Bergman Germany HoldCo GmbH

Fulda (vormals: Bergisch Gladbach)

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.11.2020 bis zum 31.12.2020

Hippocrates Capital B.V.

Naarden/Niederlande

Board Report

Company Profile

Hippocrates Capital B.V. and its subsidiaries (hereafter: the Group) are a chain of focus clinics for plannable medical care in the Netherlands, Nordics and Germany. The majority of the revenue in the Netherlands is generated from insured care in the Musculoskeletal and Ophthalmology (eye care) treatments areas. The operations in the Nordics almost fully comprise non-insured treatments related to refractive eye care. The operations in Germany focus on insured care in multiple areas.

Bergman's mission

Bergman's mission is to improve medical care on a daily basis, offering high quality treatment at a competitive price.

History

Bergman Clinics was founded in 1988 as a private clinic for cosmetic healthcare. After the adoption of the Healthcare Insurance Act in the Netherlands in 2006, the Group also started providing insured care. In the past, several clinics were acquired and insured care outgrew non-insured care. The group in its current form, is the result of the merger with NL Healthcare Clinics in January 2019 and acquisitions in 2019 and 2020. The Group acquired Memira in August 2019. Memira is a leading chain of focus clinics which offers a full range of eye services in Sweden, Norway and Denmark (Nordics). In October 2020 the Group acquired six clinics of Capio Germany, a provider of healthcare services in Germany, and Van Linschoten (ENT), a clinic focused on Ear, Nose and Throat treatments in the Netherlands.

The Group provides a wide range of plannable medical care, including orthopaedic-, eye-, and skin care and specialist care in the area of stomach, colon and pelvic-floor disorders. The majority of revenue is generated from insured care as most treatments in the Netherlands are covered by the Dutch health insurance system. A small portion of revenue in the Netherlands relates to non-insured care. This mainly comprises aesthetic surgery and refractive eye care (Memira NL). Revenue is the Nordics is almost fully generated from refractive eye care which is non-insured. Revenue in Germany is mostly generated from insured care focused on veins, musculoskeletal and ophthalmology.

Geographical footprint

The Group's main head office is located in Naarden (the Netherlands), with local head offices in Stockholm (Sweden) and Fulda (Germany). Clinics are spread across the Netherlands, Sweden, Norway, Denmark and Germany.

Strategic principles

The operating model is built on the principles of value-based health care and designed to reap the benefits of increasing Scale, Focus and Innovation:

• Scale: enables focus and innovation, to simultaneously improve the quality of care as well as the operating costs

• Focus: by specializing in selected care programs, BC can create high standards to simultaneously improve the quality of care and make the business more efficient

• Innovation: through data-driven continuous improvement and building new solution in the care process BC improves care each day

Core values

The Group's core values are essential to the company's success:

• Transparent - Open, clear, reflecting - Publish PROMs (Patient-reported outcome measures), provide feedback to team(-members), evaluate regularly

• Ambitious - Disciplined, efficient, result-oriented -set challenging goals, pro-actively negotiate with insurers by sharing results and providing insight in our business-model, help colleagues develop by focusing on their strengths

• High quality - Professional, top-quality, elegant - high standards for process and appearance, frequent and personal contact with patients after surgery, always deliver high internal quality to colleagues too by clear expectations and agreements

• Warm - Understanding, accessible, considerate - showing genuine interest in accomplishments of colleagues and sharing this, leave a hand-written note on a patient's bed, remain friendly and helpful even when a mistake is made

• Innovative - Pro-active, progressive, advanced - invest in and apply new technologies in processes and communication, publish about our care-methods, develop new partnerships (i.e. with GP's)

Report of the Supervisory Board

The Supervisory Board has discussed the annual report in detail with the Executive Board and the external auditor. Based on these discussions the Supervisory Board is of the opinion that the annual report meets all requirements.

The Supervisory Board therefore approved the Annual Report 2020 of Hippocrates Capital B.V. as prepared by the Executive Board. PWC has audited the financial statements and issued an unqualified opinion as included in the Other Information.

The annual report of Hippocrates Capital B.V. will be submitted for adoption to the General Meeting of Shareholders, on 10th May 2021.

The Supervisory Board will propose to the General Meeting of Shareholders to grant discharge to the Executive Board from liability for the policy pursued towards the company for their management. In addition, the Supervisory Board will ask the General Meeting of Shareholders to grant discharge to the Supervisory Board for its supervisory role.

Composition, appointment and role

Name	Position	Date of appointment
drs. R.L. de Bakker	Chair	3 January 2019
drs. M. Sint	Member (vice-chair)	3 January 2019
W. Malenstein	Member	3 January 2019
Prof. dr. F.C. Breedveld	Member	3 January 2019
drs. J.R. Ruigrok	Member	3 January 2019

Supervision

The Supervisory Board supervises the general course of business and the policy pursued by the Executive Board. In addition, the Supervisory Board has an advisory role and is amongst others closely involved in plans for growth, innovation, quality improvement and efficiency. Finally it acts as employer of the Board of management.

The Supervisory Board has been involved in several topics that concern the future of Bergman. Besides general topics regarding investments, operations and financial position, the emphasis was on the completion of managing COVID-19 and the acquisition of Bergman Germany and Van Linschoten during 2020.

Quality and safety for our clients and staff were also discussed on a regular basis in the Supervisory Board meetings and in discussions with the Executive Board.

Meetings of the Supervisory Board

In 2020 the Supervisory Board has met five times in regular meetings (excl. the Committee meetings). All members of the Supervisory Board were present during the 2020 meetings.

The main topics that were discussed in the 2020 meetings are:

• General course of business within the organization;

• COVID-19;

• Quality of medical care, including discussion of incidents when they occur;

• Compliance with laws and regulations;

• Strategy and business development (including possible international activities);

• Financial position, results and objectives;

• Risk management and fraud;

• Corporate Governance;

• HR topics like illness, training and education;

• Acquisitions: including Bergman Germany and Van Linschoten and minority shares;

• Results Customer satisfaction surveys;

• Relationships with insurers and financiers;

• Auditor appointment, content auditors reports and audit plan;

• The shareholders announcement, that additional funds for expansion might be provided by an international investor, including the potential implications for the organization, its employees and clients, and the finance structure.

The Supervisory Board has established 3 committees that provide advice to the Executive Board on specific tasks that prepare specific decisions. These are the Audit Committee, the Remuneration Committee and the Quality & Safety Committee.

The Supervisory Board ensured proper recording of decisions taken and minutes of topics discussed. In addition, the Supervisory Board normally maintains contact with the Works Council and staff, but due to COVID-19 it was not possible to have these meetings, in 2020.The Supervisory Board appreciates all the efforts made by the Executive Board and all employees in 2020 and looks forward to continuing this cooperation in 2021.

Naarden, 29 April 2021

Supervisory Board

drs. R.L. de Bakker

drs. M. Sint

W. Malenstein

Prof. dr. F.C. Breedveld

drs. J.R. Ruigrok

Report of the Executive Board

2020 at a glance

The year 2020 has been strongly effected by all implications of the COVID-19 outbreak. The year's excellent start after the organisational completion of the NLHCC and Bergman merger was smothered by the corona pandemic. Virtually everywhere social and economic life came to a standstill in March 2020 with major direct and indirect impact for the Group. During mid-March till mid- May the Group solely provided urgent insured medical care and consequently faced a strong decline of sales.

The Netherlands

After re-opening of the clinics the performance in the Netherlands was strong in the second half of 2020. Performance was strong in all divisions and in the insured and non-insured care. The 'second lockdown' in the Netherlands started in November 2020 and resulted in lower patient inflow, but conversion to treatments increased. The Aesthetics division suffered slightly from the lockdown. In October 2020 Van Linschoten was acquired, and assured the Group's first entry into the ENT business in the Netherlands.

Nordics

COVID-19 had an impact on the results in the Nordics during 2020. Although all clinics remained open during the second lockdown, further restrictions were imposed, particularly in Sweden and Denmark. This had an effect on lower inflow of patients and the number of treatments. Also the retail optical business was negatively impacted due to reduced opening hours, other restrictions and lower appetite from customers. The refractive business in Sweden was less impacted by these additional restrictions, partly due to a successful marketing campaign. During 2020 the Nordics acquired A6 Memira Eyecenter in Sweden and Øjenlægernes Hus in Denmark and the organisation moved to the EyeCenter of Excellence in Stockholm.

Germany

In October 2020 the Group acquired six clinics of Capio Germany (Bergman Germany) - 2 general hospitals, 3 vein clinics and an eye clinic covering different regions in Western Germany. The acquisition of Bergman Germany is the Group's gateway to the German Market as with this acquisition a hospital license has been obtained in Germany. Bergman will move towards a national coverage in Germany's most important regions, with a wider range of the focus care programs (musculoskeletal, ophthalmology); this is done by acquiring targets in adjacent regions to create enough substance. Due to further restrictions imposed by the German government, the vein clinics were under pressure in November and December and the hospital Büdingen provided care to Covid-19 patients.

During 2020 the International board has been set up with selected central functions for improved management of the International Group, use of best practices and synergy creation.

Development of sales and results

In 2020 the revenue increased by € 54 million to € 321 million compared to the same period in 2019 (€ 267 million). If Bergman Germany and VLS should have contributed the whole year, total revenue would have been € 379 million in 2020.

In 2020 the net result decreased by € 9.1 million to € -5.5 million compared to the same period in 2019 (€ 3.6 million net result). The decrease relates mainly to higher depreciation and amortisation expenses due to the NLHCC merger and acquisition of Memira and higher other operating expenses (mainly consultancy related costs).

The following table includes the (normalised) EBITDA and EBITDA 2020 as percentage of revenue, assuming that the business combinations had been 100% all year round:

	€ million	€ million
EBITDA as reported in Statement Proft or Loss	41.4	36.8
Adjustments
- Impact IFRS 16	-10.0	-9.2
- Impact acquisitions full year	4.6	4.9
- Extraordinary items	8.4	8.9
- Covid normalisation	7.2
Normalised EBITDA before impact IFRS 16	51.5	41.4
Revenue	379	305
Normalised EBITDA as percentage of revenue.	13.6%	13.6%

Financial position

Total assets increased by € 126 million to € 529 million. The increase in 2020 is mainly the result from the acquisitions of Bergman Germany and VLS. The interest-bearing borrowings from ICG increased during 2020 by € 42.5 million due to the financing of the acquisition of Bergman Germany. In the years 2018 - 2020 Bergman complies with all ICG convenants.

Strategy

The Group improves care, by delivering transparent quality and superior outcomes at competitive prices, within a select range of high-volume care programs

• The Group operationalizes the principles of value-based healthcare via process, content and costs;

• By managing on scale, focus and innovation the Group creates a virtuous cycle of improvement;

• The Group has a unique and scalable clinic governance model enabling a high utilization of resources through efficient processes and operational excellence.

The Group aims to further optimize the company's operational and financial performance:

• Realize synergies from the NLHCC merger and newly acquired clinics such as Memira, Bergman Germany and VLS;

• Grow the business by optimizing the footprint, through expanding existing clinics and acquiring new clinics;

• Grow the business by leveraging on brand strength and improving conversion;

• Continuous improvement through further roll-out of operational excellence initiatives.

The Group is active in multiple disciplines: Musculoskeletal, Ophthalmology, Aesthetics, Skin, H&GI and ENT(Ear Nose Throat). ENT is an attractive discipline that is added through the acquisition of Van Linschoten. The Group is unique in this proposition; from the start of the platform in the Netherlands, this has proven to be a logical and beneficial choice:

• Plannable focus care is comparable amongst the chosen disciplines: more scale advantages are to be reaped with multiple disciples

• When disciplines are based in one location, infrastructure is shared for synergy purposes; operational processes and logistics are always strictly divided though

• NL is too small a country to build scale in just 1 discipline

The concept is also suitable for further international roll-out, which is currently proven by Bergman Germany. Having obtained its' position in the Dutch market, the Group is now in the transition to becoming a wider European platform and ready for further roll-out.

The Group sees large opportunities to consolidate fragmented European markets, which can also benefit from BC's virtuous cycle of improvement from scale, focus and innovation

• International expansion will provide additional scale for best practice sharing and innovation on key treatments;

• Additional synergies can be obtained both within geographies and internationally (e.g. in purchasing);

• Geographic diversification will improve the risk profile of the group.

Scale to a strong, continuously improving international medical focus clinic platform in 2025 driven by high-quality client-driven diagnosis & care, and optimised customer experience. The announced deal with Triton as investor will support our growth plans.

Risk and capital management

The Executive Board recognises risks are associated with the group's strategy. External factors such as economic developments, unexpected market developments, human factors and changes in legislation and regulations can influence the achievement of the Groups' objectives.

The Executive Board has set guidelines and puts risk control measures in place, aimed to identify and control significant risks for the company. These guidelines apply to the entire organisation. Risk management is an integral management task at the Group.

Strategic risks

Market and competition

The market for specialist medical care is constantly changing. Hippocrates focuses on a limited number of care programs that through upscaling can be delivered cheaper and at a better quality, where customer comes first. Quality and customer satisfaction have always been the two most important points of attention. Thanks to the professional customer communication, Bergman is in good contact with its customer. In this way, care is matched as closely as possible to demand enabling Hippocrates to maintain its position of the leading clinic.

The increase in scale through the merger with NL Healthcare Clinics B.V. and recent acquisitions makes it possible for treatment teams to even more focus on their specialisation. In addition, the combination offers more room to invest in technological innovation, digitization and training. Thanks to the national coverage, treatments can also be planned more efficiently, making better use of the available treatment rooms in the clinics. This offers opportunities to provide customised medical care of higher quality at lower costs.

Range of services

Offering a good mix of services is essential. The Group keeps a close eye on the range of services and assesses the quality performance and profitability of each division using periodic reports and analyses.

Innovative and cost-effective services are added through acquisitions and by gaining knowledge through partnerships.

