exacerbate the impact of any disruption. The Group's activities are also vulnerable to damage or interruption from other factors beyond the Group's control, such as floods, earthquakes, fires, power loss, telecommunications failures and other similar events. Failures of the Group's security systems, or breaches to the Group's security systems, for example as a result of sophisticated cyberattacks, could disrupt the Group's activity, result in system interruptions or delays, theft, loss or corruption of data, including confidential patient data, which can ultimately expose the Group to financial and legal exposure and damage to the Group's reputation and generally could have a material adverse effect on the Group's business, financial condition and results of operations. Crisis management plans and capabilities are essential to deal with emergencies at every level of the Group's operations and to respond in an appropriate manner to either an external or internal crisis. There can be no assurance that the Group's contingency and crisis management plans will prove to be effective. Inadequacies in this regard could have a material adverse effect on the Group's business, financial condition and results of operations. The Group uses sophisticated information technology ("IT") systems that have become critical to the Group's business and reputation. Although the Group implements regular system security measures and back-up procedures, the Group's servers may be vulnerable to certain risks, including software or hardware malfunctions, computer viruses, break-ins, or hacking. Furthermore, under the integration process of acquired companies in the Group, problems may occur in connection to the compatibility of IT systems, or such problems can arise during the integration of the systems, which can lead to system interruptions or malfunctions. Any system failure that causes interruptions of service or functioning of the IT system could have a material adverse effect on the Group's business, financial condition and results of operations. Furthermore, the Group's IT systems are generally subject to constant update, upgrade and review, which is required in order to keep up with the development of technology, the development of the Group's business and operations or with the specific needs that may result from the Group's business and operations or from the Group's expansion, either organic or by acquisitions. There can be no guarantee that the Group would be able to implement such updates, upgrades or add-ons in a timely manner, or that such updates, upgrades or add-ons would function properly, all these being factors that could disrupt the Group's business or operations. Any major disruption of the Group's existing IT systems may have a material adverse effect on the Group's business, financial condition and results of operations. The Group is reliant on medical supplies for the provision of high quality healthcare and the lack of availability of supplies, or increases of supply cost, could impact on the Group's business The Group relies on third-party providers of medical and non-medical supplies. There is no guarantee that there will be no interruption or bottlenecks in connection to suppliers, quality problems, or disruption of the Group's business relationships with its suppliers, all of which could lead to short-term disruptions or deterioration of the Group's services. Similarly, cost control, or the availability of high-end products on a costeffective basis, or lack of supplier capacity to fulfil the Group's requirements could trigger business variations, operational decline or disruptions in the Group's relationships with physicians. Furthermore, increases of costs of supplies that may not be transferred to patient cost may have an impact on the Group's margins which may ultimately materially affect the Group's business, financial condition and results of operations. Healthcare activities are subject to heavy regulatory and licensing requirements and failures to observe these requirements could have severe consequences for the Group's business Holding all the necessary functioning licenses is key to the Group's business. The Group is required to obtain, maintain and renew, as applicable, a number of authorizations for the operations carried out in the medical centres, which are granted by various public authorities. The issuance of these authorizations is usually 102

36 conditional upon meeting certain standards by its centres and/or equipment. In addition to licenses for the core healthcare business, the Group must obtain, maintain and renew various other licenses related to health and safety, fire prevention, and environmental matters, inter alia. There can be no assurance that the Group will be able to ensure in the future that all such licenses and permits would be obtained, maintained or renewed at reasonable cost or terms, or at all. In particular, at the date of the Prospectus the Group does not have fire prevention authorisations in place for a number of its medical units and premises. The Group is in various stages of procedures for obtaining the necessary fire prevention authorisations. However, there is no guarantee that the Group will succeed to obtain in the future the necessary fire prevention authorisations, or that it will be able to obtain these authorisations at reasonable cost. In addition to legal and regulatory requirements, the granting of authorisations may depend on political or other factors, which are outside of the Group's control. Any delay in obtaining or renewing authorisations or permits or the failure to obtain them, the failure to comply with the terms of such authorisations or permits, the violation of legal and regulatory requirements subject to assessment for authorisation purposes, could subject the Group to onerous civil, administrative or criminal sanctions. The administrative sanctions could be applied repeatedly, could impact on other contracts concluded by the Group according to which the sanctions applied to the Group represent a material adverse effect, could generate the obligation to observe onerous requirements for the re-issue of authorisations, or could lead to the suspension of business, trigger certain limitations or waivers of liability under existing insurance policies, loss of key employees and collaborators, or could prevent the Group from accessing public funding, all of which could have a material adverse effect on the Group's business, financial condition and results of operations. Disputes and litigation could subject the Group to liability that could impact on the Group's reputation and indirectly its business Healthcare companies, including the Group, are regularly subject to claims alleging negligence, malpractice and other claims, including for substantial amounts of money claimed as suffered damage, which trigger significant defence costs, whether or not the court decides that the Group is liable for the damages claimed or not. The Group could also be exposed to claims for negligence in the operation of its clinics, hospitals or other patient treatment facilities. Furthermore, the Group may be subject to other legal and administrative proceedings or investigations, as well as to ordinary course of business disputes such as labour disputes, contract disputes, intellectual property disputes, public authorities' investigations and audits. Currently, with the exception of the litigations presented in the section " Business Litigations", the Group considers that no pending disputes, proceedings or investigations where it is a defendant are material, however there is no assurance that this will not be the case in the future. In such future disputes, the claimants may request damages or otherwise courts, including in the current material litigations of the Group, may oblige the Group to make payments of amounts that may exceed the Group's provisioning or reserves, or insurance coverage, or that could be cumulated with fines or other administrative or criminal sanctions, such as withdrawal of licenses or denying the right to participate in public tenders or to receive public funding, all that can ultimately have a material effect on the Group's business, financial condition and results of operations. While personal liability insurance is a mandatory requirement in Romania for both medical staff and healthcare facilities, the terms of insurance policies may differ from one insurer to the other and may include different insurance thresholds or terms of coverage. Liability in excess of such thresholds, if decided pursuant to a court decision, would be incumbent on the defendant. If the Group becomes exposed to such liability, it is likely that this could have a material adverse effect on the Group's business, reputation, sales and results. In addition, there can be no assurance that such insurance will be available in the future, on acceptable terms or at all. 103

37 The Group may also incur liability for products or under sale of goods law when supplying prostheses and other medical products to patients, case in which it may be forced to pay significant damages to the buyers of such products. There can be no guarantee that the Group, in the future, will not face significant claims against the Group, that adverse court rulings forcing the Group to pay substantial damages will not be issued, that the insurance concluded by the Group will fully cover its losses as a result of such litigation, or that damages would not be judged to exceed the scope of existing insurance policies, due for instance to exclusions or to exceeding the policy limitations. The Group could be forced to pay compensations for damages that insurers dispute as being within the scope of policy coverage or which are not covered due to non-compliance with policy conditions. Even if ultimately the Group or its staff are not found liable for the claims raised by third parties, defending such claims or lawsuits may be time- and resource- consuming, may generate substantial costs and may harm the Group's and its staff's reputation, or attract regulatory scrutiny, all of which can have a material adverse effect on the Group's business, financial condition and results of operations. Furthermore, certain of the Group s activities are performed by collaborators practising at the Group s facilities as independent contractors. These collaborators are required by law to conclude separate civil liability insurance policies, on top of the insurance coverage of the Group. However, there can be no assurance that a court decision ruling against such collaborators would not establish liability for the Group as well, or that such court decision could not have an impact on the Group's sales or reputation, which in turn could have a material adverse effect on its business, financial condition and results of operations. The premises of certain of the Group's medical units are leased and the termination of the lease agreements, for cause or at term, or the Group's inability to extend them in a cost-effective manner, may trigger the closure of those medical units The Group operates in facilities which are owned by Group entities or leased from third parties. The location of its facilities, the client s habit of using such facilities and the knowledge of clients and potential clients of the existing location are important drivers for generating and maintaining client traffic. Even if the most important medical facilities of the Group are owned by the Group entities, a significant number of Group facilities operate in leased premises, with leases concluded for longer or shorter periods of time and with agreements typically providing for their termination in the event of certain material breaches or events of default. The operation by the Group of the healthcare facilities located in leased premises is conditional upon the Group's rights to use the respective premises. There can be no assurance that the Group will be able to extend in the future the duration of lease agreements, at all or under the same or reasonable costs, or that the breaches or material events of default specified in the lease agreements would not occur in the future or that the landlords would accept to conclude lease agreements with the Group in case of defaulting from the pre-existing contractual obligations, or that the Group would be able to deal with any such events in order to maintain in place the lease agreements. In case of breaches to its contractual obligations undertaken under lease agreements, the Group may be forced to pay significant amounts as damages. Any of these circumstances may lead to an increase of the Group s leasing costs or could lead to the suspension or closure of activities in those premises. Failure by the Group to extend lease contracts or to procure other suitable facilities in a timely manner or on commercially reasonable terms could have a material adverse effect on the Group's business, financial condition and results of operations. The properties currently owned or used by the Group may be subject to restitution claims by former owners, on the grounds that such properties were abusively confiscated by the Romanian State during the communist regime After the collapse of the communist regime, Romania passed laws for returning property abusively seized by the Romanian State and later nationalized during the communist regime to the original owners. As a general 104

38 rule, former owners benefit from restitution in kind of their former properties. However, if restitution claims may no longer be solved by restitution in kind, remedy through other compensatory measures may be granted. Even if claimants potentially entitled to file restitution claims under specific restitution laws have not asserted such claims, under the Romanian Civil Code they are theoretically entitled to reclaim their former properties without any statute of limitations being applicable. If a court of law awards restitution in kind of the property owned or used by a member of the Group, the latter may be forced to cease any activity on that property and leave possession of that property to the entitled owner. Such an occurrence may have a material adverse effect on the Group's business, financial condition and results of operations. The Group's ownership rights over certain constructions may be subject to claims by competent authorities and/or persons that have incurred damages caused by such constructions being built With the exception of fire prevention authorisations for certain Group facilities, in respect of which the Group is undergoing authorisation procedures, the Group has obtained the necessary construction authorisations and other approvals, consents, permits, certificates and clearance required by law for its constructions currently used as medical units by the Group. However, it cannot be excluded that, if the authorisations in connection with one or more constructions of any member of the Group breach the applicable laws, or if the legal requirements were breached in the process of obtaining such authorisations, the respective Group member may be sanctioned with an administrative offence and/or required to restore the lawfulness of acts undertaken for the issuance of such authorizations, approvals, consents, permits, certificates and clearances with respect to that construction. Furthermore, in case of breach of law, in certain circumstances, the construction authorisations and the documents issued based on such authorisations may be annulled, which would result in an obligation to demolish constructions built in breach of the applicable law. Such circumstances may force the Group to cease its activities in a specific medical unit, which may have a material adverse effect on the Group's business, financial condition and results of operations. PDR's Brașov hospital is located on a land in connection with which the acquisition of the ownership right is at risk of nullity The share capital increase of PDR in December 2014 by in kind contribution of a real estate asset is at risk to be declared null and void, due to the fact that the general shareholders meeting resolution approving the share capital increase was not issued in authentic form, as required under applicable law. The respective real estate asset is an undivided share of 4/5 of a plot of land with a total surface area of 2,769 square meters located in Brasov, on 5A Turnului str., which has been transferred from MedLife to PDR by contribution in kind. On the respective plot of land, a hospital owned by PDR, in a total surface area of 825 square meters, is currently located. In case the nullity risk materializes, the ownership right over the respective plot of land will be transferred back to the Company and the Company will be required to ask and receive from PDR the proceeds from the use by PDR of the plot of land starting from the date of transfer of the respective plot of land to PDR, which may have an material adverse effect on the Group's results of operation. Certain properties used by the Group entities on the basis of lease or concession agreements concluded with state entities could be subject to nullity claims Certain agreements (concession/lease agreements) entered into by Group entities with state entities (namely administrative-territorial units) for use of properties may, under certain conditions, be subject to nullity claims. The nullity may be invoked by an interested party on the grounds that such agreements were not concluded with the observance of mandatory provisions applicable in case properties owned by administrative-territorial units are capitalized (by lease/concession). In certain instances, for example when properties belong to the public domain of the State or of administrative-territorial units, as a general rule, public tender procedures must be carried out. If a court of law decides that such agreements have been 105

39 concluded in breach of mandatory legal provisions and are null and void, the member of the Group using the respective property may be forced to cease any activity thereof. Such an occurrence may have a material adverse effect on the Group's business, financial condition and results of operations. Lack of registration of the lease agreements/ concession agreements in the Land Registry may allow a potential purchaser of the property to disregard such agreements There may be cases where lease/concession agreements on the basis of which by Group entities are using properties, are not registered with the Land Registry. As a general rule and in lack of any specific contractual provisions, in case any of the leased properties is sold by its owner, the purchaser must observe the lease agreement concluded by the seller with any Group member only if the lease agreement is registered with the Land Registry. Thus, if a purchaser of the leased property decides not to continue the lease agreement, the member of the Group using the respective property may be forced to cease any activity thereof. Such an occurrence may have a material adverse effect on the Group's business, financial condition and results of operations. The Group may face difficulties in obtaining financing for its expansion The expansion of the Group s units and activities will require the Company to invest funds in capital expenditures, including the purchase of other companies. The Group anticipates using its own cash flow and borrowed funds for this expansion. The results of the Group s operations may not be sufficient or the Group may not be able to obtain external financing or it may only be able to obtain external financing at a greatly increased cost. As at 30 September 2017, the Group had undrawn amounts under its existing financing facilities amounting to a total of approximately EUR 3,326,128, available for capital expenditures and other financing needs. In the future, though, the Group may have additional financing needs and it cannot be excluded that the Group will have difficulties in obtaining such additional financing through additional borrowings. The availability of such financing depends on various factors such as market conditions, general availability of credit, the Group's borrowing capacity and degree, including the possibility to pledge adequate and acceptable collateral, as well as on the Group's lenders maintaining a positive perspective on the Group's evolution. The Group cannot exclude that the lenders' perception of the Group would change in the future, or that financial markets would go through future turmoil hardening the conditions for accessing finance. If conditions in the Romanian or global economy weaken or change, this could prevent the Group from accessing additional finance, or could increase the cost of such additional finance obtained by the Group, which could increase the Group's costs and furthermore have a material adverse effect on the Group's business, financial condition and results of operations. The Marcu Family will continue to have significant influence over the Company after the Offering, and its interests may not be aligned with those of the other shareholders of the Company In case that Marcu Mihail, Marcu Nicolae and Cristescu Mihaela Gabriela (the "Marcu Family") do not subscribe New Shares and all the New Shares corresponding to their Pre-emption Rights are sold under the private placement to be carried out subsequent to the Offering, as the case may be, Marcu Family will own at least 45.22% of the shares issued by the Company after the share capital increase. As a result, the Marcu Family may continue to exercise significant influence over matters requiring shareholder approval, including the election of directors, business strategy, dividend distribution and significant corporate transactions, including acquisitions of participations in other entities, in case of a quorum of 70-80% of voting rights, as registered at the Company s general shareholders meetings, after the shares were admitted to trading and until now. The making of such decisions could lead to significant capital expenditure or may have the effect of delaying, deferring or preventing a change in control, impeding a 106

40 merger, consolidation, takeover or other business combination. Differences between the interests of the Marcu Family and the other shareholders of the Company may generate conflicts of interest or may restrict the Group's ability to implement its business strategy, which could materially adversely affect the Group's business, financial condition and results of operations. The Group is exposed to changes in taxes The Group conducts its business, including transactions between Group companies, based on its own interpretation and understanding of applicable fiscal laws and regulations. There can be no assurance that the Group's interpretation and application of the relevant laws, regulations and practice have been, are or will continue to be correct, or that such laws, regulations, and practice will not change in the future, including with retroactive effect. Furthermore, the Group could be subject to additional taxes, including interest and potential penalties, in connection with tax audits and assessments, which could have a material adverse effect on the Group's business, financial condition and results of operations. Tax authorities could make an adverse assessment in relation to certain services and establish additional tax liabilities for the Group The medical personnel carrying out activity within the Group are predominantly employed under labour contracts. However, a part of the Group's medical staff has concluded service agreements with the Group entities (see more details in respect of these services agreements in " Business People and resources" below), rather than labour contracts. Under the Romanian Fiscal Code, an independent activity is any activity carried out by an individual with a purpose of deriving income, subject to certain criteria provided in the Fiscal Code. If the activities carried out by the Group's collaborators do not meet or allegedly do not meet (as tax authorities may subjectively interpret such criteria) the criteria provided in the Fiscal Code, it cannot be excluded that, in the event of a tax audit, tax authorities may reclassify service agreements into employment agreements and establish additional salary income tax and social security contributions in the Group's charge for the amounts paid to its collaborators. Such additional tax obligations could be significant and may have a material adverse effect on the Group's business, financial condition and results of operations. Also, under the Romanian Fiscal Code, as a general rule, medical services are VAT exempt, provided they have as the main purpose medical care, protection, maintenance or restoration of the health of an individual. Given the extensive range of medical services offered by the Group, as well as the provision of non-medical services at intra-group level, it cannot be excluded that tax authorities may challenge the interpretation of the Group and conclude that certain services carried out by Group entities should be subject to VAT and furthermore decide the ex officio VAT registration of the relevant Group entities and establish VAT payables in charge of the said Group entities. This can have a material adverse effect on the Group's business, financial condition and results of operations. Furthermore, transactions made between the various companies from the Group must observe transfer pricing rules and be entered into at arm's length. Tax authorities can adjust the revenues and expenses of the companies taking part in the intra-group trades if the authorities believe that the Group cannot justify or improperly justifies the prices charged between related parties, which would result in additional corporate income tax liabilities (together with late payment interest and penalties) for certain Group entities. Such increase of the Company and/or the Group's fiscal burden can have a material adverse effect on the Group's business, financial condition and results of operations. The Group is exposed to exchange rate fluctuation risks The Group is subject to exchange rate fluctuations risk. Although the Group is based in Romania and files its consolidated financial statements in RON and pays dividends to shareholders in RON, the prices of HPPs, as 107

41 well as certain of the Group's borrowings and the costs of certain medical materials, are denominated in EUR. There can be no assurance that the Group will be successful in effectively hedging the fluctuations of the EUR/RON exchange rate in the long term, or otherwise negating the potential impact of risks associated with volatility in foreign currency exchange rates, and so exchange rate fluctuations may adversely affect the Group s results, reserves or future cash flows, or the Group's ability to fund its expansion strategy, which could ultimately have a material adverse effect on the Group's business, financial condition and results of operations. Country-Specific and Regional Risks Investing in developing markets, including Romania, entails certain macro-economic risks, which may be greater than risks inherent in more developed markets Even though, according to the data published by the National Institute of Statistics, during the first six months of 2017 the gross domestic product ( GDP ) increased by 5.8% (estimate data) as compared to the first six months of 2016, Romania is still lagging behind on a number of important economic indicators that contribute to sustainable future growth, such as the lack of a coherent fiscal policy and delays in initiating and implementing reforms necessary for securing an investment-friendly environment. Imports are being fostered by robust domestic demand, while exports continued to grow, especially in the services sector. Fiscal stimuli facilitated by the Romanian authorities in the last years are expected to continue to sustain the real GDP growth during , forecasted by the National Prognosis Institute to more than 5%. These measures combined with accelerating wage growth will add further to the already robust domestic demand. At the same time, policy measures on the supply side of the economy, such as investment in innovation and infrastructure or improvements to the business environment and public administration, remain limited. The main challenge will be to ensure balanced and durable growth in the future. In terms of capital market, BSE is still on the list of cross border markets, according to the classification made by the rating agency of London Stock Exchange FTSE Russell. A possible promotion to emerging markets is hindered, among others, by the failure to meet the conditions regarding custody and liquidity conditions and trades outside the market. The BSE entered the FTSE Russell monitoring list in September 2016 in order to be promoted to the status of emerging market. Generally, investments in developing countries, such as Romania, are only suitable for sophisticated investors who can fully appreciate the significance of the risks involved. The value of investments in Romania, including the value of the Shares, could be adversely affected by political and economic uncertainty The investment climate in Romania is a mixed picture, and potential investors should diligently analyse all factors before making a decision regarding a potential investment. While many political and economic reforms have taken place in the recent years, Romania still has a number of structural weaknesses. Judicial, legislative, fiscal and regulatory unpredictability continue to complicate the business environment. The Romanian government continues to use emergency measures to pass legislation, bypassing normal legislative procedures, including economic impact analysis and consultations with stakeholders. Furthermore, admission to the EU s Schengen Area is unlikely in the short term as concerns over rule of law and immigration continue to hamper agreement. Reliance on industrial sector exports, poor infrastructure, an ageing population which will require greater government expenditures on social services in the future and, historically, a current account imbalance, as well as limited improvement in the absorption of EU funds affect Romania s creditworthiness. In addition, the political arena has been marked by turbulence since 2012 onward. These events included three changes of government in 2012 alone, the impeachment of the former Romanian president and the subsequent 108

42 reversal thereof, the incrimination and indictment of certain former government officials, including a former Prime Minister, voting out of office by way of a "no confidence" motion filed by the ruling party by withdrawing political support, various other political scandals and massive street protests. The protests were targeting, among others, retraction of the proposed bills to facilitate the pardoning of officials imprisoned for bribery and increase in the financial threshold above which official misconduct is punishable by prison. Starting June 2017, the Romanian Government is led by Mihai Tudose, who will have to implement an ambitious government programme, including a series of substantial tax reductions, salary increases in the public sector, pension increases, legal reforms, implementing efficient corruption fighting measures. Recently the Prime Minister has announced a limited governmental reshuffle, and his announcement determined certain ministers, out of whom some are subject to criminal files, to leave the office. Global and regional events may adversely affect the Romanian economy On a global scale, the reactions of international investors to events taking place in a certain country or region sometimes manifest a contamination effect, case in which an entire investment region or class is less favoured by international investors, which could have a negative impact on the economy of the respective region or country. That is why unfavourable economic or financial events of other countries in the region, but also global ones, could have a negative impact on the Romanian economy. Situations caused by crises similar to the world s economic and financial crisis that started in 2008, the sovereign debt crisis or the recent political and social turbulences in Europe (including the future Brexit, a possible declaration of independence of Catalonia versus Spain, refugee crisis and terrorist attacks), the Middle East, Africa and Asia situation (especially the threats from North Korea related to a potential nuclear war) could have an adverse effect on the economic performance of the markets under development, including Romania, and on the investors trust in these markets. On the European level, the United Kingdom s exit from the European Union, the economic and political effects of the immigrants crisis, terrorist attacks, growth of popular groups, Catalonia declaration of independence from Spain, create uncertainties that may affect, inter alia, the inflow of capital investment, the trade balance, consumer confidence and their spending capacity and consequently the financial condition and prospects of companies in Romania. Moreover, the future EU assistance packages, of which Romania is a beneficiary may not be available or, even if available, may not be sufficient to stabilise the affected countries and markets in Europe or elsewhere. The possible exit from the Eurozone of one or more European states and/or the replacement of the euro by one or more successor currencies could cause significant market dislocations and lead to adverse economic and operational impacts that are difficult to predict or evaluate, and otherwise may have a potentially materially adverse effect on the Romanian economy generally or the Group s operations in particular. The Group's performance will continue to be influenced by conditions in the global, and especially European, economy. The outlook for the European and global economy over the near to medium term remains challenging, impacting on prospects for stabilisation and improvement of economic and financial conditions in Romania and throughout Central and Eastern Europe which may generally have a material adverse impact on the Group's business, financial condition and results of operations. A slow-down of the estimated growth of the Romanian economy could impact on the Group's sales or results Romania's economy has been expanding strongly since 2013, the main drivers of growth in the last period being the policies for stimulating consumption, including tax reductions, repeated increases of the minimum and average salary and of the public administration salaries. In 2016, Romania registered one of the largest growths in the EU (4.8% as compared to 1.9% in the member states), and for 2017 the International Monetary Fund estimates an increase of 5.5%, according to the World Economic Outlook report published in October 109

43 2017. Internal consumption consolidated the role of main driver for the economic growth, against the investments. Continued policies for stimulating consumption will most probably lead to an increase of trade balance deficit, considering that internal production may not secure a similar increase to cover internal needs. The current account deficit increased to 2.3% of GDP in 2016 (from 1.2% of GDP in 2015), and the forecasts of the National Commission for Prognosis anticipate for 2016 a current account deficit of 2.7% of GDP, while in the first seven months of 2017 the current account deficit already reached 2% of the GDP due to the significant decline in the trade balance. The contribution of net exports to the economic increase was also negative, and the imports grew more than the exports. Also, the fiscal incentives, coupled with the significant growth of domestic demand, exert upward pressure on prices. According to the most recent European Commission report on Romania, annual average inflation is forecasted to reach 1.1% in 2017 as compared to negative values in the previous years and 3.0% in Any slow-down in the Romanian economic growth could have an impact on the population's demand for the Group's services, which could have a negative effect on the Group's business, financial condition and results of operations. The limited predictability of the Romanian legal system, the bureaucracy, corruption and inconsistent treatment by authorities can be detrimental to the Group's business The Group's operations are carried out exclusively in Romania and that is why these are regulated by laws and regulations governing various matters such as health, data protection, environmental protection, labour relations, competition and tax. Since its accession to the European Union in 2007, Romania is pursuing the creation of a legal framework targeting the development of the market economy and investment promotion. This process is supported by the requirement to enact laws and regulations compatible with EU regulations and to adapt the current legislation to EU regulations. In many cases, the enforcement of the adopted laws and regulations takes place immediately, without transition norms and before adopting implementation norms and often the provisions of the newly adopted regulations are not compatible or consistent with similar legal provisions included in other regulations. The low efficiency of the public administration, the lack of stability and fragmentation of the legal framework and the serious corruption problems still existing in Romania have a long term impact on many aspects, from structural reforms to the successful provision of efficient and effective services to the population and a stable and business-friendly environment to investors. The relatively limited experience of a significant number of the magistrates and the existence of a number of issues relating to the independence of the judiciary system often lead to ungrounded decisions or to decisions based on non-legal considerations. Due to the gaps in the Romanian judicial system, unjustified delays in the resolution of cases may be registered. The enforcement of judgments sometimes proves difficult which in the past meant that the enforcement of rights through the Romanian court systems may be laborious. The complexity of administrative procedures as well as the fast-changing legislation and policies constitute major obstacles for the Romanian business environment. The practice of replacing the normal legislative process by government emergency ordinances, with a single ordinance occasionally covering several policy areas, raises concerns over predictability and enforcement of law in Romania. Furthermore, according to the 2016 Transparency International Corruption Perceptions Index, Romania is still listed among the most corrupt EU member states. The uncertainties in the legal and judicial systems in Romania, the high level of corruption and the bureaucratic inefficiency can have a negative effect on the Group's business, financial condition and results of operations. 110

44 Failure to satisfy EU membership requirements could lead to sanctions applied to Romania that could have an indirect effect on the Group's business Romania joined the EU in January 2007 under the condition to continue the reforms in the area of justice and rule of law. To help and monitor Romania achieve the benchmarks imposed by the EU, the Cooperation and Verification Mechanism was created. On 25 January 2017, the European Commission presented a report showing that Romania has made progress towards meeting the objectives imposed by the EU. The Reports issued by the European Commission for the last 3 years showed a positive trend and balance, with important progress and a clearer irreversible nature of the reforms. Nevertheless, the last report emphasizes the importance of the responsibility and passing on such responsibility to Romanian authorities and of the internal guarantees necessary to secure the irreversible nature of the results, mentioning that additional support for reform consolidation is needed. If Romania does not adequately address the recommendations of the European Commission regarding actions to be taken by the Romanian State, the EU is entitled to apply certain sanctions against Romania, including by the suspension of EU member states obligation to recognise and enforce, under the conditions laid down in EU law, the decisions of Romanian courts. The application of any of the sanctions referenced above may have a negative effect on the Romanian economy and investor confidence in Romania, which could have a material adverse effect on the Group's business, results of operations and financial condition. Decrease of Romania's credit rating, or other events affecting Romania's overall creditworthiness, can affect the Group's ability to access the financing required to grow its business In July 2017 the credit rating agency Fitch Ratings Limited (UK) affirmed Romania's long-term foreign currency rating at "BBB-" with stable outlook and the long-term local currency rating at "BBB-". In April 2017, the credit rating agency S&P Global Ratings France SAS (France) affirmed Romania at "BBB-" with stable outlook. In April 2017, the credit rating agency Moody's Deutschland GmbH (Germany) downgraded the "Baa3" rating with positive outlook granted to Romania for long-term foreign currency credit to "Baa3" with stable outlook, affirming the "Baa3" rating for the national currency credit, emphasizing the increase in deficit due to the tax expansion policies and the lack of sustainability of the economic growth pace registered in the last years. In case of a change in the outlook or a downgrade in Romania's rating, the public debt financing cost will go up, triggering direct effects on the general budget management. Fitch Ratings Limited (UK), Moody's Deutschland GmbH (Germany) and S&P Global Ratings France SAS (France) are credit rating agencies organised in the European Union and registered according to the Regulation of the European Commission no. 1060/2009 of the European Parliament and the Council of 16 September 2009 on credit rating agencies. Any downgrade of the credit rating of Romania could have a material adverse effect on the Group s borrowing costs, limit its access to funding and capital markets or limit the range of counterparties willing to enter into transactions with the Group and would as a consequence have a material adverse effect on the Group's business, financial condition, results of operations, liquidity or prospects. The Romanian Leu can be subject to high levels of volatility in exchange rates and inflation The Romanian Leu is subject to a managed-floating exchange rate regime, whereby its value against foreign currencies is determined in the interbank foreign exchange market. The monetary policy of the National Bank of Romania (the "NBR") is inflation-targeting. The managed-floating exchange rate regime is in line with using inflation targets as a nominal anchor for monetary policy and allowing for a flexible policy response to unpredicted shocks likely to affect the economy. The NBR does not target any level or range for the exchange rate. The ability of the NBR to limit volatility of the Romanian Leu is contingent on a number of economic and political factors, including the availability of foreign currency reserves and foreign direct investment inflows, as well as developments in market sentiment and investors risk aversion. 111

45 Any changes to global investors' perceptions of Romanian or global economic prospects may lead to further depreciation of the Romanian Leu. A significant depreciation of the Romanian Leu could adversely affect the country s economic and financial condition. Any higher than expected inflation resulting from the depreciation of the Leu could lead to a reduction in customer purchasing power and erosion of customer confidence, which may have a material adverse effect on the Group's business, results of operations and financial condition. Trust in the Romanian healthcare system remains low Healthcare system is one of the most problematic sectors in Romania. The proportion of the Romanian population reporting an unmet medical need due to lack of affordability, distance to nearest health provider and waiting times, although in decrease in the recent years, is still one of the highest in the EU. There are no recent public studies regarding the population s level of satisfaction in relation to the Romanian healthcare system. Still, according to the latest (2014) Eurobarometer Report "Patient Safety and Quality of Care" published by the European Commission, the overall quality of healthcare in Romania, based on the respondents' feedback, is bad and most also think it is likely that patients could be harmed by hospital or nonhospital healthcare in Romania. Widespread informal payments, inefficient use of public resources and the lack of professionalism in the Romanian healthcare system are among the main reasons for limited access to healthcare, especially for patients with low incomes. According to the most recent (February 2017) country report issued by the European Commission for Romania, corruption is one of the main challenges in the Romanian healthcare system: "The main issues relate to public acquisitions in the hospitals, frauds in the insurance system and fake repayments, giving and accepting bribery for issuing medical certificates, granting access to special services and the largely used practice of informal payments to healthcare professionals." Furthermore, events happening in the recent years in the public healthcare system continue to deteriorate the population's trust in the system generally. Although most of such events relate to the public healthcare system, such as bribery and non-qualified personnel, some events have a significant negative impact on the overall system. For example, earlier in 2016 a Romanian pharmaceutical company was placed under investigation and further indicted in 2017 for diluting disinfectants that were used in hospitals to clean equipment, operating theatres and floors. Such occurrences raised public discontent and distrust targeted at the Romanian healthcare system generally. Any further deterioration of the population's trust in the Romanian healthcare system may have an impact on the demand for healthcare services, including in the private sector, which may have a material adverse effect on the Group's business, results of operations and financial condition. Romania does not have an adequate plan for recovery in case of disasters Natural and other disasters often have the potential of causing significant damage on the health of the population in the affected area, including diseases, injuries, disabilities, psychological problems, including death. Furthermore, disasters may also cause significant damage to the healthcare systems, facilities and services, by affecting essential infrastructure, such as electricity (including IT system) and water supply, leaving the already vulnerable population without access to adequate care. Currently, Romania has weak health and disaster management systems, with limited capacity for prevention, planning, early warning, preparedness, response and recovery in case of emergencies caused by natural or other mass disasters. The General Inspectorate for Emergency Situations within the Ministry of Administration and Interior is the national civil protection authority in Romania responsible for coordinating the implementation of emergency management actions and measures on the national territory. Civil protection is planned, organised and performed according to the Civil Protection Law 481/2004 with a view to preventing and reducing disaster risks, protecting the population and the environment against the effects of emergencies and armed conflicts and securing life-saving conditions during emergencies. In August 2016 the Government has enacted the Decision no. 557/2016 on risk type management. However, the implementation 112

46 of the envisaged actions (which are aimed at improving prevention, preparedness, response, post-event investigation and recovery in case of emergencies) require funding, time and close cooperation and procedures between authorities. In case a major disaster occurs in Romania prior to the implementation of an adequate national plan for disasters or other emergency situations, the population requiring healthcare assistance with major injuries could exceed significantly the capacity of various healthcare units in Romania to provide necessary healthcare services. Furthermore, in case of major disruptions of public services (e.g. electricity, water) during such emergency situations which are not restored within a reasonably short of period of time the Group may be unable to provide healthcare services to the population. The occurrence of a major disaster or other emergency situations in Romania may, in the absence of an adequate national plan for such events, have a material adverse effect on the Group's business, results of operations and financial condition. Risks relating to the Shares and the Offering It is possible that the Shares may not be maintained to trading on the Bucharest Stock Exchange The Shares issued by the Company are admitted to trading on the spot regulated market managed by the BSE. There is no guarantee that, in the future, all the conditions for maintaining the Shares to trading will be met. The FSA has the right to order, and BSE has the right to suspend trading in Shares if the Company fails to comply with the applicable regulations (such as, for example, specific disclosure requirements) or if such suspension is necessary to protect the interests of market participants or the orderly functioning of the market is temporarily endangered. There can be no assurance that trading in the Shares will not be suspended. Any suspension of trading could adversely affect the trading price of the Shares. Moreover, if the Company fails to fulfil certain requirements or obligations under the laws and regulations applicable to companies the shares of which are listed on the BSE, or if the orderly stock exchange trading, the safety of trading thereon or investors' interests are endangered, the Shares can, subject to certain conditions, be excluded from trading on the stock exchange. There can be no guarantee that such a situation will not occur in relation to the Shares. All these risks would, if they materialise, have a material adverse effect on the price of the Shares and on the ability of the investors to sell their Shares on the stock exchange. Fluctuations of the market price of the Shares or illiquidity may impact the performance of an investment in the Shares The price of the shares issued by companies admitted to trading on a market may be extremely volatile, considering a low liquidity. The shares admitted to trading on the markets managed by the BSE have a very low liquidity and hence their market price is very volatile. The trading price of the Shares may be subject to wide fluctuations in response to many factors, whether internal, generated by the Group s activity or strategy, as well as the Group s results, or external, including the evolution of the prices for securities on other European and global markets, changes in the Group s applicable legal framework, changes in the evolution of the medical services sector in Romania or in the region, political or economic changes and other factors external to the Group s activity. Thus, the market price for the Shares may not reflect the Group s market value, and the external factors mentioned above could have an adverse impact on the market price of the Shares, which may trigger losses for investors, regardless of the Group s activity. The Company may not be able to distribute dividends in the future due to insufficient profits or to various legal or contractual constraints The declaration and payment of dividends are decided by the Company's shareholders. The Company's ability to pay dividends in the future will depend on, among other things, the Company's future profits (including the 113