Operational risks

Medical products

The company consumes medical products in her surgical operations. For the supply of medical products, suppliers are scanned and their reliability is constantly monitored. For regular materials (obtained from various suppliers) delivery reliability is 98%. For specific products (e.g. implants and prostheses) delivery reliability is even 100%.

Executive Board and staff

The Group has a decentralised organisation structure. For each clinic a Manager has been appointed who reports to the division manager and to the managing director of the Country. The central Shared Service departments (BiDA) provide the main central services within the company, such as Finance, IT, BI, Quality, Personnel, Purchasing and the Contact Service Centre. The expertise and dependency of these people are a potential risk. The company addresses this risk through constant performance appraisal, structural consultation with the management, division managers, clinic managers, career planning, education and training.

ICT and data management

A proper and efficient ICT systems is of importance for the Company. Inadequate IT systems can pose a risk to the continuity of the organisation. Data security is another important concern of the Group, privacy sensitive data of customers must be optimally protected. Therefore the Group monitors the performance and security of the systems. Furthermore, the company continues to invests in optimizing the systems to minimize risks and to comply with legal requirements in terms of data and privacy.

Liability and safety

The provided care to customers primarily relies on the knowledge and expertise of the medical specialists, therefore there is a risk of human error.

In order for medical specialists to function optimally, a system of annual interviews with colleague specialists has been implemented. Regular discussions regarding complications, incidents and complaints in combination with a safe culture for reporting incidents and registering complications reduces the risk. The company works with preventive checks on all treatments and products that are used. To guarantee quality, measures have been taken by targeted care reports and standard work instructions. In addition the company, fully complies with the ISO certification (9001-2008) and holds the ZKN certificates including Safety Management for all clinics and the head office.

Product and professional liability risks ("beroepsaansprakelijkheidsrisico's") are covered by agreements with customers and suppliers, as well as by insurance policies.

Health and safety are also potential risks. The company pays a lot of attention to working conditions, sickness absence and accident prevention. External parties that specialise in this are regularly consulted. The Group works with its own company doctors.

Financial and interest risks

A proper finance and cash flow management are crucial for the continuity of the Group, especially due to the ambitions to grow. In order to minimize the risk of liquidity, the company continuously assesses whether the financing and finance structure are in accordance with companies' plans.

The Group has arranged their financing at Intermediate Capital Group (ICG). ICG is an investment company and their financing fits best with the companies' strategy for the coming years. The finance arrangement includes a number of covenants of which the "Net Leverage" and "Cash flow Cover" are the most important. Management continuously assesses the ratios, liquidity positions, results and forecasts to prevent exceeding the covenants. In addition to the above, reference is made to section 29.4 "Financial instruments risk management objectives and policies".

In light of the COVID-19 pandemic, the Group has moved quickly to prevent profitability, liquidity and cash flow while seeking to ensure it is well placed to benefit when the recovery takes place. The Group entered the current crisis with a strong balance sheet as well as undrawn committed facilities, resulting in a resilient balance sheet and a strong liquidity position. Covenants have not been breached during this period.

Risk

The guidelines set by the Executive Board regarding risk appetite, can be summarized as follows (Low - L, Medium - M, High - H):

Strategic risks
Expansion through acquisitions	L/M
Increasing competition	L/M
Relevant branch developments (e.g. changing rules; healthcare ceiling)	M
Operational risks
Quality service	L/M
Available capacity	L
Client satisfaction	L
Financial risks
Low solvency position	L
Insufficient cash	L
Price fluctuations healthcare products and changing healthcare ceilings	M
Compliance risk
Relevant medical laws and regulations	M

The Executive Board aims to reduce operational, financial and compliance risks. With regard to strategic risks, the Executive Board ensures there is a good balance between building a good market position ("game changer") and control of potential risks involved.

Risk mitigating measures

Important risk mitigating measures taken are:

Strategic

• Detailed analyses of all relevant plans and projects;

• Marketing aimed to maintain and improve market position;

• Timing of M&A steps.

Operational

• Continuous focus on improving quality and innovations;

• Focus on better quality of internal organisation in a broad perspective;

• Maintaining medical specialist capacity;

• Client satisfaction monitoring and internal management on client satisfaction.

• further focus on BI and Business Control for better information to improve control of all relevant risks.

Financial

• Adequate agreements with health insurers regarding including constant rates and room for growth (in "care ceilings") to enable organic growth;

• Refinancing aimed to improve the financing structure and covenants;

• Further improvement of financial control: cash flow management, timely revenue information and correct and timely financial reports at all relevant management levels;

• Improve flexible cost structure.

Compliance

• Audits and processes focused on compliance;

• Guide the workflows regarding the merger.

Risk management and control systems

The Executive Board is of the opinion that the risk management and control systems have worked properly in the year under review and there are no indications that the risk management and control systems will not function properly in the current financial year.

Managing risks is a daily activity, however since not all risks are predictable, risk management does not offer an absolute guarantee for all company objectives to be achieved.

Corporate Social Responsibility

The Group believes it is important to do business in a sustainable and socially responsible manner. The Group focusses on the following four areas:

• Customer first;

• Environmental aspects;

• Being a good employer;

• Economical aspects.

Customer first

The vision of the Group is: "the customer comes first". The Groups' aim is to provide affordable, high-quality care that is accessible to anyone and short waiting times.

To offer customers even more service, the Group has developed an app for customers in the Netherlands that is made available free of charge. The app "My Bergman Clinics" provides all information about the treatment and the personal care process of the customer in an efficient way. Before, during and after their treatment, customers receive specific, relevant information in short messages and reminders in their personal timeline. With the app, the Group wants to ensure that customers are optimally prepared for treatment and their recovery.

Environmental aspects

The Group is constantly improving the quality and efficiency of its care, whereby the environmental aspects are also considered. However, the care and health of the client always remains paramount.

The use of decentralized intake clinics and central treatment clinics makes efficient use of the treatment rooms. Optimal utilization of treatment rooms means lower energy consumption per treatment. In addition, the aim is to minimize the paper flow within the administrative process and communication.

Being a good employer

The Group is aware that the ambition to provide the best care can only be achieved by motivated and good employees. That is why, the Group thinks it is important to pay attention to the corporate culture, pride and opportunities for growth for employees. The Group tries to achieve this by providing their employees the following:

• personal development programs;

• training courses;

• periodic performance reviews;

• be able to contribute own insights;

• offering responsibility;

• offering flexible working hours;

• offer the possibility to work part-time;

• offering a safe workplace.

Economical aspects

Good results are important for Hippocrates to ensure the continuity of the organisation and to be able to invest in the improvement care.

To achieve good results, continuous attention is paid to:

• transparent communication to clients;

• good aftercare for clients;

• quality management systems;

• product and process control;

• improvement and expansion of medical expertise.

Composition and role

The executive board is composed as follows:

T.J.M. van der Heijden	CEO, statutory director
P.H.J. Degenhart	CFO, statutory director
I. Piest	CDO, statutory director
G.B. Malenstein	statutory director

Hippocrates is required by law to have at least 30% men or 30% women in the Executive Board and Supervisory Board. Hippocrates does not comply with this provision. Hippocrates aims to reach the required quotes in the future. In case of a vacancy, Hippocrates will always aim to find the best candidate for the position. When more candidates show equal qualities, Hippocrates will give preference to the person that will help to reach the intended gender balance. Currently the Executive Board is composed of four men (100%). The supervisory Board is composed of four men (80%) and one women (20%).

Investments, Research and Development

Hippocrates' mission is "improve medical care on a daily basis, offering high quality treatment at a competitive price". A substantial contribution is made for affordable, accessible and high-quality medical care in the Netherlands. Nordics and Germany in the long term. In general, the company is constantly focusing on the development of employees and systems.

During 2020, in accordance with the company's mission, the company realised:

• the development of a digital diagnosis and indication platform for medical conditions in the form of an app for private users;

• the Acceleration Program for patient and professional information exchange (VIPP). This program consists of two parts: data exchange with the patient and data exchange between professionals and with the patient regarding medication;

• the development of "My Bergman Clinics" app. The app provides tailored information to the patient and offers functionalities to patients to, among other things: plan/manage appointments, view the results of examinations and interact with the practitioner.

Outlook 2021

The Group will continuously seek to improve operating performance, organic revenue growth and improving the profitability of the various divisions still aiming to deliver high-quality client-focused treatments at a competitive price. Furthermore, the Group will continue to look for opportunities to achieve growth through (international) acquisitions.

Bergman intends to pursue further international expansion in the coming years. In the first instance this will involve potential further acquisitions in the German market, as well as in the Swiss and English markets. In the existing countries (The Netherlands, Norway, Sweden, Denmark and Germany), both organic growth and growth through acquisitions will be pursued. As a result of the expected expansion, the staffing is expected to increase in the coming years.

COVID-19

The COVID-19 outbreak in the first months of 2020 caused significant impact to our society, including the Group, its shareholders and other stakeholders such as employees. We are continuously monitoring the market and economic turbulence that has arisen as a consequence of the COVID-19 outbreak, and are taking mitigation actions as necessary.

Subsequent events

On 17 March 2021 the Group obtained approval from the Health care authority (NZA) for the closure of the acquisition of Maurits Klinieken B.V. (sales and purchase agreement signed in December 2020). The transaction is still subject to approval by the competition authority (ACM).

In January 2021 the Group acquired Nacka for an amount of € 0.4 million. Nacka offers publicly funded eye health care on behalf of the Stockholm county.

In February 2021 the Group acquired an online information and booking platform for plastic surgery, as well as practice for plastic surgery with a hospital infrastructure in Germany. Consideration paid was € 1.8 million and the assets were bought through an asset deal.

In March 2021 Bergman and Triton have signed an agreement in which Triton will invest in the Group. The investment will be in partnership with the current shareholders. The agreement is subject to the completion of the consultation process with Bergman Clinic's work council and customary regulatory approvals.

The Group signed the sales and purchase agreement with OZ Flevoland to acquire the remaining shares for an amount of € 1.7 million, the settlement has taken place 1st of April 2021.

Projects in the Netherlands

In 2020 large number of performance monitoring tools have been successfully rolled out, such as BI monitoring of OR capacity utilization, treatment registration performance and commercial dash boarding. The financial administrations (Exact and AFAS) have been aligned and adjusted to the future reduction of legal entities in 2021. Purchase2Pay has been rolled out with further optimization of procuration processes to be done. PLNR (personnel planning system) has been implemented in autumn 2020 in order to further benefit from (benchmarking of) personnel planning capacity in the future. HiX - Electronic Health Record system - has been improved by using consistent planning and treatment codes with a number of ongoing improvements planned for 2021. The promotion and improvement of functionality of the 'My BMC customer journey application' is ongoing next to a number of back-office automation initiatives.

Automation in Scandinavia

One of the strategic focus points for Memira in Scandinavia is digitisation. This is done in several areas: components of the customer journey will be digitised (e.g. pre-examinations). Furthermore a new CRM system is implemented, with the goal to increase marketing and sales conversion (Implementation in HY 1 2021). Also improvements will be made related to scheduling and appointment bookings, including planning, scheduling and allocation of employees and location facilities. Memira's digital transformation program has commenced as an assurance for future success and to establish the business as the digital lead in the ophthalmology industry.

Arnhem/Ede and Den Bosch

The Group is in the process of expanding its business in the Netherlands though the opening of multiple (new) clinics and enlarging the client base of existing clinics, such as Arnhem/Ede and Den Bosch during 2021.

Naarden, 29 April 2021

T.J.M. van der Heijden, CEO

P.H.J. Degenhart, CFO

I. Piest, CDO

G.B. Malenstein, Statutory director

Consolidated Statement of Profit or Loss

For the year ended 31 December	Notes	2020 € 000	2019 € 000
Continuing operations
Revenue	5	320,955	266,983
Cost of providing services	6	-125,455	-106,186
Gross profit		195,5	160,797
Other operating income	7	2,533	1,977
Employee benefit expenses	8	-108,244	-93,87
Depreciation and amortisation of non-current assets	8	-27,587	-18,787
Impairment of non-current assets	8	-	-
Impairment losses on trade receivables and contract asset	8	-	-
Other operating expenses	8	-48,413	-32,11
Operating profit		13,789	18,008
Finance costs	9	-15,562	-11,413
Net finance costs		-15,562	-11,413
Profit (loss) before income tax		-1,773	6,595
Income tax expense	10	-3,698	-3,007
Profit (loss) from continuing operations for the period		-5,471	3,588
Profit (loss) attributable to:
Equity holders of the Company		-6,627	2,107
Nom-controlling interests		1,156	1,481
		-5,471	3,588

Consolidated Statement of Comprehensive Income

	2020 € 000	2019 €000
Profit (loss) for the period	(5,471)	3,588
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations	2,378	1,048
Other comprehensive income (loss) for the period, net of tax	2,378	1,048
Total comprehensive income (loss) for the period	(3,093)	4,636
Total comprehensive income (loss) for the period attributable to:
Equity holders of the Company	(4,308)	3,137
Non-controlling interests	1,215	1,499
	(3,093)	4,636
Total comprehensive income (loss) for the period attributable to equity holders of the Company arises from:
Continuing operations	(4,308)	3,137
	(4,308)	3,137

Consolidated Statement of Financial Position as at 31 December

Assets	Notes	2020 € 000	2019 € 000
Non-current assets
Property, plant and equipment	11	172,851	106,433
Intangible assets	12	248,034	224,768
Deferred tax assets	13	2,104	1,207
Other non-current financial assets	14	3,847	2,532
Total non-current assets		426,836	334,939
Current assets
Inventories	16	6,008	4,277
Trade and other receivables	17	49,728	30,895
Cash and cash equivalents	18	46,542	32,750
Total current assets		102,278	67,923
Total assets		529,114	402,861
Equity and liabilities
Equity
Share capital		-	-
Share premium		92,763	92,013
Other reserves		-46,099	-46,952
Retained earnings		-4,660	1,967
Equity attributable to equity holders of Bergman Clinics		42,004	47,029
Non-controlling interests	20	13,626	13,139
Total equity		55,630	60,168
Liabilities
Non-current liabilities
Interest-bearing loans and borrowings	21	178,519	134,322
Preference shares	22	44,930	42,387
Provisions	23	714	703
Employee benefit obligations	24	476	415
Trade and other payables	26	16,697	-
Deferred tax liabilities	13	17,944	14,231
Other non-current financial liabilities	25	77,997	53,407
Total non-current liabilities		337,278	245,465
Current liabilities
Interest-bearing loans and borrowings	21	1,162	-
Trade and other payables	26	102,749	64,452
Other current financial liabilities	25	22,042	25,300
Employee benefit obligations	24	1,288	1,392
Contract liabilities	15	1,576	3,313
Income tax payable		6,867	2,542
Provisions	23	522	229
Total current liabilities		136,206	97,228
Total liabilities		473,484	342,693
Total equity and liabilities		529,114	402,861

Consolidated Statement of Changes in Equity

	Attributable to the equity holders of the Company
	Note	Issued capital € 000	Share premium € 000	Other reserves € 000	Retained earnings € 000	Total € 000
Balance at 31 December 2018		-	-	-	(140)	(140)
Change in accounting policy		-	-	(2,274)	-	(2,274)
Restated balance at 1 January 2019		-	-	(2,274)	(140)	(2,414)
Profit (loss) for the period		-	-	-	2,107	2,107
Differences on translation of foreign operations		-	-	1,030	-	1,030
Total comprehensive income		-	-	1,030	2,107	3,137
Cash dividends		-	-	(11,390)	-	(11,390)
Contribution Legal Merger		-	92,013	(132,013)	-	(40,000)
Acquisition business
combination NLHCC	4	-	-	97,959	-	97,959
Acquisition business
combination Memira		-	-	-	-	-
Internal developed software	4	-	-	-	-	-
Purchase minority share	5	-	-	(264)	-	(264)
Balance at 31 December 2019 and 1 January 2020		-	92,013	(46,952)	1,967	47,028
Profit (loss) for the period		-	-	-	(6,627)	(6,627)
Differences on translation of foreign operations		-	-	2,319	-	2,319
Total comprehensive (expense) income		-	-	2,319	(6,627)	(4,308)
Issued share capital		-	750	-	-	750
Acquisition business
combination Capio	4	-	-	-	-	-
Purchase minority share		-	-	(1,466)	-	(1,466)
Other		-	-	-	-	-
Balance at 31 December 2020		-	92,763	(46,099)	(4,660)	42,004

	Noncontrolling interests € 000	Total equity € 000
Balance at 31 December 2018	680	540
Change in accounting policy	(21)	(2,294)
Restated balance at 1 January 2019	659	(1,754)
Profit (loss) for the period	1,481	3,588
Differences on translation of foreign operations	18	1,048
Total comprehensive income	1,499	4,636
Cash dividends	-	(11,390)
Contribution Legal Merger	-	(40,000)
Acquisition business
combination NLHCC	12,620	110,579
Acquisition business
combination Memira	631	631
Internal developed software	-	-
Purchase minority share	(2,270)	(2,534)
Balance at 31 December 2019 and 1 January 2020	13,139	60,168
Profit (loss) for the period	1,156	(5,471)
Differences on translation of foreign operations	59	2,378
Total comprehensive (expense) income	1,215	(3,093)
Issued share capital	680	1,430
Acquisition business
combination Capio	210	210
Purchase minority share	(1,618)	(3,084)
Other	-	-
Balance at 31 December 2020	13,626	55,630

Consolidated Statement of Cash flow for the year ended 31 December

	Notes	2020 € 000	2019 € 000
Cash flows from operating activities
Profit (loss) before tax from continuing operations		-1,773	6,595
Profit (loss) before tax from discontinued operations		-	-
Profit (loss) before tax		-1,773	6,595
Adjustments to reconcile profit before tax to net cash flows:
- Depreciation and impairment of property, plant and equipment	8	24,170	17,226
- Amortisation and impairment of intangible assets	8	3,417	1,560
- Finance costs	9	15,562	11,413
- Net of additions and unused amounts reversed from provisions and employee benefit obligations	23-24	-250	424
- Net additions to contingent considerations		809	7,490
Working capital adjustments:
- (Increase) Decrease in trade and other receivables and prepayments		8,546	6,66
- (Increase) Decrease in inventories		-678	-669
- Increase (Decrease) in trade and other payables		19,496	6,146
		69,299	56,845
Interest paid		-9,314	-4,96
Income tax received / (paid)		402	-2,445
Net cash flows from operating activities		60,387	49,441
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired	4	-52,113	-47,005
Dividends received from joint ventures		-	-
Purchase of property, plant and equipment (including ROU-assets)		-28,682	-18,082
Purchase of intangible assets		-2,689	-1,032
Proceeds from property, plant and equipment put out of use		239	-
Net cash flows from investing activities		-83,245	-66,119
Cash flows from financing activities
Proceeds from issue of shares		750	-
Loans granted to key personnel		-375	-
Dividends paid to equity holders of the Company		-	-11,390
Acquisition of non-controlling interests		-2,665	-2,280
Proceeds from borrowings		42,475	84,135
Repayment of borrowings	21	-	-8,396
Cost related to attract funding		-1,497	-4,522
Payment of lease contracts	25	5,648	-10,702
Payment of lease contracts		-715
Payment of earn-outs	25	-7,695	-
Advanced payments earn-outs	14	-400	-400
Net cash flows from financing activities		35,526	46,445
Net increase in cash and cash equivalents		12,668	29,766
Net foreign exchange difference		1,124	-1,481
Cash and cash equivalents at 1 January		32,75	4,465
Cash and cash equivalents at 31 December		46,542	32,750

Notes to the Consolidated Financial Statements

1 General information

The consolidated financial statements of Hippocrates Capital B.V. and its subsidiaries (collectively, the Group) for the year ended 31 December 2020 were authorised for issue in accordance with a resolution of the Executive Board following the approval by the Supervisory Board on 29 April 2021. Submission for adoption to the General Meeting of Shareholders will take place of 10th May 2021. Hippocrates Capital B.V. (Hippocrates or the Company) is a limited company incorporated and domiciled in The Netherlands.

Malenstein Holding B.V. with its headquarters in Blaricum, NPM Capital N.V. with its headquarters in Amsterdam hold respectively 60% and 40% of Hippocrates Capital B.V. Stichting Administratiekantoor Hippocrates Capital holds shares without voting rights.

Hippocrates Capital B.V. has its registered office located in Naarden, the Netherlands and has its principal place of business located at Gooimeer 11, 1411 DE in Naarden, the Netherlands. The registration number at the Dutch Chamber of Commerce Trade is no. 70918392. The principal activity of Hippocrates and its subsidiaries is operating clinics for specialist medical care.

2 Significant accounting policies for the consolidated financial statements

2.1 Basis of preparation

Statement of IFRS compliance

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union. Pursuant to the option offered in section 2:362(8) of the Dutch Civil Code, Hippocrates prepares its Company financial statements in accordance with the same accounting policies as those used for the consolidated financial statements (refer to note 32 Accounting policies to the Company Financial Statements).

The Company income statement is presented in accordance with the exemption of article 2:402 of the Dutch Civil Code.

Relevant new standards, amended standards and interpretations of existing standards effective as of 2020

New or amended standards that become effective as of 1 January 2020 and that are relevant to Hippocrates are disclosed below. Since the Company's current practice is in line with these amendments, these amendments have no effect on its consolidated financial statements.

• 'Definition of a Business (Amendments to IFRS 3)';

• 'Definition of Material (Amendments to IAS 1 and IAS 8)';

• 'Amendments to References to the Conceptual Framework in IFRS Standards';

• 'COVID-19-Related Rent Concessions (Amendment to IFRS 16)'.

Definition of a Business - Amendments to IFRS 3

On 22 October 2018, the IASB issued 'Definition of a Business (Amendments to IFRS 3)' aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets. The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020.

Definition of Material - Amendments to IAS 1 and IAS 8

On 31 October 2012, the IASB issued 'Definition of Material (Amendments to IAS 1 and IAS 8)' to clarify the definition of 'material' and to align the definition used in the Conceptual Framework and the standards themselves. The amendments are effective annual reporting periods beginning on or after 1 January 2020.

Amendments to References to the Conceptual Framework in IFRS Standards

Together with the revised 'Conceptual Framework' published in March 2018, the IASB also issued 'Amendments to References to the Conceptual Framework in IFRS Standards'. The amendments are effective for annual periods beginning on or after 1 January 2020.

COVID-19-Related Rent Concessions (Amendment to IFRS 16)

On 28 May 2020, the IASB published 'COVID-19-Related Rent Concessions (Amendment to IFRS 16)' amending the standard to provide lessees with an exemption from assessing whether a COVID-19 related rent concession is a lease modification. The amendment is effective for annual reporting periods beginning on or after 1 June 2020. The amendment is not applicable, as the Group did not receive COVID-19 related rent concessions.

Relevant new standards, amended standards and interpretations of existing standards effective date on or after January 2021

Relevant new standards, amendments to existing standards and interpretations, effective for reporting periods beginning on or after 1 January 2021, were not early adopted by Hippocrates. New or amended standards that become effective on or after 1 January 2021 and that are relevant to Hippocrates are disclosed below.

Effective date of IAS 1 amendments on classification 01 Jan 2023

On 23 January 2020, the IASB issued 'Classification of Liabilities as Current or Non-current (Amendments to IAS 1)' providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments were originally effective for annual reporting periods beginning on or after 1 January 2022, however, their effective date has been delayed to 1 January 2023.

Effective date of IAS 16 amendments regarding proceeds before intended use 01 Jan 2022

On 14 May 2020, the IASB issued 'Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16)' regarding proceeds from selling items produced while bringing an asset into the location and condition necessary for it to be capable of operating in the manner intended by management. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

Effective date of 2018-2020 annual improvements cycle 01 Jan 2022

On 14 May 2020, the IASB issued 'Annual Improvements to IFRS Standards 2018-2020'. The pronouncement contains amendments to four International Financial Reporting Standards (IFRS) as result of the IASB's annual improvements project. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

Effective date of IAS 37 amendments regarding onerous contracts 01 Jan 2022

On 14 May 2020, the IASB issued 'Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)' amending the standard regarding costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

Effective date of IFRS 3 amendments updating a reference to the Conceptual Framework 01 Jan 2022

On 14 May 2020, the IASB issued 'Reference to the Conceptual Framework (Amendments to IFRS 3)' with amendments to IFRS 3 'Business Combinations' that update an outdated reference in IFRS 3 without significantly changing its requirements. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

2.2 Changes in policies, presentation and estimates

Changes in policies

Except for the changes below, the Group has consistently applied the accounting policies to all periods presented in these consolidated financial statements.

Management has changed the Cash Generating Unit (CGU) structure of Bergman following the acquisition of the German division of Capio AB. The pre-restructuring CGU setup was based on the therapeutic treatment area in the Netherlands and a Nordics CGU. The therapeutic treatment area structure now rolls up in the CGU Netherlands. Following the acquisition of the Nordics and Germany, the CGU structure was changed to align it with the way the Company is currently managed, i.e. at the country level. Hence, the CGU structure now resembles this.

Changes in presentation

In 2020 there are no significant changes in presentation.

Changes in estimates

In 2020 there are no significant changes in estimates.

2.3 Basis for consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2020.

Subsidiaries

Subsidiaries, i.e. all entities that are controlled by Hippocrates, are consolidated. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

• Exposure, or rights, to variable returns from its involvement with the investee

• The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement(s) with the other vote holders of the investee

• Rights arising from other contractual arrangements

• The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

Elimination of group transactions

Intra-group transactions, intra-group balances and unrealised gains and losses arising from intra-group transactions are eliminated in the preparation of the consolidated financial statements.

Segment Information

Hippocrates is a non-listed company and therefore exempt from the inclusion of segment information under IFRS 8.

2.4 General accounting policies

The accounting policies set out below have been applied consistently to all the periods presented in the consolidated financial statements.

The consolidated financial statements have been prepared on a historical cost basis.

Functional currency and reporting currency

The consolidated financial statements have been prepared in thousands of euros (€). The euro is the functional and reporting currency of Hippocrates. All financial data presented in euros is rounded to the nearest thousand, unless stated otherwise. Totals are based on unrounded figures. Their sum may differ from the sum of the rounded figures.

Foreign currency

Upon initial recognition, transactions in foreign currencies are converted into euros against the exchange rate at the transaction date.

Monetary items in the statement of financial position denominated in foreign currencies are translated into euros at the exchange rate applicable at the reporting date. Exchange rate differences arising from these transactions and from converting monetary items in the statement of financial position denominated in foreign currencies are recognised in the statement of profit or loss.

The exchange rate differences of non-monetary items in the statement of financial position measured at fair value, with changes in the fair value recognised in the statement of profit or loss, are accounted for as part of these changes in the value of the related item in the statement of financial position.

Exchange rate differences of non-monetary items in the statement of financial position measured at fair value, with changes in the fair value being recognised in other comprehensive income, are incorporated into shareholders' equity.

Nonmonetary items measured at historical cost are measured at the exchange rate applicable on the initial transaction date.

Currency translation group companies

On consolidation, the assets and liabilities of foreign operations are translated into euros at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is reclassified to profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

Currency exchange rates

The following exchange rates have been used in the preparation of the consolidated financial statements:

	At year-end	Average	At year-end	Average
SEK/EUR	100.343	101.736	104.675	104.675
NOK/EUR	104.703	106.008	98.638	100.429
DK/EUR	74.409	74.412	74.715	74.720

Current versus non-current classification

The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:

• Expected to be realised or intended to be sold or consumed in the normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period

Or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in the normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting period

Or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Offsetting Financial Instruments

Financial assets and liabilities are offset and their net amounts are reported in the statement of financial position if the following conditions are met:

• a legally enforceable right to set off the recognised amounts exists;

• Hippocrates intends to settle the items on a net basis, or to realise the asset and the liability simultaneously.

If either of these conditions are not met, amounts are not offset.