47 distributable profits obtained by the Company's subsidiaries consolidated within the Group), cash flows, financial position and capital requirements, the sufficiency of distributable reserves, prospects, credit granting terms, the ability of subsidiaries to pay dividends to the Company, general economic conditions and other factors that the directors and/or shareholders deem to be important from time to time in deciding the dividends, if any. For details on the contractual restrictions applicable to the Company's distribution of profits see the chapter " Material Contracts" below. There can be no guarantee that the Company s shareholders will decide to distribute dividends in the future. If the Group s shareholders decide not to distribute dividends, the price of the Shares may be adversely affected. Subsequent sales of a significant number of Shares by the Company's major shareholders could bring down the price of the Shares The Company's major shareholders can sell Shares in the Company subject to completing the requisite formalities and to various limitations in connection with the Group's financing agreements. The Group cannot predict that such sales would actually occur, or the effect of such sales of Shares, although based on other previous situations/practice in the market it may not be excluded that the price of the Shares could decrease. Any sales of a substantial amount of Shares, or a perception that such sale might occur, could have a material adverse effect on the price of the Shares. Pre-emption rights of shareholders may not be available in the case of certain shareholders Company shareholders have, in the case of a share capital increase, pre-emption subscription rights for the new shares that the Company proposes to issue (see further details on these pre-emption subscription rights in section " Description of the Share Capital Rights, preferences and restrictions on Shares" below). Nonetheless, holders of Shares located in certain jurisdictions cannot exercise such rights unless the applicable securities law requirements in such jurisdictions would be adhered to or exemptions from such requirements would be available. As the Company is unlikely to adhere to such requirements and as exemptions are likely not to be available, the Company cannot exclude that the holders of Shares located in such jurisdictions may not be able to exercise their Pre-emption Rights and hence may not be able to subscribe New Shares under the share capital increases implemented by the Company, including under the Share Capital Increase and, as a result, the shareholdings of such shareholders in the Company s share capital could be diluted. Exchange rate variations may have an adverse impact on the value of non-romanian holders of Shares The price of the Shares and any potential dividends that the Company would distribute to the shareholders are denominated in RON. Investments by investors using as reference currency another currency than RON could expose such investors to foreign currency exchange rate fluctuation risk. Any depreciation of the RON in relation to such foreign currency will reduce the value of the investment in the Shares or of the dividends payable by the Company for those investors. The price for the New Shares will be announced upon the expiry of the Subscription Period The Final Price of each New Share will be announced after the expiry of the Subscription Period, the latest on the first Business Day subsequent to the last day of the Subscription Period. In order to subscribe during the Subscription Period, Entitled Shareholders will pay the Maximum Price. The Final Price may be lower than or equal to the Maximum Price. The lower the announced Final Price is versus the Maximum Price, the more money the investors will need to block from the subscription date until the expiry date of the Subscription Period. The amounts related to the subscription of New Shares do not bear interest while in the Collection Account. Thus, investors could be forced to block large amounts of money for a long period, without such amounts being used to subscribe additional New Shares and without bearing any interest, which could impact on the expected yield for the funds used for the subscription of New Shares. 114

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49 IMPORTANT INFORMATION ABOUT THIS PROSPECTUS This Prospectus represents a prospectus for the purpose of Article 5.3 and Article 7.2 (g) of the Prospectus Directive, was prepared according to the Prospectus Regulation and complies with the Law on Issuers and Market Operations and Regulation 1/2006. The Prospectus was approved as prospectus proportionate, for the issue of up to 2,600,000 New Shares issued by Med Life under the exercise of the pre-emption right that, following the issue, will be accepted to trading on the spot regulated market managed by BSE. The New Shares will be offered in Romania to Med Life existing shareholders registered in Med Life shareholders register as of the record date 27 October 2017 up to the Pre-emption Rights they hold, based on art. 15 par. (10) of Regulation 1/2006 and art. 26 (a) of Prospectus Regulation. This Offering does not constitute an offer to sell, or solicitation of an offer to buy, securities in any jurisdiction in which such offer or solicitation would be unlawful. The New Shares that will be issued following the exercise of the Pre-emption Rights by subscribing New Shares under the Offering or the New Shares that will be sold by means of a private placement according to the corporate approvals have not been and will not be registered under the United States Securities Act of 1933, as amended ( Securities Act ). Also, the New Shares will not be registered with any securities regulatory authority of any state or jurisdiction of the United States and may not be offered or sold within the United States or outside the United States, except in offshore transactions in reliance on Regulation S of Securities Act. For details on the restrictions applicable to the communication of offering documents, the Offering, sales and transfers documents in connection to the New Shares, as well as those applicable to the distribution of this Prospectus, see Selling and Transfer Restrictions. The duration of the Offering may be extended at the initiative of the Company, subject to FSA approving an amendment to this Prospectus and publication thereof. The Company assumes the liability for the information contained in this Prospectus. The Company states that, according to its knowledge, the information presented in the Prospectus is in accordance with the facts and no omission was made that might materially affect the content thereof. No person is authorized to disclose any information or make any declaration in connection with the Offering or the subscription of New Shares, except as contained in this Prospectus, and should any information be disclosed or any declaration be made beyond the scope of the information or declarations contained in this Prospectus, the concerned information or declarations should not be deemed as authorized by the Company or by Tradeville as Manager of the Offering ("Manager") or by either of its affiliates. If any person provides any investor with information different from or inconsistent with the information included in the Prospectus, such investor should not rely on it. This Prospectus is made available by the Company in order to allow the Entitled Shareholders to review the possibility of subscribing New Shares. This Prospectus is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Company or the Manager that the recipients of this Prospectus should subscribe New Shares. The Manager and any of its affiliates or advisors do not make any representation or guarantee whatsoever, express or implied, as to the accuracy or completeness of the information contained in this Prospectus, and no information featured in this Prospectus is or shall be deemed a promise or a declaration made by the Manager that any person could rely on in connection with past or future events. Any reproduction or distribution of this Prospectus, in whole or in part, any disclosure of its contents, except to the extent that such contents are otherwise publicly available, and any use of any information herein for any purpose other than considering an investment in the New Shares, is 116

50 prohibited. Each potential subscriber of New Shares should evaluate for itself the relevance of the information contained in this Prospectus, and its subscription of New Shares should rely upon such investigation, as it deems necessary, including the assessment of corresponding risks and its own determination of the suitability of any such investment, with particular reference to its own investment objectives and experience and any other factors relevant to such investor in connection with the subscription of New Shares. Without impacting on any obligation of the Company to publish an amendment to the Prospectus pursuant to the Law on Issuers and Market Operations and Regulation no. 1/2006, neither the delivery of this Prospectus nor any subscriptions made hereunder shall, under any circumstances, create any assumption that there has been no change in the Company s business from the date of the present Prospectus or that the information contained herein is correct as at any time subsequent to the Prospectus date. Each prospective investor, by accepting delivery of this Prospectus, agrees to the foregoing. The present Prospectus is addressed exclusively to Entitled Shareholders exclusively for the exercise of the Pre-emption Rights by subscribing New Shares during the Subscription Period. Entitled Shareholders should not consider any information in this Prospectus to be investment, legal or tax advice. Each prospective investor should consult its own legal counsel, financial adviser, accountant and other advisers for legal, tax, business, financial and related advice regarding the subscription of New Shares. Neither the Company, nor the Manager give no assurance regarding the lawfulness of an investment in New Shares made by the Entitled Shareholders for the purpose of the relevant investment or similar laws. The price of the New Shares, as well as the proceeds and dividends generated therefrom, if any, may decrease, increase, or be absent. Except as expressly set forth herein, information on the Company s website, any website mentioned in this Prospectus or any website directly or indirectly linked to the Company s website is not incorporated by reference into this Prospectus and any decision to subscribe New Shares should not be made in reliance on such information. The distribution of this Prospectus and the offer and sale of New Shares may be restricted by law in certain jurisdictions. Entitled Shareholders must inform themselves about, and observe any such restrictions. Neither the Company, nor the Manager has taken any action that is liable to support initiation of any public offering of New Shares, other than the Offering to Romanian investors, in any jurisdiction where any formality for initiation of a public offering would be necessary to be carried out. This Prospectus may not be used for, or in connection with, any offer to, or solicitation by, anyone in any jurisdiction or under any circumstances in which such offer or solicitation is not authorised or is unlawful. Further information with regard to restrictions on offers and sales of New Shares is set forth below and under Subscription and Sale section. Neither the Company nor the Manager launches any offer to sell New Shares or any invitation to participate in any offer to buy New Shares to any person in any jurisdiction, unless such offer or invitation is permitted. The Manager acts exclusively for the Company and, therefore, it does not act for any other person in connection with the Offering, and will not be held liable to any other person for protecting its clients or for providing advisory services as regards the Offering. This Prospectus shall be available on the website of Tradeville at as well as on the Company s website at and copies of this Prospectus will be available upon request during the normal business hours, at the premises of Tradeville located in Carol I Blvd., International Business Center Modern, 10th floor, 2nd district, Also, the Prospectus will be available on the internet page of the Bucharest Stock Exchange at The information contained in this Prospectus is accurate only as at the date indicated in the first page of this Prospectus. It cannot be excluded that changes occur in the activity and financial situation of the Group since the date indicated in the first page of this Prospectus. The 117

51 Subscription Form will be available on the website of the Manager ( and at its headquarters, as well as on the website of MedLife ( CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Prospectus are not historical facts and are forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934, as amended. This Prospectus includes forward-looking statements, which include, without limitation, any statements preceded by, followed by or that include the words may, will, would, should, expect, intend, estimate, forecast, anticipate, project, believe, seek, plan, predict, continue, commit, undertake and similar expressions or their negatives. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company, that could cause the Company's actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company will operate in the future. Among the important factors that could cause the Company s actual results, performance or achievements to differ materially from those expressed in such forward-looking statements are those in Risk Factors and elsewhere in this Prospectus. These factors include the following, without being limited to: the impact of certain laws, regulations and standards and their interpretation or enforcement, including changes in the taxes and charges applicable to the Group s operations; changes in the conditions of the Romanian healthcare services market or in the Group s expectations regarding the market; changes of economic conditions in general; interest rate increases; lack of capacity to meet the quality standards for the medical services offered; potential of operating incidents; failure to successfully implement the management s business strategy; political, legal and economic uncertainty in Romania and other markets under development; and entry of new competitors on the markets on which the Group currently carries out business. Before making a decision to invest in New Shares the foregoing factors should be carefully considered, as well as other uncertainties and events, especially in light of the political, economic, social and legal environment in which the Company operates. Forward-looking statements contained in this Prospectus speak only as at the date of this Prospectus. The Company expressly disclaims any obligation or undertaking to update or review these forward-looking statements contained herein to reflect any change in the Company s expectations with regard thereto or any change in the underlying conditions or circumstances of such statements, unless there is a requirement to have such updates or revisions published pursuant to the law. 118

52 SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES The Company is incorporated under the laws of Romania. Certain members of the Company s Board of Directors and management are residents of Romania, and certain entities referred to herein are organised under the laws of Romania. All or a substantial portion of the assets of such persons and entities are located in Romania. As a result, it may not be possible for investors to: effect service of process within the United States or countries other than Romania upon any of the members of the Board of Directors and managers named in this Prospectus; or enforce, in the United States or countries other than Romania, court judgments obtained in courts of the United States or such other countries against the Company or the members of the Board of Directors and managers named in this Prospectus in any action. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions located outside the United States, liabilities predicated upon US securities laws. Furthermore, until now, the United States of America and Romania have not concluded treaties providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. A final and conclusive judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon US federal securities laws, would not automatically be recognised or enforceable in Romania. A judgment of a court of law of a non-eu member state made in personam for a certain sum, which is not impeachable as void or voidable under the internal laws of the foreign jurisdiction (a Non-EU Judgment ) will be recognised in Romania, provided that: (a) the Non-EU Judgment is final (hotărâre definitivă) according to the law of the state where it was given; (b) the court rendering such Non-EU Judgment had, according to lex fori, jurisdiction to try the relevant litigation, but without relying exclusively on the presence in that jurisdiction of the defendant or of some of its assets which are not directly connected with that litigation; (c) there is reciprocity regarding the effects of foreign judgments between Romania and the foreign jurisdiction which rendered the Non-EU Judgment whose recognition is sought; (d) when given in default of appearance, the party who lost the trial was served in due course with the summoning for appearance for the hearing where the court tried the merits of the case and with the document which instituted the proceedings, was given the possibility to defend itself and was given the possibility to challenge the Non-EU Judgment. The recognition of a Non-EU Judgment may be rejected in any of the following cases: (a) the Non-EU Judgment is manifestly inconsistent with or contrary to public order of Romanian international private law; (b) the Non-EU Judgment is rendered in an area of law where persons cannot dispose freely of their rights and it was obtained exclusively for the purpose of withholding the matter from the incidence of the law that would otherwise be applicable pursuant to Romanian conflict of law rules; (c) the action or proceeding involving the same parties resulted in a judgment (even if not final) of the Romanian courts or is pending before Romanian courts as at the date the action or proceeding commenced before the foreign court which rendered the Non- EU Judgment; (d) the Non-EU Judgment is irreconcilable with a prior foreign judgment which may be recognised in Romania; (e) Romanian courts had exclusive jurisdiction to try the subject matter of the Non- EU Judgment pursuant to Romanian civil procedure laws; (f) the right of defence was breached; and (g) the Non-EU Judgment may be challenged in any other manner in the state where it was rendered. The application for recognition before Romanian courts should be made according to Romanian procedural rules and should enclose all the documentation thereby required. Additionally, the recognition of the Non-EU Judgment may not be refused solely for the reason that the foreign court rendering the Non-EU Judgment applied another law than the law that would have been applicable according to Romanian conflict of law rules, except where the trial concerns the civil status and the capacity of a Romanian citizen and the solution adopted by the court differs from the solution that would have been reached according to the Romanian law. 119

53 A Non-EU Judgment can be enforced in Romania based on a final decision of a Romanian competent court approving the enforcement, only if: (i) the requirements mentioned above for the recognition in Romania of Non-EU Judgments are met; (ii) the Non-EU Judgment is enforceable according to the law of the jurisdiction where it was made; (iii) where the Non-EU Judgment establishes an obligation arising from a foreign fiscal law, there exists reciprocity regarding the effects of foreign judgments in the relevant fiscal matter between Romania and the foreign jurisdiction which rendered the Non-EU Judgment whose recognition and enforcement is sought; (iv) the right to require enforcement is not time barred according to the statute of limitation provisions (prescriptia dreptului de a cere executarea silita) of the Romanian law; and (v) the application for enforcement before Romanian courts is duly made according to the Romanian procedural rules and encloses all the documentation thereby required. A court judgment rendered in an EU member state other than Romania (an EU Judgment ) is recognised in Romania by operation of law without any special procedure. Such recognition is rejected upon the request of any interested parties in the following circumstances: (a) such recognition is manifestly contrary to public order in Romania; (b) where the EU Judgment was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so; (c) it is irreconcilable with a judgment given in a dispute between the same parties in Romania; (d) it is irreconcilable with an earlier judgment given in a EU member state (other than Romania) or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in Romania; (e) the EU Judgment conflicts with the provisions of Council Regulation (EU) no. 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ( Regulation no. 1215/2012 ) in respect of jurisdiction in matters relating to insurance, jurisdiction over consumer contracts and individual employment contracts and exclusive jurisdiction. An EU Judgment can be enforced in Romania pursuant to Regulation no. 1215/2012 without any decision of a Romanian competent court approving the enforcement being necessary only if: (i) it is enforceable in the EU member state where the EU Judgment was rendered; (ii) the Romanian competent court is provided with a copy of the EU Judgment which satisfies the conditions necessary to establish its authenticity; (iii) the Romanian competent court is provided with an original certificate issued by the relevant EU member state s court in the form set out in Annex I of Regulation no. 1215/2012 and none of the conditions above preventing the recognition of an EU Judgment is applicable; (iv) where the EU Judgment orders a periodic payment by way of penalty, (including, but not limited to, default interest), the amount of the payment has been finally determined by the courts of the EU member state of origin; and (v) the enforcement is made according to the same conditions as in case of a decision issued in Romania. 120

54 PRESENTATION OF FINANCIAL AND OTHER INFORMATION Financial and Operating Information Financial statements of the MedLife Group The audited consolidated financial statements of the Company and its subsidiaries (the Group ) as of and for the year ended 31 December 2016 (the Annual Financial Statements ), together with the unaudited consolidated interim financial statements as of and for the nine months ended 30 September 2017 (the Interim Financial Statements and together with the Annual Financial Statements, the Financial Statements ) are included in this Prospectus. The Financial Statements included in this Prospectus have been prepared in accordance with International Financial Reporting Standards ( IFRS ), as adopted by the European Union. The Financial Statements are presented in Romanian Leu. Unless otherwise specified, financial information derived from the Financial Statements is presented on a consolidated basis. Pro-forma Financial Information The Prospectus does not include pro forma financial information. Non-IFRS measures Certain parts of this Prospectus contain reference to EBITDA and Adjusted EBITDA. EBITDA is determined as profit before net financial result, tax, depreciation and amortisation, impairments and write-ups of fixed assets. EBITDA and Adjusted EBITDA are not measures of performance under IFRS, and should not be considered by prospective investors as an alternative to (a) net profit/(loss) as a measure of operating performance; or (b) any other measure of performance under IFRS. MedLife believes that EBITDA and Adjusted EBITDA provide a useful indication of the underlying performance of the Company's business, because they remove the variances stemming from the effects of differences in taxation and other factors. Since EBITDA and Adjusted EBITDA are not measures of performance under IFRS, all companies may not calculate these measures on a consistent basis and, therefore, may not be comparable to measures used by other companies under the same or similar names. Accordingly, undue reliance should not be placed on the EBITDA and Adjusted EBITDA measures contained in this Prospectus. We encourage you to evaluate these items of information and the limitations for purposes of analysis in excluding them. Unaudited operating information The Company s unaudited operating information in relation to its business is derived from the following sources: (i) internal books and records of the Company; (ii) accounting systems (based on invoices issued and/or received); (iii) internal reporting systems supporting the preparation of financial statements; (iv) management assumptions and reviews; and (v) discussions with key operating personnel. Operating information derived from management accounts or internal reporting systems in relations to the Company s business is to be found mainly in Business section. Market information Market data used in this Prospectus under the chapters Summary, Risk Factors, Romanian Healthcare Market and Business have been extracted from official and industry sources and other sources the Company believes to be reliable. The sources of such information, data and statistics include the Romanian National Institute of Statistics, the National Institute of Prognosis, the Ministry of Health, the World Health 121

55 Organisation, Eurostat, European Commission, International Monetary Fund, the Ministry of Public Finance, PMR (a company dealing with acquisition of market knowledge, with experience in more than 25 countries in the Central and Eastern Europe, and specialised in industries, such as: construction, retail, pharma, healthcare services and information technology and communications) ("PMR"), the National Bank of Romania, and the Financial Supervisory Authority. Such information, data and statistics have been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published or provided by the aforementioned sources, no facts have been omitted which would render the reproduced information, data and statistics inaccurate or misleading. Countries In this Prospectus, all references to US or to United States are to the United States of America, all references to the EU are to the European Union and its member states as of the date of this Prospectus, and all references to the EEA are to the European Economic Area and its member states as of the date of this Prospectus. Currencies In this Prospectus, all references to RON and Leu are to the lawful currency of Romania, all references to EUR, Euro and euro are to the lawful currency introduced at the start of the third stage of the European economic and monetary union, and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May 1998 on the introduction of the euro, as amended, all references to US dollar, USD and dollar are to the lawful currency of the United States. Rounding Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. References to the Company In this Prospectus, the "Issuer", "Company" and "MedLife" refer to Med Life S.A, and any reference to "Group" is to MedLife and all of its subsidiaries, as such are consolidated in the Financial Statements. Legal references Except where expressly mentioned otherwise, a reference in this Prospectus to a legal provision is considered a reference to the respective provision as it was amended and/or republished and in force as at the date of this Prospectus. 122

56 EXCHANGE RATE INFORMATION The following tables show, for the periods and as of the dates indicated, information relating to the exchange rates between RON and USD, based on information derived from the NBR. The columns titled Average in the tables below show the average yearly exchange rate calculated as the simple arithmetic mean of the monthly average exchange rates for the respective periods. Years ended 31 December High Low Average Period End (RON per USD) Source: NBR Nine month period ended 30 September High Low Average Period End (RON per USD) Source: NBR The following tables show, for the periods indicated, information relating to the exchange rates between RON and EUR, based on information derived from the NBR. The columns titled Average in the tables below show the average yearly exchange rate calculated as the simple arithmetic mean of the monthly average exchange rates for the respective periods. Years ended 31 December High Low Average Period End (RON per EUR) Source: NBR Nine month period ended 30 September High Low Average Period End (RON per EUR) Source: NBR The Company gives no assurance that the Romanian Leu amounts referred to in this Prospectus could have been or 123

57 could be converted into any currency at the above exchange rates, at any other rate or at all. 124

58 OVERVIEW OF THE OFFERING The Company The Offering Manager Pre-emption Rights New Shares Med Life S.A. The Offering consists of the offering by the Company of a number of up to 2,600,000 ordinary, nominative and dematerialised new shares, with a face value of RON 0.25/share ( New Shares ) under the Share Capital Increase exclusively to the Entitled Shareholders up to the limit of the Pre-emption Rights they hold. The New Shares subscribed and allocated in the Offering together with the New Shares subscribed under the Private Placement, if initiated, shall be accepted to trading on the spot regulated market managed by BSE. The Offering is addressed exclusively to the Entitled Shareholders, namely the persons registered as Company s shareholders in the Company s shareholders register as of the record date 27 October The financial investment services company Tradeville S.A., established and operating under the laws of Romania, authorised for the provision of financial investment services by FSA (former NSC) decision no. 2225/ , registered in FSA Register under no. PJR01/ of , registered at the Register of Commerce under no. J40/5868/1996, sole registration code RO , with registered office in Bucharest, 2nd district, Carol Blvd., International Business Center Modern, 10th floor, Romania. The number of Pre-emption Rights is equal to the number of shares issued by the Company and registered in the Company s shareholders register as of the record date related to the Share Capital Increase, namely 20,092,000 Pre-emption Rights, and each Entitled Shareholder will be allocated a number of Preemption Rights equal to the number of shares held as of the record date related to the Share Capital Increase. For subscribing one New Share Pre-emption Rights are necessary. The Pre-emption Rights may not be traded. Up to 2,600,000 ordinary, nominative and dematerialised new shares, with a face value of RON 0.25/share to be issued under the Share Capital Increase approved by the decision of the Board of Directors no. 1 of 11 October 2017, and the decision of the Company s extraordinary general shareholders meeting no. 1 of 13 September For subscribing one New Share Pre-emption Rights are necessary. An Entitled Shareholder may subscribe a maximum number of New Shares calculated by dividing the number of Pre-emption Rights held by the respective Entitled Shareholder as of the record date related to the Share Capital Increase by the number of Pre-emption Rights needed to subscribe a New Share ( ). In case that fractions of New Shares that may be 125

59 Underlying legislation of New Shares issuance Shareholders register The currency of the New Shares Subscription Period Allocation Date Maximum Price Final Price subscribed result from the mathematical calculation, the maximum number of New Shares will be rounded down to the lower integer. Romanian law The Company s shareholders register, including for the New Shares sold under the Share Capital Increase, shall be kept by Depozitarul Central S.A., with the registered office in Bulevardul Carol I, 3rd, 8th and 9th floors, District 2, postal code , Bucharest, Romania. RON The period in which New Shares may be subscribed by the Entitled Shareholders by exercising their Pre-emption Rights is of one month, from 16 November 2017 to 18 December Last day of the Subscription Period RON 36 per New Share The Final Price of the New Shares offered for subscription under the exercise of the Pre-emption Right shall be lower or equal to the Maximum Price and shall be announced the latest on the first Business Day following the last day of the Subscription Period, namely the latest on ( Final Price ) and will be published on the internet page of MedLife at as well as on the internet page of BSE at In case the Final Price will be lower than the Maximum Price, the Entitled Shareholders that subscribed New Shares during the Subscription Period shall be repaid the amounts representing the difference between the Maximum Price and the Final Price for each share validly subscribed during the Subscription Period. Intermediation Method Listing and Trading Best efforts. The Shares are accepted to trading on the spot regulated market managed by the BSE under the market symbol M. The New Shares to be subscribed under the Share Capital Increase will be accepted to trading on the spot regulated market managed by the BSE, after the Offering or, as the case may be, the Private Placement is closed. The market managed by BSE is a regulated market within the EEA for the purpose of the Markets in Financial Instruments Directive. The security identification numbers and trading symbols of the New Shares will be the following: ISIN: ROMEDLACNOR6 CFI: ESVUFR 126

60 Bucharest Stock Exchange trading symbol: M Settlement and Transfer For the Entitled Shareholders that subscribed based on the Preemption Rights recorded in Section II of Depozitarul Central at the subscription time, the settlement of the New Shares shall be made according to Depozitarul Central regulations on processing corporate actions. For the Entitled Shareholders that subscribed through a Manager based on the Pre-emption Rights recorded in Section I of Depozitarul Central at the subscription time, a list of validated subscription shall be sent to Depozitarul Central by 18:00 hrs. on the last day of the Subscription Period. Lock-Up Use of proceeds Taxation Dividend Policy Voting Rights Selling and Transfer Restrictions Risk Factors Not applicable. The Company intends to use the proceeds for the purposes disclosed in the section "Use of Proceeds. For the disclosure of certain tax consequences of buying and holding New Shares in Romania, please see section "Taxation". For details on the Company s dividend policy, please see section "Dividend policy" of this Prospectus. For details on the voting rights attached to the Shares, please see the section "Description of Share Capital and Corporate Structure - Rights, preferences and restrictions attached to the Shares"of this Prospectus. The New Shares may be subscribed during the Subscription Period exclusively by Entitled Shareholders. The Pre-emption Rights related to New Shares may not be transferred. The New Shares that are not subscribed during the Subscription Period shall be offered under a private placement, by means of an offering exempted from the obligation to publish an offering prospectus, according to the provisions of art. 16 par. (3) letter (a) of the Law on Issuers and Market Operations and art. 15 par. (1) of the NSC Regulation no. 1/2006 (the Private Placement ). The Private Placement is not subject to the present Prospectus. The Company will publish a current report regarding the number of New Shares which will be subject of the Private Placement and, also, a current report regarding the number of New Shares which will be sold in the Private Placement. Investors should carefully consider certain risks discussed under the section Risk Factors. 127

61 USE OF PROCEEDS The gross proceeds obtained by the Company following the Share Capital Increase will be of approximately RON (assuming that all the New Shares will be subscribed at the Maximum Price of RON 36). The total net proceeds obtained by the Company following the Share Capital Increase, after deduction of fees, rates and charges incurred with the Offering, will be of approximately RON 91,600,000 (assuming that all the New Shares will be subscribed at the Maximum Price of RON 36). The total fees, rates and charges payable by the Company in connection with the Share Capital Increase are expected to be in the range of RON (assuming that all the New Shares will be subscribed at the Maximum Price of RON 36). The proceeds obtained by the Company following the Share Capital Increase shall be used to ensure the implementation of the Company s growth and development plans by continuing to expand the service offer and the geographical coverage. The proceeds obtained shall secure a (partial) financing source for organic growth and possible future acquisitions. No commissions, fees or expenses in connection with the Share Capital Increase will be charged to investors by the Company. 128

62 DIVIDEND POLICY Shares owned by the Company's shareholders other than the Company bear equal and full rights to dividends. The Company s Ordinary General Shareholders Meeting of shareholders is free to decide the distribution of dividends based on the proposal of the Board of Directors. Shareholders holding individually or collectively at least 5% of the voting rights may also request to add to the agenda of the shareholders' meeting an item on the distribution of dividends, including the distribution quota. Dividends may be distributed only out of profits determined by law, based on and according to the financial statements approved by the shareholders' meeting, pro rata with the contribution to the paid-in share capital. The Board of Directors is focused on creating value for the Company's shareholders. To sustain the Group's current pace of growth in terms of profitability, the Group needs both internal and external resources. Thus, the Board of Directors, committed to further expand the Group's profitability to the benefit of the shareholders, intends to propose not to distribute dividends to the shareholders for as long as the growth of the Group is according to the historical performance. In case the Board of Directors will propose the distribution of dividends in the future, certain matters will need to be considered, such as general business conditions, the Group's financial results, investment requirements as well as contractual and legal restrictions on the payment of dividends or any other factors as the Board of Directors will deem relevant. Profits not required for the Company's growth plans or not encumbered by contractual, legal or other restrictions is expected to be paid to the shareholders as dividends, unless it is needed for any other corporate purpose including investments in business growth opportunities. The General Shareholders Meetings approving the annual financial statements generally establishes also the amount of the gross dividend per share, as well as the payment process. According to the Law on Issuers and Market Operations, the dividend payment date will be set no later than 6 months from the date of the Ordinary General Shareholders Meeting deciding the dividends. If the General Shareholders Meeting does not decide on a dividend payment period, the dividends shall be payable within 30 days from the date of publication of the resolution approving the payment of dividends in the Official Gazette of Romania. Upon expiry of such period, the Company would be deemed to be in payment default by operation of law. Payment of dividends is made only to shareholders registered on the registration date (data de înregistrare) set by the Ordinary General Shareholders Meeting approving the distribution of dividends. The registration date must be set on a date that occurs at least 10 business days after the date of the Ordinary General Shareholders Meeting. Furthermore, the payment date set by the Ordinary General Shareholders Meeting must not occur later than 15 business days after the registration date, but must occur within the six months period from the date of the Ordinary General Shareholders Meeting approving the dividend distribution. Under capital markets regulations, the Company must publish, before the dividend payment date, a press release in a nationwide newspaper specifying at least the value of the dividend per share, the ex date, the registration date and the dividend payment date, as approved by the Ordinary General Shareholders Meeting, as well as the means of dividend payment and identifying information of the paying agent. Any dividends that are not claimed within three years from the date on which their payment becomes due may be retained by the Company. According to the Companies Law, the dividend payment, in any form, out of fictitious profits or from sources that could be distributed, in the absence of annual financial statements or contrary to the relevant data included in the financial statements, attracts the criminal liability of the Company s founders, directors, general manager, managers or legal representatives. Furthermore, if the Company registers a loss of its net assets, the share capital must be replenished or reduced before any dividend distribution. In addition, if the Company has accumulated losses, it may not pay dividends until the losses are offset. 129

63 The Company s financial year begins on 1 January and ends on 31 December. According to Companies Law, dividends may be distributed only if the Company registers profit, as reported in the annual financial statements, approved by the Ordinary General Shareholders Meeting. Romanian law does not allow the distribution of interim dividends. The Company s profit after the payment of the profit tax shall be distributed according to the decision of the Ordinary General Shareholders Meeting. The Company is under an obligation to create reserves and other funds required by applicable legislation. The distribution of dividends by the Company and by Group companies to the Company is subject to the restrictions included in the credit contracts concluded by the Group members. Please see a description of these restrictions in the section " Material Contracts Material Financing Facilities Credit Facilities Contracted by the Group". The Company did not pay any dividends during the period covered by the Annual Financial Statements. 130

64 CAPITALISATION AND INDEBTEDNESS The following table sets forth the Company s capitalisation and indebtedness as at 30 September The following tables should be read in conjunction with the sections Selected Financial and Operating Information, Business and the Financial Statements and the related notes thereto. As at 30 September 2017 Unaudited (RON) Total interest-bearing debt, current portion... 37,385,992 Guaranteed... - Secured... 37,385,992 Unguaranteed/unsecured... - Total interest-bearing debt, non-current portion (excluding current portion of longterm debt) ,575,455 Guaranteed... - Secured ,575,455 Unguaranteed/unsecured... - Total interest-bearing debt ,961,447 Stockholders equity ,144,685 Share capital... 13,932,034 Reserves... 91,961,463 Retained earnings... (20,092,036) Non-controlling interest... 14,343,224 Total capitalisation ,106,133 Source: Interim Financial Statements The following table sets forth the Company s net financial debt as at 30 September 2017: As at 30 September 2017 Unaudited (RON) Cash and cash equivalents... 22,374,171 Total interest-bearing debt ,961,447 Obligations under finance lease... 13,889,324 Net financial indebtedness ,476,600 Source: Interim Financial Statements The Company declares that, as at 30 September 2017, the total value of the Group's interest bearing loans amounted to RON 291,961,447, the total value of the Group's capitalization amounted to RON 392,106,133, and the Group's net financial debt amounted to RON 283,476,600. As at 30 September 2017, the Group's contingent liabilities generated by bank letters of guarantee amounted to RON 1,888,294. Statement regarding the working capital 131

65 The Company s management is of the opinion that the Company has sufficient working capital for its current needs for at least 12 months after the publication of the Prospectus. Interests of individuals or entities involved in the Offering Save for the ones presented in the section Main Shareholders, there are no interests (including conflicts of interests) that could have a material impact on the Offering. The Manager and/or its respective affiliates have provided in the past, and may provide in the future, from time to time, investment services, financial advice and banking and commercial services to the Group in their ordinary course of business, for which they could or might receive specific fees and commissions. 132

66 SELECTED FINANCIAL AND OPERATING INFORMATION Operating results for the financial years ended on 31 December 2015 and 31 December 2016 respectively The table below presents the Group s consolidated statement of profit and loss and comprehensive income for the year ended on 31 December 2015 and 31 December 2016, respectively: Year ended 31 December 2015 Audited 2016 Audited All amounts are in RON, unless specified otherwise SALES 390,978, ,986,790 Other operating revenues 4,591,826 5,468,590 Operating income 395,570, ,455,380 Operating expenses (366,579,247) (488,901,027) Operating profit 28,991,476 19,554,353 Finance cost (11,270,696) (13,336,592) Other financial expenses (4,722,017) (5,048,649) Financial result (15,992,713) (18,385,241) Result before taxes 12,998,763 1,169,112 Income tax expense (3,093,994) (2,411,102) Net result 9,904,769 (1,241,990) Owners of the Group 8,580,871 (5,109,958) Non-controlling interests 1,323,898 3,867,968 Other comprehensive income items that will not be reclassified to profit or loss Gain / Loss on revaluation of properties - 3,398,211 Corrections related to prior years (391,949) - Deferred tax on other comprehensive income components 62,335 (543,714) Total other comprehensive income (329,614) 2,854,497 Total other comprehensive income attributable to: Owners of the Group (329,614) 5,439,256 Non-controlling interests - (2,584,759) Total comprehensive income 9,575,155 1,612,507 Total comprehensive income attributable to: Owners of the Group 8,251, ,298 Non-controlling interests 1,323,898 1,283,209 Source: Audited Consolidated Financial Statements for year ended 31 December 2016 Net result 9,904,769 (1,241,990) Income tax expense 3,093,994 2,411,102 Financial result 15,992,713 18,385,241 Depreciation 26,748,141 35,122,887 EBITDA 55,739,617 54,677,239 Source: Company's Statements 133

67 The following table sets out the sales for each of the Group's business lines for the years ended 31 December 2015 and 31 December 2016, respectively: Year ended on 31 December % change 2016/2015 Sales volumes (RON), of which: Clinics 101,014, ,109, % Stomatology 1,973,307 18,504, % Laboratories 76,187,985 96,725, % Corporate 111,190, ,988, % Hospitals 80,483, ,977, % Pharmacies 19,573,149 23,597, % Other revenues 556,349 1,083, % Total sales 390,978, ,986, % Source: Audited Annual Financial Statements Results of Operations for the nine months period ended 30 September 2017 The following table sets out the Group's unaudited consolidated interim statement of profit and loss for the nine months period ended 30 September 2017, as compared to 30 September 2016: Nine months ended 30 September Unaudited, Unaudited reviewed Sales 459,182, ,489,209 Other operating revenues 4,454, ,470 Operating income 463,637, ,117,679 Operating expenses (434,536,793) (350,679,676) Operating profit 29,100,630 11,438,003 Finance cost (10,645,670) (10,567,686) Other financial expenses (3,892,282) 555,767 Financial result (14,537,952) (10,011,919) Result before taxes 14,562,678 1,426,084 Income tax expense (5,002,865) (1,382,946) Net result 9,559,813 43,138 Owners of the Group 5,711,029 (2,001,084) Non-controlling interests 3,848,784 2,044,222 Gain/Loss on reevaluation of properties - - Corrections related to prior years - - Deferred tax on other comprehensive income components - - Total other comprehensive income - Total comprehensive income attributable to: Owners of the Group - Non-controlling interests - Total comprehensive income 9,559,813 43,138 Total comprehensive income attributable to: Owners of the Group 5,711,029 (2,001,084) Non-controlling interests 3,848,784 2,044,222 Source: Unaudited and reviewed Interim Consolidated Financial Statements for period ended 30 September 2016, Unaudited Interim Consolidated Financial Statements for period ended 30 September 2017 The following table sets out the sales for the nine months ended 30 September 2017 as compared to the nine months ended 30 September 2016 for each of the Group's business lines: Business Line 9 months 2017 % of total 9 months 2016 % of total Change Sales sales sales sales 2017/2016 Clinics 123,033,421 27% 91,197,849 25% 35% Stomatology 28,062,823 2% 9,645,716 3% 191% 134

68 Hospitals 88,249,720 19% 78,395,460 22% 13% Laboratories 85,912,393 19% 69,087,896 19% 24% Corporate 105,590,728 23% 93,766,469 26% 13% Pharmacies 21,176,009 5% 16,958,285 5% 25% Other revenues 7,157,894 2% 2,437,534 1% 194% TOTAL SALES 459,182, % 361,489, % 27% Source: Group internal data Cash flows for years ended 31 December 2015 and 2016 The following table sets out a summary of the Group cash flow information for the periods ended 31 December 2015 and 2016: Year ended 31 December 2015 Audited In RON unless otherwise indicated 2016 Audited Cash flow from operating activities Profit / Loss before tax 12,998,763 1,169,112 Adjustments for: Depreciation 26,748,141 36,093,805 Disposal of subsidiaries - 714,750 Interest expense 11,270,696 13,336,592 Interest income (385,938) (454,439) Allowance for doubtful debts and receivables written-off 214,477 8,175, ,041 Financial discounts 2,804,052 3,052,445 Gain/(Loss) with impairment of non-current assets - (970,918) Unrealized exchange gain/loss 2,357,932 2,608,677 Other non-monetary gains (3,300,000) (3,300,000) Net gain/(loss) on disposal of property (57,292) - Operating cash flow before working capital changes 52,650,831 60,534,265 Increase in accounts receivable (3,242,399) (11,152,764) Increase in inventories (3,390,778) (2,974,751) Decrease/(Increase) in prepayments (422,694) (446,269) Increase in accounts payable 9,447,452 12,787,223 Cash generated from operations 55,042,412 58,747,704 Income tax paid (2,470,547) (2,945,862) Interest paid (11,316,966) (13,144,091) Interest received 385, ,439 Net cash flow from operating activities 41,640,837 43,112,190 Cash flow from investing activities Investments in business combinations (3,107,334) (32,993,008) Purchase of intangible assets (1,831,817) (4,038,544) Purchase of property, plant and equipment (23,194,914) (28,035,141) Proceeds from sale of business combinations - 45,000 Proceeds from sale of fixed assets 57,292 45,000 Net cash used in investing activities (28,076,773) (65,021,693) Cash flow from financing activities Share capital contribution - 137,030 Increase in loans 1,633,867 73,824,643 Payment of loans (13,110,964) (30,629,749) Payments of financial leasing (3,788,829) (6,602,067) Net cash generated by/(used in) financing activity (15,265,926) 36,729,857 Net increase/ (decrease) in cash and cash equivalents (1,701,862) 14,820,354 Cash and cash equivalents opening balance 7,583,358 5,881,496 Cash and cash equivalents closing balance 5,881,496 20,701,850 Source: Audited Consolidated Financial Statements for the year ended 31 December 2016 Cash flows for the period of nine months ended 30 September 2017 The following table sets out the Group's summary cash flow information for the nine months ended 30 September 2017 as compared to 30 September 2016: 135

69 Nine months ended 30 September 2017 Unaudited 2016 Unaudited, reviewed Profit / Loss before tax 14,562,678 1,426,084 Adjustments for: Depreciation 29,196,756 27,420,605 Loss from sale of subsidiaries - 714,751 Interest income ( ) (330,270) Interest expense Allowance for inventory and inventory written-off Written off from stock depreciation - 109,041 Financial discounts Other non-monetary gains ( ) - Loss from Unrealized exchange gain/loss ( ) Net gain/(loss) on disposal of property ( ) Operating cash flow before working capital changes Decrease / (increase) in accounts receivable ( ) ( ) Decrease / (increase) in inventories Decrease / (increase) in prepayments ( ) ( ) Increase / (decrease) in accounts payable ( ) Cash generated from operations Income tax paid ( ) ( ) Interest paid ( ) ( ) Interest received Net cash flow from operating activities Investments in business combinations ( ) ( ) Purchase of intangible assets ( ) ( ) Purchase of property, plant and equipment ( ) ( ) Proceeds from sale of fixed assets Net cash used in investing activities ( ) ( ) Share capital contribution Increase in loans Payment of loans ( ) ( ) Payments of financial leasing ( ) ( ) Dividends paid to NCI ( ) - Net cash generated by financing activity Net change in cash and cash equivalents Cash and cash equivalents opening balance Cash and cash equivalents closing balance Source: Unaudited and reviewed interim consolidated financial statements for period ended 30 September 2016, Unaudited interim consolidated financial statements for period ended 30 September

70 ROMANIAN HEALTHCARE MARKET Macroeconomic Overview Romania is located at the crossroads of Central and South-Eastern Europe, north of the Balkan Peninsula, on the Lower Danube, within and outside the Carpathian arch, and is bordered by the Black Sea. Romania shares borders with the following countries: Hungary, Serbia, Republic of Moldova, Ukraine and Bulgaria. Romania s population, estimated by Eurostat as of 1 January 2016 to be approximately million inhabitants, is the 2 nd largest in Central and Eastern Europe ("CEE") after Poland (according to the International Monetary Fund's World Economic Outlook report October 2017 ("WEO April 2017") and Eurostat data). In 2016, Romania had a public deficit of 3% of GDP (Eurostat data) with a State debt in 2016 of approximately 37.6% of GDP (based on Eurostat data) and a relatively stable and fully convertible currency, the Leu (RON). Romania s key economic drivers Expansion of the economy The Romanian economy is projected to continue to expand in the coming period, with real GDP growth being forecasted in the WEO October 2017 at 5.5% in 2017 and 3.3% in Domestic demand the growth driver of the Romanian economy over the last years A key driver of the Romanian economy s growth in 2016 was the increase in domestic demand (with domestic demand year-on-year growing 5.3% versus 2015, based on the Romanian National Institute of Statistics data). According to WEO April 2017, the internal demand is estimated to increase in 2017 by 5.2% versus Low inflation rate Since 2013, headline consumer price inflation has rapidly fallen and has been below the NBR's inflation target of 2.5%±1 percentage point (set at the start of 2013) since early In 2015, the rate became negative, as VAT for food products was cut by 9 percentage points, lowering the costs of household food purchases. The deflation has increased since January 2016, reflecting the further 4 percentage points decrease in the general VAT rate (from 24% to 20%) effective from 1 January 2016, to an annualised inflation rate of -0.2% in August According to the Romanian National Institute of Statistics, the yearly inflation rate at the end of 2016 was 0.5%. Also, the National Bank of Romania projects in its August 2017 Inflation Report an annual consumer price index inflation rate of 1.9% at the end of 2017, before increasing to a rate of 3.2% at the end of Stable exchange rate Household expenditure (RON billions) % CAGR = 5.6% 5.8% % Source: Eurostat, WEO October % 1.1% % Household expenditure Inflation 14.0% 9.0% 4.0% -1.0% 137

71 The RON/EUR exchange rate has been fairly stable since 2016, with an average of RON 4.49, based on the information provided by the National Bank of Romania for the period In the first 9 months 2017, the average RON / EUR exchange rate was RON Supportive fiscal policy During the period , Romania achieved fiscal consolidation, having reduced the annual fiscal deficit as a percentage of GDP (based on the ESA2010 methodology) from -7.13% to less than -1.5% of GDP in 2015 (WEO October 2016). Between , the Romanian Government implemented a number of pro-cyclical measures, such as a cut of 5 percentage points in social security contributions, the decrease of the VAT rate on food and of the general VAT rate from 24% to 20%, as well as sectoral and general public wage hikes. According to the Ministry of Public Finance, the budget deficit for the first six months of 2017 was of 0.77% of GDP. Growing current account deficit In 2016, Romania's current account deficit increased up to approximately 2.5% of GDP (National Bank of Romania). The current account deficit is forecast to widen slightly in 2017 and 2018, reflecting, inter alia, the deterioration in the trade balance driven by higher imports from the expanding consumption, which are expected to offset the projected growth in exports. The National Bank of Romania forecasts a continuing deterioration trend for the current account in the medium term, its weight in GDP being estimated to increase to 3.1% in 2017 and to 3.2% in 2018 respectively. Stable labour market Unemployment rate was of 6.6% at the end of 2015, dropping to 5.5% at the end of 2016, according to Eurostat data. Unemployment is expected to further decrease as the economy continues to grow. According to the latest Eurostat data, in August 2017 the unemployment rate was 5.1%. Demographics The structure of the resident population by age is marked by a deepening ageing process. The share of the population in the 60+ age group is increasing disproportionately, as the post-world War II baby boomers age and the population experiences a general decline in birth rates. As of 1 January 2017, the population residing in urban areas was of 12,519 thousand people, down by 0.3% as compared to the level registered as of 1 January 2016 (according to the Romanian National Institute of Statistics). In 2016, the process of demographic ageing accelerated and the period 1 January 2017 and 1 January 2016 witnessed a slight drop in the weight of young people (0-14 years old) and an increase by 0.3 percentage points of the weight of aged population (65 years old and over). Structure of usual resident population, by age group: Age groups Age of groups % % % % 0-4 years years years years years years years years years years years years years years years years years years

72 Source: Romanian National Institute of Statistics Romanian Healthcare System Overview The Romanian healthcare system is set-up and managed by the Romanian State and funded through a combination of contributions from employers and employees, collected by the NHIH, as well as through direct allocations from the state budget. The healthcare system has passed through several reforms since the return to democracy in the early 1990s, designed to decentralise the healthcare sector and to reflect a focus on prevention and primary healthcare. The Law no. 95/2006 on health reform, subsequently amended, supplemented and restated (the "Health Reform Law"), lays down the legal framework applicable to public health in Romania and regulates matters such as national health programmes, primary and specialist ambulatory medical care, the national emergency medical care system, the licensing and operation of hospitals, the social health insurance system, the exercise of the medical profession, including the stomatology and pharmacy professions, and drugs and medical devices. The "National Health Strategy " developed by the MoH sets out the objectives of health policy until It seeks to accommodate national priorities and the recommendations made to Romania by the EU for ensuring an efficient, comprehensive and equitable health care system. The implementation of the healthcare reform programme is being made with the financial and technical support of the European Regional Development Fund and the World Bank. As part of the reform of the Romanian health care system, the MoH conducted public consultations with respect to establishing a basic health services package and a minimal health services package. In December 2013, the Ministry of Health finalised the basic package, including emergency services, preventive services, primary care, certain ambulatory and hospital services. The basic package aimed to decrease admissions to hospitals, increase the number of cases resolved in day-care facilities and to establish the conditions for the development of primary health care and ambulatory services. Under the package, certain diagnoses (covering 104 medical conditions), surgical procedures (96) and medical services (36) will be dealt with in day-care facilities. Admission to hospital is allowed, however, in cases of medical need. The minimum package of health services for 2014 and 2015 was defined by Government Decision No. 400/2014 and by Order 388/186/2015, which approved the methodological norms for the application Government Decision No. 400/2014 in At the primary health care level, preventive consultations were introduced for people over the age of 18 to check for certain major diseases and conditions. For 2016 and 2017, the minimum package of health services is defined by Government Decision No. 161/2016, as amended, which has entered into force on 1 July Governing Bodies The Romanian healthcare market is governed primarily by the MoH and by the NHIH. Ministry of Health The MoH is the central authority in matters of public health placed under the supervision of the Romanian Government. Its main responsibilities include the development of national healthcare policies, the regulation of the healthcare sector, establishing organisational and functional standards for the healthcare sector, and promoting and improving the general health of the population. The MoH is also responsible for the operation of public hospitals across the country, sharing this responsibility between its head office in Bucharest and 42 district-level offices. Additionally, the MoH assists public hospitals and clinics with the financing of modern medical equipment. National Health Insurance House 139

73 The NHIH is a central, semi-autonomous body. Its main responsibility is to manage Romania s national health insurance system and to contract both public and private healthcare services providers. Its responsibilities are shared between the head office in Bucharest and 42 district health insurance offices, each with the ability to allocate funds in its area. The president of the NHIH is named by the Prime Minister. The MoH and the NHIH prepare each year the National Framework Contract Law, which sets out national entitlements to various healthcare services, pharmaceuticals and medical devices. This framework also establishes rules concerning the contracts between NHIH and private healthcare providers, as well as the payments made under those contracts, and sets benchmarks for quality reviews. Funding and uses Overview In 2014, patient co-payment requirements were introduced on certain state-funded services in an attempt to limit the high number of admissions into public hospitals. However, in most cases, co-payment is limited to very low amounts. The overall use of state healthcare funds is managed by the NHIH. Healthcare services are carried out by service providers based on contracts with the NHIH. These providers include: Public healthcare providers owned by local authorities and the MoH; Independent physicians' practices, primary healthcare providers and specialists; and Certain private healthcare service providers. Public healthcare covers the entire spectrum of medical need of the Romanian population. Key services include: Primary and secondary care; Inpatient and outpatient care; and Provision of pharmaceuticals and medical devices. Primary care Day-to-day healthcare is provided by doctors and nurses who serve as the first point of contact and the principal point of continuing care for patients. Primary care providers also coordinate the specialist care that may be required. Primary care services are carried out in both clinics and hospitals across Romania. Secondary care Secondary care includes acute care, such as accident and emergency services at hospitals, as well as specialised medical services (such as cardiology, urology, and dermatology) based on referrals from primary care providers. These services are carried out in both clinics and hospitals across Romania. Inpatient and outpatient care The Romanian model of public healthcare has historically been biased towards inpatient hospital care; this tendency is however shifting towards a more balanced and needs-based approach following the change of strategy by the MoH to focus on prevention and primary healthcare. The public healthcare sector includes a large number of hospitals and hospital beds operating in a fragmented structure and with unequal and insufficient development of the levels of care required to treat different pathologies. Starting in 2014, the Romanian Government launched a national plan to decrease the number of public hospital beds (with planned yearly decreases of 1,000 beds in each of 2015 and 2016), in order to reduce reliance on hospital services, and encourage the use of primary care doctors and outpatient services. The Government issued a decision 140

74 approving the National Plan of Beds for the period , by which it maintained the yearly number of beds in the public and private hospitals in Romania, for which the healthcare insurance houses may conclude contracts for the provision of hospital care services at 119,579 beds. Financial assistance in relation to pharmaceuticals and medical devices cost Based on MoH-determined guidelines, which relate to medical need by condition and varying levels of copayment, patients are able to access a wide range of pharmaceutical products and medical devices. Underfunding of the Romanian Public Healthcare Systems Romanian healthcare remains underfunded compared to other European countries, with the lowest absolute and per capita level of GDP dedicated to healthcare. Source: World Healthcare Organization (WHO) The low level of financial resources which have been allocated to the Romanian healthcare system is reflected in the relatively poor quality of medical service provision, limited scope of services, poor treatment results and long waiting times. This has been recorded throughout by Eurostat, which consistently ranked Romania first among the EU countries where there are unmet medical needs. Approximately 9.2% of the Romanian population claimed unmet medical needs in 2014, the fourth highest in Europe after two Baltic countries and Greece, based on data published by Eurostat. The main reasons for the unmet needs include lack of availability of healthcare services, long distances to appropriate venues and long waiting times. 141

75 Source: Eurostat 2014 Private Medical Services Market History and overview The private medical services market ("PMSM") emerged in Romania in the mid-90s as a privately paid alternative to the public healthcare system. The overall poor condition of the public health system was the key driver underpinning the development of the PMSM. At the time, the public healthcare system was plagued by chronic under-funding, inefficiencies, resource waste, inadequate healthcare equipment and informal payments to the medical staff. In its early stages, the PMSM consisted mainly of medical offices serviced by small numbers of physicians and other medical staff. The consolidation process on the PMSM started in the late 1990's on the back of an increase of private demand, with small medical offices collaborating and grouping into larger units to better afford the equipment and technology needed to improve service. The period from 2000 to 2010 saw the increasing sophistication of the leading PMSM providers, particularly as the focus shifted increasingly to opening inpatient facilities. As the PMSM continued to grow, the sector witnessed increasing levels of interest from local and international investors. The International Finance Corporation, member of the World Bank Group, made an early investment in MedLife. Then reputable private equity firms followed: V4C (formerly part of Société Générale Asset Management) invested in MedLife at the end of 2009 (V4C is no longer a shareholder of MedLife since 2016); Advent International invested in Centrul Medical Unirea (now Regina Maria), purchasing the stake of another private provider 3TS in early Bedminster Capital Management acquired Hiperdia, a provider of imagistic diagnostics services, in The growth of the medical health prevention packages ("HPPs") in Romania in the late 1990s and early 2000s also spurred substantial growth in the PMSM, generated by the demand of HPP companies to offer their employees an additional benefit, as alternative to the state healthcare system s shortcomings. This 142

76 business line remains an important part of the development of today s large private medical services providers such as the Group. Private healthcare providers are an established component of the Romanian healthcare system, in particular within the outpatient lines of clinics and laboratories. While hospitals remain overwhelmingly public in terms of both funding and provision of services, all other lines of the healthcare sector see a significant contribution from the private sector. Private sector capacity growing Private sector market share (%), % 89 % 89 % 97 % Dental surgeries Polyclinics Source: PMR, Romanian National Institute of Statistics Funding of the PMSM The PMSM sources its revenues through three separate streams: HPPs and private health insurance ("PHI") are typically designed (in the case of most of the HPPs offered on the market) to be purchased by employers as part of their employee benefit packages; Fee-for-service payments received from patients for healthcare services provided by the private medical services providers; and Allocations from the NHIH for the provision of medical services to state insured individuals. In the Group s view, HPPs generally address two sub-segments: Occupational health, which is mandatory under Romanian law and which involved annual check-ups and certain other basic procedures to be provided and paid for by employers. Increasingly, these services are outsourced by employers to private medical players; Additional medical services and opportunities, which are aimed at preventing, identifying and monitoring potential health issues of the employees and are not required to be provided by the employer. Depending on the type of package, they usually cover regular check-ups, basic doctors consultations and selected laboratory tests. Generally, this part of the HPPs is purchased by the employer as part of the company s overall employee benefit package. PHI has yet to be offered by companies to their employees to the same extent as HPPs. According to the 2016 PMR Report, in 2015, the entire health insurance market was estimated to represent just 1.2% of the private healthcare spending. PHI policies are underwritten by insurance companies and the actual services are provided by private healthcare providers, as insurers currently do not own healthcare facilities in Romania. As both PHI and HPPs are typically purchased by companies as employee benefits, the deductibility for corporate tax purposes of the programmes also impacts their appeal. PHI is only deductible (at company and individual level) if and to the extent that the services offered exceed those offered under the basic health package defined by the Romanian State. Given the broadness of the basic package, as described above, in the Group s opinion there is limited scope for additional services which would be deductible. This follows similar 143

77 approaches in other EU countries such as France and Poland. Deductibility in Romania of PHI is limited to Euro 400 per insured individual per year. For corporate tax purposes, the portion of the HPP covering the mandatory occupational health services is deductible. This permits some deductibility of the HPP cost for the corporate providers. A range of factors limited the development of the private healthcare insurance market, according to the 2016 PMR Report: Despite the issues related to the quality of the services offered, the basic package of healthcare services provided through the national health insurance and offered by the public healthcare system is comprehensive and covers a substantial portion of potential needs, removing the need and incentive to contract for extra services for much of the population; The population is not very well informed about the benefits of private health insurance. Insurance is perceived as a luxury product; and The limited purchasing power of individual clients. As a result, only 2% of Romanians have private healthcare insurance, according to a GfK study whose results were made public on 4 February 2015 (the survey was based on the answers of 1,000 Romanian respondents of more than 15 years of age). Characteristics and size of the PMSM The PMSM has evolved from small medical offices to large, multi-service, national providers. In the Group s opinion, the main characteristics of the market today include: The PMSM remains highly fragmented, with the core of the market remaining centred on Bucharest. Certain small providers carry out business on a regional level, but few of them have been able to build a national presence. The market is also segmented into service areas, focused on outpatient clinics, inpatient hospitals, laboratories and diagnostic imaging. Pharmacies represent a separate segment of the market. Few providers offer diversified services covering all market segments. The private healthcare providers can also be segmented in terms of the source of payment for the services offered to clients, namely out of private or public funds. A significant portion of private healthcare providers pursue a model targeting funds from NHIH allocations in labs, clinics or hospitals. Others, such as the Group, set their main source of income on revenues from medical services and companies, from the sale of HPPs. As in other CEE markets such as Poland, HPPs continue to hold a market share significantly higher as compared to the market share held by PHI. The providers are largely of Romanian origin and are still owned by their founders. Limited investment from international strategic operators has taken place in the segment. Sector consolidation should accelerate as the aging of the founders of many of the early private providers increasingly look to realise on their work and investments as the demands for further investment to provide the expected levels of service grows and the competition from the leading providers increases as they look to expand into new regions or specialities. 144

78 The private medical services market in Romania Value (EURm) and change (%), ,500 3,000 2,500 2,000 CAGR = 11% 1,725 1,552 1,913 2,107 CAGR = 9.5% 2,537 2,314 2,768 3,021 3, % 25.0% 20.0% 15.0% 1, % 1, % 11.1% 10.9% 10.1% 9.8% 9.6% 9.1% 9.1% 9.0% 5.0% E 2014E 2015E 2016F 2017F 2018F 2019F 2020F 2021F Value Change Source: PMR August 2016 Report 0.0% Note: the amounts referred to in the table above include also the spending on drugs and other healthcare products, which is a specialized part of the private market. Key Providers of the PMSM The following table shows the key players and their financial and non-financial key performance indicators for the year 2015, as reported in the 2016 PMR Report. The Group is reported as the leading player in private healthcare across core financial and business metrics: presence, revenue, infrastructure (clinics, patient capacity, laboratories), and number of HPP clients. TOP 6 players Presence Revenue (EURm) # of clinics # of HPP clients # of beds # of labs * national k national K regional K local 42 4 n.a local n.a local 17 4 n.a Source: 2016 PMR Report Note: Values of metrics present for MedLife in the 2016 PMR Report are different than the values of the same metrics according to the Group s records and used elsewhere in this Prospectus. Outlook of the PMSM and Main Growth Drivers The main drivers for the future development of the private healthcare services in Romania are: 145

79 Future intrinsic growth: it is estimated that the Romanian healthcare market, according to 2016 PMR Report, will to record the highest growth rate in comparison to other CEE countries, due to the low level of development of the current healthcare infrastructure and an expected high level of new investments in private healthcare provision. Furthermore, the poor performance of Romania's public healthcare system and the sizeable gap in spending to other CEE markets, in terms of investments, generates a continuing potential, that is to ensure the convergence of investments in Romania with the ones in Western Europe. According to PMR's forecast in the 2016 PMR Report, the expected average compound annual growth rate for development of private healthcare in Romania is 9.5% for the period Source: 2016 PMR Report Improving infrastructure to support demand: investment in healthcare infrastructure made by private healthcare providers continued to expand their capacity to serve patients outside the State system and address the unmet medical needs in Romania. Growing affordability: the increase in real wages in Romania has, along with other factors, resulted in increases in household disposable income. These increases have made private healthcare generally more affordable to a broader section of the population. Ageing population: Romania continues to see an increase in the proportion of its citizens aged over 60, who will require more frequent, quality and long-term healthcare treatments. Increasing incidence of certain lifestyle-related diseases (in particular, hypertension, ischemic heart diseases, cerebrovascular diseases and diabetes, as reported by the Romanian National Institute of Statistics), will also boost demand for medical care. Market consolidation: as mentioned in the 2016 PMR Report, a series of transactions occurred throughout where leading players acquired regional or specialized/niche players, marking the start of a new consolidation phase on the PMSM. Market consolidation, which is particularly available to leading PMSM players, allows an accelerated growth and the increase of market presence, both regionally and in niche medical specialities, as well as allowing the acquirers to garner economies of scale. Increasing confidence in private healthcare system: the persistently low levels of satisfaction of patients with public services (according to Eurostat time series on "Unmet medical needs") and the development of new national programmes that offer more support to private healthcare providers are set to increase confidence in the private healthcare system. The slowly changing mentality of patients, who are becoming better informed and requesting integrated and personalized medical services, will also contribute to increased demand and confidence in the private healthcare system. 146

80 Deductibility of medical subscriptions: By GEO no. 3 of 6 January 2017, the Romanian Government adopted a measure introducing the deductibility for medical services subscriptions. Thus, the voluntary health insurance premiums, as well as the medical services provided as HPP offered by the employer to its own employees are not subject to tax, for the purpose of the income tax and social contributions, on condition that the yearly level does not exceed the RON equivalent of EUR 400. The measure is a positive one for the private medical healthcare market and will lead to a faster development of the Romanian medical system. 147

81 BUSINESS Overview Founded in 1996, MedLife is the leading private healthcare provider in Romania. According to the 2016 PMR Report, it holds leadership positions in key metrics including sales, number of clinics, number of hospital beds, and number of HPP subscribers. At the same time, the Company is also one of the large private healthcare companies in CEE by sales, according to the Group s review of public data. The Group is a market leader in its core business lines: Corporate (which offers HPP packages), Clinics, Hospitals, and Laboratories. Recently, the Company has developed its Stomatology business line, opening a standalone clinic in 2015 and acquiring in 2016 a controlling stake in the Dent Estet group, the largest dental clinic network in Romania. The Group is also active in the Pharmacies business line, operating a number of pharmacies in its own clinics. MedLife s presence in all these core healthcare service areas is the basis of the Group's revenue capture model, offering patients a complete service from prevention to diagnosis to treatment. The Group provides its services via the largest single pool of private doctors and nurses in Romania, totalling approximately 2,300 doctors and 1,500 nurses as of 30 September 2017 (please refer to the section " Business People and resources" below). The Group's policy is to facilitate the employment of medical staff on an exclusive basis, unlike many competitors which share their medical staff with other private healthcare providers or with the public healthcare facilities. The Group engages part-time professionals only for specific specialities or functions. In addition, committed to providing quality medical services, the Group has consistently invested in medical equipment supporting its market position as a technology leader in diagnostic imaging. The Group registers a high satisfaction level from patients, obtained a high score for the awareness of its brands among clients and a high number of patients recommend its services. MedLife has been recognised as the "Most Trusted Brand" by Readers Digest in the Romanian Private Clinics category for six years in a row, during the period , obtained four Superbrand distinctions including in 2017, Qudal distinction in 2016 and 2017 and is placed first among the Group's competitors in the survey carried out by Exact Cercetare si Consultanta in 2017 to assess top-of-mind brand awareness. The Group surveys patients on a weekly basis for feedback on the medical services it provides. In the surveys carried out during the month of September 2017 among a total of 1,410 Group s clinic patients, 71% of the respondents declared that they were "very pleased" by the quality of service provided by MedLife, while 28% of the respondents declared that they were "pleased". According to a GfK study Brand & Advertising Tracking & Leadership of December 2016, MedLife is the most trusted brand of private healthcare operators. MedLife ranks first for the "preference" indicator, far from its main competitors. MedLife is part of the Top of Romanian Brands (BrandRO) for the fourth year in a row. MedLife ranks 27th in the total list of brands, irrespective of the category (10 categories) and it passed before large brands, with local tradition. In the Company's 20 years of operation on the Romanian market, over 5 million unique patients were provided services in the Group's medical facilities, which accounts for over one in four Romanians, based on the population data of Eurostat for In September 2017, the Group's clinics provided services to a number of 10,000 patients per day, which included patients under HPPs, FFS and State insurance, and conducted over 36,000 laboratory tests on average each day. Private sector sales including the Corporate business line and FFS individuals across all its business lines are very important to the Group, representing 87% of the Group's total sales in 2016 and 86.5% of the Group's total sales for the nine months ended

82 September Sales from State insured patients, the Group's other revenue stream, represented 13% of the Group's total sales in 2016 and 14% for the nine months ended 30 September 2017 respectively. For the period ended on 31 December 2016, the Group's total sales amounted to RON 502,986,790. Total sales for the nine months period ended 30 September 2017 amounted to RON 459,182,988, higher than the total sales obtained during the similar nine-month period of 2016, of RON 361,489,209. For the nine-month period ended 30 September 2017, the Group's EBITDA was RON as compared to RON in the nine months ended 30 September For the 12 months period ended 31 December 2016, the Group's EBITDA amounted to RON 54,677,239. Since the Company s founding as a two-room medical company by Dr. Mihaela Gabriela Cristescu, MedLife has developed into a structured business. The Company has put in place a formal and structured corporate governance system. Further, its annual consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards and audited since The Company s senior management team is led by Mr. Mihail Marcu as Chief Executive Officer (CEO), Dr. Nicolae Marcu, member of the Board of Directors and executive director responsible for Healthcare and Operations and Mr. Dorin Preda, member of the Board of Directors and executive director responsible for Finance and Treasury. Under the leadership of the key managers referred to above is a group of senior managers, many of whom have an extensive track record with the Group, who manage the central functions, business lines and units. These professionals operate with substantial independence and freedom in the implementation of agreed unit and business line budgets. Competitive Strengths The leader in the private healthcare market in Romania and one of the large providers of private healthcare services in Central and Eastern Europe The private medical services market in Romania is led by two major providers: MedLife and Regina Maria, followed by a group of second tier companies occupying regional or niche positions. Beyond the first and second tier companies, the market remains highly fragmented with a significant number of smaller, regional players. MedLife s leader position supports the Group in building its brand awareness and trust among the population when choosing their healthcare provider. The Group is able to address the needs of the largest HPP clients nationwide, providing medical care solutions in different locations. The size of the Group's business allows it to efficiently purchase and integrate smaller businesses active in other operational areas and ensures the client volumes required to amortise the capital costs of investments in facilities and medical equipment across a wider business base. Having reached a level of sales of RON 502,986,790 and an EBITDA of RON 54,677,239 in 2016, the Group has a solid base to continue expansion and acquisitions. A balanced and robust business model, spanning all key private healthcare segments The Group's Clinics, Laboratories and Hospitals provided a balanced share of sales in 2016, accounting for 25.9%, 19.2% and 20.9% of the Group's total sales in 2016, respectively. For the first nine months of 2017, the structure for the 3 business lines remained similar, with Clinics, Laboratories and Hospitals generating 26.8%, 18.7% and 19.2% respectively of the Group s total sales for the first 9 months of These sales reflect only the FFS and NHIH spending in each of these business lines. An additional 25.4% of 2016 total sales was generated by the Corporate business line through sales of HPPs. The scale of each of these business lines and the relatively balanced split in the Group's total sales highlights the strength of each line as well as the diversity of the Group's services. According to the 2016 PMR Report, each of the Group's Clinics and Laboratories business lines on a standalone basis would rank in the top 10 healthcare providers in Romania in terms of sales. 149