Fair Value of Assets and Liabilities

Fair Value

The fair value is the price that Hippocrates would receive to sell an asset or to pay to transfer a liability in an orderly transaction between market participants in the principal market, or in the most advantageous market and assuming the highest and best use for non-financial assets.

Fair Value Hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

Level 1

The fair value of financial assets and liabilities is determined using quoted prices where available. These quoted prices are primarily derived from transaction prices for listed instruments. If transaction prices are not available, market prices from independent market participants or other experts are used.

Level 2

In markets where activity has decreased or in inactive markets, the range of prices from different sources can be significant for a certain asset. Selecting the most appropriate price requires judgement; available market information relating to the fair value of the instrument is taken into account.

Level 3

When no market price is available for certain financial assets and liabilities, the fair value of these financial assets and liabilities is determined using valuation techniques, which may vary from net present value calculation to valuation models that use accepted economic methodologies. Input used in these models is based on observable market information to the extent possible. All valuation methods used are assessed and reviewed according to the Group's governance procedures.

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

2.5 Accounting policies for the statement of financial position

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognised in the statement of profit or loss in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognised in profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

Taxes

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss.

The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Sales tax

Expenses and assets are recognised net of the amount of sales tax, except:

• When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable

• When receivables and payables are stated with the amount of sales tax included

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Non-current assets held for sale and discontinued operations

The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.

Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position.

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

• Represents a separate major line of business or geographical area of operations

• Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations

Or

• Is a subsidiary acquired exclusively with a view to resale

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit or loss.

Additional disclosures are provided in note 19. All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.

Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.

When significant parts of plant and equipment are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Construction in progress is stated at cost, net of accumulated impairment losses, if any.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:

• Goodwill	Indefinite
• Licences and intellectual property	5 years and indefinite
• Software	5 years
• Tradenames	Indefinite

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

• the contract involves the use of an identified asset - this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

• the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:

o the Group has the right to operate the asset; or

o the Group designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of cars and equipment in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

As a lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments, including in-substance fixed payments;

• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable under a residual value guarantee; and

• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'other financial liabilities' in the statement of financial position.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a lessor

The Group only acts as an intermediate lessor, this mainly concerns the sub-lease of a few rooms.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of 'other income'.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Amortisation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:

• Goodwill Indefinite

• Licences and intellectual property 5 years and indefinite

• Software 5 years

• Tradenames Indefinite

An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss.

Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:

• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale

• Its intention to complete and its ability and intention to use or sell the asset

• How the asset will generate future economic benefits

• The availability of resources to complete the asset

• The ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses.

Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. During the period of development, the asset is tested for impairment annually. In 2020 the Group R&D costs did not occur.

Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or CGU's fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. A long-term growth rate is calculated and applied to project future cash flows after the fifth year (1%).

Impairment losses of continuing operations are recognised in the statement of profit or loss.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset's or CGU's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss.

Goodwill

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives

Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.

Financial instruments

Financial instruments - initial recognition and subsequent measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price.

In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

Based on the assessment group's financial assets are all classified as financial assets at amortised cost.

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset.

Subsequent measurement

Financial assets at amortised cost

The Group measures financial assets at amortised cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows

And

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Group's financial assets at amortised cost includes trade receivables, and loan to an associate and loan to a director included under other non-current financial assets.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when:

• The rights to receive cash flows from the asset have expired;

Or

• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or payables.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts. The Group has not designated any financial liability as at fair value through profit or loss.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Loans and borrowings

This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

This category generally applies to interest-bearing loans and borrowings. For more information, refer to note 21 'Interest-bearing loans and borrowings'.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Inventories

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

• Raw materials: purchase cost on a first-in/first-out basis

• finished goods and work in progress: cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. In determining the net realisable value, the shelf-life of the medical supplies is taken into account to determine the obsolete stock.

Contract assets and liabilities

Refer to section 2.6 paragraph "Revenue from contracts with customers".

Cash and short-term deposits

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group's cash management.

Share based payments

The management shares plan is designed to provide long-term incentives for the executive board to deliver long-term shareholder returns. Participation in the plan is at the shareholder's discretion, and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. The fair value at grant date is independently determined and the shares are granted at fair value and carry no voting rights. Shares issued under the scheme may not be sold until the earlier of five years after issue or after a change in ownership of the Company or when an executive ceases to be employed by the Group within this period.

Preference shares

Preference shares are separated into liability and equity components based on the terms of the contract.

On issuance of the preference shares, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or redemption.

The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not remeasured in subsequent years.

Transaction costs are apportioned between the liability and equity components of the convertible preference shares, based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.

Cash dividend

The Group recognises a liability to pay a dividend when the distribution is authorised and the distribution is no longer at the discretion of the Group. As per the corporate laws of The Netherlands, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

Provisions

General

Provisions are recognised when the Group has:

• a present obligation (legal or constructive) as a result of a past event,

• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and

• a reliable estimate can be made of the amount of the obligation.

When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Restructuring provisions

Restructuring provisions are recognised only when the Group has a constructive obligation, which is when:

• there is a detailed formal plan that identifies the business or part of the business concerned, the location and number of employees affected, the detailed estimate of the associated costs, and the timeline; and

• the employees affected have been notified of the plan's main features.

Onerous contracts

If the Group has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Group recognises any impairment loss that has occurred on assets dedicated to that contract.

An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.

Onerous lease contracts are adjusted on the carrying amount of the Right of Use (ROU) asset, in accordance with IFRS 16.

Employee benefit obligations

Short-term employee benefits

Short-term employee benefits include salaries, short paid leave, profit-sharing and bonus schemes. These are accounted for in the statement of profit or loss over the period in which the related services are rendered. In the event that employees have not made use of their entitlements at the end of the period, a liability is formed for the nominal amount.

Pension benefits

Defined contribution schemes

The Group has several defined contribution schemes insured by pension insurers. In accordance with these pension schemes, defined contributions are paid to independent pension funds. Besides these defined contributions, the Group has no obligation to make additional payments to the scheme to make up for deficits resulting from actuarial or investment risk.

These contributions are accounted for in the statement of profit or loss. At year end, a liability is formed for any contributions payable, or an asset for prepaid contributions for the nominal amount.

Defined benefit schemes

A defined benefit scheme exists for a number of (former) employees, which is insured with the industry-wide pension fund "Pensioenfonds Zorg & Welzijn" (PFZW). At their retirement age, eligible employees, are entitled to a pension based on the average wage calculated over the years that the employee has accrued pension. In this scheme, the group has no obligations to make additional contributions in the event of a deficit, other than higher future contributions.

PFZW, a multi-employer plan, is not able to provide sufficient information to the Group to account for the scheme as defined benefit plan. Therefore, the Group, makes use of the exemption provided by IAS 19.34, which allows accounting as if the plan were a defined contribution plan.

Other long term employee benefits

These refer to jubilee benefits and provision for the long-term sick. The amount of the obligation is based on the present value of the expected future expenses taking into account past experiences.

Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released to profit or loss over the expected useful life of the asset, based on the pattern of consumption of the benefits of the underlying asset by equal annual instalments.

2.6 Accounting policies for the statement of profit or loss

Revenue from contracts with customers

Revenue from contracts with customers is recognised when services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services. The Group has generally concluded that it is the principal in its revenue arrangements, because it typically controls the services before transferring them to the customer.

The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (e.g., warranties). In determining the transaction price for the services provided, the Group considers the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer (if any).

Generally, the Group receives short-term advances from its customers. Using the practical expedient in IFRS 15, the Group does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the provided service to the customer and when the customer pays for that service will be one year or less.

The Groups revenue consists of two main types of contracts with customers:

• Insured-care

• Non-insured care

Insured care

Insured care are medical services provided to customers which are reimbursed by their health insurer. These services are generally performed 'over time' and therefore revenue from insured care is recognised over time. Given the nature of the medical services provided, a contract does not include different performance obligations.

The services provided are administered using the national tool "WIP-Grouper" (Work in progress Grouper), used to settle work performed between medical service providers and insurers. The WIP-Grouper includes DBC care products (dbc: diagnose-behandelcombinatie) and transaction prices agreed with the health insurers.

Non-insured care

Non-insured care are services provided to customers which are not settled via the customers health insurers. In general these services take place within a day and are paid upfront by the customer. Accordingly the revenue is recognised, at the point in time, on the treatment date. Non-insured care contracts in general do not include different performance obligations and therefore transaction prices do not need to be allocated to different performance obligations.

Contract balances

Contract assets

A contract asset is the right to consideration in exchange for services provided to the customer. If the Group performs a services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.

Contract liabilities

A contract liability is the obligation to provide services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group provides services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.

Recognition

The contract assets and liabilities related to DBC care products are recognised using WIP-Grouper. The WIP-Grouper includes the production value of the work in progress that has not yet been invoiced to the health insurers. In some cases an insurer pays in advance, these advanced payments are netted with the work in progress. If the advance payment exceeds the work in progress a liability is recognised.

Provisions for expected losses (DBC care products only) are recognised in the period in which these losses occur. Provisions are deducted from work in progress balances.

Cost to obtain a contract

In general, the Group does not incur any costs to get a contract. If such cost occur Group has elected to apply the practical expedient which allows the Group to immediately expense these cost because the amortisation period of the asset that the Group otherwise would have used is one year or less.

Other income

Other income is recognised in the period the performance is delivered to the third party.

Cost of providing services

Cost of providing services includes direct and indirect costs attributable to sales, including purchase costs of medical devices and consumables, fees for medical specialists and other operating costs that are attributable to the cost of sales.

Finance income and costs

Interest income, for financial assets at amortised cost and interest-bearing financial assets available for sale, is recognised using the effective interest method. The effective interest method is based on estimated future cash flows, taking into account the risk of early redemption of the underlying financial instruments and direct costs and income, such as transaction costs charged, brokerage fees and discounts or premiums. Interest income is recognized in the income statement under financing income.

Financing costs consist of interest charges on interest-bearing loans and borrowings. Interest expenses are recognised in the income statement as they accrue, using the effective interest method.

3 Significant accounting judgements, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Revenue recognition uncertainties as a result of sector developments specialist medical care

Compliance audits 2019 and 2020

The revenue has been determined based on contractual agreements with Health Insures using the Compliance Guide Medical Specialist Care ("Handreiking Rechtmatigheidsonderzoek Medisch Specialistische Zorg"). Health insurers have the right to conduct compliance audits. The financial statements are based on preliminary results and risk assessment arising from detected incorrect registrations and/or declarations. The final results are expected in autumn 2021. Group's Executive Board does not expect the outcome of these compliance audits will lead to material gains or losses.

The finalisation of compliance audits regarding 2019 revenue did not result in material gains or losses.

Revenue-ceiling and allocation to claim year

The Group agrees revenue-ceilings with Health insurers per fiscal year. At year end the cut off regarding claims allocation to the fiscal year have been determined, in accordance with "Guide Revenue Recognition", based on best estimates regarding progress of treatment.

Any adjustments have been deducted from the 2020 revenue and, where applicable, recognised as work in progress at the end of 2020.

The final settlements with health insurers will take place in coming years. Management is of the opinion that the financial statements provides the best estimates available when preparing these statements.

Determining the lease term of contracts with renewal and termination options - Group as lessee

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation to the leased asset).

The Group included the renewal period as part of the lease term for leases of property with shorter non-cancellable period. The Group typically exercises its option to renew for these leases because there will be a significant negative effect on revenue to customers if the lease of a clinic is not extended. The renewal periods for leases of plant and machinery with longer non-cancellable periods are not included as part of the lease term as these are not reasonably certain to be exercised.

In addition, the renewal options for leases of (medical) equipment and motor vehicles are not included as part of the lease term because the Group typically leases (medical) equipment, motor vehicles for not more than five years and, hence, is not exercising any renewal options.

Furthermore, the periods covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised.

Refer to note 25 for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term.

Leases - incremental borrowing rate

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary's functional currency).

The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary's stand-alone credit rating).

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget and forecast for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Group. The key assumptions used to determine the recoverable amount for the different CGUs, are disclosed and further explained in note 12.

Provision for expected credit losses of trade receivables and contract assets

The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns.

The provision matrix is initially based on the Group's historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group's historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future. The information about the ECLs on the Group's trade receivables and contract assets is disclosed in note 15 and 17.

Utilisation of tax losses and uncertain tax positions

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies. Further details on taxes are disclosed in note 13.

Provisions

In determining the provisions, assumptions and estimates are made in relation to discount rates, the expected cost, likelihood and the expected timing of those costs.

The Group uses the DCF method for calculating the provision, when the expected realisation of the provisions takes longer than a year.

Fair value measurement of financial instruments and used for business combinations

When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial instruments. See note 29 for further disclosures.

Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability of meeting each performance target and the discount factor (see notes 4 and 25 for further details).

4 Business combinations

The Group completed several acquisitions in 2020 including six clinics from the Capio health care chain in Germany, Van Linschoten specialist and the Group increased the interest in Oogheelkunde Zonnestraal Oost-Nederland B.V. to 100%. In 2019 the Group completed the acquisition of NL Healthcare Clinics B.V. on 3 January 2019 and the acquisition of Memira on 30 August 2019.

Acquisition of Capio

On 30 October 2020, the Group acquired Bergman Germany from Ramsey. With the acquisition of the six clinics the Group enters the German market, Europe's biggest care market and strengthens its position in Northwest Europe. By expanding, the Group aims to become an international platform for highly specialized planned medical care. The six clinics that the Group has acquired include two regional hospitals (Büdingen and Aschaffenburg), three vein clinics (Hilden, Bad Bertrich and Laufen) and 1 eye care clinic (Bremen).

The fair values of the identifiable assets and liabilities of Germany as at the date of acquisition were:

	Note	Fair value recognised on acquisition € 000
Assets
Property, plant and equipment	11	47,272
Right of Use assets	11	9,848
Intangible assets
- License to Operate	12	5,849
- Software	12	363
Other non current financial assets		67
Inventories		1,002
Trade and other receivables		20,469
Cash and cash equivalents		1,015
		85,885
Liabilities
Interest bearing loans and borrowings		1,188
Other provision	23	314
Lease liability		9,848
Employee benefit obligations		4,035
Deferred tax liability		2,605
Grant liability		17,963
Trade and other payables		7,398
Other financial liabilities		3,100
		46,450
Total identifiable net assets at fair value		39,435
Non-controlling interest measured at fair value		(209)
Goodwill arising on acquisition	12	-
Purchase consideration transferred		39,226

	2020 € 000
Purchase consideration
Cash consideration	38,971
Contingent consideration liability	3,100
Receivable	-2,845
Total consideration	39,226
	2020
Analysis of cash flow on acquisition	€ 000
Cash consideration paid (included in cash flows from investing activities)	-38,971
Transaction costs of the acquisition (included in cash flows from
operating activities)	-2,618
Net cash acquired with the subsidiary (included in cash flows from
investing activities)	1,015
Net cash flow on acquisition	-40,574

The fair value of the trade receivables amounts to € 5.3 million and approximate largely the gross amount of trade receivables. It is expected that the full contractual amounts can be collected. The deferred tax liability comprises the tax effect of the intangible assets with an indefinite useful life and the impact on fair value changes of the property, plant and equipment and the liabilities for grants. No goodwill has been recognised. This business combination has been accounted for initially and has not yet been finalized (measurement period is open till 30th of October 2021).

From the date of acquisition, Germany contributed € 12 million of revenue and € -2.8 million to profit before tax from continuing operations of the Group. If the combination had taken place at the beginning of the year, revenue from continuing operations would have been € 59 million and profit before tax from continuing operations for the group would have been approximately € -3.1 million.

Total transaction costs amount to € 2.6 million which were expensed in 2020 in the other operating expenses.

Acquisition of Van Linschoten Klinieken

On 30 October 2020, the Group acquired Van Linschoten Klinieken (VLS). With the integration of VLS, Bergman Clinics is expanding its care offering with ENT care.

The fair values of the identifiable assets and liabilities of VLS as at the date of acquisition were:

	Note	Fair value recognised on acquisition € 000
Assets
Property, plant and equipment	11	827
Right of Use assets (includes net unfavourable contracts)	11	3,081
Intangible assets		-
- License to Operate	12	1,379
- Customer agreements		-
- Trade names	12	76
- Software	12	-
Other non current financial assets		8
Inventories		17
Trade and other receivables		1,142
Contract assets		1,605
Income tax receivable		56
Cash and cash equivalents		248
		8,439
Liabilities
Interest bearing loans and borrowings		-
Provisions	23	8
Employee benefit obligations		-
Lease liability		3,081
Other financial liabilities		60
Deferred tax liability		364
Trade and other payables		806
Income tax payable		-
Employee benefit obligations (short term)		298
		4,617
Total identifiable net assets at fair value		3,822
Goodwill arising on acquisition	12	11,643
Purchase consideration transferred		15,465

The fair value of the trade receivables amounts to € 0.6 million and approximate largely the gross amount of trade receivables. It is expected that the full contractual amounts can be collected.

The deferred tax liability mainly comprises the tax effect of the accelerated depreciation for tax purposes of tangible and intangible assets.

The goodwill of € 11.6 million comprises the value of expected synergies arising from the acquisition and assembled workforce, which are not separately recognised. Goodwill is allocated entirely to CGU segment Netherlands. None of the goodwill recognised is expected to be deductible for income tax purposes.

From the date of acquisition, VLS contributed € 1.3 million of revenue and € 0.4 million to profit before tax from continuing operations of the Group. If the combination had taken place at the beginning of the year, revenue from continuing operations would have been € 8.1 million and profit before tax from continuing operations for the Group would have been approximately € 1.2 million.

	€ 000
Purchase consideration
Cash consideration	13,165
Contingent consideration liability	2,300
Total consideration	15,465
	€ 000
Analysis of cash flow on acquisition
Cash consideration paid (included in cash flows from investing activities)	(13,165)
Transaction costs of the acquisition (included in cash flows from
operating activities)	(250)
Net cash acquired with the subsidiary (included in cash flows from
investing activities)	248
Net cash flow on acquisition	(13,167)

Total transaction costs amounts to € 0.4 million which were expensed in the period 2019 until 2020. For 2020 the expense amounts to € 0.2 million which has been included in other operating expenses of 2020.

Acquisition of other companies

The Group acquired the activities of A6 Memira Eyecenter AB in Sweden and Øjenlægernes Hus ApS in Denmark. Total consideration amounts to € 1,2 million. The Group paid € 1,1 million in cash and recognized a contingent consideration liability of € 0,1 million related to future revenues.

Acquisition of non-controlling interests

In September 2020, the Group acquired the additional 49.0% interest in the voting shares of Oogheelkunde Zonnestraal Oost-Nederland B.V., increasing its ownership interest to 100.0%.

The total consideration amounts to € 3.1 million, of which € 2.7 million is paid in 2020 and € 0.4 million will be paid during 2021. The difference between the purchase price and value of the non-controlling interest is deducted from the retained earnings.

5 Revenue

	2020 € 000	2019 € 000
Revenue insured care	232,980	220,440
Revenue non-insured care	76,968	42,923
Other revenue	11,007	3,620
	320,955	266,983
Divisional breakdown of revenue:
	2020 € 000	2019 € 000
Revenue The Netherlands	256,406	245,174
Revenue Scandinavia	53,142	21,809
Revenue Germany	11,407	-
Total revenue	320,955	266,983

The category other revenue mainly contains € 7,660 of COVID support from Healthcare insurers and revenue from compressions socks and equipment sterilisation.

6 Cost of providing services

Cost of providing services	2020 € 000	2019 € 000
Medical specialists	56,697	43,646
Consumables/medication	30,835	29,046
Prosthesis/lenses	20,338	16,688
Diagnostic	6,770	7,398
Rent/maintenance medical equipment	3,097	2,370
Sterilization cost	3,515	3,570
Other cost	4,203	3,468
	125,455	106,186
Cost of providing services The Netherlands	102,672	99,671
Cost of providing services Scandinavia	17,803	6,515
Cost of providing services Germany	4,980	-
Total cost of providing services	125,455	106,186

7 Other operating income

	2020 € 000	2019 € 000
Government grants	2,533	1,816
Other	-	161
	2,533	1,977

The government grants income relate to KIPZ and VIPP. KIPZ is a grant for staff hours due to staff training, internal and external training costs and maintaining training facilities (e.g. E-learning). VIPP is a grant for costs related to the program "information transfer between patient and medical service provider".

8 Operating expenses

Employee benefit expenses

	2020 € 000	2019 € 000
Wages and salaries	76,517	61,464
Social security costs	13,578	10,757
Pension costs	5,554	4,258
Other personnel related costs	12,595	17,391
	108,244	93,87

The other personnel related costs are lower due to one-off costs in 2019 relating to the merger between NLHCC and Bergman and lower travel costs and other personnel event related costs due to COVID-19. Divisional breakdown of fte's:

	2020	2019
The Netherlands	1,167	1,107
Scandinavia	240	73
Germany	104	-
Total FTE	1,511	1,180

Depreciation and amortisation of non-current assets

	2020 € 000	2019 € 000
Depreciation	24,170	17,226
Amortisation	3,417	1,560
	27,587	18,787

Other operating expenses

	2020 € 000	2019 € 000
Housing costs	10,573	8,958
Office and general expenses	5,570	5,568
Audit and consultancy costs	13,915	5,131
IT costs	9,593	7,423
Advertising and sales costs	8,762	5,030
	48,413	32,110

The audit and consultancy costs includes transaction related costs for business combinations.

9 Finance income and costs

Finance costs

	2020 € 000	2019 € 000
Interest-bearing loans	13,817	8,727
Finance charges payable under finance leases	10	19
Total interest expense	13,827	8,746
Unwind of discount on lease liabilities	2,792	2,666
Result due to revised extension options	-1,057	-
Total finance costs	15,562	11,413

The gain of € 1.1 million recognised as result due to revised extension options is a gain due to not exercising expected extension options refer to note 25.1.1.

10 Income tax expense

	2020 € 000	2019 € 000
Income tax charge reconciliation
Profit/(loss) before tax from continuing operations	-1,773	6,595
Untaxed result	13,317	2,131
Profit/(loss) before income tax	11,544	8,726
Statutory income tax amount	2,910	3,020
Adjustments in respect of current income tax of previous year	133	-14
Effect of lower tax rates	655	-
Total	3,698	3,007
Effective tax rate	32%	34%
Current income tax
Current income tax charge	4,378	3,848
Adjustments in respect of current income tax of previous year	-11	-14
Deferred income tax
Relating to origination and reversal of temporary differences	-669	-829
Income tax expense reported in the statement of profit or loss	3,698	3,007

11 Property, plant and equipment

	Note	2020 € 000	2019 € 000
Property, plant and equipment owned	11.1	100,035	54,848
Right-of-use assets	11.2	72,958	51,584
		172,993	106,433

11.1 Property, plant and equipment owned

	Freehold land and buildings € 000	Medical equipment € 000	Other € 000	Construc- tion in progress € 000	Total € 000
Cost
At 1 January 2020	47,560	22,908	11,265	2,898	84,631
Additions	1,848	5,996	2,229	957	11,030
Through business combinations	43,764	453	4,063	22	48,302
Disposals	-3,053	-12	-52	-5	-3,122
Transfers from/to	2,583	116	194	-2,893	-
Exchange translation	-51	89	-168	-5	-135
At 31 December 2020	92,651	29,550	17,531	974	140,706
Depreciation and impairment
At 1 January 2020	18,682	7,275	3,826	-	29,783
Depreciation charge for the year	7,260	4,136	2,736	-	14,132
Impairment	-	-	-	-	-
Disposals	-2,863	-	-20	-	-2,883
Assets classified as held for sale	-	-	-	-	-
Exchange translation	-48	-30	-141	-	-219
At 31 December 2020	23,031	11,381	6,401	-	40,813
Net book value
At 31 December 2020	69,620	18,169	11,130	974	99,893
At 31 December 2019	28,878	15,632	7,440	2,898	54,848

	Freehold land and buildings € 000	Medical equipment € 000	Other € 000	Construc- tion in progress € 000	Total € 000
Cost
At 1 January 2019	38,599	16,493	13,317	443	68,852
Additions	5,687	3,818	3,766	2,477	15,748
Through business combinations	8,132	11,744	2,833	57	22,766
Disposals	-4,870	-9,336	-8,679	-	-22,885
Transfers from/to	-	79	-	-79	-
Exchange translation	12	110	28	-	149
At 31 December 2019	47,560	22,908	11,265	2,898	84,631
Depreciation and impairment
At 1 January 2019	18,717	12,754	10,82	-	42,291
Depreciation charge for the year	4,748	3,801	1,684	-	10,232
Impairment	-	-	-	-	-
Disposals	-4,783	-9,279	-8,679	-	-22,741
Assets classified as held for sale	-	-	-	-	-
Exchange translation	-	-	-	-	-
At 31 December 2019	18,682	7,275	3,826	-	29,783

The category other mainly comprises hardware and office furniture. Additions during 2020 relates to the new clinic in Rijswijk and location in Stockholm and several medical equipment.

Government grants relating to purchase of property, plant and equipment are deducted from the Freehold land and buildings. As per year end 2020 this relates to an amount of EUR 21 million received for the 2 general hospitals in Germany.

The property, plant and equipment are pledged as collateral, refer to note 21.

11.2 Right-of-use assets

	Medical Property € 000	Equipment € 000	Other € 000	Total € 000
Balance at 1 January 2020	50,566	159	860	51,584
Through Business Combinations	13,458	-	-	13,458
New contracts	24,129	64	514	24,708
Additions, remeasurments and indexations	-6,841	-	21	-6,820
Depreciation charge for the year	-9,622	-43	-373	-10,038
Exchange translation	66	-	-	66
Balance at 31 December 2020	71,756	180	1,022	72,958

The category other consist of lease car contracts.

	Medical Property € 000	Equipment € 000	Other € 000	Total € 000
Balance at 1 January 2019	28,428	188	194	28,81
Through Business Combinations	26,199	-	482	26,681
Additions and indexations	2,431	-	504	2,935
Depreciation charge for the year	-6,642	-29	-320	-6,991
Exchange translation	150	-	-	150
Balance at 31 December 2019	50,566	159	860	51,584

The new contracts mainly comprises the not recognised leased commitments from 2019, Rijswijk Braillelaan and Amsterdam Nijenburg, which now have been recognised.

12 Intangible assets

	Goodwill € 000	Licenses with indefinite useful life € 000	Trade names € 000	Software € 000	Customer agreements € 000	Total € 000
Cost
At 1 January 2019	20,781	-	464	1,608	-	22,853
Additions	279	-	-	753	-	1,032
Through business combinations	137,63	20,883	36,382	508	5,355	200,758
Acquisitions - internally developed	-	-	-	-	-	-
Disposals	138	-	-339	-	-	-201
Exchange translation	1,367	-	1,045	36	159	2,607
At 31 December 2019	160,195	20,883	37,552	2,905	5,514	227,049
Additions	-	-	-	1,876	-	1,876
Through business combinations	12,845	7,061	76	372	550	20,904
Acquisitions - internally developed	-	-	-	198	-	198
Disposals	-	-	-	-27	-	-27
Exchange translation	1,951	-	1,569	128	238	3,886
At 31 December 2020	174,991	27,944	39,197	5,452	6,302	253,886
Amortisation/impairment
At 1 January 2019	259	-	323	336	-	918
Amortisation	-	-	1,129	239	192	1,560
Impairment	-	-	-	-	-	-
Disposals	-	-	-198	-	-	-198
Exchange translation	-	-	-	-	-	-
At 31 December 2019	259	-	1,254	575	192	2,280
Amortisation	-	-	2,426	469	522	3,417
Impairment	-	-	-	-	-	-
Disposals	-	-	-	-	-	-
Exchange translation	-	-	117	4	34	155
At 31 December 2020	259	-	3,797	1,048	748	5,852
Net book value
At 31 December 2020	174,732	27,944	35,4	4,404	5,554	248,034
At 31 December 2019	159,936	20,883	36,298	2,329	5,322	224,768

Software consist of software developed by and purchased from third parties. The intangible assets are pledged as collateral, refer to note 21.