83 A business model that generates significant revenue capture opportunities MedLife s concept of Hyperclinics, large scale ambulatory clinics, as well as the integration of various segments in the Group provide substantial potential for revenue capture. For example, an HPP client visiting a Group clinic for a preventative check-up may be advised to undertake further tests or seek further consultations not covered by the HPP. These additional services or consultations are often available within the same Hyperclinic, facilitating the client to choose the Group's services. The Group's ability to accompany the patients in many cases from prevention to diagnosis through treatment provides a continuity of treatment for the patient as well as the capture of FFS revenue for the Group. The Group's Pharmacies business line is another example of revenue capture. When a prescription is given in one of the Group's consulting rooms, patients will often use the most convenient location to fill it: a pharmacy that is within the same building where the prescription was given. The Group's expansion into the Stomatology business line adds a further leg to this strategy. Preventative dental check-ups can be included in some HPP packages, which may lead patients to choose the Group for any follow-up treatment as a FFS client. Sales largely from cash-pay and HPP with low dependency on NHIH funding Many private healthcare providers in Romania remain dependent for a significant portion of their sales on contracts awarded by the NHIH to service State insured patients. This increases their exposure to changes in the NHIH healthcare priorities, pricings and allocation systems. With only 14% of its sales during the first nine months of 2017 deriving from the treatment of NHIH insured patients, MedLife can independently determine its policies and priorities. The largest number of HPP clients in Romania With over 570,000 HPP subscribers as at 30 September 2017, the Group has access to a significant potential client base for its FFS activities. This base is further expanded when the HPP subscribers bring family members and provide referrals to others for the Group s FFS offering. The HPP client base also provides opportunities for up-selling as many of the HPP clients begin with basic medical services packages and gradually move to more comprehensive services. The Group's continuous investments in new medical facilities set the basis for potential new HPP clients, as the Group's ability to service HPP subscribers in its own medical facilities is often key to the clients' purchasing decision. The market outside Bucharest remains, in the Group's view, underdeveloped for HPP and as such represents an opportunity for further growth by acquiring and integrating local and regional providers, thus expanding its footprint on a regional level and increasing its appeal to HPP clients. Experienced management able to generate and manage activity development both by organic growth and acquisitions The Group's track record of organic and acquisition growth is largely due to the Company s strong management team. The Company has developed systems for screening potential acquisitions, completing detailed analysis and decision making in a timely manner, and implementing, post transaction, a fast and efficient integration process. The Group has a reputation in the market as a "friendly acquirer", mainly because the targets founder/owners are often given the opportunity to stay in the business as minority shareholders, and managers of the subsidiary. Through this approach, MedLife retains their accumulated experience and market knowledge while being able to fully integrate the acquisition into its own systems and revenue capture opportunities. The Group has opened and acquired 101 facilities since 2009, providing the Group with valuable knowledge and experience to find the best path for continued and successful expansion. Strong financials with an asset-rich balance sheet The Group's financial results in 2016 and the nine months ended 30 September 2017 show the increase in sales and EBITDA of its recurring business. While the nominal value of the Group's net debt has increased from 2014 onward on the account of the investments made in new facilities and the acquisitions, the ratio of 150

84 the Group's net debt to EBITDA shows a slight increase from in 2015 to 3.15 in 2016, illustrating the Group's ability to generate profitable growth by harvesting business opportunities. The increasing use of acquisitions to fill in geographic or service gaps in its portfolio will allow the Company to save, on average, the 2-3 year development period which the Group estimates is required for the ramp-up of an organic opening. One of the strengths of MedLife s balance sheet is the fact that the Company owns its key facilities, particularly hospitals located in Bucharest, Brasov and Arad. These include the land and buildings of the Grivita / Life Memorial Hospital complex, the Paediatric Hospital in Bucharest, the land and buildings of the main facilities in Brasov and Arad and other facilities as further described in the section " Business Business Model" below. Usually hospital buildings require large investments in, among other, the building structure and walls, special utilities such as for medical fluids or ventilation, as well as specialised constructions for surgery and intensive therapy units. The Group's strategy is to purchase the major hospital buildings to avoid burdens of moving from one leased building to another at expiry of lease contracts. Access to the financing required for expansion As of 30 September 2017, the Group has approved but unused debt facilities amounting to approximately EUR 3,326,128 from its lending banks, which can be used to refinance leasing commitments according to the terms of the facility agreements. Strategy MedLife s strategy focuses on maintaining its leadership position. The Company seeks to grow its portfolio of facilities and services to profitably provide national coverage to the Group's existing and new clients. The Company targets opportunities that provide additional revenue capture and synergies within its existing network and services. This goal is expected to be achieved through a combination of organic growth and acquisitions of smaller medical healthcare providers in the market. At the same time, the Company remains committed to ensuring quality and safe medical treatment to its clients, balancing the medical risks and opportunities with the Group's commercial goals. Organic growth During the period 2014 September 2017, the Company opened a number of new clinics and other facilities, particularly sampling points for its Laboratories business line. Many of these facilities are believed to still have the capacity to service greater numbers of patients, which should allow for the increase in their revenue and profit contribution, as they reach fuller utilisation. Further, the Group continues to optimise the range of services offered at its other facilities to the specific local market conditions, seeking to improve the revenue and margins of each location. As a result, the constant and accelerated ramp-up of these facilities is expected to improve margins as well as deliver further sales growth. The Company often takes advantage of the base facilities resulting from an acquisition to further organically expand their business. The recent acquisitions set out below, provide new platforms for organic expansion of the business. For example, in 2016, the Group acquired Diamed Center, which operates a network of laboratories and sampling points, primarily in Bucharest. Based on this acquisition, the Group is further developing a second brand of laboratories under the brand "Sfânta Maria" laboratories, which is expected to provide FFS laboratory tests at lower prices than in MedLife branded labs. Further, the Group plans to build on the existing contracts of Diamed Center with the NHIH, although the Company does not expect this to materially change the Group's overall exposure to NHIH contracts as a percentage of its total sales. As of 30 September 2017, the Group had 24 sampling points under "Sfânta Maria" laboratories brand, thus consolidating the acquisition through organic growth. 151

85 Selective acquisitions and integration of other market players The Group intends to continue to expand its service offering and geographical presence through strategic acquisitions. The Group estimates that, in 2017, 2.5% of its sales will be generated by units it acquired during the first nine months of The Group s acquisition strategy consists in pursuing the acquisition of regional or other businesses that offer complementary geographic or service coverage to the Group's existing portfolio or provide the opportunity to include new healthcare specialities in its service offer, that could provide synergy and revenue capture potential to the Group's existing activities. Post-acquisition, the Group generally rolls-out MedLife specialities and services which are not currently offered or upgrades the services offered by the acquired business to the Group's standards. The Group often re-invests the cash flow of the acquired business, as well as additional resources, in expanding the new subsidiary s business. The Group s acquisition strategy is based on encouraging the founding shareholders of the acquired business to remain active post-acquisition in the integrated business and also to hold a minority stake in the respective business. Although the Group has also made 100% acquisitions, the Group's management believes that this approach often matches the goals of the sellers and expands the negotiations beyond the topic of price, providing the Group an advantage over strategies focused on the 100% buy-out of targets. Minorities' rights are carefully negotiated to ensure alignment with the Group's overall governance framework. The Group's acquisition strategy envisages the full integration of the acquired units into the MedLife system, ensuring uniformity of service, branding and other standards across the business. The Group's support functions such as human resource management, accounting, marketing, public relations and purchasing are centralized, thus reducing the costs and increasing the efficiencies within such functions. The Group pays particular attention to its IT solutions, which are a critical part of increased client service, and seeks to transfer its accumulated know-how to the operation of the acquired business. The Group's 12 past acquisitions and integrations provide a clear road map for further acquisitions. By acquiring clinic and laboratory businesses, the Group may directly address the needs of the patients accessing HPPs. The profit formerly generated for NetLife partners servicing the Group's HPP patients in the acquisition target s service area are now captured by the Group directly. NetLife is a network of partner clinics with which the Group has negotiated tariffs for the servicing of its HPPs clients. In furtherance of this strategy, in 2016 the Company completed the purchase of: Dent Estet Clinic S.A., which has provided the Group a strong platform for the further development of a stand-alone Stomatology business line, following the opening of the Group s first standalone stomatology clinic in May The acquisition makes the Group the leader in this highly fragmented segment. The Group has already identified and is assessing further potential acquisitions in the Stomatology business line. Diamed Center S.R.L., a laboratory operator, used as a launching base for the "Sfânta Maria" laboratories brand. Prima Medical S.R.L., operating an imagistic center located in Craiova, which complements the Group's existing offer in the region. Stem Cells Bank S.A., a complementary activity to the Group's maternity services. The Group had previously outsourced this activity and the addition of Stem Cells Bank to its portfolio allows the Group to capture additional revenue and profit. Centrul Medical Panduri S.A., a medical company holding two clinics and one laboratory in Bucharest, an acquisition extending the Group s presence in Bucharest. 152

86 During the 9-month period ending on 30 September 2017, the Company finalised the following acquisitions: Almina Trading S.A., company offering integrated ambulatory, imaging and laboratory tests medical services, carrying out business for more than 20 years on the local market and being the largest medical operator in Dambovita county; Anima Specialty Medical Services S.R.L., a company offering medical services formed of 6 clinics and a laboratory, more than 200 employees, medical specialists and support personnel. Being the first private primary care unit with its own network in Romania and one of the largest private providers of medical ambulatory services for services paid though NHIH. Anima Promovare și Vânzări S.R.L., a company carrying out leasing and sub-leasing of premises for companies in the medical and pharmaceutical industry, which also sub-leased certain locations to Anima clinics. a new shareholding of 40% of Stem Cells Bank in Timișoara, one of the most modern and well equipped stem cells bank in South-Eastern Europe, in June additional percent of Genesys Medical Clinic Group of Arad, one of the largest private medical services operators in Western Romania, where the Group holds the majority stake of 58% as of the Prospectus date. the majority stake of 55% in Valdi Medica SRL company, owning the Humanitas hospital in Cluj. This offers a range of medical services mainly focused on surgical treatments, but its portfolio also includes outpatient medical specialties sustaining the surgical activity through pre-surgery multi-disciplinary consults, treatments and post-surgery care. In October 2017, MedLife signed the acquisition of the entire shareholding of Polisano medical services division, one of the largest private medical operators in Romania. Set up in the 90 s, Polisano is the first fully integrated group in the Romanian medical area. It includes a series of four clinics with own laboratories located in Bucharest and Sibiu, a private hospital Polisano European Hospital of Sibiu recognised as being one of the most modern and effective hospitals in Romania, a center for in vitro fertilization and the largest private maternity in Transylvania. The transaction will be completed once it is validated by the Competition Council and once the suspensive conditions are be met. The Company maintains an active pipeline of potential acquisition targets and regularly scans the market for opportunities. Benefiting from a leading position and strong brand, the Company is also frequently approached by advisers and principals of potential target companies. As the consolidation of the market accelerates and with additional debt financing available, the Company expects to continue with acquisitions to complement its organic expansion. Corporate structure The chart below shows the Group's simplified corporate structure, including the Group's material subsidiaries. A further brief description of the companies within the Group is provided below. 153

87 Summary description of Group companies Med Life The Company was founded in As of the Prospectus date, the Company is held by Mihail Marcu, Nicolae Marcu and Mihaela Gabriela Cristescu with a total stake of %. The International Finance Corporation, member of the World Bank Group, holds a 5% stake in the Company s share capital, while a number of shareholders individuals and entities hold together of the Company s share capital. According to the data published on BSE website, as of 21 December 2016, Charlemagne Capital (IOM) Limited reported a holding of % of the share capital and voting rights, and Allianz-Tiriac Pensii Private reported a holding of 5.31% of the Company s share capital and voting rights. As of 30 September 2017, the Company operated 8 hospitals, 50 clinics, 9 dental clinics, 10 pharmacies and 143 sampling points. Accipiens Accipiens S.A. ("Accipiens") is a company doing business in Arad, which operates the Genesys hospital in Arad, through Genesys Medical Clinic S.R.L.. ( Genesys ), a company where it holds 99.83%. In June 2017, MedLife increased the stake in Accipiens share capital to 58%, with the remaining 42% being held by minority shareholders, which are the former owners of Accipiens. Genesys holds a stake of 95% in Bactro S.R.L. ( Bactro ), while Accipiens holds the remaining 0.5%. RURR Medical RUR Medical S.A.. ("RUR Medical") is a company carrying out hospital activities, which operates the Eva maternity and clinic in Brasov, Romania. MedLife controls 100% of the shares in RUR Medical (directly and indirectly through Bahtco) following an acquisition completed in October

88 PDR Policlinica de Diagnostic Rapid S.A. ("PDR") is a company carrying out specialised medical activities, which operates, directly and through companies under its control, the Group's PDR Hospital, PDR Hyperclinic, Livada Hyperclinic, as well as a number of laboratories in Brasov, Romania. MedLife acquired % of PDR's share capital in August 2010, with the remaining % being held by minority shareholders that are former owners of PDR. Through PDR, the Group holds a stake of 60% in Histo S.R.L., a stake of 100% on Medapt S.R.L. and a stake of 80% in Policlinica de Diagnostic Rapid Medis S.R.L. Bahtco Bahtco Invest S.A. ("Bahtco") is a real estate development company and is acting also as holding company in connection with various other companies from the Group. MedLife controls 100% of the shares in Bahtco (directly and indirectly through PharmaLife Med) following an acquisition completed in Centrul Medical SAMA Centrul Medical SAMA S.A. ("CM Sama") is a company carrying out specialised medical activities, which operates, directly or through companies under its control, the MedLife Craiova Hyperclinic, which can provide day-hospitalisation as well as the usual clinics services, and a network of laboratories in Craiova and in other cities in the south-west of Romania. MedLife completed the acquisition of 55% of the share capital of CM Sama in February 2015, with the remaining 45% being held by minority shareholders that are former owners of CM Sama. CM Sama controls 60% in the share capital of Ultratest S.A. ("Ultratest"), a company performing laboratory activities, with MedLife holding 18% and the remaining 22% being held by minority shareholders of Ultratest. Vital Test Vital Test S.R.L. ("Vital Test") is a company 100% controlled by the Group, owned by the Company (60%) and Bathco (40%). Biotest Med S.R.L. Biotest Med S.R.L. ("Biotest Med") is a company 100% controlled by the Group, owned by the Company (75%) and Bathco (25%). PharmaLife Med PharmaLife Med S.R.L. ("PharmaLife") is a company carrying out pharmacies activities, which operates, together with Biofarm Farmec S.R.L. (a company controlled via Accipiens) the Group's pharmacies. MedLife set up PharmaLife and is sole shareholder with 100% of the share capital. MedLife Insurance Broker Med Life Broker de Asigurare și Reasigurare S.R.L. ("MedLife Insurance Broker") is a company carrying out insurance intermediation activities. MedLife Insurance Broker is fully controlled by MedLife, which holds a participation of % in MedLife Insurance Broker's share capital, with the remaining shareholding of % being held by Dorin Preda (who is a member of the Board of Directors in MedLife). MedLife Ocupational Med Life Ocupațional S.R.L. ("MedLife Ocupational") is a company carrying out general medical assistance activities. MedLife Ocupational is fully controlled by MedLife, which holds a participation of 95% in MedLife Ocupational's share capital, with the remaining shareholding of 5% being held by PharmaLife. 155

89 Prima Medical Prima Medical S.R.L. ("Prima Medical") operates an imagistic center in Craiova, Romania. MedLife completed the acquisition of 100% in the share capital of Prima Medical (held directly and indirectly, via Bahtco) in March Diamed Center Diamed Center S.R.L. ("Diamed Center") operates a medical recovery center and a laboratory network (including sampling points) in Bucharest and in various other cities in South-East Romania. MedLife completed the acquisition of 100% in the share capital of Diamed Center (held directly and indirectly, via Bahtco) in March Stem Cells Bank Stem Cells Bank S.A. ("Stem Cells Bank") operates a stem cells bank in Bucharest and Timisoara, Romania. MedLife completed the acquisition of % in the share capital of Stem Cells Bank in March 2016, and in June 2017 the Company, together with Bahtco Invest S.A., acquired also the remaining % of the share capital. As of the Prospectus date, the Company holds % of the share capital of Stem Cells Bank, while the company Bahtco Invest S.A. holds the remaining % of the share capital. Dent Estet Dent Estet Clinic S.A. ("Dent Estet") is a company active in the dental care business, which operates, directly and through companies where it holds a majority stake, 8 dental clinics in Bucharest and Timisoara and one dental laboratory. MedLife completed the acquisition of 60% of the share capital of Dent Estet in July 2016, with the remaining 40% being held by the founder of Dent Estet. Dent Estet holds controlling participations in various companies involved in the stomatology business, such as 75% of Aspen Laborator Dentar S.R.L., 51.61% of Dent A Porter S.R.L., 52.94% of Dentestet Kids S.R.L, 52% of Dentist 4 Kids S.R.L. and 51% of Green Dental Clinic S.R.L.. Centrul Medical Panduri Centrul Medical Panduri S.A. ("CM Panduri") is a company providing specialised medical assistance in two clinics and a laboratory in Bucharest. MedLife completed the acquisition of 90% in the share capital of CM Panduri in October 2016, with the remaining 10% being held by a minority shareholder that is the former owner of CM Panduri. Almina Trading Almina Trading S.A. ("Almina") is a company offering integrated ambulatory, imaging and laboratory tests medical services, present on Dâmbovița and Ilfov markets with 7 medical centers (5 in Targoviște and 2 in Pucioasa) and two laboratories (Targoviste and Buftea), offering its patients integrated ambulatory, imaging and laboratory tests medical services. The seven units use state-of-the-art medical equipment and a medical team formed of more than 125 specialists. MedLife finalised the acquisition of 80% of Almina share capital in March 2017, while the remaining 20% are owned by the minority shareholders, which are the company s founders. Anima Specialty Medical Services Anima Specialty Medical Services S.R.L. ("Anima") is a medical services company, one of the largest private providers of ambulatory medical services based on contract with NHIH, covering more than 15 specialties, among which primary caree, obstetrics gynaecology, ORL, endocrinology, ophthalmology, dermatology and venereology, cardiology, psychiatry, rheumatology, gastroenterology, allergology and clinical immunology. Anima is formed of 6 clinics and a laboratory, more than 200 employees, medical specialists and support personnel, being the first private primary care unit with its own network in Romania. MedLife finalised the acquisition of 100% of Anima share capital in May

90 Anima Promovare și Vânzări Anima Promovare și Vânzări S.R.L. ("Anima Promovare") is a company carrying out leasing and subleasing of premises for companies in the medical and pharmaceutical industry, and it also sub-leased certain locations to Anima clinics. MedLife finalised the acquisition of 100% of Anima Promovare share capital in May Valdi Medica Valdi Medica S.R.L. ("Valdi") is a company owning the Humanitas hospital in Cluj. The hospital offers a range of medical services mainly focused on surgical treatments, but its portfolio also includes outpatient medical specialties sustaining the surgical activity through pre-surgery multi-disciplinary consults, treatments and post-surgery care. MedLife finalised the acquisition of 55% of Valdi share capital in September 2017, while the remaining 45% are held by 2 minority shareholders, which are the previous owners of Valdi. Polisano In October 2017, MedLife signed the acquisition of the entire shareholding of Polisano medical services division, one of the largest private medical operators in Romania. Set up in the 90 s, Polisano is the first fully integrated group in the Romanian medical area. It includes a series of four clinics with own laboratories located in Bucharest and Sibiu, a private hospital Polisano European Hospital of Sibiu recognised as being one of the most modern and effective hospitals in Romania, a center for in vitro fertilization and the largest private maternity in Transylvania. The transaction will be completed once it is validated by the Competition Council and once the suspensive conditions are met. Business Model MedLife s business model focuses on servicing companies and private clients. The Company seeks to capture the private healthcare spending of these clients throughout all stages of a medical condition: prevention, diagnosis and treatment, by offering a wide range of medical services delivered in modern, high quality facilities by professional teams of doctors, nurses and support personnel. The Company puts considerable emphasis on client service, operating an IT infrastructure and customer service and sales operation that has served over 5 million unique patients, representing over 1 in 4 Romanians. The Group divides its operations into six business lines: Corporate: The Corporate business line offers HPP to corporate clients, offered as part of the benefit packages by the respective clients to their employees. These programmes, which focus on prevention through regular check-ups and offer access to diagnostic services, complement the legally required occupational health services that corporate clients also contract from MedLife under the HPP offering. As at 30 September 2017, MedLife had over 570,000 subscribers to its programmes from over 4,500 different companies. Clinics: The Clinics business line includes the Group's ambulatory clinics and diagnostic imaging services. Clinics offer general practitioner and specialist consultations and include the Group's outpatient diagnostic imaging services. Certain of its clinics also undertake day hospitalisation services. As of 30 September 2017, the Group covered more than 45 medical specialities in its 50 clinics with 510 medical offices. Hospitals: The Hospitals business line covers the Group's inpatient activities, which consist of a wide range of medical and surgical specializations. The Group holds 5 inpatient hospital licenses, which encompass the business line's activities. One of the licences was issued for one hospital unit and 3 other external sections. In addition to these, the Group was granted licenses for three additional 1-day inpatient units, which operate within Clinic locations and provide only 1-day inpatient services 157

91 (i.e. Iași, Craiova and Timișoara). The financial results from these three 1-day hospital services are accounted for in the Clinics division. The Group regards these units as functional parts of the hyperclinics located in Iași, Craiova and Timișoara. The Group's 8 hospital locations and the additional three 1-day inpatient units have a total of 613 licensed beds and 25 operating theatres as of 30 September 2017, forming the largest chain of private hospitals in Romania. Laboratories: The Laboratories business line provides biochemistry, haematology, coagulation, immunology, microbiology, anatomy, pathology, cytology, molecular biology and toxicology laboratories tests. The Laboratories business line conducted a total of 4,223,000 laboratory tests during As of 30 September 2017, the Group processed samples collected in 29 laboratories and operated 143 sampling points across the country. Pharmacies: The Pharmacies business line offers prescription, over the counter and other related medical products in 10 pharmacies opened within the Group's clinics. Stomatology: The Stomatology business line provides a wide range of dental services from simple check-ups to complicated surgery. As of 30 September 2017, the 9 dental offices in operation included 3 clinics focused on children, one in Timisoara and two in Bucharest, a clinic focused on teens, and 5 clinics for adults. Overview of the Company's sales streams The Group s business and revenue model focuses on the spending power of clients entities and private individuals on medical services, while the State's contribution through the NHIH represents a complement, not the core revenue of MedLife s activities. The Corporate business line focuses its sales of HPP on Romanian corporations and businesses. Generally, the sales take the form of annual contracts which are often subject to tenders by the purchasing company. MedLife s extensive footprint, wide range of services and reputation for quality are key sales arguments. Contract terms generally require clients to make monthly payments with credit terms of 30 days. The Group's IT system allows the control of HPP clients' access to its services ensuring that people breaching the contractual obligations cannot continue to benefit from its medical services. FFS payments are generally made by patients in cash or through credit card payments at the time of service delivery, minimising credit risk and receivables. State insured patients are treated under annual contracts agreed with the NHIH. The payment term according to the contracts is 25 days, however the actual level of receivables averaged 60 days of NHIH sales as of the end of MedLife carefully monitors its utilisation of State allocations to ensure it remains within the contracted amounts, reducing the risk of these receivables. Across its business lines, the Group's reliance on sales from NHIH funding remains low. The Pharmacies business line has the highest percentage of its sales deriving from NHIH funding. This reflects the system where many drugs prescribed to patients and purchased in the Group's pharmacies are fully or partially reimbursed by the NHIH. This particular NHIH funding is not subject to a specific contract with the Group, but reimbursed under national programmes. The NHIH allocations represented a total of 14% of the Group's total sales in the first 9 months of 2017, however this was divided between various contracts and paid from different NHIH budgets, reducing the risk of a significant impact on the Group in case a specific contract would be terminated. Marketing of MedLife's Healthcare Services and its IT systems A key part of the Group's success has been the strong development and management of its sales and marketing expertise. MedLife is a leading innovator in the market and the key reference point for its 158

92 competition. From its earliest days, MedLife focused on systematic marketing of its products and created a sizeable database of customers. MedLife s sales activities include a Marketing department responsible for the promotion of the MedLife brand and services. Sale teams work on a business line level with: A Corporate business line team divided into separate sales teams that focus on client retention and acquisition ensuring a high level of customer service to the key purchasing decision makers. A Laboratories sales team that promotes MedLife services to the medical community, non-medlife clinics and small hospitals and other potential sources of customers. The development of "Sfânta Maria" laboratories brand led to the creation of a separate sales team focused on the development of that brand. MedLife used a solid IT infrastructure supporting the general performance of its activities, being one of the most important client service tools. In mid-2013, MedLife updated its software and IT systems to provide integrated patient records and a comprehensive management tracking system. The implementation of the new software has enabled MedLife to provide patient electronic records that bring together information from all its business lines and make these accessible across all its business lines Clinics (including diagnostic imaging), Laboratories and Hospitals. Its IT system also represents a strong driver for ensuring client loyalty as a patient s medical records are professionally stored, maintained and accessible in one place. MedLife has also deployed complex solution for call centers, managing the patients appointments. Integrated with customer information such as HPP status and package, the call centre manages the yield and range of appointments between HPP and FFS payers. This yield management includes promoting alternative locations or doctors to better manage capacity and direct traffic to newer locations. MedLife believes that its call center performance is a key part of the reputation and awareness of its services. Corporate Overview The Corporate business line offers HPPs on a subscription basis, generally to corporate clients, as part of the benefit packages for their employees. These programmes, which focus on prevention, such as regular checkups and access to diagnostic services, complement the legally required occupational health services that corporate clients contract from MedLife as the Standard HPP. HPPs (Health Prevention Packages) The HPPs offered by the Group cover the following: Mandatory occupational health services, which mainly include the provision of annual employee check-ups and more specific services depending on the client's industry. Many companies begin by purchasing occupational health services under the "Standard" HPP and then add benefits under broader HPPs from the same provider for certain or all of their employees, providing an upselling opportunity for the occupational health provider. More general, "prevention oriented" health plans, providing expanded access to general practitioners and certain specialists in the Group's clinics and as well as to specified laboratory tests and diagnostic imaging for higher end packages. The specific services vary depending on the type of package. The revenues generated by HPPs is not allocated to the business line providing the service to the HPP client, as all the revenues are assigned to the Corporate business line. However, as the client moves into more detailed diagnosis and screening, the Clinics, Laboratories and Hospitals do earn FFS revenue from the HPP 159

93 clients. Providing the HPP client the opportunity to seamlessly continue within the MedLife system is at the heart of the Group s revenue capture model. HPP patients generally seek services within their proximity. In areas where MedLife is not present, the Group has developed the "NetLife" network, which is a network of partner clinics with which MedLife has negotiated tariffs for the servicing of its HPP clients. As MedLife expands its footprint, the role of NetLife has decreased, with the Group's own facilities capturing the margin and the follow-on sales from these HPP clients. Occupational health services are delivered by the Corporate business line in dedicated clinics, in some circumstances within the Group s other clinics and directly at the client s premises in the case of larger clients. The Group also maintains 40 mobile occupation health vans, travelling to specific locations to service the clients. Approximately 462 doctors and other medical personnel were assigned to occupational health services within the Corporate business line as of 30 September The HPP offering HPP packages range from Standard, which offers the occupation health services that a company is required by law to provide to its employees, to Executive packages that provide broader access to specialities and offer discounts off the published tariffs for some of MedLife's specialised services. The table below summarises the current standardised packages on offer by the Group as of 30 September Specific packages and terms can be tailored to meet the needs of larger clients and ensure that MedLife remains competitive. Selected services Standard Standard Plus Classic Business Executive Occupational health Doctor s appointments Emergency care at the company x General practician x Specialists x x Biochemistry, hematology, microbiology, histology, toxicology x once a year based on doctor referral based on doctor referral based on doctor referral Services offered Laboratory tests Allergy test, skin tests, simple spirometry Tumor markers, endocrine markers, immunology, bone markers, etc. Autoimmunity, molecular biology, pathological anatomy. Cardiology testing (e.g. echocardiography, Holter monitoring) x x 20% off x x 20% off based on doctor referral based on doctor referral x x 10% off 20% off 20% off x x 20% off on demand on demand DI 2D ultrasound x x after advice based on doctor referral based on doctor referral 3D ultrasound x x 20% off based on doctor referral based on doctor referral Other Dermatology (e.g. laser surgery, minor surgeries) x x 10% off 15% off 20% off Physiotherapy x x 10% off 20% off 30% off Medical Hotline 24/24 x unlimited unlimited unlimited unlimited For the 9 months ended 30 September 2017, the HPP price (calculated based on the total Corporate business line sales for the period divided by the average number of HPPs sold in the period) was RON 185 per HPP. In the past, the Group has often succeeded in up-selling its Standard package clients to higher value programmes as their employees become familiar with MedLife s services and seek to include more services as part of their benefits. 160

94 The HPP sales process The typical procurement process carried out by companies when selecting an occupational health or broader HPP service provider can take up to six months. Usually, larger companies request proposals from healthcare providers and negotiate with the best offerors. Contracts are entered into for periods ranging between one and three years and may be extended for subsequent periods. When choosing a healthcare service provider, the price-quality ratio, the range of medical services and geographical coverage are key. MedLife is very well placed in these criteria, having the most extensive portfolio of healthcare facilities, the broadest national coverage and a reputable brand. MedLife is the largest provider of HPP, as reported by the 2016 PMR Report, in terms of the number of individuals covered by HPP, including occupational health. The Group's success in HPP is the result of the following key factors: Leadership: The Company invested in people, facilities, equipment and systems to achieve the scale, range and quality of services requested by clients. o o o The Group's large footprint of facilities, complemented by the NetLife Network, appeals to clients operating across Romania, especially the largest HPP purchasers. The Group's portfolio of the latest diagnostic technology as a core part of the Group's offering provides sophisticated client care. The Group's overall reputation and leadership position ensure that a HPP is perceived as a real benefit by the Corporate client's individual employees. Sophisticated marketing: MedLife is the "market maker" in the Romanian HPP market with its pricing and innovations closely followed by the competition. This reflects the Company s strong focus on: o o o Maintaining a large and effective sales force (see "Marketing of MedLife's Healthcare Services and IT" above). Systematic tracking and analysis of its client data base developed since the launch of its first subscriptions in Tailoring its offering to address clients' needs, a wide range of in-house services which can be deployed to respond to the purchaser s needs in developing their own HPP. Development of IT capabilities: MedLife has invested in its IT capabilities to enable it to track and analyse client behaviour, track the profitability of individual clients and optimise the utilisation of its facilities by HPP and FFS clients. Upselling: MedLife s extensive occupational health client base provides significant upselling opportunities into more comprehensive HPPs. Occupational health patients also represent a significant FFS capture opportunity. Diversified Client base: MedLife has a broad client base with the top 10 clients representing 12.2% of the HPP business line s sales for the first nine months of Constant growth in the number of HPP clients For the 9 months ended 30 September 2017, MedLife has increased its revenue from HPP by 12.6% as compared to the 9 months ended 30 September This increase was generated by the constant growth in the number of clients in the Corporate business line and implicitly the number of individual subscribers, while focusing on the retention and up-sale of existing clients. 161

95 The expansion of the Group's footprint outside Bucharest has enabled access to new potential clients as the clinics operated by the Group under its own brand and other Group s units offer a local solution directly under the MedLife brand. The Group has increased its regional sales teams to address this market. While comprehensive market share data is difficult to access, PMR placed MedLife as the undisputed leader in the number of HPP clients as of August According to 2016 PMR Report, MedLife reached 430,000 HPP clients by the end of September 2016, which represents a market share in excess of 50% of the Corporate sector countrywide. Regina Maria is cited by the study as the second ranked player, with 34% fewer subscribers than MedLife at 321,000 during the same period. The Company notes that these figures are different from the actual HPP base of the Group, but are used for comparison purposes as an independent source. The Group has limited concentration in its customer base, with its top 10 clients accounting for only 12.2% of HPPs sales during the first 9 months of 2017, limiting the risk associated with losing a particular client or with bad and doubtful debts. MedLife has implemented IT solutions to track and control credit risk, including mechanisms to cut off the access of delinquent clients from subscribed services. Revenue Capture HPP generates substantial benefits for all other MedLife s business lines, enabling MedLife to capture incremental revenue streams from, for instance, FFS spending by existing HPP patients and their families. While the HPP often covers initial access and assessment, additional treatments and services such as laboratory, hospital treatment and pharmacy sales are often provided on a FFS basis. Clinics Overview The core of the Group's operations is the network of ambulatory clinics throughout Romania. The business line comprises a network of 50 facilities, which offer a wide range of outpatient services covering a broad range of medical specialities. The imaging services offered by the Group, provided to clients other than hospital inpatients also form part of this business line. As of 30 September 2017, the clinic network included 510 medical offices. The Group's clinics provide a wide range of services delivered mainly in two formats: Hyperclinics, a format pioneered by MedLife in Romania, consisting of large facilities with at least 20 medical offices and surface areas in excess of 1,000 sqm. It is a one-stop-shop for clinical examinations and imaging. This format is designed for larger urban areas, with a population over 175,000. Hyperclinics would usually offer a broad range of imaging services on site including radiology, bone density DEXA, CT, MRI 3T, 2D-4D ultrasounds and Mammography; in the case of new openings, such services may be included in the Hyperclinics' offering gradually. Hyperclinic locations also host the services of other business lines, such as pharmacies or sampling points for laboratories. As of 30 September 2017, the Group operated 17 Hyperclinics throughout Romania Clinics, offering a wide range of treatments from general practitioner services to specialized medical services, are aimed at servicing the core needs of the Group's HPP patients and FFS clients. The Group's clinics typically have between 5 and 12 medical offices, although there are also smaller satellite clinics offering solutions to specific market situations. Clinics are designed for smaller cities or to serve specific concentrations of patients. Clinics, with limited capacity and generally limited imaging services, act as feeder networks for the more specialised services located in the Hyperclinics. Certain clinics are fully specialized, such as Mindcare and the Obor and Paediatrics hospitals, which also have dedicated outpatient units. 162