12.1 Goodwill and intangible assets with indefinite useful lives

Goodwill and licenses with indefinite useful lives have been allocated to the following CGU's, which are also operating divisions:

	Goodwill 2020 € 000	2019 € 000	Licenses with indefinite useful life 2020 € 000	2019 € 000
The Netherlands	124,093	111,806	22,262	20,883
Scandinavia	50,639	48,130	-	-
Germany	-	-	5,682	-
At 31 December	174,732	159,936	27,944	20,883

The Group performed its annual impairment test in December 2020 (2019: December). The Group considers the relationship between its value in use and its book value, among other factors, when reviewing for indicators of impairment.

The recoverable amount of the cash-generating units is determined based on a value in use calculated using cash flow estimates derived from the budgets and forecasts approved by senior management for a period of 5 years.

The following revenue growth percentages have been used:

	2021 %	2022 %	2023 %	2024 %	2025 %
Revenue growth used
The Netherlands	10.5%	8.9%	8.7%	7.1%	7.1%
Scandinavia	43.6%	11.0%	8.9%	8.9%	8.9%

During 2020 Nordics revenue declined by 8.6% mainly due to the COVID-19 pandemic. Management estimates that in 2021 revenues will grow by 43.6%, mainly based on a recovery from the COVID-19 pandemic and a return to growth as observed in the pre-COVID budget of 2020. The impact of COVID-19 is larger for Memira than it is for Bergman Netherlands. Memira clients are more price sensitive and the (laser) treatments are easily delayed, while patients of Bergman Netherlands are typically treated for more urgent procedures.

Cash Generating Units

The CGU Germany has been excluded from the impairment test as this CGU has been acquired close to the Valuation Date. Hence, we deem the purchase price to be the best proxy of the recoverable amount of the CGU. In addition, trading between acquisition date and the Valuation Date does not give an indication that performance is worser than expected.

A pre-tax discount rate of 9.5% was applied to the cash flow projections (2019: 7.5%). The WACC increased due to a higher beta related to the COVID-19 pandemic. The cash flows after 5-year have been determined on the basis of the "terminal value" which includes a growth of 1.25% after the 5th year (2019: 1%). Based on the analysis, management has not established any impairment for these cash-generating units as there is a large headroom and changes in key assumptions do not lead to an impairment.

The CGU Germany has been excluded from the impairment test as this CGU has been acquired close to the Valuation Date. Hence, we deem the purchase price to be the best proxy of the recoverable amount of the CGU. In addition, trading between acquisition date and the Valuation Date does not give an indication that performance is worser than expected.

A pre-tax discount rate of 9.5% was applied to the cash flow projections (2019: 7.5%). The WACC increased due to a higher beta related to the COVID-19 pandemic. The cash flows after 5-year have been determined on the basis of the "terminal value" which includes a growth of 1.25% after the 5th year (2019: 1%). Based on the analysis, management has not established any impairment for these cash-generating units as there is a large headroom and changes in key assumptions do not lead to an impairment.

Cash Generating Units

The Group has the following three CGUs:

The Netherlands: This CGU represents the activities of Bergman in the Netherlands following the therapeutic treatment areas such as Ophthalmology, Musculoskeletal, Woman's Health and Gastro-Internal, Aesthetic and Skin.

Nordics: Following the acquisition of Memira AB the CGU Nordics was formed. The CGU consists of three countries namely: Sweden, Norway and Denmark. The Management reviews the financials in Swedish Krona ("SEK"), and decisions are made on the level of the total CGU and not the separate countries.

Germany: Following the acquisition of the German division of Capio AB as of October30, 2020, a new CGU was formed named Germany. This CGU reflects the German activities of the Group.

Key assumptions used in value in use calculations and sensitivity to changes in assumptions

The calculation of value in use is most sensitive to the following assumptions:

• Gross margins

• Discount rates

• Capital expenditures

Gross margins

Gross margins are based on the average realised values over last three years, adjusted for expected efficiency improvements and expected increase in management costs.

Discount rates

Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates.

The discount rate calculation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted average cost of capital (WACC), CAPM-model. The WACC takes into account both debt and equity.

The cost of equity is determined from the risk free rate, levered equity beta, the market risk premium and the small firm premium.

The cost of debt is based on the interest-bearing borrowings the Group is obliged to service. Segment-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.

Capital expenditures

The capital expenditure forecast used is based on a best estimate by senior management.

13 Deferred tax assets and liabilities

	2020 € 000	2019 € 000
Deferred tax assets	2,104	1,207
Deferred tax liabilities	-17,944	-14,231
Net deferred tax assets (liabilities)	-15,840	-13,024
Current	-579	-435
Non-current	-15,261	-12,589

Tax assets and tax liabilities are offset by Group if it has a legally enforceable right to set off and tax assets and liabilities relate to income taxes levied by the same tax authority.

	Consolidated statement of financial position		Consolidated statement of profit or loss
	2020 € 000	2019 € 000	2020 € 000	2019 € 000
Intangible fixed assets	-17,588	-13,485	-540	57
Tangible fixed assets	1,009	733	136	401
Tax losses	594	209	-410	261
Other	145	-480	145	-239
Deferred tax expense/ (benefit)			-669	485
Net deferred tax assets/ (liabilities)	-15,840	-13,024

Reconciliation of deferred tax liabilities, net

	2020 € 000	2019 € 000
At 1 January	-13,024	-561
Deferred taxes acquired through business combinations	-3,057	-13,952
Tax expense during the period recognised in profit or loss	1,278	224
Effect higher rate	-655	-
Adjustment previous year to short term liability	-	450
Exchange differences	-382	-
At 31 December	-15,840	-13,024

Tax losses/non-deductible interest amounts

The Group has € 13,175 (2019: € 12,008) of tax losses carried forward. In addition, the group has an amount of € 4.761 as non-deductible interest expenses, which, depending on the EBITDA, will be egligible for settlement in the coming years. A deferred tax asset of € 740 (2019: € 208) has been formed for both items. The valuations are based on current business plans and forecasts for the coming years, considering the expiration of the tax losses/non-deductible amounts.

14 Other non-current financial assets

	2020 € 000	2019 € 000
Deposits and bank guarantees	1,552	1,732
Advanced payments contingent liabilities	1,918	800
Loans granted to key personnel	377	-
	3,847	2,532

Other non-current financial assets consist of advance payments of retention fees to medical specialists. Refer to note 25.2 "Contingent considerations". The duration of these assets is longer than one year and less than five years.

15 Contract assets and liabilities

	2020 € 000	2019 € 000
Work in progress DBC care	24,176	19,935
Closed DBC care, to be invoiced	5,489	1,774
Advanced payments health insurers	-25,752	-23,248
Total contract balances DBC Care	3,913	-1,539
Trade and other receivables	5,489	1,774
Contract assets/(liabilities)	-1,576	-3,313
Total contract balances DBC Care	3,913	-1,539

Work In Progress care products (WIP)

The work in progress DBC care and advanced payments received from health insurers have been offset when conditions are met as stated in the general accounting policies. Accordingly, the remaining net asset or liability per health insurer have been recognised respectively as contract asset or contract liability.

The work in progress € 24,176 (2019: € 19,935) is net of an allowance for € 8,140 (2019: € 8,952) provisioning for exceeding the claims plafond, self-examination and physical checks.

16 Inventories

	2020 € 000	2019 € 000
Consumables in clinics	6,008	4,277
Provision obsolete stock	50	187

As previous year, no significant write-offs were charged to the result. The inventories are pledged as collateral.

17 Trade and other receivables

	2020 € 000	2019 € 000
Trade receivables	22,692	23,318
COVID 19 compensation	7,660	-
Closed DBC care, to be invoiced	5,489	1,774
Receivable Ramsey	2,151	-
Related party receivables	21	2
Income tax receivables	521	-
Prepayments	1,636	1,396
Other receivables	9,558	4,406
	49,728	30,895

Trade receivables are recognised at the amount of consideration that is unconditional. The Group holds the receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost.

Management assessed that the fair values of trade receivables and other current receivables approximate their carrying amounts largely due to the short-term maturities of these instruments.

Furthermore management assessed the expected credit losses regarding trade receivables is limited, since its customers are mainly health insurers. The credit risk with regard to these health insurers is considered low. The uninsured care activities are, in general, paid in advance by the customer. Therefore the credit risk is considered to be limited.

During 2020 there were no significant write-offs on trade receivables. At year-end, the provision for expected credit losses amounts to € 2,198 (2019: € 169).

Set out below is the information about the credit risk exposure on the Group's trade receivables and using a provision matrix:

	Contract
31 December 2020	assets Total € 000	Trade receivables Total € 000	Days past due Current € 000	< 30 days € 000	30-60 days € 000	>60 days € 000
Estimated totals gross
carrying amount at default 2020	5,489	24,89	20,268	767	419	3,436
Expected credit loss	-	-2,198	-52	-1	-15	-2,130
	5,489	22,692	20,216	766	404	1,306
	Contract
31 December 2019	assets Total € 000	Trade receivables Total € 000	Days past due Current € 000	< 30 days € 000	30-60 days € 000	> 60 days € 000
Estimated totals gross
carrying amount at default 2020	1,774	23,487	18,917	273	169	4,128
Expected credit loss	-	-169	-	-	-	-169
	1,774	23,318	18,917	273	169	3,959

The trade receivables are pledged as collateral, refer to note 21.

18 Cash and cash equivalents

	2020 € 000	2019 € 000
Cash at bank and in hand	46,542	32,750

Reconciliation to cash flow statement

	2020 € 000	2019 € 000
Cash at bank and in hand	46,542	32,750
Bank overdrafts	-	-
Cash and cash equivalents in the statement of cash flows	46,542	32,750

The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year as follows:

Classification as cash equivalents

Cash and cash equivalents include all cash on hand balances, cheques, debit and credit receivables in transfer. Term deposits are presented as cash equivalents if they have a maturity of three months or less.

Restricted cash

The cash at bank and in hand are at the Group's free disposal (2019: except for € 5,781 which was subject to restrictions due to an earn-out liability which has been settled in 2020).

19 Assets held for sale and directly associated liabilities

Assets held for sale do not apply in 2020, as in 2019.

20 Equity

Share capital

On 13 November 2020 Hippocrates renamed the existing 100 ordinary shares to ordinary shares "A" and issued 21 new ordinary shares "B". Both categories shares have a nominal value of € 0.01 each and the shares have been fully paid. Only shares A have voting rights.

The 21 shares B have been granted to the STAK Hippocrates Capital and subsequently the STAK granted certificates on shares to key personnel.

Share premium

As of 3 January 2019, shareholders A contributed € 92,013 on the ordinary shares A through contribution of the companies Malsquare and NL Healthcare Clinics. This contribution on the ordinary shares has been recognised as share premium.

As of 13 November 2020, shareholders B contributed € 750 on the ordinary shares B. Key personnel contributed € 375 in cash and € 375 via a loan granted to Key Personnel.

Non-controlling interests

The Group is the majority shareholder of all material subsidiaries and has control in all cases. Information in relation to subsidiaries is provided in note 31.

The following material subsidiaries have a significant non-controlling interest:

Name	2020 %
Oogheelkunde Zonnestraal Noord-Holland B.V.	49.0%
Oogziekenhuis Zonnestraal Flevoland B.V.	40.0%
Oogziekenhuis Amsterdam B.V.	49.0%

The financial information of these material subsidiaries with significant non-controlling interests is provided below.

Summarised statement of comprehensive income 2020	Oogziekenhuis Zonnestraal Noord-Holland € 000	Oogziekenhuis Zonnestraal Flevoland € 000	Oogziekenhuis Zonnestraal Amsterdam € 000
Revenue from contracts with customers	6,627	7,740	10,502
Profit (loss) for the period after tax	604	328	953
Total comprehensive income	604	328	953
Attributable to non-controlling interests	296	131	467
Dividends paid to non-controlling interests	-	-	-
Summarised statement of comprehensive income 2019	Oogziekenhuis Zonnestraal Oost-Nederland € 000	Oogziekenhuis Zonnestraal Noord-Holland € 000	Oogziekenhuis Zonnestraal Flevoland € 000	Oogziekenhuis Zonnestraal Amsterdam € 000
Revenue form contracts with customers	6,214	6,292	7,386	9,905
Profit (loss) for the period after tax	240	685	382	1,200
Total comprehensive income	240	685	382	1,200
Attributable to non-controlling interests	118	336	153	588
Dividends paid to non-controlling interests	-	-	-	-
Summarised statement of financial position as at 31 December 2020	Oogziekenhuis Zonnestraal Noord-Holland € 000	Oogziekenhuis Zonnestraal Flevoland € 000	Oogziekenhuis Zonnestraal Amsterdam € 000
Total assets	12,122	8,848	16,588
Current liabilities	3,736	1,556	2,567
Non-current liabilities	1,960	1,290	3,284
Total equity	6,426	6,002	10,737
Attributable to non-controlling interests	3,149	2,401	5,261
Summarised statement of financial position as at 31 December 2019	Oogziekenhuis Zonnestraal Oost-Nederland € 000	Oogziekenhuis Zonnestraal Noord-Holland € 000	Oogziekenhuis Zonnestraal Flevoland € 000	Oogziekenhuis Zonnestraal Amsterdam € 000
Total assets	6,475	10,738	7,989	14,933
Current liabilities	-1,182	-911	-780	-1,251
Non-current liabilities	-1,989	-4,031	-1,510	-3,849
Total equity	3,304	5,795	5,700	9,833
Attributable to non-controlling interests	1,619	2,840	2,280	4,818
Summarised cash flow information position as at 31 December 2020	Oogziekenhuis Zonnestraal Noord-Holland € 000	Oogziekenhuis Zonnestraal Flevoland € 000	Oogziekenhuis Zonnestraal Amsterdam € 000
Net increase in cash and cash equivalents	66	44	82
Summarised cash flow information position as at 31 December 2019	Oogziekenhuis Zonnestraal Oost-Nederland € 000	Oogziekenhuis Zonnestraal Noord-Holland € 000	Oogziekenhuis Zonnestraal Flevoland € 000	Oogziekenhuis Zonnestraal Amsterdam € 000
Net increase/(decrease) in cash and cash equivalents	-21	-115	-6	-103

21 Interest-bearing loans and borrowings

	2020 € 000	2019 € 000
Credit facility ICG	183,703	139,442
Deferred financing costs	-5,24	-5,171
Loan Sparkasse	1,162	-
Other loans	56	52
Total interest-bearing Loans and borrowings	179,681	134,322
Current	1,162	-
Non-current	178,519	134,322

Refer to note 29 for further details Interest-bearing loans and borrowings.