96 The 1-day hospitalisation activities carried out in the Iași, Craiova and Timișoara Hyperclinics are included in the Clinics business line's sales. Since its founding, the Group expanded its clinics footprint, opening or acquiring clinics to serve its growing client base. In 2016, the Group opened 4 clinics, out of which 3 were acquired, and in 2017, until the Prospectus Date, the Group purchased 13 clinics. The following table summarises the Group's clinics at 30 September 201t: Name Location Year of opening/acquisition Clinica Grivita Bucharest 2004 Timisoara Timisoara 2008 Unirii Bucharest 2008 Favorit Bucharest 2009 FIV Bucharest 2009 Baneasa Bucharest 2010 Livada Brasov 2010 Mindcare Bucharest 2010 Eva Brasov 2011 Genesys Arad 2011 Pediatrie Bucharest 2011 Turnului Brasov 2011 Victoriei Bucharest 2011 Dermalife Bucharest 2012 Sf Gheorghe Brasov 2012 Titan Bucharest 2012 Floreasca Bucharest 2013 Constanta Constanta 2014 Dermalife Constanta 2014 Fagaras Fagaras 2014 Galati Galati 2014 Iasi Iasi 2014 Pediatrie Brasov Brasov 2014 Prejmer Prejmer 2014 Berceni Bucharest 2015 Chisinau Cris Arad 2015 Cluj Cluj 2015 Sama Craiova 2015 Sama Rm Valcea 2015 Sama Slatina 2015 Sighisoara Sighisoara 2015 Targu Mures Targu Mures 2015 Tg Jiu Tg Jiu 2015 Timisoara Timisoara 2015 Deva Deva 2015 Ploiesti Ploiesti 2016 Prima Medical Craiova 2016 Panduri Bucharest 2016 Arcul de Triumf Bucharest 2016 Delfinului Bucharest 2017 Progresului Bucharest 2017 Promenada Bucharest 2017 Titan Anima Bucharest 2017 Veteranilor Bucharest 2017 Victoriei Anima Bucharest 2017 Boerescu Zaharia Dambovita 2017 Calea București 1 Dambovita 2017 Calea București 2 Dambovita 2017 Gabriel Popescu Dambovita 2017 Pucioasa 1 Dambovita 2017 Pucioasa 2 Dambovita Mai Dambovita 2017 Diagnostic imaging for outpatients is included in the Clinics business line, rather than being treated as a separate business line. The Group invests continuously in this area to offer its patients imagistic services with 163

97 state of the art medical equipment. The range of imagistic services is broad, from standard echography and radiology to specialized CT and nuclear magnetic resonance. Hospitals Overview MedLife created its Hospitals business line to complement its Clinics and Laboratories business lines, creating a full service offering, including general and specialised hospitalisation services. The Group's first hospital, Life Memorial Hospital ("LMH"), opened in 2007, was one of the first, and is still among the largest, private hospitals in Romania. Subsequent growth has resulted in the Group becoming the largest private operator of inpatient facilities in Romania, measured by licensed beds, as well as operating theatres. The Group began an accelerated expansion of its hospital base in This initiative reflected the increased maturity of the Romanian private health care market and a belief that inpatient capacity would be an important strategic asset to complement the existing services offered to outpatient in the following years. The expansion corresponded to a period of significant growth in private hospital capacity generally in Romania, encouraging the Group to invest to consolidate its leadership position. Between 2010 and 2012, the Group developed three new hospital facilities and acquired and integrated two existing hospital business: MedLife Paediatrics Hospital in Bucharest, opened in The hospital focuses on inpatient care and surgery for paediatric patients and also houses a specialised clinic, pharmacy and laboratory (operating under their respective business lines). The hospital is licensed for 132 beds and has 2 operating theatres. Diagnostic imaging equipment including echography equipment and RX equipment is also installed at this location. The hospital was a brownfield development on land owned by the Group. Genesys Arad was acquired in 2011 and operates as a generalist hospital in Arad, in the West of Romania. The hospital is licensed for 77 beds and has 3 operating theatres. The hospital itself was established in 2009 and owns the land and building in which it operates. Eva Brasov was acquired in 2011 and operates as a maternity focused hospital in Brasov, in the centre of Romania. The hospital is licensed for 35 beds and includes 3 operating theatres. The land and building in which it operates are owned by the Group. PDR Hospital in Brasov was developed and expanded by the Group following the acquisition of PDR in 2011, which included the land and building in which the hospital operates. This generalist hospital is licensed for 82 beds and has 3 operating theatres. Orthopedics Obor, located in central Bucharest in leased facilities, opened in It is licensed as a section of LMH with 36 beds and 3 operating theatres. The section specialises in orthopaedic surgery and since 2016 has become the centre for the Group's development of a neurological surgery centre of excellence. The following table contains the breakdown of beds per hospital and specialty. Paediatrics Hospital LMH Angio Orthopaedics Hospital Titan Turnului Hospital Hospital Eva Maternity Genesys Hospital Iasi 1- day inpatietn Timisoara 1-day inpatient Craiova 1-day Total inpatient ATI

98 Neonatology Continuous inpatient day inpatient Total In 2015, the Group resumed the development of the Hospitals business line with the opening of new facilities, following a change in NHIH vision and in the reimbursement policies favouring short term stays and an increasing acceptance of the concept of day surgery among the Group's client base. During 2015, the Group opened the following facilities: Titan Day Patient facility was established in 2015 in rented facilities above the existing MedLife Titan clinic. It is licensed as a section of LMH and has 29 beds and one operating theatre. Interventional Cardiology Centre was established as an external section of LMH in rented facilities adjacent to the LMH site. Opened in 2015, the centre has 9 beds and one operating theatre, focusing on the treatment of heart disease through laparoscopic procedures. In 2017, MedLife initiated the process of changing the operating structure of LMH hospital by building two operating theatres and a post-surgery hall. The development of the Cardiology Centre represents the Group's continual review of niche opportunities where specialised medical teams can be recruited to the Group's facilities to service the Group's patient base. As noted above, some of the Group's hospitals were developed on owned land, increasing the asset rich character of the Group's business. Most hospitals were brown-field constructions, with significant renovation of pre-existing structures. Utilisation of these assets is also increasing as the Group recruits surgeons and develops new niches to optimise the use of the hospitals' capacity. The following table summarises the Group's number of licensed hospital beds at 30 September Name Location Date of opening No. of beds Life Memorial Hospital Bucharest Genesys Hospital Arad Eva Materinity Brasov Pediatrics Hospital Bucharest Turnului Hospital Brasov Orthopaedics Hospital* Bucharest Craiova 1-Day Inpatient** Craiova Angio* Bucharest Titan Hospital* Bucharest Iasi 1-Day Inpatient** Iasi Timisoara 1-Day Inpatient** Timisoara TOTAL 613 *licensed as sections of the Life Memorial Hospital ** The hospitals located in Iași, Craiova and Timișoara are licenced by the Ministry of Health as 1-Day hospital units. These units are located in the same buildings with the Group's HyperClinics in Iași, Craiova and Timișoara and are regarded by the Group as a functional part of the Clinics business line. The Group believes the growth in the sales of its Hospitals business line is the result of the following factors: Modern and well-equipped facilities: the Group's hospitals offer some of the latest diagnostic technology and equipment. The average age of its inpatient facilities, weighted by number of beds is 165

99 6.6 years, in the Group s estimation substantially lower than the State system. In the Group s view, its approach to patient service also distinguishes the Group from the State system. Medical results and reputation: the Group and its doctors have a strong reputation in their fields of expertise. The Group pays attention to managing medical risks and recruits reputed doctors and their teams to undertake specialised procedures. Clear and transparent costs: the practise of informal payments to medical staff (doctors and nurses) in the State system, although diminishing, combined with the need, in many cases, to purchase medicine for treatment, creates an advantage for the private sector, which offers clear and transparent pricing. The informal costs in the State sector and the availability of NHIH funding for some private procedures narrow the cost comparison between the public and private sector at a time when disposable incomes are rising to make private care more affordable. Availability of State funding: the Group's hospitals generally have limited available allocations of NHIH funding, which help attract patients to the hospitals. Given the comparatively high fixed costs of operating a hospital, increasing utilisation of the facilities with NHIH insured patients helps to cover costs and enables the Group to lower prices for all patients. The continued improvement in the Group's NHIH allocations generated an improved hospital performance. The Group has maintained a dominance of FFS in its Hospitals business line, ensuring the allocations under NHIH contracts are only complementary rather than the core of its activities. Revenue capture system: clients of the Group s HPP and Clinics business lines are important contributors to the patient flows into the Hospitals business line. With the largest number of HPPs and number of clinic facilities in Romania, inter-group referrals represent an important source of business. Although hospitalisation is not covered under HPPs, patients being seen in a MedLife clinic under an HPP or as a FFS client are regularly referred to a MedLife hospital, when the Group's hospitals offer the appropriate inpatient solution for the client. For the patient, the Group's integrated IT systems, modern and well-equipped facilities and the reputation of its doctors helps convert a referral into a patient. The Group s practice of generally employing full time doctors within its Clinics reduces potential conflicts with the doctors other activities in deciding on a referral option. NHIH contracts with hospitals are currently determined for each facility on an annual basis based on published, standardised formula, which take account of capacity, prior contract amounts and a medical complexity index for the specific facility. The Group s annual contracts are currently constrained primarily by the limitation on annual increases in contract amounts. During the period , when the Group was ramping up its hospital activities, the NHIH contracting system went through various reforms and the basis of awarding contracts was subject to decisions that departed, in the Group s view, from the stated criteria, generally to the disadvantage of MedLife. Since this period, the allocation process has evolved, and the Group has successfully increased the overall amount of NHIH funding and the funding per procedure from allocations in prior years. This has been accomplished by increasing the medical complexity index (a key component of the allocations) of the services provided in its units, by undertaking more medically complicated procedures and expanding the service offering and by the annual increase in the allocated amounts, supported by a strong flow of potential NHIH patients, ensuring that each year s allocation is fully utilised. 166

100 Laboratories Overview The Group is a leading player in the field of laboratories, where the Group has been active since The Group is currently the leading laboratory chain focused on the private market, according to the 2016 PMR Report. The Laboratories business line provides a broad range of biological medical tests including the following: biochemistry, haematology, coagulation, immunology, microbiology, anatomy, pathology, cytology, molecular biology and toxicology. Complex and tailored laboratory tests are carried out based on the partnership with Cerba Laboratory (Pasteur) in France. As of 30 September 2017, the Group operated 29 laboratories under the MedLife brand, including both large units, with state-of-the-art equipment such as Grivita lab facility and smaller regional facilities. None of these facilities are located in public hospitals. The Group's laboratories operate as a network: certain locations specialise in certain tests and samples are allocated, to the extent feasible, across the network to achieve economies of scale and permit greater automation of the analysis. As of 30 September 201t, the Group also operated approximately 143 sampling points located throughout Romania. Sampling points are locations where the Group collects blood and other samples from patients and are located in the largest cities in Romania, including in the Group's clinics and hospitals and in the dedicated premises. The Group's solid marketing team dedicated to Laboratories business line of the Group seeks to capture testing volumes from third party doctors, clinics and, to a limited extent, State patients. The Group's information technology ("IT") infrastructure supports the service and customer experience of the Group's Laboratories clients. Results are available online for the clients through a password protected site, with approximately 70% of all tests being performance in the Group s laboratories being available within 24 hours. In 2016, the Group performed over 4.22 million laboratories tests, including FFS, NHIH and HPP laboratory tests, recording a 16.4% growth from the 3.63 million tests conducted in In the first nine months of 2017, the Group conducted more than 3.97 million laboratory tests, up by 19.7% versus the 3.22 million tests carried out during the similar period of last year. The expansion of the Laboratories business line is the result of both acquisitions and organic growth. In 2016, the Group acquired Diamed Center, a chain of five laboratories out of which two are located in Bucharest and three in other cities in Romania. The Group's objective is to use this acquisition as a platform for the launch of the second laboratory brand, "Sfânta Maria". This network will promote the concept of lower-priced laboratory venue compared to the MedLife branded laboratories and would offer patients a competitive alternative when price is a key purchasing decision. The Diamed Center laboratories are undergoing a process of re-branding of the existing locations, undertaken simultaneously with the opening of new sampling points under the "Sfânta Maria" laboratory brand. Until now, 5 laboratories and 24 sampling points had been established under the "Sfânta Maria" laboratory brand. The Group also expects that "Sfânta Maria" laboratories will work to expand the volume of contracted NHIH work, building on its existing base of services paid by NHIH. However, this is not expected to materially change the Laboratories business line s overall exposure to NHIH contracts. The following table summarises the Group's laboratories at 30 September 2017: Name Location Date of opening Laborator Grivita Bucharest 1999 Cluj Cluj 2008 Timișoara Timișoara 2008 Brasov Brasov

101 Histo Brasov 2010 Sf Gheorghe Sf Gheorghe 2010 Pediatrie Bucharest 2011 Genesys Arad 2012 Constanta Constanta 2014 Deva Deva 2014 Cotroceni Bucharest 2014 Genetic Bucharest 2014 Iasi Iasi 2014 Sama Balcesti 2015 Sama Calafat 2015 Sama Craiova 2015 Sama Rm Valcea 2015 Sama Slatina 2015 Ultratest Craiova 2015 Diamed Braila 2016 Diamed Bucharest 2016 Diamed Focsani 2016 Diamed Tecuci 2016 Diamed Bucharest 2016 Panduri Bucharest 2016 Panduri Bucharest 2016 Buftea Ilfov 2017 Târgoviște Targoviste 2017 Anima Ilfov 2017 The Laboratories business line sources the bulk of its revenue from FFS clients. Pharmacies Overview The Group launched its PharmaLife brand of pharmacies in 2010 to capture additional revenue from the patient traffic in the Group's clinics. PharmaLife operates pharmacies only in the Group's own facilities, space, license and sales potential permitting. As at 30 September 2017, 10 pharmacies were in operation, providing patients with prescription, over-the-counter and healthcare related products. In 2016, the sales of the Pharmacies business line increased by 20.6% as compared to the sales registered by this business line in During the first none months of 2017, the sales increased by 24.9% as compared to the similar period of the previous year, from RON 16.9 million to RON 21.1 million. The following table summarises the Group's pharmacies at 30 September 2017: Name Location Date of opening Grivita Bucharest 2010 Unirii Bucharest 2010 Baneasa Bucharest 2010 Brasov Brasov 2011 Pediatrie Bucharest 2011 Titan Bucharest 2012 Arad Arad 2013 Constanta Constanta 2015 Iasi Iasi 2016 Cluj Cluj

102 Stomatology Building on its experience operating dental chairs within one of its clinics, the Group opened its first standalone stomatology clinic under the DentaLife brand in Bucharest in 2015 in leased premises, with the plan to expand the network further within Bucharest and across the country. On 11 July 2016, the Group completed the acquisition of Dent Estet, the largest player in the Romanian dental market. The Dent Estet group already operated a total of 7 dental clinics, including two clinics targeted specifically at children under the DentEstet 4 Kids brand and a teenage focused facility. The Dent Estet acquisition propelled the Group to a leading position on the stomatology market, which remains highly fragmented. Following the Dent Estet acquisition, the Group plans to continue to expand under the Dent Estet brand, building on its strong existing positioning in the market. Starting May 2017, a new dental clinic under Dentestet brand was opened. The clinic has 10 diagnosis and treatment rooms and is the largest Planmeca Digital Academy center in Romania, a distinction confirming the integration of revolutionary technology in all the medical processes in the clinic. Furthermore, the unit also has a state of the art surgery room and its own laboratory, combining the CAD-CAM technology with the precision of internationally certified technicians; thus, the doctor s time is made more efficient, while the patient, in less than 24 hours, obtains a product similar to the natural tooth, incomparable as execution with the works carried out using similar equipment in a dental office. The Group's Stomatology business line offers a full range of dental services, from routine check-ups to dental surgery, implants and orthodontics. As of 30 September 2017, 95 doctors were employed in this business line. The business line operates in leased facilities. Stomatology is not subject to NHIH allocations; all of the sales are FFS based. Quality standards MedLife has implemented the following standards for Quality, Environment and Occupational Health&Safety management systems: ISO 9001:2008 (Quality Assessment) is based on the management of the organization's processes, oriented towards the client and the assessment of the client's satisfaction, as well as towards' top management's engagement for a continuous improvement. ISO 14001:2005 (Environmental management) provides requirements on the Company to declare its operations concerning control and decrease of its impact on the environment. OHSAS 18001:2007 (Occupational health&safety management system) represents a working model for the organizations that intend to have a better control over the professional risks. All of the Group's labs are accredited by the Romanian Accreditation Association with ISO for Quality management. People and resources The Group services patients through the largest private pool of doctors and nurses in Romania. As of 30 September 2017, the Group was collaborating with a number of approximately 2,300 physicians and 1,500 qualified nurses across its business lines, including both employees working exclusively for the Group and collaborators, providing services as independent professionals. In addition, more than 1,500 full time employees were working in support and administrative functions as of 30 September The Group's objective is that its medical staff be formed exclusively of full-time employees, even if certain specialties and functions either do not justify full-time engagements or such personnel are not available. In 169

103 these circumstances, the Group enters into part-time employment or collaboration arrangements with the respective staff. The type of contractual arrangement between the Group and its medical staff depends on various criteria, such as the professional context or the time that the medical staff can allocate to services provided to the Group. Medical staff under services agreements are seen by the Group as commercial partners, providing services to the Group as independent contractors, in compliance with the applicable legislation. The Group seeks to provide adequate compensation and incentives to physicians and other medical staff in exchange for quality medical care and commitments to promote the MedLife business model. The usual compensation package offered by the Group to its employees includes fixed remuneration, to which a variable remuneration is added, determined based on a revenue sharing mechanism connected to appointment and consulting activity. Collaborators are compensated based on their appointment and consulting activity. The Group does not operate pension plans or long-term incentive schemes. Management Details on the Company's Board of Directors and top executive management are included in the section "Company Management" below. The Group's management is structured on two pillars. Operational management is carried out by an experienced senior management team, acting below the executive directors of the Group, which is known as the "40+" group of managers. This body includes the functional heads of support departments, business line heads and managers of larger units. The 40+ group meets weekly as a broad management committee with the objective to identify and address emerging risks and opportunities in the business and review budget performance. Members of the 40+ group outside Bucharest usually attend by conference call. The Group manages its business based on an annual budget, agreed on a bottom-up basis with the 40+ group, initially, and subsequently confirmed by the Group's executive managers and by the Board of the Directors. The budget includes detailed operational key performance indicators as well as financial targets, represents the Group's operating and financial plan for the current financial year, and sets the operational and financial targets at the unit level. Compensation of the members of the 40+ group is heavily linked to the achievement of the budget. Within their units, the managers have substantial autonomy to operate within the agreed budget framework. Alongside the operational management, the Group implements a medical management system with the primary objective to ensure quality care and the management of medical risks. Medical management at Group level is led by the Group's medical manager. Medical managers or coordinators at unit level meet regularly to review patient cases, identify current and upcoming medical issues, as well as plan medical resources. Each medical unit has a medical coordinator and in the more complex hospital setting the medical management structure includes a Medical Director, Medical Council and Ethics Council. Conducting new medical procedures or altering existing protocols is usually conditional upon approval of the medical management groups. Material Property The Group's fixed tangible assets comprise buildings and lands, which are used in the Group s private healthcare network. The Group companies own some of these assets. Most of the owned properties are held under sole ownership by the Group companies, while certain other properties are held under co-ownership with individuals. The PDR share capital increased performed in December 2014 by a in kind contribution with a property is subjected to a risk of nullity due to the fact that the shareholders decision has not been authenticated as requested by the applicable legislation. The property in question comprises of 4/5 undivided share of land 170

104 with an area of 2,769 square meters located in Brasov, Tower Street, nr. 5A, which was transferred from MedLife to PDR through contribution in kind. On the respective land there is a PDR hospital with a surface of 825 square meters. In addition, the Group uses a large number of properties under lease agreements and some other under free lease agreements and concession agreements, which are periodically renewed. Most of the owned properties are subject to immovable mortgages to secure borrowings granted by the Group's creditors. Please see section " Material Contracts" below for details with respect to the financing agreements to which the Group companies are party. Health, Safety, Security and Environment The Group is subjected, and complies with Romanian laws and regulations related to health, safety, security and environment matters. These laws and regulations refer, among other things, to management and disposal of hazardous substances and medical waste, exposure to hazardous materials and protection of health and safety of employees. The Group is required to obtain environmental permits, licences and authorizations and provide notification to local authorities prior to opening new administrative and medical units. At the date of the Prospectus, the Group is in various stages of procedures for obtaining or updating its fire prevention authorisations for certain of its medical units and other premises. The completion of these procedures is subject to various requirements, such as the performance of certain works and upgrades to the Group's facilities. The Group regards the amounts of the required investments as being immaterial; however, the completion of the necessary works and upgrades is subject to, in certain cases, additional authorisations and clearances, or other procedures in which the Group has engaged. As at the date of the Prospectus, the Group does not have all fire prevention authorisations in place. Equipment and Technology The Group purchases computerised optical coherence tomography systems, investigation equipment through MRI and CT equipment, bone densitometer, dermatoscopy fotofinder, fibro scan equipment, laser, lypocryo cold vacuum systems, endoscopic capsule diagnostic systems. The Group's Suppliers The Group sources its medical and non-medical supplies from market leading suppliers, including highly reputed international firms and local companies. The Group has customary supply agreements with its major suppliers for medical disposables, substances used in laboratory activities, pharmaceuticals, medical equipment and other non-medical purchases. These agreements are negotiated at Group level, in order to leverage a higher bargaining power to obtain favourable terms. The procurement department is a key factor in generating cost synergies immediately after the Group closes an acquisition and redirects the purchasing flows of the newly acquired target through the centralized purchasing department of the Group. The Group chooses its suppliers having regard for quality, prices and delivery capabilities and aims to create long-term strong business relationships with its suppliers. The Group's largest suppliers include Abbott, Diamedix Impex, Roche Romania and Novaintermed, which supply the reagents and other consumables used in the medical activity, as well as certain pieces of equipment required for the performance of the medical activity, which are provided by certain suppliers for use with their products. Suppliers of diagnostic imaging equipment include, among others, General Electric and Siemens. The Group acquires its pharmaceutical products from local distributors of pharmaceuticals, and its main suppliers in 2017 were Mediplus Exim S.R.L., Farmexpert D.C.I. S.R.L., Farmexim S.A., Romastru Trading S.R.L. and Farmaceutica Remedia S.A.. The largest non-medical suppliers of the Group are Telekom Romania for communication solutions and property leases and Capital Fleet Management for operational leasing. Other non-medical purchases include 171

105 information technology and information systems hardware and software, office equipment, stationery, furniture. In addition, various services such as medical waste disposal, laundry, security, catering are outsourced by the Group to third party companies. Information Technology The Group relies on international providers for its IT hardware infrastructure. With regards to communication between the Group s various locations, the Group uses a virtual private network, which ensures effectiveness, security and privacy of communications. The Group uses, for the performance of its medical activities, the Group's medical software that manages all stages of operations, from patient appointment, to HPP access and usage monitoring, clinic/emergency room admission, primary medical examination and diagnosis, laboratory tests, advanced examinations, surgery stage, hospitalization, and billing. The Group has also implemented a robust IT infrastructure within all its hospitals, which covers admission and surgery appointments, medical procedures, patient check-in and check-out, medical supplies and consumables management, billing on a per-customer basis and generating general management reports. The Laboratories business line has been equipped with software to manage the lab test processes including the management of samples, patient records, barcode labelling and automated procedures for final results. Intellectual Property MedLife is a strong brand, usually placed in the top tier of the most powerful Romanian brands. According to an international study carried out by Reader's Digest, MedLife is for the sixth consecutive year viewed as the most trusted brand in Romania in the "Private Clinic" category. Also, MedLife received the Qudal distinction in 2016 and 2017, granted by ICERTIAS (International Certification Association GmbH). MedLife brand remains the main brand used for the Group's activities. Other brands such as PharmaLife, AngioLife, DermaLife, Mindcare, and Sfânta Maria, were developed by the Group. The various medical facilities of the Group generally operate under the MedLife brand and logo, together with certain other trade names, used to designate the individual venue or speciality offered. New acquisitions undergo a rebranding process as a priority measure as part of their integration into the Group; as a result of this process, the MedLife brand is associated with the new acquisition, which generally also maintains a connection with the prior trade name. The Group registered the MedLife brands and logos in the European Union with the Register of Community Trade Marks. Insurance Professionals involved in the provision of medical services, both companies and individuals, are generally required to conclude professional liability insurance and have them in place. As at 30 September 2017, the Group maintains valid insurance policies for its healthcare facilities and assets (including equipment), as well as for the medical activities carried out by its employees and collaborators. The risks covered by the Group's insurance policies include: Civil liability of the employees, auxiliary personnel, healthcare units and healthcare providers; Professional liability for the employees, pharmacists and medical personnel; Liability for the administrative and executive staff; Property damage caused by fire and calamities; and 172

106 Loss of electronic equipment, data and additional costs. The Group has contracted insurance policies with important insurance companies on the Romanian market. The insurance policies are entered into at market standard terms. In addition, all the medical staff carrying out their activity on behalf of the Group are required by law to conclude valid individual professional liability insurance and have them in place. The Group requires that its employees and collaborators involved in the provision of medical services observe this requirement. Certain insurance policies relating to specific real estate assets held by the various companies in the Group are assigned in favour of certain creditors of the Group (see the section "Material Contracts" below for details with respect to the financing agreements to which the companies of the Group are a party). These are concluded according to the standard financing practice valid in Romania. Legal Proceedings The Group companies are party to various proceedings arising in the ordinary course of business, both as plaintiff and as defendant. Other than as described below and elsewhere in this Prospectus, the Group is not involved in, nor is the Group aware of, any legal, arbitral or administrative proceedings or governmental investigations that could reasonably be expected to have a material adverse effect on the Group's business, financial condition or results of operations during the 12 months preceding Prospectus date. Employment litigation As of the Prospectus date, MedLife is involved in one employment litigation initiated by an employee of the Company who claims that the Company ilegally terminated his employment contract, asking the court to cancel the dismissal decision issued against him and moral damages worth EUR 2 million. The court dismissed the claim as ungrounded. The plaintiff appealed. Malpractice litigations MedLife is involved in various litigation files in relation to alleged malpractice cases. The litigations are in various procedural stages ranging from first instance courts to higher appeal courts; there are also criminal pursuits against the Company for alleged malpractice cases. Generally, the malpractice litigations in which the Company is involved have both a civil and a criminal side; the litigations are directed both at the Company and at the physicians involved in the performance of procedures in respect of which the malpractice is alleged. The Company obtained, for a part of these litigation cases, expert reports from the National Legal Medicine Institute or from the Romanian College of Physicians attesting that the Company's doctors are not responsible for malpractice. In other cases, forensic expertise is ongoing to determine the presence of malpractice. The Company has in place malpractice insurance policies, covering malpractice liability risk for the Company. However, the coverage of such insurance policies is limited and it is possible that such insurance policies will not cover in full the damages that the Company might be compelled to pay based on certain court rulings. Furthermore, all doctors and all medical nurses carrying their activity withing the Company are also ensured against malpractice (the coverage level of such insurance policies is also limited); such policies may be used to limit the amounts charged as damages for malpractice. On 28 November 2016, the Bucharest Court of Appeal has ruled irrevocably against the Company in a litigation concerning malpractice. By rejecting the extraordinary appeal submitted by the Company, the Bucharest Court of Appeal has ordered the Company to pay the RON equivalent of EUR 500,000, in pecuniary and moral damages. The amounts set as compensation were paid by the Company at the beginning of

107 NHIH Litigation MedLife is involved in a litigation with NHIH, whereby MedLife requests the payment by the NHIH of medical services provided by MedLife to state-insured individuals in the period , which were not settled by the NHIH. MedLife had performed medical services to state-insured patients based on agreements contracted by the Company with NHIH, in accordance with the framework agreements approved yearly by the Romanian Government. The total amount claimed by MedLife from NHIH is of RON 7,365,835, representing the value of medical services provided by MedLife to state-insured patients in excess of the estimates included in the contracts entered into between MedLife and NHIH, which were not settled by NHIH. By a decision issued on 23 December 2014, the Bucharest Tribunal, acting as court of first instance, rejected the Company's claim with respect to the amounts requested on account of 2009 and 2010, on ground that the Company's claim was filed beyond the applicable statute of limitations, and rejected altogether all the other claims of the Company for being without merit. The Company lodged appeal with the Bucharest Court of Appeal against the decision of the Bucharest Tribunal decision. By a decision issued on 3 March 2016, the Bucharest Court of Appeal dismissed the decision of the Bucharest Tribunal with respect to exceeding the statute of limitations in respect of amounts owed by NHIH for 2009 and The Bucharest Court of Appeal rejected entirely MedLife's claims against NHIH for being without merit. MedLife challenged the decision of the Bucharest Court of Appeal in front of the High Court of Cassation and Justice and the appeal was accepted. The file was re-sent for ruling by decision dated 25 May The Company booked as accounts receivable the amounts in dispute with NHIH in each financial year, amounting to a total of RON 7,365,835. The Company recorded during 2016 a provision for the full amount recorded with NHIH that is currently under dispute. In the spring of 2017, more companies of MedLife group were forced by NHIH to return the amounts received from this institution during , representing the value of the medical services provided, reported and allocated by NHIH, before concluding addendums for these amounts. In particular, these are the amounts representing medical services provided by the respective companies based on the framework contract concluded with NHIH, but which exceed the limit initially set in the contract, such services being provided, reported and allocated by NHIH, prior to concluding addendums by which the limit was extended. The amounts requested to be returned to NHIH are the following: RON 1,722, requested to Med Life S.A., RON 165, requested to Med Life S.A. Bucharest branch, RON requested to Diamed Center S.R.L., RON 206, requested to Centrul Medical Panduri S.A. and RON requested to Anima Specialty Medical Services S.R.L.. The Company considers that the risk associated with the notification received from NHIH is a minor one, because they are not the subject of any litigation, and thus, the Company has not registered any provision in relation to these amounts in the current period. Competition Council investigation The Company is subject to an investigation carried out by the Competition Council regarding possible breaches of Law no. 21/1996 on competition. Through the investigation start resolution, the Competition Council indicated that there are elements purporting a (i) possible breach of anti-competition agreements regarding the tariffs for blood collecting from the umbilical cord, as well as the tissue from the umbilical cord by MedLife, Arcadia Hospital S.R.L., Genesys Medical Clinic S.R.L., RUR Medical S.A., Clinica Polisano S.R.L., Medicover Hospitals S.A. and Centrul Medical Unirea S.R.L. on one side, and Cord Blood Center Medical S.R.L., Stem Sure Solutions S.R.L. and Regina Maria Banca Centrală de Celule Stem S.A. on the other side and a (ii) possible carrying out of abuse of dominant position by MedLife, Arcadia Hospital S.R.L., Genesys Medical Clinic S.R.L., RUR Medical S.A., Clinica Polisano S.R.L., Medicover Hospitals S.A. and Centrul Medical Unirea S.R.L. on the hospital medical services market for private maternity. At the date of the Prospectus, the investigation is ongoing. The result of the Competition Council's investigation is 174

108 uncertain, without the possibility to anticipate if, after the finalization of the legal proceedings, the Competition Council will apply or not fines to the three targeted companies within the Group. 175

109 COMPANY MANAGEMENT General The Company is managed in one tier system by the Board of Directors that delegated management of the Company to the managers. The Board of Directors consists of seven (7) members appointed by the Ordinary General Shareholders Meeting for a term of 4 years, with the possibility of re-election for subsequent 4 years terms of office. The Chairman and Vice-Chairman of the Board of Directors are elected by the Board of Directors among its members. The Board of Directors is responsible for all useful and necessary acts to fulfil the object of activity of the Company, except for the duties that are allocated by law to the shareholders' meetings. Board of Directors As at the date of this Prospectus, the Board of Directors consists of the following members: Name Date of birth Title Mihail Marcu Member and Chairman of the Board of Directors Ana Maria Mihăescu Temporary Member of the Board of Directors Ion Nicolae Scorei Member of the Board of Directors Dimitrie Pelinescu-Onciul Member of the Board of Directors Dorin Preda Member of the Board of Directors Marius-Leonard Gherghina Member of the Board of Directors Nicolae Marcu Member of the Board of Directors The members of the Board of Directors, save for Mrs. Ana Maria Mihaescu, were appointed by decision of the ordinary general shareholder meeting of 21 November 2016 members in the new Board of Directors, for 4-year terms of office starting on Mrs. Ana Maria Mihaescu was appointed temporary member of the Board of Directors by decision of the Board of Directors no. 1 of starting from until the date of convening the following ordinary general shareholders meeting of the Company. Mihail Marcu has been the Chairman of the Board of Directors of MedLife since Mihail Marcu is a graduate of Bucharest University, the Mathematics and Computer Science Faculty in 1995, and has further graduated other post-graduate and advanced training courses delivered by the Romanian Banking Institute, the Open University, DC Gardner training or Codecs, both in Romania, and abroad. Prior to his position as a director of MedLife, Mihail Marcu used to be the chief executive officer of MedLife between January 2004 and August 2006; before that, he held the office of Vice-Chairman of RoBank S.A. (currently, OTP Bank Romania S.A.), being authorised in this capacity by the National Bank of Romania. Earlier, Mr. Marcu held various positions in Credit Bank Romania S.A. and RoBank S.A., including credit inspector, head of credit unit, manager of the credit department, and manager of the corporate department. Ana Maria Mihaescu has been a temporary member of the Board of Directors of MedLife since In the last 20 years, Ana Maria Mihaescu managed the International Finance Corporation mission, member of the World Bank and the largest financier of the private sector in emerging countries. During the period

110 2016, Ana Maria Mihaescu had a decisional role with respect to the projects carried out by the International Finance Corporation, member of the World Bank, in several European countries, Romania included. Previously, she held top management positions in the banking sector. Starting 2016, she is part of the Supervision Council of Raiffeisen Bank S.A., as independent member, for a term of office of 4 years. Ion Nicolae Scorei has been a member of the Board of Directors of MedLife since He is also an attorney-at-law, member of the Bucharest Bar, and coordinating partner of Scorei și Asociații Law Firm. Ion Nicolae Scorei is a graduated of the Romanian-American University, Faculty of Law (1998). Dimitrie Pelinescu-Onciul has been a member of the Board of Directors of MedLife since He is a graduate of the Carol Davila Medicine and Pharmacy University of Bucharest, Faculty of Medicine (1972), specialising in obstetrics and gynaecology (residency ), and became Doctor in Medical Sciences in Dimitrie Pelinescu-Onciul is a member of 11 Romanian scientific societies in Romania and of 7 scientific societies abroad, and held among other the office of President of the Romanian Perinatal Medicine Association ( ). Before joining the MedLife team in 2004, Dimitrie Pelinescu-Onciul used to render work for Filantropia Clinical Hospital of Bucharest ( ), Titan Clinical Hospital of Bucharest ( ), Brâncovenesc Clinical Hospital ( ), and Sinești Rural Hospital, county of Vâlcea ( ), as primary care physician, obstetrics and gynaecology, head of clinics or hospital director. Dorin Preda has been a member of the Board of Directors of MedLife since He is a graduate of the Economics Academy of Bucharest, Faculty of Finance, Insurance, Banks and Stock Exchanges (1998). Before joining the MedLife team, Dorin Preda used to be the Chief Executive Officer (CEO) of Asilife Insurance Broker S.R.L. ( ), Branch Manager with HVB Țiriac Bank S.A. ( ), HVB Bank S.A. ( ), Banca Comerciala Ion Țiriac ( ) and Banca Comerciala RoBank S.A. ( ). Similarly, he used to hold the positions of Manager of Loans and Marketing Department of Banca Comerciala RoBank S.A. ( ), credit analyst with the same bank ( ), and Manager of the Loans Department of Banca Dacia Felix S.A. ( ). Marius-Leonard Gherghina has been a member of the Board of Directors of MedLife since He is a graduate of the Polytechnics University of Bucharest, Faculty of Aerospace Engineering (1998), and of a Master in Business Administration (MBA) programme of McGill University of Montreal, Canada. Before joining the MedLife team, Marius a used to be a partner for Central Europe with Value4Capital Eastern Europe Holding V Limited ( ), partner for Central Europe with Baring Private Equity Partners ( ), and senior investment officer with the Romanian-American Enterprise Fund ( ). Nicolae Marcu has been a member of the Board of Directors since December Nicolae Marcu is a graduate of Carol Davila Medicine and Pharmacy University of Bucharest, Faculty of Medicine (1996), and has been a doctoral student in psychiatry since Nicolae Marcu graduated a number of post-graduate studies in psychiatry in the country and abroad. Prior to joining the MedLife team, Nicolae Marcu was a specialised physician in psychiatry with "Dr. Al Obregia" Psychiatric Hospital. Managers Executive managers The individuals holding the position of executive manager in the Company at the date of this Prospectus or the persons to whom management of the Company has been delegated pursuant to the Articles of Association, are presented in the table below. At the date of this Prospectus, all these persons fulfil these functions based on mandate contracts. The executive managers carry out their duties at the registered office of the Company. Name Title 177

111 Mihail Marcu Nicolae Marcu Dorin Preda Adrian Lungu Radu Petrescu Geanina Nicoleta Durigu Mariana-Ilea Brateș Mihai-Stelian Vârciu Vera Firu Mirela Dogaru Chief Executive Officer (CEO) Health and Operations Manager Finance and Treasury Manager Chief Financial Officer (CFO) Human Resources Manager Retail Sales/Laboratories Division Manager Procurement Manager Medical Manager Economic and Operations Manager Corporate Manager Mihail Marcu has been the Chief Executive Officer of MedLife December Mihail Marcu is a graduate of Bucharest University, Mathematics and Computer Science section in 1995, and has further graduated other post-graduate and advanced training courses delivered by the Romanian Banking Institute, the Open University, DC Gardner training or Codecs, both in Romania and abroad. Prior to his position as member of MedLife Board of Directors, between January 2004 and August 2006, Mihail Marcu was Chief Executive Officer of MedLife; before that, he held the office of Vice-Chairman of RoBank S.A. (currently, OTP Bank Romania S.A.), being authorised in this capacity by the National Bank of Romania. Earlier, Mr. Marcu held various positions in Credit Bank Romania S.A. and RoBank S.A., including credit inspector, head of credit unit, manager of the credit department, and manager of the corporate department. Nicolae Marcu is the Health and Operations Manager of MedLife. Nicolae Marcu is a graduate of Carol Davila Medicine and Pharmacy University of Bucharest, Faculty of Medicine (1996), and has been a doctoral student in psychiatry since Nicolae Marcu graduated a number of post-graduate studies in psychiatry in the country and abroad. Prior to joining the MedLife team, Nicolae Marcu was a specialised physician in psychiatry with "Dr. Al Obregia" Psychiatric Hospital. Dorin Preda is MedLife Finance and Treasury Manager. He graduated from Bucharest Academy of Economic Studies, Faculty of Finance, Insurance, Banks and Stock Exchanges (1998). Prior to joining MedLife, Dorin Preda was CEO of Asilife Insurance Broker S.R.L. ( ), branch manager for HVB Țiriac Bank S.A. ( ), HVB Bank S.A. ( ), Banca Comerciala Ion Țiriac ( ) and Banca Comerciala RoBank S.A. ( ). Also, he worked as manager of the Loans and Marketing Department of Banca Comerciala RoBank S.A. ( ), loan analyst for the same bank ( ) and manager of the Loans Department of Banca Dacia Felix S.A. ( ). Adrian Lungu is the chief financial officer of the Company. Adrian Lungu graduated in 2008 from the Academy of Economic Studies in Bucharest with a degree in business administration. He started working at MedLife in 2011 as Head of the Business Controlling Department. Previously, Adrian Lungu has worked at Ernst & Young Romania ( ), in the Transactions and Advisory Services Department, as a senior consultant, and at KPMG Romania (2007) in the Financial Services Department (Audit ) as a trainee. Mihai-Stelian Vârciu is the medical manager of the Group. Mr. Vârciu graduated from the University of Medicine and Pharmacy of Cluj Napoca, Faculty of Medicine, being licensed as a physician, and in 2000 obtained his PhD in Medical Sciences from Carol Davila University of Medicine and Pharmacy, Bucharest. Mr. Vârciu has teaching experience, as since 2003 he is a university teacher at Transylvania University, Faculty of Medicine, where he has held since 2013 the position of Lecturer. Mr. Vârciu is the author of several works, scientific communications and specialized articles and is a member of the College of Physicians, of the Romanian Society of Endocrinology and of the Romanian Society of 178

112 Psychoneuroendocrinology. His professional experience includes the position of primary care doctor, head of section in Brasov Emergency County Hospital held during Vera Firu is the Economic and Operations Manager of the Company. Vera Firu graduated in 1985 the Academy of Economic Studies, Faculty of Industry, Construction and Transport Economics. Prior to joining MedLife team, Vera Firu served as chief financial officer of Unicom Holding S.A. ( ) and previously, she was chief accountant within Romquartz S.A. Mirela Dogaru is the manager of the Corporate department at Group level since Mirela Dogaru graduated the Polytechnic University of Bucharest, Faculty of Biochemistry (2003) and Executive Master program in Business Administration (EMBA) / ASEBUSS of Kenesaw University in Atlanta, Georgia, USA. Mirela joined the MedLife team in 2005 as coordinator of the corporate sales team (Corporate Sales Manager), a position she held until 2011 when she was appointed New Business Sales Manager. Prior to joining MedLife, Mirela Dogaru held the position of sales manager within Petchim S.A. ( ) and Key Account Manager within Freshtex Textile Finishing S.R.L. ( ). Geanina Nicoleta Durigu is the Manager of Retail Sales Department/Laboratories Division since 2008 having successive mandates in this position. Geanina Nicoleta Durigu graduated in 2004 from the University of Medicine and Pharmacy Gr. T. Popa of Iasi, Faculty of Medical Bioengineering and in 2005 from Carol Davila University of Medicine and Pharmacy of Bucharest, Faculty of General Medicine. Geanina also graduated in 2005 Master studies in biotechnology of the Polytechnic University of Bucharest and in 2008 Masters Programme in Business Administration (MBA) offered by Codecs. Geanina Nicoleta Durigu has been part of the MedLife team since 2004 when she began work as a medical representative in the Company and from 2006 to 2008 she served as coordinating medical representative of the Company. Mariana Ilea-Brateş is the manager of the Supply Department of the Company since November Mariana Ilea-Brateş graduated in 1992 from the Polytechnic Institute of Bucharest, Faculty of Inorganic Chemical Technology. During university, she worked as a laboratory chemist at the National Institute of Wood ( ), and after graduation she was a chemical engineer at the same institution ( ). Before joining the MedLife team in 2004, she served as manager of procurement and management within Medicover SRL ( ). Mariana Ilea-Brateş is a graduate of several courses in the areas such as: sales, management and accounting, being a chartered accountant since Radu Petrescu is the Company s Human Resources manager. Radu Petrescu has an extensive experience in the human resources area in pharma and FMCG industries, where he coordinated large scale recruitment projects and performance management projects. He was the HR Manager, Central and Eastern Europe, for Danone. Previously he worked in the pharmaceutical sector, where he held positions of operations manager for Pfizer s HR Operations Europe, as well as in the advisory and audit services, having worked for PricewaterhouseCoopers (PWC). A graduate of the sociology college of Bucharest University, Radu Petrescu also completed a master s degree program with the same institution. Advisory committees Until the date of this Prospectus, the Board of Directors has established 2 advisory committees, namely the audit committee and the investments committee, and is to form a nomination and remuneration committee. Audit Committee The Board of Directors set up the Audit Committee and approved its rules of functioning. The Audit Committee has mainly the following duties: (i) to examine and review the annual financial statements and the proposal for profit distribution; (ii) to perform yearly assessments of the internal control system; (iii) to assess the efficiency of the internal control system and the risk management system; (iv) to monitor the application of the legal standards and internal audit standards generally accepted; (v) to assess the conflicts of interests in 179

113 transactions with related parties; (vi) to analyse and review the transactions with related parties that exceed or may exceed 5% of the Company s net assets in the previous year; and (vii) to make recommendations to the Board of Directors. The members of the Audit Committee are: Leonard Gherghina (non-executive independent director) and Nicolae Scorei (non-executive director). Investments Committee The Board of Directors set up the Investments Committee and approved its rules of functioning. The Investments Committee has mainly the following duties: (i) to define the regulatory framework for investment projects; (ii) to validate the investment projects; (iii) to monitor and report to the Board of Directors the status of the projects regarding current investments. The members of the Investments Committee are: Leonard Gherghina (non-executive independent director), Nicolae Marcu (executive director), Dorin Preda (executive director), Adrian Lungu (member of the executive committee), Mihai Vârciu (member of executive committee). Nomination and remuneration Committee The Board of Directors will set up the Nomination and remuneration Committee, formed of non-executive members of the Board of Directors that, among others, (i) will coordinate the nomination procedure for the new members of the Board of Directors and will make recommendations to the Board of Directors and (ii) will carry out the process of assessing the activity of the Board of Directors. Until the establishment of this committee, the Board of Directors, following its self-assessment process: (i) approves the description of the role and eligibility conditions required for the position of member of the Board of Directors and for the position of manager; (ii) identifies candidates for the position of director, as the case may be; (iii) decides the appropriate remuneration policy, compatible with MedLife long term strategy and interests; and (iv) ensures the publication of the directors and executive managers direct and indirect remuneration in the annual report, broken down in fix and fluctuating components of the remuneration. Positions held in other companies In addition to their positions in the Company, members of the Board of Directors and executive managers of the Company hold, or have held in the past five years, the following management or supervisory positions that are relevant for the Company: Executive and non-executive members of the Board of Directors: Name Entity Title Period/Currently holds the position of: Yes (Y) / No (N) Mihail Marcu Accipiens S.A. Chairman of the Board of Directors Y Almina Trading S.R.L. Chairman of the Board of Directors Y Bahtco Invest S.A. Director N Black Sea Magic Chairman of the Board of Directors Y Centrul Medical Panduri S.A. Chairman of the Board of Directors Y Centrul Medical Sama S.A. Chairman of the Board of Directors Y 180

114 Dent Estet Clinic S.A. Chairman of the Board of Directors Y Diamed Center S.R.L. Director unlimited Y Genesys Medical Clinic S.R.L. Chairman of the Board of Directors Y Life Finance G.I.E. Director unlimited Y Life Residence S.R.L. Director N Life Resort S.R.L. Director Y Med Life Broker de Asigurare și Reasigurare S.R.L. Director unlimited Y Memorial Life Brașov S.R.L. Director Y Memorial Life Constanța S.R.L. Director Y Memorial Life Iași S.R.L. Director Y Memorial Life Timișoara S.R.L. Director Y Pet Star Holding S.R.L. Member of the Board of Directors Y Policlinica de Diagnostic Rapid S.A. Chairman of the Board of Directors Y Prima Medical S.R.L. Chairman of the Board of Directors Y PharmaLife MED S.R.L. Director unlimited Y Stem Cells Banks S.A. Ultratest S.A. Chairman of the Board of Directors Chairman of the Board of Directors Y Y Vital Test S.R.L. Director unlimited Y Valdi Medica S.R.L Chairman of the Board of Directors Y Nicolae Marcu Biotest MED S.R.L. Director unlimited Y Centrul Medical Panduri S.A. Member of the Board of Directors Y Dent Estet Clinic S.A. Member of the Board of Directors Y Centrul Medical Sama S.A. Member of the Board of Directors Y Hotel Predeal S.R.L. Director N Life Finance G.I.E. Director unlimited Y Med Life Ocupational S.R.L. Director unlimited Y Nautic Life S.R.L. Director Y RUR Medical S.A. Chairman of the Board of Directors N Stem Cells Bank S.A. Member of the Board of Directors Y Ultratest S.A. Member of the Board of Directors Y Almina Trading S.R.L. Member of the Board of Directors Y Anima Specialty Medical Services Chairman of the Board of S.R.L Directors Y Valdi Medica S.R.L Member of the Board of Directors Y Ana Maria Mihăescu Raiffeisen Bank S.A. Member of the supervisory council Y International Finance Corporation Regional Manager N Icme Ecab S.A. Member of the Board of Directors Y Prietenii Muzeului Național de Artă a Chairman of the Board of României Directors unlimited Y 181

115 Ion Nicolae Scorei Coordinating partner S.C.P "Scorei și asociații" attorney 2006-prezent Y Dimitrie Pelinescu-Onciul Dorin Preda Member of the Board of Policlinica de Diagnostic Rapid S.A. Directors Y Accipiens S.A. Member of the Board of Directors Y RUR Medical S.A. Member of the Board of Directors Y Thinkbig Perspective S.R.L. Director 2014 unlimited Y Medlife Broker de Asigurare și Reasigurare S.R.L. Executive Manager N Genesys Medical Clinic S.A. Member of the Board of Directors Y Valdi Medica S.R.L Member of the Board of Directors Y Marius-Leonard Gherghina Cashnet S.A. (former Konsalnet Chairman of the Board of S.A.) Directors Y Băile Govora S.A. Chairman of the Board of Directors Y Medical Govora S.A: Chairman of the Board of Directors Y Invalt Consult S.R.L. (fosta Member of the Board of Value4Capital S.R.L.) Directors 2005 unlimited Y Value4Capital Holdings Ltd. Member of the Board of Directors 2011 present Y Accipiens S.A. Member of the Board of Directors Y Centrul Medical Sama S.A: Member of the Board of Directors Y Dent Estet Clinic S.A. Member of the Board of Directors Y Policlinica de Diagnostic Rapid S.A. Member of the Board of Directors Y Stem Cells Bank S.A. Member of the Board of Directors Y Ultratest S.A. Member of the Board of Directors Y Valdi Medica S.R.L Member of the Board of Directors Y Executive managers, save for the members of the Board of Directors Name Entity Title Period/Presently holds the position of: Yes (Y) / No (N) Mihai-Stelian Vârciu Medis Consult S.R.L. Director unlimited Y Life Finance G.I.E. Director unlimited Y Policlinica de Diagnostic Rapid S.A. Member of the Board of Directors Y Policlinica de Diagnostic Rapid Mediș Member of the Board of S.R.L. Directors unlimited Y Life Finance G.I.E. Director unlimited Y Vera Firu Bahtco Invest S.A. Director Y Geanina Nicoleta Durigu Diamed Center S.R.L. Director Y Mirela Dogaru Anima Specialty Medical Services S.R.L Director Y Ownership of Shares and Options 182

116 The table below sets out the number of shares held in the Company by the members of the Board of Directors and the Company s executive managers mentioned in this Prospectus, as of the Prospectus date. Executive and non-executive members of the Board of Directors Name No. of shares Participation to the share capital (%) Mihail Marcu 4,219, Nicolae Marcu 3,013, The executive managers, save for the members of the Board of Directors, do not own shares in the Company. As of the date of this Prospectus, the Company has not issued options for its shares. Statements As of the Prospectus Date, each member of the Board of Directors and each executive manager of the Company mentioned above represents stated that he/she: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) has not been and is not convicted of fraud during the last five years preceding the date of the Prospectus; acting as a member of the administrative, management or supervisory bodies or as manager or founder of a company or a partnership, has not been associated with any bankruptcy, sequestration or liquidation procedure over the last five years preceding the date of the Prospectus; has not been publicly incriminated and/or sanctioned by statutory or regulatory authorities (including by designated professional bodies) and was not prohibited by the court to act as a member of the administrative, management or supervisory bodies of an issuer or from acting in the management or conduct of the affairs of any issuer during the last 5 years prior to the date of the Prospectus; does not carry out activities outside the Company which is material to the Company, other than those presented in the section "- Positions held by members of the Board of Directors and managers" above; has not been elected a member of the administrative, management or supervisory body or manager within the Company pursuant to any understanding or any agreement with major shareholders, Company's customers or suppliers or others; does not hold shares in the share capital of the Company other than those presented in the section "-Holding of Shares and Options" above; there is no restriction on the assignment, within a certain period of time, of the shareholding of the Company; there is no family relationship between them and other members of the administrative, management, supervisory bodies of the Company or the Company's managers or founders; there are no arrangements or understandings with major shareholders, customers, suppliers or others who are in a relationships with the Company, under which the members of the Board of Directors or managers have been appointed as members of the administrative, management or control bodies of the Company. with the following exceptions: 183

117 (i) (ii) (iii) Mihail Marcu was a shareholder and director of the company Life Residence S.R.L., which entered into voluntary liquidation, completely fulfilling all its obligations. According to Mihail Marcu s statement, Life Residence S.R.L. performed no commercial, financial, investment services, real estate business or any other activity during its existence; FSA has temporarily suspended the activity of MedLife Insurance Broker in October 2016 until the date on which Dorin Preda, acting as executive manager of MedLife Insurance Broker completes a two-year course of professional training for persons holding management positions within insurance brokers and passes a final exam in this regard; There are family relations between Mihail Marcu and Nicolae Marcu. Conflicts of Interest Except as provided below, there are no conflict of interest between the obligations of members of the Board of Directors and executive managers towards the Company and their private interests or other obligations thereof. The members of the Board of Directors and executive managers mentioned in the Prospectus occupy various other positions in companies within the Group or affiliates, they carry activities or provide services within the Company, have the status of shareholders in other companies within the Group, situations that might create conflicts of interest with the membership in the Board of Directors or the position of executive manager or manager. In the case a conflict of interest occurs, the members of the Board of Directors and managers shall act in accordance with legal provisions, abstaining from deliberations and voting or decision about which there is a conflict of interest. The working procedures of the Board of Directors and the manner to address conflicts of interest and transactions with affiliates are governed by appropriate internal regulations. The directors have the duty to disclose immediately to the Board of Directors any material personal interests they may have in transactions concluded by the Company as well as all other conflicts of interest. All business transactions between the Company and members of the Board of Directors or between the Company and managers and with persons or companies located in close relations with them are concluded at market prices in compliance with applicable laws and regulations. Liability Insurance Policies Currently the Company has in place liability insurance policies/contracts for members of the Board of Directors and managers. 184

118 MAIN SHAREHOLDERS The table below presents information on the main shareholders holdings in the Company s share capital as of the Prospectus date: Participation to share capital Number of shares (%) Shareholder INTERNATIONAL FINANCE CORPORATION, member of the World Bank Group 1,004, CRISTESCU MIHAELA GABRIELA 3,028, MARCU MIHAIL 4,219, MARCU NICOLAE 3,013, OTHE SHAREHOLDERS INDIVIDUALS AND ENTITIES Total... 8,825, According to the Law on Issuers and Market Operations, if, following the purchase or sale of shares, as well as other operations with shares of an issuer, the voting rights held by a person reach, exceed or fall below one of the thresholds of 5%, 10%, 15%, 20%, 25%, 33%, 50% or 75% of total voting rights, that person must immediately inform the Company regarding the number of voting rights held, but no later than 4 trading days from the date on which the respective person: (i) finds out about the purchase or sale or the possibility to exercise voting rights or, as the case may be, should have found out about it, irrespective of the date on which the purchase, sale or possibility to exercise the voting rights enters into force or (ii) is notified in connection to an event thant changes the structure of the voting rights. The shareholders referred to in the table above have the same voting rights as any other shareholder of the Company, the shares issued by Company granting equal voting rights to all shareholders of the Company. The Marcu Family exercises control over the Company, as a result of holding the majority of shares and voting rights in the Company. Despite the control exercised by The Marcu Family over the Company, the Romanian applicable legislation and the Company s Articles of Association prevent these shareholders from exercising their control power in an abusive manner. According to information held by the Company, except for any enforcement of the mortgages on shares issued by MedLife and held by the Marcu Family, there is no agreement or understanding that could result in future changes in control of the Company. 185

119 DESCRIPTION OF SHARE CAPITAL AND CORPORATE STRUCTURE Company s legal and commercial name The Company s legal and commercial name is Med Life S.A. The purpose and main activity of the Company Under Article 2 of the Articles of Association, the main activity of the Company consists of Medical and dental practice activities (NACE code 862) and the main subject matter of the Company consists of Specialist medical practice activities (NACE code 8622) according to the National Classification of Economic Activities. Also, the Company may carry out a series of secondary and ancillary activities referred to in Article 3.1 of the Articles of Association: NACE code 8610 hospital activities NACE code 8621 general medical practice activities NACE code 8623 dental practice activities NACE code 8690 other human healthcare activities NACE code 8710 residential medical care facilities NACE code 8720 residential care activities for mental retardation, mental health and substance abuse, excluding hospitals NACE code 8730 residential care activities for the elderly and disabled NACE code 7211 research and experimental development on biotechnology NACE code 7219 other research and experimental development on natural sciences and engineering NACE code 7220 research and experimental development on social sciences and humanities. Share capital Subscribed and paid in share capital Company's share capital is fully subscribed and paid and has a value of RON 5,023,000, of which RON 4,015,500 and RON equivalent of USD 362,161.1, representing a cash contribution and RON 2,935.5 contributions in kind of Mr. Mihai Marcu and Nicolae Marcu, as shareholders. Company's share capital is divided into 20,092,000 nominative, freely transferable, fully paid ordinary shares, each having a face value of RON 0.25, issued in dematerialized form by registration in Company s shareholders register. The are no shares issued that do not represent share capital of the Company. The Company issued only one class of shares: ordinary. There are no shares in the Company held by the Company or its subsidiaries. The Company has not issued convertible securities, exchange securities or securities with warrants associated. Authorized share capital By the decision of the extraordinary general shareholders meeting of MedLife of , the Board of Directors was authorised to increase the Company s share capital by the maximum amount of RON 650,000, by 13 September 2020 the latest, by issuing of up to 2,600,000 new shares in exchange for contributions in 186

120 cash and, if the share capital increase is performed by the Board of Directors at the maximum authorised level, the share capital will increase from RON 5,023,000 to RON 5,673,000 RON (authorised share capital). The same decision approved the appropriate change of the Articles of Association (i.e. art. 9.5). The Company is not aware of any acquisition rights and/or obligations related to the unissued capital of the Company. Rights, preferences and restrictions attaching to existing shares According to the Articles of Association, each share subscribed and fully paid by the shareholders grants equal rights and grant to its holder, in accordance with the law, the right to one vote in the General Shareholders Meeting of the Company, the right to elect and to be elected to the management bodies of the Company, the right to dividend distribution o in accordance with the Articles of Association and applicable law and other rights. Holding a share issued by the Company certifies the holder s adherence to the Articles of Association. Treasury shares of the Company, if any, do not grant voting or dividend rights. According to the Companies Law, every shareholder must exercise its rights in good faith, by observing the rights and legitimate interests of the Company and of other shareholders. Such rights are essentially related to the shareholders involvement in the activity of the Company by attending and casting votes in the General Shareholders Meeting, exercising the right to elect and be elected in the Company s management bodies and taking part in the profit distribution. Pre-emption right According to the Articles of Association and the regulations on capital markets, the newly issued shares in relation to a share capital increase by contribution in cash, must be offered with priority to the holders of preemption rights belonging to the Company s existing shareholders registered in the shareholder register on the record date that did not alienated them during the trading period, if applicable, or to holders of pre-emption rights acquired during their trading. If, after the deadline for exercising pre-emption rights, the new shares issued were fully subscribed, the shares that were not subscribed may be cancelled or offered to the investing public, according to the decision of the management body responsible for approving the capital increase. According to the regulations on capital market, the period in which shares can be subscribed in the exercise of the pre-emption rights shall not be less than one month from the date stated in the prospectus, which must be after the record date and the date of publication of the decision of the Extraordinary General Shareholders Meeting or Board of Directors in the Official Gazette of Romania. The pre-emption right of shareholders to subscribe new shares in a share capital increase by contribution in cash may be waived, with the approval of the Extraordinary General Shareholders Meeting, in which shareholders representing at least 85% of the subscribed and paid in share capital attend and by the vote of shareholders holding at least three fourth of the voting rights. Following cessation of the pre-emption rights of shareholders to subscribe the new shares they will be offered for public subscription, in compliance with the legal provisions on public offerings. Voting right and the right to participate at the General Shareholders Meeting The shareholders fundamental rights include the right to attend the General Shareholders Meeting and the right to vote. In addition to the provisions of the Articles of Association and the Companies Law, the provisions of the Romanian FSA Regulation no. 6/2009 regarding the exercise of certain shareholders rights at the General Shareholders Meeting set out the following rights: the right of one or more shareholders representing severally or jointly at least 5% of the share capital: 187

121 (i) to add items to the agenda of the General Shareholders Meeting, provided that each item is accompanied by a justification or a draft resolution proposed to be adopted by the General Shareholders Meeting and (ii) to submit draft resolutions for the items included or proposed to be included on the agenda of the General Shareholders Meeting. The respective rights may be exercised only in writing and within a maximum of 15 days from the publication of the convening notice for the respective General Shareholders Meeting. In case the exercise of the right mentioned at point (i) above triggers a change to the agenda already published, the Company must re-publish the convening notice with the updated agenda, using the same procedure as the one used for the previous agenda, before the reference date and no later than 10 days before the date of the General Shareholders Meeting; the right of all shareholders to receive equal treatment as concerns attendance and exercise of voting rights in the General Shareholders Meeting; the right of all shareholders to have access to sufficient information and documents with respect to items to be discussed at the General Shareholders Meeting, as well as to those that would enable them to exercise their rights at the General Shareholders Meeting; the right of all shareholders to fast and non-discriminatory access to the convening notice of the General Shareholders Meeting; the right of each shareholder to ask questions regarding the items on the agenda of the General Shareholders Meeting and to receive answers from the Company; the right to attend the General Shareholders Meeting, directly or indirectly, including by electronic means, by correspondence or by proxy. Rights to dividends Dividends, where the dividend distribution was approved by the Ordinary General Shareholders Meeting, shall be distributed to the shareholders registered, as of the record date, in the Company s shareholders register pro rate to the number of shares held in the Company. Dividends may be distributed only if the Company registers profit, as recorded in the annual financial statements approved by the Ordinary General Shareholders Meeting and if the latter decides to distribute dividends. For more details on the right to dividends, please see "Dividend policy" of this Prospectus. Right to information According to the Articles of Association, the Company must make available materials with respect to each item on the agenda of the General Shareholders Meeting at least 30 days before the meeting at the Company headquarters and by publishing them on the website of the Company. If the agenda of the Ordinary General Shareholders Meeting includes the election of board members, the Company must make available to shareholders information concerning the name, address and qualifications of the persons proposed as candidates for members of the Board of Directors and this list will be supplemented by shareholders no later than 15 days before the first convocation of the meeting. When the agenda of the General Shareholders Meeting includes proposals to amend the Articles of Association, the convening notice shall contain the full text of such proposals. In addition, at least 30 days before each General Shareholders Meeting, shareholders are entitled to receive a number of documents and information to facilitate their exercise of rights in the meeting, such as: the convening notice, special proxy forms for participation through representation and the form of voting ballots by correspondence, the total number of voting rights, draft resolutions for each item on the agenda, in Romanian and in English. In case of an Ordinary General Shareholders Meeting, the Board of Directors must make available to the shareholders the annual financial statements, the annual report of the Board of Directors, the financial auditor s report and the proposed dividend distribution at least 30 days before the 188

122 meeting. The Company must use mass media to provide information that reasonably endures effective dissemination to the public throughout the European Union. Withdrawal right According to the Companies Law, shareholders that do not vote in favour of a certain corporate action submitted to voting in the General Shareholders Meeting have the right to withdraw from the Company and to request that the Company acquire their shares. This right may be exercised only if the corporate actions referred to above: (i) change the Company s main object of activity as set out in the Articles of Association; (ii) relocate the Company s registered seat to another country; (iii) change the Company s legal form; or (iv) are in relation to the Company s merger or spin-off. Right to challenge the resolutions of the General Shareholders Meeting The decisions of the General Shareholders Meeting contrary to law or the Articles of Association may be challenged in court, within 15 days of its publication in the Official Gazette of Romania, Part IV, by any shareholder who did not attend the meeting or voted against and requested its insertion it in the minutes of the meeting. When invoking reasons of absolute nullity right the court motion may be filed at any time with no statute of limitation and the court motion can be made by any interested person. Also, according to the Law on Issuers and Market Operations, the decisions of the General Shareholders Meeting contrary to law or the Articles of Association, which have the effect of modifying the share capital of the Company, may be challenged in court, within 15 days of its publication in the Official Gazette of Romania, Part IV, by any shareholder who did not attend the meeting or voted against and requested the insertion of its vote it in the minutes of the meeting. Rights derived from liquidation In case of MedLife liquidation, all the Company's assets remaining after payment of all debts shall be distributed among the shareholders according to their stake in the share capital. Other rights of the shareholders Certain shareholders rights are set out in Company Law and in the capital markets legal framework only in favour of shareholders holding a minimum percentage of the share capital of the Company, such as: the right of the shareholder(s) holding individually or together at least 5% of the total voting rights to request the financial auditors to investigate allegations concerning the Company s management and to prepare reports, based on the information provided by the Board of Directors; the right of the shareholder(s) holding individually or together at least 5% of the share capital of the Company to request the convening of a General Shareholders Meeting; the right of the shareholder(s) holding individually or together at least 10% of the share capital of the Company to request the court to appoint one or more experts to analyse operations from the management of the Company and to prepare a written report in this respect; where a General Shareholders Meeting fails to resolve upon commencement of a court action to engage the liability of founders, directors, managers or of internal or financial auditors of the Company having caused losses (Romanian: daune) to the Company by being in breach of its/their duties towards the Company, the right of the shareholder(s) holding, individually or together, at least 5% of the share capital of the Company to take legal action in this respect. In these cases, such actions are initiated in the name of the claimant shareholder(s) but for the account of the Company; the right of a significant shareholder to request the appointment of members of the Board of Directors 189

123 using the cumulative voting method and, where the cumulative voting method is not used when voting in the General Shareholders Meeting on the appointment of the Board of Directors members, the respective shareholder has the right to ask the court immediately to convene the General Shareholders Meeting. Under the Law on Issuers and Market Operations, a significant shareholder is a natural person, legal person or group of persons acting in concert who directly or indirectly holds a participation of at least 10% of the share capital of a company or of the voting rights; The right of a shareholder individually holding or, where applicable, shareholders who together hold at least 5% of share capital, to ask not more than once in a financial year, convening a General Shareholders Meeting having on the agenda the election of the members of the Board of Directors, with the cumulative vote method. Obligation to refrain from deliberations A shareholder that, in a certain operation, has an interest contrary to the interests of the Company, either personally or as a representative of another person, must refrain from deliberations. A shareholder who fails to observe this legal requirement may be held liable for damages incurred by the Company if, without the vote of such shareholder, the required majority for the adoption of the respective resolution would not have been met. Obligation to notify a major shareholding According to the Law on Issuers and Market Operations, if, following the purchase or sale of shares and any other operations with shares, the quota of voting rights held by a person reaches, exceeds or falls below one of the thresholds of 5%, 10%, 15%, 20%, 25%, 33%, 50% or 75% of total voting rights, that person must immediately inform the Company regarding the number of voting rights held, but no later than 4 trading days from the date on which the respective person: (i) finds out about the purchase or sale or the possibility to exercise voting rights or, as the case may be, should have found out about it, irrespective of the date on which the purchase, sale or possibility to exercise the voting rights enters into force or (ii) is notified in connection to an event that changes the structure of the voting rights. Neither the Articles of Association nor any other Company s regulation provides for another obligation to disclose the holders of shares held above a certain threshold. Obligation to launch a mandatory takeover bid According to the Law on Issuers and Market Operations, where a person, as a result of a direct acquisition or an acquisition by persons acting in concert therewith, holds securities in a listed company that, together with the previous holdings of the respective person or the persons with whom it acts in concert, grant the respective person, directly or indirectly, more than 33% of a company s voting rights, the respective person is required to initiate a mandatory takeover bid addressed to all securities holders for all their holdings, at a fair price, as soon as possible, but no later than two months after the date when the respective threshold is reached. Prior to launching the mandatory takeover bid, the voting rights attached to securities exceeding 33% of the total voting rights in the Company are suspended and the respective shareholder, together with persons acting in concert therewith, are prohibited from acquiring, by other operations, shares in the Company. The obligation to launch a mandatory takeover bid does not apply to persons that have acquired the respective holdings: (i) as a result of an excepted transaction; or (ii) unintentionally. An excepted transaction is the acquisition of securities that lead to the respective holding: within the privatisation process; by acquisition of shares from the Ministry of Public Finance or from other legally authorised entities, 190

124 within the process of enforcement of budgetary claims; as a result of a transfer of shares between a parent company and its subsidiaries or between subsidiaries of the same parent company; or resulting from a voluntary takeover bid addressed to all holders of the respective securities for all their holdings. Reaching the 33% threshold unintentionally occurs as result of operations such as: share capital reduction, by share buy-back followed by cancellation of treasury shares; exercise of the pre-emption, subscription or conversion rights in relation to certain rights initially granted, as well as a result of conversion of the preferential shares into ordinary shares; or merger/spin-off or inheritance. Furthermore, following a bid addressed to all shareholders for all their holdings in the company the bid refers to, the bidder has the right to require all the shareholders that did not subscribe in the bid to sell those shares at a fair price, in one of the following cases: if the respective bidder holds shares representing at least 95% of the total number of shares with voting rights and at least 95% of the voting rights in the company the offer refers to, that may be effectively exercised; or if it acquired, in the bid, shares representing at least 90% of the total number of shares with voting rights in the company the offer refers to and at least 90% of the voting rights targeted in the bid. The squeeze-out right granted to the bidder as set out above corresponds to the right of the other shareholders of the company to request sell-out, by requiring the respective bidder to acquire their shares. If any of the remaining shareholders exercises this right, the bidder is compelled to buy the shares held by the selling shareholders. The squeeze-out and the sell-out rights may be exercised within three months from the closing date of the bid. Obligations of statutory insiders Persons with managerial responsibilities within the Company and all insiders in relation to the Company shall notify both the Company and FSA about transactions with shares issued by the Company under applicable provisions. 191