22 Preference shares

	2020 € 000	2019 € 000
Preference shares	44,930	42,387
Current	-	-
Non-current	44,930	42,387

On 13 November 2020 Hippocrates renamed the existing 100 cumulative preferences shares "A" and issued 21 new preference shares "B". Both categories preference shares have a nominal value of € 0.01 each, without voting rights.

Cumulative preference shares A are held by the Shareholders which contributed € 40,000 on these preference shares, as of 3 January 2019. The shares are entitled to dividends at a rate of 6% per annum over the total outstanding balances.

Cumulative preference shares B are indirectly held by Key personnel via STAK. Key personnel contributed the nominal value in total of € 0.21, these shares are entitled to dividends of 7% per annum over the total outstanding balances.

If sufficient profits are not available in a particular financial year, the dividends accumulate and are payable when sufficient profits are available.

Since the preference shares include a contractual obligation for Hippocrates to deliver cash (dividends) to the preference shareholders, they are recognised as liabilities and consequently dividends are recognised as interest expenses.

23 Provisions

	Claims € 000	Restructuring € 000	Other € 000	Total € 000
At 1 January 2020	703	229	-	932
Through business combinations	101	-	213	314
Additions	136	218	9	363
Utilised	-100	-75	-	-175
Unused amounts reversed	-48	-154	-	-202
Exchange translation	-	4	-	4
At 31 December 2020	792	222	222	1,236
Current	350	161	11	522
Non-current	442	61	211	714

24 Employee benefit obligations

	2020 € 000	2019 € 000
Pension benefit obligations	311	369
Other employee benefit obligations	1,453	1,438
	1,764	1,807
Current	1,288	1,392
Non-current	476	415

Pension benefit obligations

Pension benefit obligations relate to the pension contributions due at the end of the year.

Defined contribution schemes

The Group has several defined contribution schemes insured by pension insurers. In accordance with these pension schemes, defined contributions are paid to independent pension funds. Besides these defined contributions, the Group has no obligation to make additional payments to the scheme to make up for deficits resulting from actuarial or investment risk.

These contributions are accounted for in the statement of profit or loss. At year end, a liability is formed for any contributions payable, or an asset for prepaid contributions for the nominal amount.

The Group's contribution to the defined contribution plans is expected to amount to € 2,107 in 2021.

Defined benefit schemes

A defined benefit scheme exists for a number of (former) employees, which is insured with the industry-wide pension fund "Pensioenfonds Zorg & Welzijn" (PFZW). At their retirement age, eligible employees, are entitled to a pension based on the average wage calculated over the years that the employee has accrued pension. In this scheme, the group has no obligations to make additional contributions in the event of a deficit, other than higher future contributions.

The Group pays contributions to PFZW, half of which is paid by the Group and half by the employee via deduction from salary.

The pension rights are indexed annually, only if the coverage ratio of the pension fund (the assets of the pension fund divided by its financial obligations) so permits. From 2015, the pension fund requires a coverage ratio of at least 110.0%. At the end of December 2020, the coverage ratio of the pension fund is 92.6% (2019: 99.2%).

The pension fund does not foresee the need for participating companies to make additional payments. However the pension contributions have been increased by a 2% surcharge (2019: 2%), as included in the Recovery Plan that was submitted to "De Nederlandsche Bank" in 2020.

PFZW, a multi-employer plan, is not able to provide sufficient information to the Group to account for the scheme as defined benefit plan. Therefore, the Group, makes use of the exemption provided by IAS 19.34, which allows accounting as if the plan were a defined contribution plan.

The Group's contribution to the PFZW defined benefit plan is expected to amount to € 5,534 in 2021.

Other employee benefit obligations

The other employee benefit obligations include jubilee benefits, provision for the long-term sick and termination benefits. The following table include the changes during the year:

	Jubilee € 000	Sick leave € 000
At 1 January 2020	436	1,002
Through business combinations	127	-
Additions	40	896
Utilised	-46	-1,002
At 31 December 2020	557	896
Current	81	896
Non-current	476	-
	Jubilee € 000	Sick leave € 000
At 1 January 2019	-	-
Through business combinations	236	641
Additions	235	1,002
Utilised	-35	-641
At 31 December 2019	436	1,002
Current	21	1,002
Non-current	415	-

25 Other financial liabilities

	2020 € 000	2019 € 000
Lease obligations	82,611	60,861
Contingent considerations	15,397	16,091
Retention fees	840	600
Liabilities non-controlling interests	980	980
Liabilities participants	11	11
Other	200	164
Other financial liabilities	100,039	78,707
Current	22,042	25,300
Non-current	77,997	53,407

25.1 Lease liabilities

25.1.1 Lease liabilities as lessee

Lease liabilities

	2020 € 000	2019 € 000
Lease liabilities - related to ROU assets	78,511	57,638
Lease liabilities - financial lease	4,100	3,223
Lease liabilities	82,611	60,861
Current	12,105	9,516
Non-current	70,506	51,345

Financial lease obligations

The financial lease obligation has an initial principal amount of € 722 (2019: € 812). The remaining term is 1 to 60 months (2019: 4 to 73 months). The related assets are recognised as medical equipment as part of the property, plant and equipment.

Lease liabilities related to ROU assets

Maturity analysis - contractual undiscounted cash flows

	2020 € 000	2019 € 000
Less than one year	10,752	11,061
One to five years	58,152	31,197
More than five years	41,029	31,770
	109,933	74,028

Amounts recognised in profit or loss

	2020 € 000	2019 € 000
Depreciation expense of right-of-use assets	10,038	6,991
Interest on lease liabilities	2,791	2,666
Result due to revised extension options	-1,056	-
Expenses relating to short-term leases	451	233
Expenses relating to lease of low-value-assets, excluding
short-term leases of low-value assets	16	36
Total amount recognised in profit or loss	12,24	9,926

The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an decrease in recognised lease liabilities and right-of-use assets of respectively € 6.7 million and € 5.6 million resulting in a gain of € 1.1 million. The gain is recognised in the Profit or Loss as "Result due to not exercising expected extension options" refer to note 9 Net Finance income and costs.

The Group does not have lease contracts that contains variable payments. The total cash outflows for leases amounts to € 12,295 in 2020 (2019: € 9,467).

The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group's business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised (see note 3).

25.1.2 Lease liabilities as lessor

The Group has a limited number of small sublease contracts. The annual income is approximately € 400 (2019: € 300).

25.2 Contingent considerations

	2020 € 000	2019 € 000
As at 1 January	16,091	1,793
Considerations arising on business combination	5,521	13,078
Other considerations arised	619	-
Considerations paid	(7,736)	-
Unrealised fair value changes recognised in profit or loss	482	1,220
Exchange translation	421	-
As at 31 December	15,398	16,091
Current	9,854	15,785
Non-current	5,544	306

As part of the purchase agreement with the previous owners of Bergman Germany, a contingent consideration has been agreed. This consideration is dependent on the EBITDA-level of 2021. The fair value of the contingent consideration at the acquisition date was € 3.1 million and the fair value did not change as at 31 December 2020.

As part of the purchase agreement with the previous owners of Van Linschoten, a contingent consideration has been agreed as well as a settlement of the profit of the year 2020. This consideration is dependent on the production volume of the years 2021 and 2022 (needs to be higher than 90% of the realised production volume of 2018 and the management agreements of the former owners needs to be in place). The fair value of the contingent consideration at the acquisition date was € 1.5 million and the fair value did not change as at 31 December 2020.

As part of the purchase agreement with the previous owners of Memira, a contingent consideration has been agreed. This consideration is dependent on: Memira EBITDA adjusted for exceptional and one-off costs for 2019 and 2020. For 2019, the multiples to calculate the considerations vary for the EBITDA including and excluding SEC. The fair value of the contingent consideration at the acquisition date was SEK 65 million, during the year SEK 13.9 million has been paid and the outstanding liability, including interest amounts to € 5.8 million.

As part of the business combination Memira, a contingent consideration is acquired with the previous owners of EYE Center. The fair value of the contingent consideration amounts to € 6,435 at year-end 2019 and this consideration has been paid during the year.

In 2009, the group offered three specialists a fictitious interest of 15% in the value increase of a clinic for musculoskeletal care over a period of 10 years. The most important factors for valuation are turnover, net profit and invested capital excluding property. At year-end the Group recognised a liability of € 3.2 million (2019: € 3.0 million). The agreement will be settled in 2020 and 2021.

At year-end the Group recognised additional contingent considerations for the amount of € 0,8 million relating to the purchase of a non-controlling interest and the activities of a medical specialist (2019: € 434). These considerations are expected to be settled within 1 to 5 years.

25.3 Retention fees

The group agreed upon retention fees with six specialists at establishing a clinic for musculoskeletal care. The total retention amounts to € 1.2 million subject to the conditions that the specialists will contribute their expertise for a period of at least five years and are still employed on 1 July 2022. The retention fees are paid in advance in three equal installments on January 1 of the year 2018, 2019 and 2020.

In accordance with IAS 19, the total obligation will be accrued within five years and the advanced payments are recognised as other non-current financial assets. At year-end the total liabilities amount to € 840 (2019: € 600) and the advanced payments amount to € 1,200 (2019: € 800).

25.4 Liabilities non-controlling interests

Two loans with holders of non-controlling interests for the total amount of € 980. A 4% loan of € 539 with Zaans Medisch Centrum (ZMC) and a 8% loan of € 441 with Academisch Medisch Centrum (AMC).

26 Trade and other payables

	2020 € 000	2019 € 000
Trade payables	29,361	24,523
Other taxes	21,446	5,686
Benefits to be paid	14,591	10,743
Payables to medical specialists	6,193	5,555
Deferred income	19,888	2,313
Other payables	27,967	15,632
	119,446	64,452

The deferred income includes an amount of € 18,829 for grant liabilities: general hospitals receive grants in conjunction with the Hospital Funding Guidelines. In the event of a sale of the building, not the entire amount received is to be repaid, but the sum that still exits after an underlying depreciation period of 25 years at the time of the sale. The current part of this liability is € 1,266 and the duration of the liability is till 2035.

All other liabilities have a remaining term of less than one year, except for the other taxes. In the Netherlands and the Nordics the government has made separate payment agreements for the payment of other taxes occurred during COVID-19 wave 1 2020. An amount of € 14 million needs to be repaid as of October 2021 in equal tranches during a period of 36 months and an amount of € 1 million needs to be repaid in 2022. Management assessed that the fair values of trade receivables and other current receivables approximate their carrying amounts largely due to the short-term maturities of these instruments.

27 Commitments and contingencies

Lease commitments not recognised

	2020 € 000	2019 € 000
Within one year	980	725
After one year but not more than five years	3,916	2,850
More than five years	7,240	6,000
	12,136	9,575

At the end of 2020 the lease commitments which are not recognised comprise two property lease contracts which are not yet in use due to renovations. At the end of 2019 the not recognised lease commitments included two lease commitments with a commencement date in 2020.

Other commitments

End of 2019, the Group has entered into two declarations of intent to purchase property with a total value of € 3,625 (2020: -).

The Group has entered into investment commitments for an amount of € 1,000 (2019: € 4,101).

Contingencies

Medical specialists

In 2017, the group offered six medical specialists a fictitious interest of 20% in the value increase of a clinic for musculoskeletal care over a period of 10 years. The most important factors for valuation are turnover, net profit and invested capital.

After 5 years, the medical specialists are entitled to 50% of the realised value increase. In the event of disability or death, the individual medical specialist or his heirs are entitled to his share in the accumulated value. In the first 5 years this is still 50% of the increase in value.

At year-end the Group did not recognise a liability regarding this agreement due to start-up losses and uncertain future expectations.

Revenue-ceiling

The Minister of Health, Welfare and Sport in the Netherlands can use the "macro-management instrument" (macrobeheersinstrument; MBI) to reclaim the excess cost of the "macrokader zorg" from medical care institutions. Every year the Dutch Healthcare Authority (NZa) sets an total MBI-revenue ceiling and for each medical care institution.

For 2020 the total national MBI-revenue ceiling has been determined at € 24.3 billion price level respectively 2019.

When preparing the 2020 financial statements the actual realisation of the MBI-revenue ceiling for 2020 is still under review. As Management is unable to quantify a reliable estimation of the obligation if any, the Group did not recognise a liability as at December 31, 2020.

Claims and disputes

The Group is in dispute with the former owners of Memira Holding AB in relation to the final settlement of the earn-out which has been agreed in the SPA dated 3 July 2019. Main dispute between parties is the qualification of the revenue. An arbitration procedure has been started and the first hearing is scheduled in April 2021. The Group has recognized a contingent consideration of € 5.8 million equal to the disputed amount, including interest.

Pursuant to Article 76, paragraph 1 of the Healthcare Market Regulation Act (Wmg), the NZa has instructed Stichting KNO Mid-West and Stichting KNO Het Gooi en Omstreken for violating Articles 35 and 36 Wmg. The Group has waived this risk in the SPA to the former owners of VLS and the Group has not provided for this claim.

28 Related parties

Transactions with key management Personnel

The key management personnel consists of the members of the Executive Board and the Supervisory Board.