125 RELATED PARTIES TRANSACTIONS For information about significant transactions with related parties as defined in the Annual Financial Statements and the Interim Financial Statements, as of the date and for the periods that ended on 31 December 2016 and 30 September 2017, please see Note 23 Related Parties to the Financial Statements. In the normal course of work and on constant and regular basis, the Company enters into transactions with Nautic Life SRL., which is a related party. These transactions consist of providing and receiving products and services that are traded under the prevailing market terms and normal commercial terms which are fair and reasonable and in the interests of the Company and its shareholders. All transactions entered into by the Company with related parties are concluded at arms' length. The balances of acquisitions, debts and receivables (if applicable) regarding significant transactions with related parties on 30 September 2017 are presented in the Interim Financial Statements. Except for the above transactions, the Company has not entered into other significant transactions with related parties subsequent to the date of 30 September

126 MATERIAL AGREEMENTS Except as described below, the Group has not entered into any important contracts, other than contracts entered into in the normal course of business. Important financing facilities The contracts listed below represent major loan agreements entered into by companies in the Group, effective as of the date of this Prospectus. Credit facilities contracted by the Group Club Loan The Company, together with Bahtco Invest, Accipiens and PDR (as borrowers) concluded on March 2, 2016 a credit facility agreement with a number of credit institutions, namely Banca Comercială Română S.A., BRD Groupe Société Générale S.A., ING Bank N.V. Amsterdam Bucharest Branch and Raiffeisen Bank S.A. ( Club Loan ). The financing parties have provided to borrowers three credit facilities, totalling EUR 48,764, and RON 27,000,000, as follows: (a) Term facility in EUR, totalling 28,764,589.98, allocated as follows: - Up to EUR 15,711, to the Company, - Up to EUR 972, to Accipiens, - Up to EUR 6,486, to Bahtco Invest, - Up to EUR 5,594, to PDR, intended for the total refinancing of the sums owed by each of the above entities under the credit facility agreement concluded with BCR on 28 August (b) Revolving type facility in RON, amounting to RON 27,000,000, granted to the Company in order to refinance in full the amounts owed by it under a credit facility agreement concluded with BCR on August 28, 2014 and financing current needs of the Company; (c) A term facility in euro, totalling EUR 10,000,000, granted to the Company for the acquisition of shareholdings in companies carrying out activities similar or complementary to those carried out by the borrowers ( Target companies covered by the Club Loan"), respectively, within EUR 3,000,000 to the Companies Targeted by the Club Loan that will join as borrowers to the credit facility agreement to refinance their financial debts. (d) A term facility in euro, totalling EUR 8,000,000, granted to the Company for refinancing its leasing agreements. The security package includes, among others, real estate mortgages on the assets from Bucharest (the hospital in 365 Calea Griviţei - MedLife property, the pediatric hospital in 7 Zagazului street, owned by Bahtco) and Brasov (the clinic and hospital from 5 Turnului street, owned by PDR), mortgage securities on medical equipment, shares in Target companies covered by the Club Loan, credit balances of accounts, insurance policies, Company s receivables on healthcare insurance house, shares held by Marcu Family in the Company etc. The obligations of the borrowers under the contract are conjunct, which is reflected in the mortgages established by each of the borrowers. However, the Company and Bahtco Invest mutually act as guarantors (each on the other s obligations from the credit agreement mentioned above). The contract contains provisions on the forfeiture of the period benefit (resulting in the prepayment obligation) if the International Finance Corporation, a member of the World Bank Group, enforces its security 193

127 rights on shares owned by the Marcu Family and/or if the Marcu Family ceases to have control over the Company or the Company ceases to have control over any of the other borrowers. With respect to the shares issued by the Company, the financing documentation includes certain specific provisions, namely: (i) restrictions on the payment of dividends or other distributions; (ii) enforcement by the International Finance Corporation, a member of the World Bank Group, of the mortgage on MedLife shares set to ensure the obligations of Marcu Family under the shareholders' agreement is an event of default (which may trigger the acceleration of the amounts due); (iii) the obligation of Marcu Family to keep ownership of the shares held throughout the contract duration. The restriction on the distribution of dividends contained in the Club Loan consist on prohibiting the approval of the distribution and payment of dividends, interest on dividends and any other distributions and shares buyback and payments to other members of the Group (with some exceptions) without the approval of the majority of the lending banks. The obligation relates to any financial year beginning from In addition to the above, the loan agreement includes other standard provisions regarding, inter alia: prohibition of disposal/encumbrance of the assets and on changing the control in the Company and other borrowers, cross default, restrictions on capital expenditures, to the conclusion of joint ventures (with some exceptions), transfer of assets or to contracting loans. Loans from International Finance Corporation, member of World Bank Group The Company (as borrower) together with Accipiens, Bahtco Invest and PDR (as co-debtors) currently runs two loan agreements with International Finance Corporation, a member of World Bank Group ( "IFC Loans"), namely: (a) the term loan agreement dated 30 June 2010, as amended and restated on 11 August 2011, as amended (the amount due on 30 September 2017 under this agreement being EUR 2,857,142.25); and (b) the term loan agreement dated 30 September 2016, in the amount of EUR 10,000,000 as of 30 September 2017, intended to finance the investment plan of the Company and of co-borrowers to expand their operations, both organically and through acquisitions of holdings in companies with activities similar or complementary to those carried out by the borrowers ("Target Companies covered by IFC Loans ). Both loans are contracted under similar circumstances, being repayable in semi-annual equal instalments by the principal (the final maturity being on May 15, 2023) and, with some exceptions, most of the security package is common to both loans and also common to the security package related to the Club Loan as reflected in the Intrecreditor Contract dated March 2, 2016, as subsequently amended concluded between Banca Comercială Română S.A., BRD Groupe Societe Generale S.A., ING Bank N.V. Amsterdam Bucharest Branch, Raiffeisen Bank S.A, International Finance Corporation, a member of the World Bank Group, the Company, Accipiens, Bahtco, PDR and Marcu Family. The security package includes, among others, real estate mortgages on the assets from Bucharest (the hospital in 365 Calea Griviţei in MedLife property, the pediatric hospital in 7 Zagazului street, owned by Bahtco) and Brasov (the clinic and hospital from 5 Turnului street, owned by PDR), mortgage securities on medical equipment, shares in Target companies covered by the IFC Loans, credit balances of accounts, insurance policies, Company s receivables on health insurance house, shares held by the Marcu Family in the Company, the shares issued by the co-debtors, etc. The Company and Bahtco Invest mutually act as guarantors (each on the other s obligations from the loan agreements mentioned above). 194

128 The contracts contain similar provisions, including with regard to limiting dividends distribution, prohibition of substantial amendments of the constitutive documents, likely to conflict with the loan documentation and the obligation of early repayment of the amounts due for the loss by the Family Marcu of the control of the Company, of the co-debtors and of Target companies covered by IFC Loans. The restriction on the distribution of dividends included in IFC Loans consists of the prohibition of approving the distribution or payment of dividends or other distributions in cash (excluding dividends or distributions made in shares issued by the Company or co-debtors) and shares buy-back without express consent of the International Finance Corporation, a member of the World Bank Group. The loan agreements provide for certain exceptions to this restriction, i.e. the possibility to make such payments to the extent that they are made from retained earnings or the possibility of distributing dividends if, following such distribution, the Group does not enters in an event of default or a potential event of default and the financial indicators set out in the Loan agreements for the Group are still observed. The put option of International Finance Corporation, a member of World Bank Group International Finance Corporation, a member of World Bank Group, has signed with Mihail Marcu, on November 21, 2016 an agreement for the put option of the shares held by International Finance Corporation, a member of World Bank Group, to Mihail Marcu ("IFC Put Option"), irrevocably undertaken by Mihail Marcu, which is governed by New York state law. International Finance Corporation, a member of World Bank Group, can exercise its put option anytime during 20 December 2016 and the date on which the shares issued by the Company reach a threshold of liquidity consisting in achieving a daily average trading value for a period of six consecutive months, except for transactions carried out by Marcu Family members, the Company or their affiliates, which are of a value of at least the ratio of five times the number of Company shares held by the International Finance Corporation, a member of World Bank Group, divided by the number of trading days in the two preceding months. International Finance Corporation, a member of World Bank Group, will also be entitled to exercise the put option to Mihail Marcu where, during the period in which International Finance Corporation, a member of World Bank Group, is a shareholder of the Company, certain events occur in connection with the Company or if the holdings of Marcu Family in the Company falls below 51% of the share capital and the voting rights or in the context of a sale of shares by the Marcu Family to a third party purchaser who decides not to also buy the shares of International Finance Corporation, a member of World Bank Group, is the latter offers them. Exercising the put option by International Finance Corporation, a member of World Bank Group, can only be made in accordance with applicable provisions of law of capital markets and BSE regulations, including through a private placement at the price agreed by the parties in IFC Put Option. IFC Put Option include a mechanism whereby, if the International Finance Corporation exercises its option and Mihail Marcu does not fulfil its obligation to acquire the shares offered by International Finance Corporation, a member of the World Bank Group, the latter will be able to sell the shares question to a third party or to enforce the IFC Mortgage on Shares (as defined below). Mortgage on Mihail Marcu s shares To secure commitments undertaken by Mihail Marcu in IFC Put Option, International Finance Corporation, a member of World Bank Group, and Mihail Marcu entered into a mortgage agreement on 4,219,320 shares of the Company, representing all shares held by Mihail Marcu in the Company, namely 21% of the share capital of the Company ("IFC Mortgage on Shares"). IFC Mortgage on Shares creates a first rank mortgage in favour of International Finance Corporation, a member of World Bank Group, on the shares held by Mihail Marcu in the Company, which has priority over the mortgage on the shares of Marcu Family constituted in favour of the creditor banks according to the Club Loan. 195

129 Credit facilities contracted by Med Life subsidiaries On August 24, 2010, Accipiens concluded with Banca Transilvania S.A. the contract no. 121/ , amounting to EUR 3,221,000 euro, intended for the construction of a medical complex. Subsequently, by addendum dated December 18, 2012 Genesys took over the quality of borrower, Accipiens becoming only coborrower under the contract. Under the contract, the loan is repaid in equal monthly instalments, with the final maturity on August 15, The loan is secured with mortgages (on Accipiens and Genesys accounts, the shares hold by Genesys, mortgages on Accipiens clinic in Arad) and by personal guarantees provided by minority shareholders. In addition to other standard provisions concerning: prohibition of disposal/encumbrance of assets over a certain level, information requirements, obligations of percentage turnover through accounts opened at the bank, restrictions on the encumbrance and/or disposal of assets, the agreement also contains restrictions and obligations regarding the Group s structure and the control over the borrower and other liable parties, namely: (i) the borrower is not allowed to initiate any change in the structure of its share capital likely to affect the control of Genesys, Med Life and other guarantors unless it obtains the consent of the bank; also these entities are obliged to notify such changes if occurred by operation of law; (ii) the bank may unilaterally terminate the contract, inter alia, if it finds (a) reduction of the repayment capacity of the liable persons, as a result of changes in the shareholding, managership/administration, including in the event of incapacity/death/prohibitions affecting key persons or (b) reorganization of the customer likely to affect the subsequent creditworthiness or (c) legislative changes and/or payment terms in the industry, likely to significantly reduce the turnover of the liable persons, the impossibility/restriction of its ability to exercise its subject matter etc. Contracts related to the Offering For details on contracts relating to the Offering, please see Subscription and Sale of this Prospectus. 196

130 REGULATORY FRAMEWORK OF HEALTHCARE SECTOR IN ROMANIA In Romania, the health sector is governed by specific legislation, especially Health Reform Law. The provisions of the Health Reform Law are supplemented by Government Ordinance no. 124 of regarding the organization and operation of medical offices and of the Emergency Ordinance no. 83 of on the organization and operation of the free practice cabinets for public services related to healthcare. Other legal and administrative rules in force regulate various specific areas of the healthcare sector. Private healthcare facilities in Romania are subject to the laws mentioned above. Authorization of healthcare services Establishment of healthcare units and installation of medical equipment must be approved and authorized by local or regional health authorities subordinated to the Ministry of Health. Permits and authorizations must comply with Health Reform Law or with various conditions applicable to healthcare activities or related to equipment. Healthcare sector financing Public healthcare is guaranteed by the state and financed from the state budget, local budgets, the Sole National Fund of health insurance or other sources, including private, repayable and non-repayable foreign funds, contracts with third parties and from personal contributions and direct payments. Private health care establishments can conclude an agreement with NHIH for reimbursement of costs as limited by law. Healthcare Preventive and curative healthcare is provided by: (a) outpatient medical offices of family physicians and other specialties, diagnostic and treatment centres, laboratories and by other public and private healthcare facilities; (b) public and private units with beds (hospitals). Specialized outpatient care provides two types of services: (a) preventive services, diagnosis and treatment is conducted in outpatient regime; (b) ensuring diagnostic and therapeutic continuity through integration with primary and hospital healthcare. The provision of medical outpatient services is achieved through (i) medical offices (public or private), (ii) medical units with legal personality or (iii) medical offices of the institution structure. Authorizing the performance of healthcare activities Medical offices are set up at the request of the holder doctor or associate doctors from the medical civil society, the setting up deed being the Registration Certificate in the Unique Register of medical offices created and maintained by the public health authority. The registration certificate is issued based on the free practice authorization among other things of the holder doctor or associates and the opinion of the Medical College of Romania. The latter is obtained based on the authorization of free practice and proof of legal possession of the space and only after checking the existence of minimum facilities (which varies by the specialty addressed). The medical office operates under a (i) sanitary permit, which is the first stage of verification of the hygiene and public health rules, and (ii) a sanitary authorization of operation, which are issued by public health 197

131 directorates and which are endorsed annually. Medical offices can conduct radiology, medical imaging and healthcare activities and other healthcare activities and related to healthcare, with the approval of the Ministry of Health and Ministry of Education and Research. The medical devices used in the medical assistance shall be subject to regular monitoring conducted at an interval of not more than three years. The sanitary inspection within the Directorate of Public Health may temporarily or permanently withdraw the sanitary operating authorization, the consequence of withdrawal being the suspension of the medical office activity. Clinics are companies that bring together the work of several medical offices. Clinics go through an authorization process similar to that described above in connection with medical offices. Private hospitals The hospital is defined by applicable legislation as a healthcare facility with beds, of public utility, with legal personality, which provides healthcare services. The healthcare services provided by the hospital can be preventive, curative, recovery and/or palliative. Hospitals may be (i) public (organized as public institutions) and (ii) private (organized as private legal persons), and there is the possibility that in a public hospital private sections operate. Private hospitals are set up under the approval of the Ministry of Health and operates under a sanitary operating authorization. After obtaining the sanitary operating authorization, the hospital enters, upon request in the accreditation process. Accreditation is the process of validating the compliance of the characteristics of healthcare services, resulting in health units being classified by accreditation categories. Accreditation of health units is made by the National Authority of Quality Management in Healthcare. Hospitals may change the organizational structure and can reorganize, restructure or change their name and headquarters only with the approval of the Ministry of Health. The organizational structure of a hospital may include, as appropriate: sections, laboratories, diagnostic and treatment, departments services, technical, economic and administrative compartments, services or offices, pre-hospital support service and emergency transport, emergency structures and other structures approved by order of the Minister of Health. Pharmaceutical assistance Pharmaceutical assistance is ensured through the preparation and delivery of drugs and other products established by the Order of the Minister of Health, such as: cosmetics, medical devices, dietary supplements and others. Marketing of drugs and pharmacovigilance activity is achieved through separate procedures. Medical laboratories Medical analysis laboratory is the facility belonging to the public or private system, with or without legal personality, providing medical laboratory services, which include: (a) examination of materials derived from the human body through various methods and techniques in order to provide information or to assess the healthcare of the patient; (b) advice on interpreting the results of any investigations carried out and any further investigation necessary. Medical laboratories operates under a sanitary operating authorization issued by the public healthcare authorities, based on the affidavit on ensuring compliance with hygiene and public health norms. This sanitary authorization is annually endorsed. Ministry of Health, through its specialized structures, regularly checks the fulfilment of the authorization 198

132 conditions by medical analysis laboratories. Stomatology offices The profession of dentist is performed in Romania by individuals holding a formal qualification in stomatology who are members of the College of Dentists in Romania ( CMDR ). Dentists exert their profession based on the certificate of a member of CMDR annually endorsed based on a civil liability insurance for mistakes in the professional activity, valid for that year. Stomatology offices operate under a sanitary operating authorization by the public health authorities in Romania. The control and supervision of the profession of dentist is performed by the Ministry of Health and CMDR. Environmental and safety aspects of the buildings where healthcare activities are carried Environmental issues Medical offices are subject to specific obligations with regard to waste disposal. The waste producer is responsible for waste disposal and management in accordance with applicable law. In particular, waste must be collected separately, with the remark that the waste producer may subcontract their disposal and management to various services subcontractors. In addition, where appropriate, waste from healthcare activities involving infectious risks may be subject to regulations applicable on the transport of dangerous goods. Medical analysis laboratories must be equipped, especially, with containers for separate waste collection by categories: hazardous waste (infectious, sharp - pungent, chemicals and pharmaceuticals) and non-hazardous waste, similar to household waste. Medical analysis laboratories must conclude with specialized companies a contract for waste collection and neutralization or must be endowed with its own system of waste neutralization. Failure to comply with applicable laws attracts administrative penalties (including fines). Where noncompliance causes damage, the manufacturer and/or waste consignee can be civilly or even criminally liable. Aspects of safety of buildings The buildings in which medical offices and hospitals work are subject to the rules applicable to facilities open to the public. Therefore, buildings undergo safety checks carried out by specialized authorities. Activities carried within medical offices and hospitals are subject to safety and environmental rules and healthcare providers must ensure compliance with the legislation on: facilities for environmental protection, safety in case of fire and electrical safety, protection against risks related to materials containing asbestos, to exposure to biological agents and ionic radiation, Use of hot water for sanitary reasons, and The use of medical gases. Regulations for Patient Safety Medical offices and hospitals are subject to health regulations related to patient safety, including the prevention and control of healthcare associated to infections, risks and incidents involving medical devices. Rights of the Patient 199

133 Patients enjoy the freedom to choose the healthcare facility (among private or state institutions) where they wish to receive medical treatment. Private healthcare facilities will conclude a medical service contract with the patients, contracts containing clauses on care services and with private hospitals also clauses on patient accommodation shall be included. These contracts must comply with some general principles and obligations imposed on healthcare institutions by Law no. 46/2003 on patients' rights: healthcare facilities must apply a higher standard of quality, according to human, financial and material resources held by the company, according to art. 2 of Law no. 46/2003; healthcare facilities must observe the right of patients to be informed about available healthcare services, and the right to inform patients about the health condition, medical interventions proposed, potential risks of each procedure, including in relation to treatment failure and failure to comply with medical recommendations, as well as on the details of the diagnosis and prognosis; healthcare facilities must observe the patient's right to be respected as a human being, without any discrimination; healthcare facilities must communicate the information to patients using a respectful, clear language, minimising the use of specialised terms. If the patient is not a Romanian citizen, the information will be communicated to him/her in an internationally used language or, as the case may be, another form of communication will be sought. failure by medical personnel of medical units to comply with patient data privacy, namely the medical act, draws, as appropriate, disciplinary, administrative or criminal liability under the law. Processing of personal data relating to healthcare Processing of personal data related to healthcare is regulated by Law no. 677/2001 for the protection of individuals with regard to the processing of personal data and the free movement of such data, transposing in Romania Directive 95/46/EC of 24 October 1995 on the protection of individuals with regard to the processing of personal data and the free movement of such data. In general, the collection of personal data should be performed for specified, explicit and legitimate purposes. The law requires operators, among others, obligations related to informing the data subjects, to the content of personal data that can be processed, to privacy and to the requirements of notification to the supervisory authority. Personal data concerning health condition may only be processed in limited cases, including situations where (i) the data subject has given express consent or (ii) the processing is necessary for medical purposes and in the interest of the data subject. Processing of data concerning healthcare may be made only by or under the supervision of medical staff, subject to professional secrecy, unless the person concerned has given his/her written and unequivocal consent, as long as such consent has not been withdrawn, and unless the processing is necessary for the public interest. Failure to comply with the law on personal data processing constitutes an offense unless committed under such conditions as to constitute a criminal offense and is punishable with fines from RON 500 to RON 50,000. On 27 April 2016, Council Regulation (EU) 679/2016 on the protection of individuals with regard to the processing of personal data and on the free movement of such data and repealing Directive 95/46/EC was approved. This Regulation shall apply as of 25 May The Regulation does not substantially alter the provisions described above in connection with personal data protection in the field of health. Some of the major changes to this regulation are the increase of the administrative fines applicable for violations of the protection of personal data, which can reach up to the highest value of EUR 20,000,000 or 4% of total 200

134 worldwide annual turnover corresponding to the financial year. 201

135 TAXATION The following summary of certain Romanian tax consequences related to revenues obtained in Romanian from the ownership of the Shares is based upon laws, regulations, decrees, tax rulings, income tax conventions (treaties) for the avoidance of double taxation, administrative practice and judicial decisions in effect at the date of this Prospectus. Legislative, judicial or administrative changes or interpretations may, however, be forthcoming that could alter or modify the statements and conclusions set forth herein. Any such interpretations may be retroactive and could affect the tax regime applicable to holders of the Shares. The following information is a summary of the most significant Romanian tax considerations relevant to the holders of the Shares. This summary is based on laws, regulations and administrative procedures in Romania and the EU in force at the date of this Prospectus and aims to represent a legal opinion or a comprehensive analysis of all possible tax implications that may be relevant to Romanian and foreign legal entities and individuals obtaining Shares following the exercise of the Pre-emption Rights by subscribing New Shares. Prior to exercising the Pre-emption Rights by subscribing New Shares, potential investors are recommended to seek advice from their own tax and financial advisers with respect to Romanian and/or EU tax regulations applicable in their specific case, including the applicability of double taxation treaties, pending or proposed changes in applicable tax laws as of the date of this Prospectus and any actual changes in applicable tax laws after such date. Under Law No. 227/2015 on the Fiscal Code as subsequently amended and supplemented, in force as of 1 January 2016 (the Fiscal Code ), as amended, and the related implementing rules (approved by Government Decision no. 1/2016 on the Norms for implementing the Fiscal Code, as amended and supplemented) (the Norms"), certain types of income received in Romania by non-residents or by residents from Romania or from abroad may be subject to taxation in Romania at the tax rates stipulated by the Fiscal Code. Definitions For the purpose of the Fiscal Code, a resident means any Romanian legal entity, any foreign legal entity which has its place of effective management in Romania, any legal entity having its headquarters in Romania, incorporated according to European legislation and any resident individual. resident natural person is any natural person who: either (a) has his/her domicile in Romania, or (b) has his/her centre of vital interests located in Romania, or (c) is present in Romania for a period or several periods exceeding in aggregate 183 days during any 12 consecutive months, and that period(s) end(s) in the calendar year relevant for tax purposes, or (d) is a Romanian citizen who works abroad as an officer or an employee of the Romanian State. By way of exception from the provisions (a) to (d) above, a foreign citizen enjoying diplomatic or consular regime in Romania, a foreign citizen who is an employee or officer of an international or intergovernmental organization registered in Romania, a foreign citizen who is an officer or an employee of a foreign state in Romania, or their family members will not be deemed to be resident individuals in Romania; a non-resident means any foreign legal entity, any non-resident individual and any other foreign entities, including undertakings for collective investment in transferable securities without legal personality, which are not registered in Romania according to the law; a non-resident individual means any individual who does not meet the conditions for being considered a resident individual; 202

136 a foreign legal entity means any legal entity which is not a Romanian legal entity and any legal entity established pursuant to European law which is not headquartered in Romania; a Romanian legal entity means any legal entity established and operating in accordance with Romanian law; and a legal entity established pursuant to European law means any legal entity established in accordance with and by the mechanics contemplated by European regulations; and a "micro-company" means a Romanian legal entity which fulfils the following conditions cumulatively: (i) as at 31 December of the previous year had a turnover of no more than EUR 500 thousand; and (ii) its income from consulting and management activities, if any, does not exceed 20% of its total turnover; and (iii) is not active in any of the following sectors: banking, insurance and reassurance, capital markets, gambling, upstream oil & gas activities. Taxation of dividends Tax rate Dividends paid by Romanian legal entities to individuals or legal entities (either Romanian or non-romanian tax residents) are subject to a tax of 5% withheld at source. Exemption from tax on dividends applicable for shareholders under certain conditions According to the Fiscal Code, Romanian legal persons paying income tax may be eligible for exemption from the 5% dividend withholding tax provided that they have held a minimum of 10% of the Company s share capital for a continuous period of one year elapsed until the date of payment of said dividends. Under the Parent Subsidiary Directive, transposed in the Fiscal Code, the holders of share which are legal entities and tax residents in a member state of the EU may benefit from the same exemption from Romanian dividend withholding tax according to the terms specified above. Also, holders of Shares organized as legal persons must have one of the organization forms provided for in the Directive concerning the tax treatment of parent companies and their subsidiaries and to pay one of the taxes provided for in the Directive concerning the tax treatment of parent companies and their subsidiaries or a similar tax to income tax (without the possibility of an option or exception) in their residence country. If the condition regarding the minimum holding period of one year is not met at the payment date, the 5% dividend withholding tax will be retained by the Company. Subsequently, in the fiscal year in which the condition is met, the tax paid may be recovered from the Romanian state budget. To qualify for exemption from tax on dividends in Romania under the Directive concerning the tax treatment of parent companies and their subsidiaries, a holder of shares legal person resident in an EU Member State must provide to the Company, directly or through the custodian thereof, to the Romanian legal entity paying the dividend, the original or a notarized copy of the certificate of tax residence issued by the tax authority of the State or other document issued by an authority (other than the tax one), which is responsible for certification of residence under the domestic law of that State, confirming its tax residence as of the date on which dividends are paid. Furthermore, the holder of shares must submit to the Company an affidavit indicating that it meets the condition of beneficiary when applying European Union law, accompanied by a certified translation into Romanian. Dividends distributed/paid by the Company to voluntary pension funds and to privately managed pension funds, respectively, as well as to the bodies of the public administration exercising, according to the law, the rights and obligations deriving from the capacity of shareholder of the Romanian State/local administrative unit in that Romanian legal entity are also exempted from the payment of the dividend tax. 203

137 Application of double taxation treaties for non-resident shareholders (individuals or legal entities) In the event that the provisions of the EU Parent /Subsidiary Directive do not apply, the 5% dividend tax withheld according to the Fiscal Code may be reduced or eliminated depending on the country of residence of the non-resident shareholder (individual or legal entity) pursuant to the double taxation treaties (if any) between Romania and the country of residence of the non-resident shareholder. To benefit from the provisions of the double taxation treaties, a non-resident shareholder is required to provide, in original or legalised copy, together with an authorised translation into the Romanian language, the tax residency certificate issued by the tax authority from the relevant country or another document issued by an authority (other than the tax authority) which has responsibilities in residence certification, according to the internal legislation of the relevant country, which should be valid for the year in which the tax is owed. In the absence of a tax residence certificate at the time of payment of dividends, the dividend tax will apply. The non-resident holder of Shares may provide the Company tax residency certificate valid as of a specific date within five years (the statute of limitation) from the dividend payment date. This will allow the recovery from the Romanian state budget of the dividend tax paid. Taxation of dividend income for Romanian legal entities Dividend income received from a Romanian legal entity is exempt for corporate income tax purposes in Romania. For Romanian legal entities subject to tax on income obtained by micro-companies, the dividend income will be part of that their taxable result and will be subject to the 1% or 3% micro-companies income tax. Taxation of capital gains Tax rate The taxable gain from the transfer of Shares is calculated as the positive difference between the sale price and the purchase price of those shares, less any fees, charges and other amounts related to the transaction with such Shares. According to the Romanian tax legislation, capital gains realised by legal entities or individuals from the sale of the Shares are subject to 16% tax. Exemption from tax on capital gains applicable to shareholders under certain conditions The capital gain derived by the shareholders that are legal entities, resident in Romania or in a state with which Romania has concluded a double taxation treaty can be eligible for exemption from the 16% tax on capital gains, in Romania, provided that said shareholders have held more than 10% of the share capital of the Company for a continuous period of at least one year, on the date of the sale. In order to benefit from this exemption, the holder of Shares, which are legal entities, must be corporate income taxpayers (not microcompany taxpayers). Application of double taxation treaties If the tax exemption described above does not apply, capital gains tax due by non-residents according to the Fiscal Code may be reduced to nil by virtue of a double taxation treaty entered into by Romania and the country of residence of the seller of the Shares. To benefit from the provisions of a double taxation treaty, a non-resident seller of Shares must provide a tax residency certificate issued by the tax authorities of its country of residence (valid for the year in which capital gains were realised) to the Romanian intermediary who is performing the transaction, or, if there is no intermediary involved, directly to the Company. In the absence of a tax residency certificate at the time when the capital gains are realised, the Romanian capital gains tax of 16% will be due for the total amount of realised capital gains. The non-resident seller of Shares may provide the tax residency certificate valid at the time of payment within five years (the statute of limitations) following the date of payment. This will allow for the recovery of the tax from the Romanian budget. 204

138 Declaration and payment of capital gains tax by resident or non-resident individuals Resident individuals realising capital gains from the sale of Shares in the Company are required to file with the competent tax office an annual tax return with respect to the capital gains realised in the respective year by 25 May of the following year. Based on this return, the competent tax office establishes the annual tax due, by applying the tax rate to the taxable annual net income obtained as a result of the transfer of Shares. The above rules are also applicable to non-resident individuals, who are required to fulfil the obligations to pay tax and file tax returns in connection with capital gains tax due in Romania, for which they are required to register with the competent tax authority. Non-resident individuals for which Romania is not a tax domicile, who have tax liabilities in Romania, must appoint a proxy with a tax domicile in Romania, to declare and pay any taxes on behalf of the non-resident individuals. The requirement to appoint a proxy does not apply to taxpayers who are resident in an EU member state, a state of the European Economic Area or a state with which Romania has concluded an accord for tax administrative cooperation and recovery of tax receivables. Non-resident individuals are not required to declare in Romania gains/losses resulting from transactions performed within a year, provided that the double taxation treaty concluded between Romania and the residence country of the individual does not grant taxation rights to Romania and that non-resident individual provides the Company with his/her tax residency certificate. Declaration and payment of capital gains tax by Romanian legal entities If the exemption above does not apply, capital gains realised by a Romanian corporate income taxpayer from the sale of Shares shall be part of that company s taxable result (profit or loss) and shall be subject to corporate income tax, as appropriate. In what concerns capital gains derived by a Romanian company which is subject to micro-company tax, the income from the sale of the Shares (not the gain) shall be part of that company s taxable result and shall be subject to the 1% or 3% turnover tax, depending on the number of employees said company has. Declaration and payment of capital gains tax by foreign legal entities As a rule, a foreign legal entity deriving income from the sale of Shares must register with the tax authority for the declaration and payment of the capital gains tax to the Romanian tax authorities. The formalities regarding the declaration and payment of the capital gains tax by foreign legal entities are similar to the formalities applicable to Romanian legal entities. Any non-resident seller of Shares may appoint a proxy in Romania in order to comply with these obligations. If the non-resident seller relies on the provisions of a double taxation treaty in respect of Romanian capital gains tax, it must provide the Company with the tax residency certificate (which entitles the non-resident seller to invoke the double taxation treaty protection). If the non-resident seller is required to file a tax return in Romania for other transactions performed for which double taxation treaties do not provide a tax exemption in Romania, when submitting said tax return, the seller must attach a notarised copy of the tax residency certificate and a certified Romanian translation thereof for cases when the seller benefited from treaty protection for its capital gains. Other taxation related matters Dividend income and capital gains obtained by resident individuals are also subject to a 5.5% social healthcare contribution. The contribution is not due for these particular types of income if the individual obtains other types of income (i.e. salary) for which he/she already pays the healthcare contribution. 205

139 SUBSCRIPTION AND SALE Offering Summary By the decision of the Company s extraordinary general shareholders meeting , the Board of Directors was authorised to increase the Company s share capital based on contributions in cash by the maximum amount of RON 650,000, by one or more issues of new shares, without the total number of the shares exceeding 2,600,000 shares, from the current value of RON 5,023,000 to the maximum value of the share capital of RON 5,673,000, over a period of 3 years from the date on which the decision was adopted by the extraordinary general shareholders meeting. According to the decision no. 1 of , the Company s Board of Directors decided to increase the Company s share capital by the maximum amount of RON 650,000, from the current value of RON 5,023,000 to the maximum value of the share capital of RON 5,673,000, by issuing of up to 2,600,000 dematerialised, ordinary, nominal new shares, each having a face value of RON 0.25/share at a maximum price to be decided after the adoption of the decision ("New Shares"). The maximum price at which the New Shares may be subscribed through the exercise of the pre-emption right is RON 36 per share (out of which RON 0.25 is the nominal value and RON represents the issue premium per share) ("Maximum Price"). The share capital will be increased by offering New Shares for subscription to the shareholders registered in MedLife s shareholder register as of the record date ("Record Date") (each an "Entitled Shareholder"). The total number of the pre-emption rights is equal to the number of the shares issued by the Company and registered in the Company s shareholders register as of the record date related to the Share Capital Increase, namely 20,092,000 pre-emption rights (the Pre-emption Rights ). Each Entitled Shareholder is assigned a number of Pre-emption Rights equal to the number of shares held as of the Record Date ( ). To subscribe one New Share under the Offering it is necessary to hold Pre-emption Rights. An Entitled Shareholder may subscribe a maximum number of New Shares calculated by dividing the number of Pre-emption Rights held to the number of Pre-emption Rights needed to subscribe a New Share ( ). If, following such division, the result consists in fractions of New Shares that may be subscribed, the maximum number of New Shares will be rounded down to the lower integer. The Subscription Period is one month, between inclusively and inclusively, during the hours mentioned below ("Subscription Period"). During the Subscription Period, the Entitled Shareholders may exercise the Pre-emption Rights they enjoy. After the expiry of the Subscription Period no subscriptions from the Entitled Shareholders will be accepted. The Final Price of the New Shares offered for subscription under the exercise of the Pre-emption Right shall be lower or equal to the Maximum Price and shall be announced the latest on the first Business Day following the last day of the Subscription Period, namely the latest on ( Final Price ) and will be published on the internet page of MedLife at as well as on the internet page of BSE at In case the Final Price is lower than the Maximum Price, the Entitled Shareholders that subscribed New Shares during the Subscription Period shall be repaid the amounts representing the difference between the Maximum Price and the Final Price for each share validly subscribed during the Subscription Period. The amounts representing the difference between the Maximum Price and the Final Price for each share validly subscribed during the Subscription Period shall be repaid to the Entitled Shareholders as follows: (i) to the ones whose Pre-emption rights were registered in Section I of Depozitarul Central s Register ("Section I") at the time they were exercised and subscribed through the Manager in the bank 206

140 account mentioned in the Subscription form, within maximum 5 Business Days from the end of the Subscription Period; (ii) to the ones whose Pre-emption rights were registered in Section II of Depozitarul Central s Register ("Section II") at the time they were exercised and subscribed through a Participant, including the Manager, according to the provisions of the intermediation services agreement signed with the Participant through which they exercised the Pre-emption Rights within maximum 5 Business Days from the end of the Subscription Period; The New Shares that were not subscribed following the exercise of the Pre-emption Rights during the Subscription Period shall be offered for subscription, according to the Decision of the Board of Directors no. 1 of , under a private placement for which the Issuer shall not prepare and publish a prospectus based on the exemption mentioned at art. 16 par. (3) letter (a) of the Law on Issuers and Market Operations (the "Private Placement"). The Private Placement is not subject to the present Prospectus. The Company will publish a current report regarding the number of New Shares which will be subject of the Private Placement and, also, a current report regarding the number of New Shares which will be sold in the Private Placement. After the Private Placement is closed, the Board of Directors, by decision, will assess the effective results of MedLife share capital increase depending on the exercise of the Pre-emption Rights by subscribing New Shares during the Subscription Period and the New Shares sold under the Private Placement and shall amend the Articles of Association of MedLife accordingly. The share capital increase is carried out to improve the Issuer s capital base and ensure the implementation of the Issuer s development plans. Subscription under the Offering By subscribing under the Offering, each Entitled Shareholder confirms that it has read this Prospectus, that it has accepted the terms and conditions set out in this Prospectus and that it has made the subscription according to the terms included in this Prospectus. Signing the Subscription Form means the unconditional acceptance of all the terms and conditions of the Offering and the Prospectus in its entirety. The maximum price at which the Entitled Shareholders may subscribe New Shares through the exercise of the Pre-emption Right is RON 36 per share, out of which RON 0.25 is the face value and RON represents the issue premium per share. The Final Price, which shall be lower or equal to the Maximum Price, shall be announced on the last day of the Subscription Period. In case the Final Price is lower than the Maximum Price, the Entitled Shareholders that subscribed during the Subscription Period shall be repaid the amounts representing the difference between the Maximum Price and the Final Price for each share validly subscribed during the Subscription Period. The amounts representing the difference between the Maximum Price and the Final Price for each share validly subscribed during the Subscription Period shall be repaid: (i) (ii) to the Entitled Shareholders whose Pre-emption rights were registered in Section I in the bank account mentioned in the Subscription form, within maximum 5 Business Days from the end of the Subscription Period or to the Entitled Shareholders whose Pre-emption rights were registered in Section II according to the provisions of the intermediation services agreement signed with the Participant through which they exercised the Pre-emption Rights within maximum 5 Business Days from the end of the Subscription Period. In connection to the subscriptions made, no intermediation fee shall be charged to the Entitled Shareholders. 207

141 An Entitled Shareholder may subscribe based on the pre-emption right a maximum number of New Shares equal to the number of Pre-emption Rights held divided by the number of the Pre-emption Rights necessary to subscribe a New Share ( ). If, following such division, the result consists in fractions of New Shares that may be subscribed, the maximum number of New Shares will be rounded down to the lower integer. Offering Manager The Manager of the Offering is the financial investment services company Tradeville S.A, organised and functioning according to the laws of Romania, authorised for the provision of financial investment services by FSA (former NSC) Decision no. 2225/ , registered in the FSA Register under no. PJR01/ of , registered in the Register of Commerce under no. J40/5868/1996, sole registration code RO , with registered office in Bucharest, 2nd district, Carol I Blvd., International Business Center Modern, 10th floor, Romania. Subscribing New Shares The subscription schedule is from 9:00 to 17:00 hrs., Romania time, on each Business Day of the Subscription Period, save for the last day of the Subscription Period when subscriptions may be registered only between 9:00 12:00 hrs., Romania time. After the expiry of the Subscription Period no subscriptions from the Entitled Sharheolders will be accepted. The New Shares may be subscribed by the Entitled Shareholders as follows: (i) (ii) in case of Entitled Shareholders whose Pre-emption rights are registered, at the time the subscription is made, in Section I exclusively through the Manager, namely Tradeville S.A, with registered office in Bucharest, 2nd district, Carol I Blvd., International Business Center Modern, 10th floor, Romania. to the Entitled Shareholders whose Pre-emption rights are registered, at the time the subscription corresponding to the respective rights is made, in an account opened by a Participant in Section II, exclusively through that Participant. 1. Subscription of New Shares by the Entitled Shareholders that have a valid contract for financial investment services concluded with a Participant, Manager included, and that, at the time the subscription is made, have their Pre-emption Rights registered in an account opened by that Participant in Section II The Subscription is made by sending a subscription order/instruction according to the provisions of a valid contract for financial investment services/custody concluded with the Participant, by any communication means included in the respective contract. The Participant will accept the subscriptions according to the present Prospectus and the internal regulations applicable for receiving, validating and sending for execution the subscriptions received, as well as the ones pertaining to managing the settlement of subscription instructions in Depozitarul Central s system. The validation of subscriptions by the Participant, and the Manager respectively includes also checking the fact that the Entitled Shareholder has not subscribed a number of New Shares larger than it was entitled based on the number of Pre-emption rights held. After checking each subscription, the Manager or the Participant, as the case may be, will register the respective subscription in Depozitarul Central s system. Subscription instructions are placed based on the Preemption Rights held by the Entitled Shareholders, and the funds are settled using the settlement mechanism managed by Depozitarul Central, within the daily settlement sessions. 208

142 During the Subscription Period, the Manager/Participant taking over the subscription will receive the subscription orders and will process, validate and register, in the shortest time possible, all the subscriptions validly received. The subscriptions for the New Shares shall not be validated if the subscription procedures included in the present Prospectus were not observed. The subscriptions for New Shares that were not validated will be cancelled, and the Entitled Shareholders will be informed accordingly, as per the conditions included in the contract for investment/custody contract concluded with the Participant/Manager. The liability for the funds necessary for the settlement of the subscription instructions lies completely with the Participant/Manager through which subscriptions were made under the Offering. The subscribed New Shares will have to be paid according to the procedures communicated by the Participant/Manager. The subscription of New Shares during the Subscription Period shall be made by observing the regulations and procedures of Depozitarul Central, as well as the internal procedures of the participant by which the subscription of new shares is made. 2. Subscription of New Shares by the Entitled Shareholders that, at the time the subscription is made, hold the Pre-emption Rights listed in accounts opened in Section I The subscription is carried out exclusively through the Manager. The Manager will validate the subscriptions on condition that the Entitled Shareholder subscribing New Shares observes all the requirements below: (a) holds Pre-emption Rights listed in Section I; (b) submits/sends the Subscription Form signed in one original copy for the number of New Shares it wished to subscribe and up to the limit of the maximum number of New Shares it is entitled to subscribe based on the Pre-emption Rights it holds. The Subscription Form shall be available of the Manager s website ( and MedLife website ( (c) submit/send the document confirming the payment of the subscribed New Shares, according to the requirements included in the Section Payment of the price for the New Shares within this Chapter; (d) submit/send together with the Subscription Form the documents necessary for subscribing, mentioned in the section Subscription Documents of this Chapter. The Entitled Shareholders may submit/send the documents mentioned above using the following means: (i) (ii) Send the documents to Tradeville by courier or registered letter, return receipt, mentioning on the envelopr "For Medlife Share Capital Increase" at Carol I Blvd., International Business Center Modern, 10th floor, 2nd district, Bucharest, Romania. Submit the documents at Tradeville registered office of Carol I Blvd., International Business Center Modern, 10th floor, 2nd district, Bucharest, Romania from Monday to Friday between 9:00-17:00 hrs., Romania time, on each Business Day of the Subscription Period, save for the last Business Day of the Subscription Period when the subscriptions may be registered only between 9:00 12:00 hrs., Romania time. Irrespective of the means chosen, the subscriptions made based on documents received outside the subscription period and/or that do not meet the subscription conditions in the Prospectus shall not be validated. Irrespective of the means chosen to send/submit the documents, the subscription under this Offering represents the unconditional acceptance of the Offering terms and conditions and the present Prospectus, while the Entitled Shareholder confirms that it received, read, understood and accepted the terms and conditions included in this Prospectus and subscribed in agreement herewith. 209

143 New Shares will be subscribed during the Subscription Period in compliance with Depozitarul Central regulations and procedures, as well as with the Manager s internal procedures. Subscriptions for New Shares shall not be validated if the subscription procedures included in this Prospect are not fulfilled. Subscriptions for New Shares that were not validated shall be cancelled. The Entitled Shareholders whose subscriptions for New Shares were not validated shall be notified accordingly and the amounts paid will be returned to them in the account mentioned in the Subscription Form within maximum five Business Days from the end of the Subscription Period. The Manager and/or MedLife shall not be held liable if, for reasons outside their control, the Collection Account is not effectively credited with the amounts representing the value of the New Shares subscribed by the Entitled Shareholder before 12:00 hrs. on the last day of the Subscription Period. If the amount transferred in the Collection Account for a specific subscription is higher than the Maximum Price multiplied by the number of New Shares mentioned by the respective Entitled Shareholder in the Subscription Form, the subscription shall be validated only for the number of New Shares mentioned in the Subscription Form. In case the amount transferred to the Collection Account for a specific subscription is lower than the Maximum Price multiplied by the number of New Shares mentioned by the respective Entitled Shareholder in the Subscription Form, the subscription shall be cancelled, and the Entitled Shareholder shall have the option to resend the Subscription Form so as to match the amount received in the Collection Account. If an Entitled Shareholder subscribed a higher number of New Shares than it could subscribe according to the Pre-emption rights it holds and transferred to the Collection Account the Maximum Price, the subscription shall be validated only for the number of New Shares that could be subscribed according to the number of Pre-emption rights held by the respective Shareholder. After the subscription, the Manager will send to the Entitled Shareholders that subscribed New Shares the confirmation regarding the validity or invalidity of the subscription it made within maximum 5 Business Days from making the subscription, using the communication means specified in the Subscription Form, as the case may be (i.e. phone, fax, , post). Payment for the price of New Shares Payment of the price for New Shares in case the subscription of New Shares is made through a Participant in accordance with the Pre-emption rights registered in the Participant s account in Section II at the time the subscription is made The payment of the New Shares subscribed by an Entitled Shareholder in accordance with the Pre-emption Rights held in Section II on the subscription date shall be made according to the contract for the provision of investment/custody services concluded with the Participant through which the subscription is made and in compliance with Depozitarul Central requirements and the provisions included in this Prospectus. The Participant shall validate the subscriptions exclusively at the time the subscription amounts are credited to the client s account opened with the Participant. Payment of the price for New Shares in case the subscription of New Shares is made through the Manager in accordance with the Pre-emption rights registered in Section I at the time the subscription is made The proof of paying the price for the New Shares subscribed by an Entitled Shareholder through the Manager is represented by the payment order showing that the price for the New Shares subscribed was transferred by bank transfer to the collection account opened by the Manager on condition that the respective amount is 210

144 received in the collection account before 12:00 hrs. (Romania time) on the last day of the Subscription Period ("Payment Evidence"). The Collection Account for the subscriptions of New Shares is the RON bank account opened by the Manager, RO93BREL opened with Libra Internet Bank owned by Tradeville ("Collection Account "). The Collection Account does not bear any interest. The payment order must contain exclusively in the "payment details" section the personal number/passport series/sole registration code of the Entitled Shareholder. The bank account to be filled in by an Entitled Shareholder in the Subscription Form is the bank account from which the amount is effectively transferred to the Collection Account. The Entitled Shareholder must consider possible transfer fees and, as the case may be, the fees for opening the bank account. The Manager shall validate the subscriptions exclusively at the time the subscription amounts are credited to the Collection Account. Final Price The latest on the first Business Day subsequent to the last day of the Subscription Period, MedLife shall publish the Final Price on the internet page of MedLife at as well as on the internet page of BSE at The Final Price shall be lower than or equal to the Maximum Price. In case the Final Price is lower than the Maximum Price, the Entitled Shareholders that subscribed during the Subscription Period shall be repaid the amounts representing the difference between the Maximum Price and the Final Price for each share validly subscribed during the Subscription Period. The amounts representing the difference between the Maximum Price and the Final Price for each share validly subscribed during the Subscription Period shall be repaid to the Entitled Shareholders as follows: (i) (ii) to the ones whose Pre-emption rights were registered in Section I at the time they were exercised and subscribed through the Manager in the bank account mentioned in the Subscription form, within maximum 5 Business Days from the end of the Subscription Period; to the ones whose Pre-emption rights were registered in Section II at the time they were exercised and subscribed through a Participant, including the Manager, according to the provisions of the intermediation services agreement signed with the Participant through which they exercised the Preemption Rights within maximum 5 Business Days from the end of the Subscription Period; Subscription Documents In order to be accepted by the Manager, the Subscription Forms for the New Shares subscribed by the Entitled Shareholders according to their holdings of Pre-emption Rights registered in Section I at the time the subscription is made must be accompanied by a Payment Evidence and by the documents set out below: In case the Entitled Shareholder whose Pre-emption Rights, at the time the subscription was made, were registered in an account of a Participant, Manager included, opened in Section II, it may validly subscribe through the respective Participant, Manager included, if it has concluded with the latter an investment services contract, without being required to submit the identification documentation listed below, unless any changes occurred in relation to his/her/its identification data since the latest update. In case of subscriptions made through the Manager corresponding to the Pre-emption Rights registered in Section I at the time the subscription is made, the Entitled Shareholder will submit or send to the Manager the Subscription Form duly filled in by the Entitled Shareholder in two original copies, accompanied by a Payment Evidence and by the documents listed below, which shall be provided in English or Romanian. For the avoidance of any doubt, the Manager shall be liable for verifying the documents corresponding to subscriptions it receives and shall not be liable for verifying or validating the subscriptions of New Shares 211

145 carried out through Participants, case in which the liability lies with the Participant through which the subscription is made. Resident individuals subscribing in their own name: Resident individuals subscribing in the name of other individuals: Resident individuals with no legal capacity (impaired judgment) or placed under guardianship: ID (original and copy). ID (original and copy) of the representative and the ID (in copy) of the represented individual; and Power of attorney in authenticated form (original and copy). ID (original and copy) of the resident individual subscribing for the represented individual and the ID of the person with no legal capacity (copy); Passport (original and copy) and/or residence permit (original and copy) of the individual subscribing for the person with no legal capacity applicable only to foreign citizens; and The guardianship document or, as appropriate, the trustee or the special trustee document. Resident corporate entities subscribing in their own name: Registration certificate issued by the Trade Registry (copy); Updated constitutive act (copy certified for its conformity with the original by the legal representative of the legal person); Original certificate of current standing issued by the Trade Registry (issued no more than 30 business days prior to the date of subscription); Power of attorney/mandate in original for the person signing the Subscription Form, issued as stipulated by the constitutive act, or proof that the person concerned is legally representing the subscribing corporate entity, with individual representation right (if the company is collectively represented by two or more persons who all are present for the signing of the Subscription Form, such proof shall be presented for all such persons) (power of attorney in original and any other documents certified for their conformity with the original by the legal representative of the legal entity); and ID (original and copy) of the person subscribing in the name of the legal person. Non-resident individual subscribing in their own name: Non-resident individual subscribing through resident authorised representatives: Passport or ID for citizens of the EU/EEA (original and copy). Passport or ID, for citizens of the EU/EEA (copy) for the represented individual; ID for the authorised representative (original and copy); and Authenticated power of attorney setting out that the representative is authorised to act in the name of the non-resident individual (original and copy). Non-resident corporate Certificate of incorporation of the non-resident corporate entity issued 212

146 entities subscribing in their own name: by the Trade Registry or by any equivalent institution, if existing (copy); Updated constitutive act of the non-resident corporate entity (copy certified as true to the original by the legal representatives of the nonresident corporate entity); Certificate of current standing, in original, for the non-resident corporate entity evidencing the legal representatives of the non-resident entity issued by the Trade Registry or by an equivalent institution (issued no more than 30 business days prior to the date of subscription). If no authority or institution is authorised to issue such certificate, any corporate document evidencing the legal representatives of the nonresident corporate entity shall be submitted (issued no more than 30 business days prior to the date of subscription); such corporate document of the non-resident corporate entity shall set out clearly whether the legal representatives are entitled to act individually or jointly; In case subscriptions are made through a person other than the legal representative(s) of the non-resident corporate entity, the power of attorney/mandate signed by the legal representatives of the non-resident corporate entity empowering the respective person to subscribe on behalf of the non-resident corporate entity in the Offer Shares (in original and in copy); and IDs for the person making the subscription as legal representative or attorney in fact of the non-resident corporate entity: passport, ID (for citizens of EU/EEA) (copy). Non-resident corporate entities subscribing through a resident corporate entity Certificate of incorporation of the non-resident corporate entity issued by the Trade Registry or by any equivalent institution, if existing (copy); Updated constitutive act of the non-resident corporate entity (copy certified as true to the original by the legal representatives of the nonresident corporate entity); Certificate of current standing, in original, for the non-resident corporate entity evidencing the legal representatives of the non-resident entity issued by thetrade Registry or by an equivalent institution (issued no more than 30 business days prior to the date of subscription). If no authority or institution is authorised to issue such certificate, any corporate document evidencing the legal representatives of the nonresident corporate entity shall be submitted (issued no more than 30 business days prior to the date of subscription); such corporate document shall set out clearly whether the legal representatives are entitled to act individually or jointly; Incorporation certificate for the representing resident corporate entity issued by the Trade Registry (copy); Updated constitutive act of the representing resident corporate entity (copy certified for its conformity with the original by the legal representative of the legal person); Certificate of current standing, in original, for the representing resident corporate entity issued by the Trade Registry (not older than 30 business days prior to the date of subscription); ID for the legal representative of the representing resident corporate 213

147 entity subscribing on behalf of the non-resident corporate entity (original and copy); and Power of attorney signed by the legal representative(s) of the nonresident corporate entity empowering the resident corporate entity to subscribe to the Offering. IFIs Constitutive act of the IFI or a copy of the Romanian law whereby Romania accepts or adheres to the constitutive act of the relevant IFI; Power of attorney/certificate empowering the person who will sign the Subscription Form to subscribe on behalf of the IFI (in original or notarised copy); and ID for the person who signs the Subscription Form on behalf of the IFI (copy). Resident/non-resident individual represented by an asset management company through a portfolio management mandate ID (copy), in case of resident individuals; Passport or ID for citizens of the EU/EEA (copy), in case of nonresident individuals; Representation mandate (original and copy); Registration certificate issued by the Trade Registry (copy); Documents for the asset management company Updated constitutive act (copy certified for its conformity with the original by the legal representative of the legal person); Original certificate of current standing issued by the Trade Registry (issued no more than 30 business days prior to the date of subscription); Power of attorney/mandate in original for the person signing the Subscription Form, issued as stipulated by the constitutive act, or proof that the person concerned is legally representing the subscribing corporate entity, with individual representation right (if the company is collectively represented by two or more persons who all are present for the signing of the Subscription Form, such proof shall be presented for all such persons) (power of attorney in original and any other documents certified for their conformity with the original by the legal representative of the legal entity); and ID (original and copy) of the person subscribing in the name of the legal person. 214

148 Entities managed by other resident or non-resident corporate entities (eg. Investment funds, pension funds) The documents listed below shall be submitted for the corporate entity that manages the respective entity and shall be accompanied by the authorisation received by the respective entity from the competent supervisory authority Registration certificate issued by the Trade Registry (copy); Updated constitutive act (copy certified for its conformity with the original by the legal representative of the legal person); Original certificate of current standing issued by the Trade Registry (issued no more than 30 business days prior to the date of subscription); Power of attorney/mandate in original for the person signing the Subscription Form, issued as stipulated by the constitutive act, or proof that the person concerned is legally representing the subscribing corporate entity, with individual representation right (if the company is collectively represented by two or more persons who all are present for the signing of the Subscription Form, such proof shall be presented for all such persons) (power of attorney in original and any other documents certified for their conformity with the original by the legal representative of the legal entity); and ID (original and copy) of the person subscribing in the name of the legal person The Manager or Participant by which the subscription is made is entitled to request any additional documents for the purpose of carrying out its duty to comply with the "know your customer" rules, based on its internal norms and procedures of client identification. Documents in a language other than Romanian or English submitted by an investor, legal person or entity with no legal personality, shall be accompanied by a notarised translation thereof in Romanian or English. In case of investors without legal personality, the identification documents of the management company must be submitted. Change and Withdrawal of Subscriptions Entitled Shareholders may change or revoke the subscriptions for the New Shares. If the Prospectus is subject to an amendment, subscriptions may be revoked by any Entitled Shareholder within two Business Days from the date when the respective amendment to the Prospectus was published. In such a case, the Entitle Shareholders may revoke their subscriptions for New Shares by filling in a subscription revocation form with the same Participant used for making the subscription, or with the Manager if they subscribed through the Manager. Repayments Entitled Shareholders shall be repaid: - the amount representing the price paid for the New Shares subscribed, in case the respective subscription is not validated/is cancelled according to the provisions of this Prospectus; - the amount paid representing the product between the Maximum Price and the New Shares subscribed, in case the respective subscription is revoked according to the provisions of this Prospectus; 215

149 - the amount paid in addition to the product between the Maximum Price and the New Shares subscribed for which the subscription is validated; - the amount paid in addition for the New Shares that the Entitled Shareholder did not have the right to subscribe considering the number of Pre-emption rights it holds; - the amount representing the difference between the Maximum Price and the Final Price multiplied with the number of shares subscribed by the Entitled Shareholder during the Subscription Period, in case the Final Price is lower than the Maximum Price. In the cases mentioned above, the payment shall be made: (i) (ii) to the Entitled Shareholders whose Pre-emption Rights were registered in Section I to the bank account they specified in the Subscription Form within maximum five Business Days from the end of the Subscription Period, unless the subscription is revoked, when the payment shall be made within maximum five Business Days from the date on which the subscription was revoked; to the Entitled Shareholders whose Pre-emption Rights were registered in Section II, according to the provisions of the contract for the provision of investment services/custody concluded with the Participant through which the subscription was made. All possible fees in connection to the payments made by the Entitled Shareholders in any of the cases mentioned above, save for the payment of the amounts resulted from the difference between the Maximum Price and the Final Price shall be borne by the Entitled Shareholders. Allocation of New Shares Each Entitled Shareholder that subscribed under the Offering shall receive a number of New Shares equal to the number of New Shares validly subscribed under the Offering. MedLife is not aware of the intention of any of its main shareholders or of the members of the administration, management or supervision bodies to subscribe under the Offering, or the intention of any person to subscribe more than 5% of the Offering. Settlement For the Entitled Shareholders who subscribed based on the Pre-emption Rights registered in Section II at the time the subscription was made, the New Shares shall be settled according to Depozitarul Central regulations on processing corporate actions. For the Entitled Shareholders who subscribed through the Manager, based on the Pre-emption Rights registered in Section I at the time the subscription was made, a list of the validated subscriptions shall be sent to Depozitarul Central by 18:00 hrs. on the last day of the Subscription Period. Notifying the Offering results The Offering results shall be notified to FSA and BSE within five Business Days from the end of the Subscription Period. MedLife will carry out all the actions to complete the increase of the Company s share capital, namely the registration of the share capital increase at the Trade Registry, request FSA to issue the updated securities registration certificate and request the registration of the New Shares subscribed and allocated under the Offering in the shareholders register kept by Depozitarul Central. After the New Shares subscribed and allocated under the Offering are registered in MedLife shareholders register, the New Shares shall be accepted to trading on the spot regulated market managed by BSE. New Shares may be traded after the share capital increase is registered with Depozitarul Central. 216

150 The shares issued as of the date of this Prospectus by MedLife are traded on the spot regulated market managed by BSE, main segment, Premium tier, having the symbol M. 217

151 LEGAL ASSISTANCE The Company was assisted on the legal aspects in connection with the Offering by Schoenherr și Asociații. 218

152 INDEPENDENT AUDITORS Deloitte Audit S.R.L., an independent audit company, audited the consolidated financial statements of the Group as of and for the year ended as at 31 December 2016 and issued an unqualified audit opinion in respect of these consolidated financial statements. Deloitte Audit S.R.L., based in Bucharest, 4-8 Nicolae Titulescu Road, 3rd floor, sector 1, Romania, registered with the Trade Registry under no. J40/6775/1995 having sole registration code , and is member of the Chamber of Financial Auditors of Romania, registered in the Public Registry of Financial Auditors under number 25/

153 GENERAL INFORMATION 1. Listing and Trading The New Shares are intended to be accepted to trading on the spot regulated market managed by the Bucharest Stock Exchange S.A. around 12 January The Pre-emption Rights may not be traded. 2. Permits The Company obtained all the permits (statutory or otherwise), approvals and authorisations necessary for issuing the New Shares and in connection to the Pre-emption Rights. The Share Capital Increase was approved by the Board of Directors by decision no. 1 of 11 October 2017, published in Romania s Official Gazette no of 16 October This Prospectus was approved by the Board of Directors by decision of Dilution of participations The Offering is carried out in compliance with the pre-emption right of the Company s shareholders registered in the Company s shareholders register as of the record date 27 October Therefore, if all the shareholders registered in the shareholders register as of the record date 27 October 2017 would exercise the Pre-emption Right, no shareholder would be diluted. The Entitled Shareholders that will not subscribe under the Offering shall register an immediate maximum dilution by %, after the Share Capital Increase is implemented. 4. Liquidity of Shares on the secondary market There is no entity assuming a firm commitment to act as intermediary for the trading of Shares after the Offering is closed and to guarantee their liquidity through buy offers. 5. Lock-up agreement Not applicable 6. Payment and deposit agents Not applicable 7. State what other information in the Prospectus were verified or reviewed by the auditors and if they prepared a report. Not applicable 8. In case the Prospectus contains a statement or report assigned to a person acting as expert, state the name, address, qualifications of the respective person and, as the case may be, any significant interests of that person in connection to the Issuer. Not applicable 9. Documents available for inspection During the validity term of this Prospectus, the following documents will be available to investors by their publication by the Company on the Company s website at (a) (b) Prospectus; Articles of Association; and 220

154 (c) Annual Financial Statements together with the related audit reports and the Interim Financial Statements, together with the related review report. 10. Material changes As of 30 September 2017, respectively the reference date of the Interim Financial Statements, no significant changes in the financial or commercial situation of the Group have occurred. 11. Subsidiaries For more details, please refer to section "Business - Summary description of the companies within the Group" of this Prospectus. 12. Information not applicable to the Prospectus in accordance with Annex XXIII and Annex XXIV of Regulation (EC) no. 809/2004 The following paragraphs of Annexes XXIII and XXIV of Regulation (EC) 809/2004 are not applicable to the Prospectus: Annex XXIII: 2.2, 4.2.2, 4.2.3, 5.3, 5.4, 8, 10, 11, 12.2, 15.2, , , , , , and Annex XXIV: 5.1.4, 5.1.7, 5.4.2, 5.4.3, 5.4.4, 6.3, 6.4, 7.1 and

155 DEFINITIONS AND GLOSSARY OF SELECTED TERMS Accipiens Articles of Association Shares New Shares OGSM or the Ordinary General Shareholders Meeting EGSM or the Extraordinary General Shareholders Meeting Almina ANEVAR Anima Anima Promovare PHI FSA Bahtco BSE or Bucharest Stock Exchange CEE Centrul Medical Panduri Centrul Medical SAMA CMDR Fiscal Code NHIH CT Settlement Date Relevant Implementation Date Accipiens S.A., a company within the Group The Company s articles of association, in place and applicable at the date of this Prospectus Any and all ordinary nominal shares issued in dematerialised form by the Company from time to time Up to 2,600,000 Shares newly issued by the Company following the Share Capital Increase The Company's ordinary general shareholders' meeting The Company's extraordinary general shareholders' meeting Almina Trading S.A., a company within the Group The National Association of Authorised Valuators in Romania Anima Specialty Medical Services S.R.L., a company within the Group Anima Promovare și Vânzări S.R.L, a company within the Group Private health insurance Financial Supervision Authority Bahtco Invest S.A., a company within the Group Bucharest Stock Exchange S.A., operator of the spot regulated market, with headquarters at Carol I Boulevard, 14 th floor, 2 nd District, postal code , Bucharest, Romania Central and Eastern Europe Centrul Medical Panduri S.A., a company within the Group Centrul Medical SAMA S.A., a company within the Group Romanian College of Dental Physicians Law no. 227/2015 on the fiscal code, as amended and supplemented, effective starting with 1 January 2016 National Health Insurance House in Romania Computerised tomography The date when the transactions with New Shares will be settled, identified in the section "Subscription and Sale Offering Summary" of this Prospectus The date when the Prospectus Directive was implemented in any Relevant Member State 222

156 Deloitte Dent Estet Diamed Center Markets in Financial Instruments Directive Prospectus Directive Payment Evidence Pre-emption Rights Marcu Family Subscription Form Genesys Group IFC IFRS IFC Shares Mortgage Deloitte Audit S.R.L., an independent audit company, which audited the Annual Financial Statements and revised the Interim Financial Statements Dent Estet Clinic S.A., a company from the Group Diamed Center S.R.L., a company from the Group Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC The documents that evidence the payment or the guarantee of payment for the New Shares subscribed within the Offer, in accordance with the section "Subscription and Sale Subscription of New Shares " of this Prospectus Up to 20,092,000 pre-emption rights issued by the Company in favour of Entitled Shareholders Marcu Mihail, Marcu Nicolae and Cristescu Mihaela Gabriela, Company shareholders Subscription form for the New Shares Genesys Medical Clinic S.R.L., a company within the Group The Company together with its subsidiaries, as presented in the section " Business Corporate Structure" of this Prospectus International Finance Corporation, member of the World Bank Group, an international financial organisation founded according to the Agreement regarding the International Finance Corporation accepted by the Romanian State under Law no. 28/1991, having its head-offices at 2121 Pennsylvania Avenue, N.W, Washington D.C , United States of America The International Financial Reporting Standards adopted by the European Union via the Commission Regulation (EC) No 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council The mortgage over 4,219,320 Company shares, representing all the shares owned by Mihail Marcu in the Company, or 21% of the share capital of the Company, created by Mihail Marcu in favour of International Finance Corporation, member of the World Bank Group, to secure the commitments undertaken by Mihail Marcu in 223

157 the IFC Put Option IT Club Loan IFC Loans Law on issuers and market operations Healthcare Reform Law Companies Law LMH Manager or Tradeville MedLife, Issuer, Company MedLife Insurance Broker MedLife Ocupațional Ministry of Health MRI Norms Offering Subscription Period Information technology systems The club loan agreement concluded by the Company with Banca Comercială Română S.A., BRD Group Société Générale S.A., ING Bank N.V. Amsterdam Sucursala București and Raiffeisen Bank S.A. in March 2016 The loans granted by International Finance Corporation, member of the World Bank Group, to the Group companies, as mentioned in the section " Material Contracts Loans from International Finance Corporation, member of the World Bank Group" of this Prospectus Law no. 24/2017 on the issuers of securities and market operations Law no. 95/2006 on healthcare reform, as amended and supplemented Law no. 31/1990 on companies, republished, as amended and supplemented Life Memorial Hospital The financial investment services company Tradeville S.A, organised and functioning according to the laws of Romania, authorised for the provision of financial investment services by FSA (former NSC) Decision no. 2225/ , registered in the FSA Register under no. PJR01/ of , registered in the Trade Registry under no. J40/5868/1996, sole registration code RO , with registered office in Bucharest, 2nd district, Carol I Blvd., International Business Center Modern, 10th floor, Romania. Med Life S.A. Med Life Broker de Asigurare și Reasigurare S.R.L., a company within the Group Med Life Ocupațional S.R.L., a company within the Group The Romanian Ministry of Health Magnetic resonance imaging The Fiscal Code application norms, approved via the Government Decision no. 1/2016 on the Norms for the application of the Fiscal Code, as amended and supplemented The public offering of New Shares based on the exercise of the preemption right initiated by MedLife and subject to this Prospectus The period during which the Pre-emption Rights will be exercised based on this Prospectus, as provided for in the section " 224

158 Subscription and Sale Offering Summary" of this Prospectus Participant PharmaLife Med GDP PDR PMR HPP FFS Prima Medical Prospectus PMSM Participant to the System of Depozitarul Central S.A., custodians included PharmaLife Med S.R.L, a company within the Group A country's gross domestic product Policlinica de Diagnostic Rapid S.A., a subsidiary of the Company A company carrying out activities of market research, with expertise in over 25 countries of Central and Eastern Europe, specialising in areas such as constructions, retail, pharmaceuticals, healthcare services and communication and information technology Health prevention packages sold by the Group via its Corporate business line Fee for service Prima Medical S.R.L., a company from the Group This prospectus, as approved by the FSA The private medical services market in Romania PMR 2016 Report The report issued by PMR in August 2016 Regulation no. 1/2006 The Regulation of the National Securities Commission no. 1/2006 on issuers and securities transactions Regulation no. 1215/2012 Regulation S RUR Medical Section I Section II EEA Financial Statements Annual Financial Statements Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters The Regulation S from the Securities Act in place in the United States of America RUR Medical S.A., a subsidiary of the Company Section of Depozitarul Central s clearing-settlement and registry system listing the accounts of Pre-emption Rights holders that do not have an account opened with a Participant Section of Depozitarul Central s clearing-settlement and registry system listing (i) the individual and global accounts of Pre-emption Rights holders that have an account opened with a Participant and (ii) the Participants own accounts European Economic Area The Annual Financial Statements and the Interim Financial Statements Med Life S.A.'s consolidated financial statements for the financial year ended 31 December 2016, prepared in accordance with the International Financial Reporting Standards adopted by the 225

159 European Union, audited Interim Financial Statements Club Loan Target Companies Member State Relevant Member State Stem Cells Bank Med Life S.A.'s consolidated interim financial statements for the period ended 30 September 2017, prepared in accordance with the International Financial Reporting Standards adopted by the European Union, unaudited Companies carrying out activities that are similar to or complementary with the Group's activities, as further defined in the Club Loan Member State of the European Union EEA Member State that implemented the Prospectus Directive Stem Cells Bank S.A., a company within the Group EU Ultratest Valdi Ultratest S.A., a company within the Group Valdi Medica S.R.L., a company within the Group WEO October 2016 IMF's World Economic Outlook issued in October 2016 Business Day A day in which both the Romanian interbanking market and the trading system of the Bucharest Stock Exchange are opened for business 226

160 List of Annexes to the Prospectus Annex I - Consolidated Financial Statements for the years ended on 31 December 2016 and the independent auditor s report Annex II - Consolidated Interim Financial Statements for the period ended as at 30 September

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