Key management participates in a "IFRS 2 classified" Key Management participation Agreement. The grant date is the first of January 2019 (issue date November 2020) with a fair value of € 0.8 million. The 21 shares are granted to STAK Hippocrates Capital and subsequently the STAK granted 21 certificates on the shares to key management. The agreement is equity-settled with service-related conditions (e.g. equity instruments vests until the employee completes a period of service) and the number of shares issued during the year is 21 and the ending-balance is 21 as well.

	2020 € 000	2019 € 000
Supervisory board
Short-term remuneration	187	160
Executive Board
Short-term remuneration	1,178	1,083
Pension plans	17	14
Total remuneration key personnel	1,382	1,257
Other items
Loans granted to key personnel	375	-
Finance income loans granted	2	-
Preference shares	-	-
Finance costs preference shares	-	-

Transactions with Shareholders of the Group

The table below specifies the transactions with the shareholders of the Company.

	2020 € 000	2019 € 000
Fee shareholder	120	120
Fee advisor to the board	289	145
Total compensation shareholder	409	265
Other items
Dividend paid	-	11,390
Preference shares	44,930	42,387
Finance costs preference shares	2,543	2,387
Liability to shareholder	11	11

One of the shareholders is also advisor to the board and till mid 2019 the shareholder was part of the Executive Board. During 2020 no dividend has been paid. Reference made to note 22 for the preference shares.

29 Financial assets and financial liabilities

29.1 Financial assets

	Note	2020 € 000	2019 € 000
Debt instruments at amortised cost
Advanced payments contingent liabilities	14	1,918	800
Loans granted to key personnel	14	377	-
Trade receivables	17	22,692	23,318
Other receivables and prepayments	17	13,345	5,802
		38,332	29,920
Total current		36,037	29,120
Total non-current		2,295	800

29.2 Financial liabilities

Interest-bearing loans and borrowings at amortised cost

Non-current interest-bearing loans and borrowings	Original facility	Effective interest rate	Maturity	2020 € 000	2019 € 000
Credit facility B ICG	€ 60,500	6.00%	July 2023	60,500	60,500
Credit Capex facility ICG	€ 15,000	6.00%	July 2023	6,000	6,000
Credit facility C ICG	€ 34,000	6.00%	July 2023	32,151	32,151
Credit facility D ICG	SEK 435,000	6.00%	July 2023	42,552	40,791
Credit facility E ICG	SEK 95,000	6.30%	July 2023	-	-
Credit facility F ICG	€ 42,500	6.00%		42,500	-
Deferred financing costs			July 2023	-5,239	-5,171
Sparkasse		4.20%	February 2021	1,162	-
Loan Procolo		10.00%	May 2028	56	52
Total interest-bearing loans and borrowings				179,682	134,322

Credit facility ICG

In July 2017 the Group entered into a financing agreement with ICG (Intermediate Capital Group). In 2019 this agreement was first expanded due to the refinancing as part of the merger with NLHCC and secondly with the acquisition of Memira. In 2020 this agreement was thirdly expanded due to the acquisition of Bergman Germany.

The facilities have been used for refinancing, acquisitions and to fund the renovations and (re-)furnishing of clinics. As of 31 December 2020, € 10.8 million (31 December 2019 € 10.8 million) and SEK 103.0 million (31 December 2019 SEK 103.0 million) of these facilities are still available to be used by the Group.

The following covenants have been agreed with ICG:

• Net leverage: (net debt/normalized ebitda) at year-end 2020 will amount to a maximum of 5.7 (2019: 5.4)

• Cash flow cover (cash flow/debt service): will be at least 1.0 at least 1.0 at 30 September 2021

If the group does not comply with the covenants ICG can withdraw the credit facility and the outstanding balances including accumulated interest immediately becomes due.

The Group complied with the covenants and agreements made since the start of the Facility. For the forecast 2021 a reference is made to the Board Report.

As part of the credit agreement with ICG the following collateral has been provided:

• Pledge first in rank on shares of the companies of the Group;

• Pledge first in rank on present and future receivables of the Group;

• Pledge first in rank on existing and future receivables under (credit) insurance, bank accounts and intercompany receivables of the Group;

• Pledge first in rank on present and future inventories, plant and equipment and other movable property of the Group;

• Pledge first in rank on intellectual property rights of the Group.

Revolving facility Rabobank

A revolving facility of € 10 million is agreed with Rabobank and fully available at year-end (2019: € 10 million).

Credit facility Danske Bank

A credit facility of SEK 30 million is agreed with Danske Bank and fully available at year-end. The facility is a one year facility which is renewable.

Other financial liabilities

	2020 € 000	2019 € 000
Financial liabilities at fair value through profit or loss
Contingent considerations	15,397	16,091
Retention fees	840	600
Total other financial liabilities at fair value	16,237	16,691
Other financial liabilities at amortised cost, other than interest-bearing loans and borrowings
Lease obligations	82,611	60,861
Loans non-controlling interests	980	980
Other financial liabilities	210	175
Trade and other payables	119,446	64,452
Contract liabilities	1,576	3,313
Total other financial liabilities at amortised cost	204,823	129,781
Total other financial liabilities	221,060	146,472

29.3 Fair values

The management assessed that the fair values of cash, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of loans and borrowings approximate their carrying amounts largely as the facilities have been extended during 2020. The interest rates agreed would be used in determining the fair value at the-end of 2020.

The fair value of lease obligations approximate their carrying amounts. At initial recognition lease obligations are determined based on the discounted value of future cash flows, using the Incremental Borrowing Rate. As these lease obligations are first recognised in 2019 and further increased through business combinations and new contracts during 2020 their carrying amounts approximate their fair value.

The fair value of lease obligations has been estimated based on the discounted value of future cash flows, using the prevailing interest rate plus a risk premium.

Hierarchy level used

The following table includes fair value of instruments and their fair value level:

	Level	2020 fair value € 000	2019 fair value € 000
Financial liabilities
Interest-bearing loans and borrowing	2	179,682	134,322
Other financial liabilities:
-Lease obligations	2	82,611	60,861
-Contingent considerations	2	10,722	16,091
-Contingent considerations	3	4,676	-
-Retention fees	2	840	600
-Other	2	210	176
		278,741	212,050

The fair value of contingent considerations have been estimated based on assumed probability-adjusted normalised EBITDA. As the contingent considerations are due within one year these expected future cash flows have not been discounted.

The fair value of retention fees have been estimated based on assumed probability-the specialist are still employed. The future cash flows have not been discounted considering the amounts involved.

At year-end there were no transfers between fair value hierarchy levels.

29.4 Financial instruments risk management objectives and policies

The Group's principal financial liabilities, comprise loans and borrowings, and trade and other payables. The main purpose of these financial liabilities is to finance the Group's operations and providing guarantees for these operations. The Group's principal financial assets include trade receivables, and cash and short-term deposits that derive directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group's senior management oversees the management of these risks. The Executive Board reviews and agrees policies for managing each of these risks, which are summarised below.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk include loans and borrowings.

The sensitivity analyses in the following sections relate to the position as at 31 December in 2020 and 2019.

The sensitivity analyses have been prepared on the basis that the amount of net debt and the proportion of financial instruments in foreign currencies are all constant.

The analyses exclude the impact of movements in market variables on: provisions; and the non-financial assets and liabilities of foreign operations. The analysis for the contingent consideration liability is provided in note 25.2.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group's exposure to the risk of changes in market interest rates is limited as a fixed interest rate has been agreed in the financing agreement with ICG. The fixed interest rate is depending on agreed covenants, refer below to capital management paragraph.

In order to hedge the risk of higher interest rates, the following agreements are in place:

• An interest cap transaction agreement dated 27 April 2020 between Bergman Scandinavia B.V. and Coöperatieve Rabobank U.A. for a nominal amount of SEK 260 million and a capped rate of 1.0 % with a termination date of 30 August 2022; and

• An interest cap transaction agreement dated 27 April 2020 between Bergman Scandinavia B.V. and Coöperatieve Rabobank U.A. for a nominal amount of € 16.1 million and a cap level of 1.0 % with a termination date of 30 August 2022.

The Mark-to-Market value of the interest caps per 31 December 2020 is € 1.

The Group is of the opinion that the concentration of risks with regard to interest rate risks is low.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Group's profit before tax is affected through the impact on interest rate change due to covenants ICG, as follows:

29.4 Interest rate sensitivity		Increase/ decrease in basis points	Effect on profit before tax €000
2020	Euro	50	493
	SEK	50	213
	Euro	-50	(493)
	SEK	-50	(213)
2019	Euro	50	493
	SEK	50	204
	Euro	-50	(493)
	SEK	-50	(204)

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's net investments in foreign subsidiaries.

Currency exposures are managed within prescribed limits, however as the foreign subsidiaries are located in Sweden, Norway and Denmark the currency volatility is relatively limited. In addition the foreign operating companies borrow in local currency.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in SEK, NOK and DKK exchange rates, with all other variables held constant.

		Change in currency rate	Effect on profit before tax € 000	Effect on profit pretax equity € 000
2020	SEK	5.0%	(116)	2,743
	NOK	5.0%	13	13
	DKK	5.0%	22	22
	SEK	-5.0%	128	(3,032)
	NOK	-5.0%	(13)	(13)
	DKK	-5.0%	(22)	(22)
2019	SEK	5.0%	103	1,187
	NOK	5.0%	210	210
	DKK	5.0%	100	100
	SEK	-5.0%	(113)	(1,312)
	NOK	-5.0%	(210)	(210)
	DKK	-5.0%	(100)	(100)

Price risk

Price fluctuations are limited as the Group has made agreements regarding rates and a revenue ceiling with health insurers.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade receivables and contract assets

Customer credit risk is managed by each business unit subject to the Group's established policy, procedures and control relating to customer credit risk management.

The Group is of the opinion that the concentration of risks with regard to trade receivables is limited, since its customers are mainly health insurers. The credit risk with regard to these health insurers is considered low. The uninsured care activities are, in general, paid in advance by the customer. Therefore the credit risk is considered to be limited.

At 31 December 2020, the Group had 4 health insurers (2019: 6) that owed it more than € 1,000 each and accounted for approximately 85% (2019: 89%) of all the receivables and contract assets outstanding (excluded pre-payments).

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than one year and are not subject to enforcement activity. Refer to note 17 for details regarding the expected credit losses.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 29.1. The Group does not hold collateral as security.

Credit risk exposure

The Group's maximum exposure to credit risk for the components of the statement of financial position at 31 December 2020 and 2019 is the carrying amounts as illustrated in table below.

	2020 € 000	2019 € 000
Other financial assets	1,918	800
Trade and other receivables	44,238	29,121
	46,156	29,921

Liquidity risk

The Group monitors its risk of a shortage of funds using a liquidity planning tool.

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank facilities and bank loans (ICG), debentures, preference shares and leases contracts.

The Group considers the current financing structure to be adequate for the coming years.

The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments:

Year ended 31 December 2020	< 3 months €000	3-12 months €000	1 to 5 years €000	> 5 years €000	Total €000
Interest-bearing loans and borrowings ^*	1,162	-	183,759	-	184,921
Interest payable	2,756	8,267	16,533	-	27,556
Preference shares	-	-	4,930	40,000	44,930
Lease obligations	3,743	11,152	58,227	41,029	114,151
Contingent consideration	1,790	8,064	5,543	-	15,397
Retention fees	-	-	840	-	840
Other financial liabilities	-	-	1,190	-	1,190
Trade and other payables	79,773	21,247	6,455	11,971	119,446
	89,223	48,730	277,477	93,000	508,430
^* excluding deferred financing costs

Year ended 31 December 2019	< 3 months € 000	3-12 months € 000	1 to 5 years € 000	> 5 years € 000	Total € 000
Interest-bearing loans and borrowings ^*	-	-	139,442	52	139,494
Interest payable	1,948	5,844	19,479	-	27,271
Preference shares	-	-	2,387	40,000	42,387
Lease obligations	-	11,060	31,197	31,770	74,028
Contingent consideration	-	15,785	306	-	16,091
Retention fees	-	-	600	-	600
Other financial liabilities	-	-	1,156	-	1,156
Trade and other payables	53,708	10,743	-	-	64,452
	55,656	43,432	194,567	71,822	365,477
^* excluding deferred financing costs

Refer to note 21 for collateral requirements regarding interest-bearing loans and borrowings.

Capital management

For the purpose of the Group's capital management, capital includes issued capital, preference shares, share premium and all other equity reserves attributable to the equity holders of the parent.

The primary objective of the Group's capital management is to maintain a good credit rating, a healthy financial position to support the Group's activities and to maximise the shareholder value.

The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.

In order to achieve the overall objective, the Group's capital management, among other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches of the financial covenants of any interest-bearing loans and borrowing in the current period.

The following financial covenants are agreed upon with ICG:

• Net Leverage ratio < 5.70

• RCF Gross Leverage ratio < 1.25

• Cash flow Cover ratio > 1.00 (on or after 30 September 2021)

Management monitor's these ratio's constantly and reports to ICG on a monthly basis.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2020 and 2019.

30 Subsequent events

On 17 March 2021 the Group obtained approval from the Health care authority (NZA) for the closure of the acquisition of Maurits Klinieken B.V. (sales and purchase agreement signed in December 2020). The transaction is still subject to approval by the competition authority (ACM).

In January 2021 the Group acquired Nacka for an amount of € 0,4 million. Nacka offers publicly funded eye health care on behalf of the Stockholm county.

In February 2021 the Group acquired an online information and booking platform for plastic surgery, as well as practice for plastic surgery with a hospital infrastructure in Germany. Consideration paid was € 1,8 million and the assets were bought through an asset deal.

In March 2021 Bergman and Triton has signed an agreement in which Triton will invest in the Group. The investment will be in partnership with the current shareholders. The agreement is subject to the completion of the consultation process with Bergman Clinic's work council and customary regulatory approvals.

The Group signed the sales and purchase agreement with OZ Flevoland to acquire the remaining shares for an amount of € 1.7 million. Final closure of the deal is expected in April 2021.

31 List of subsidiaries

Principal subsidiaries	Proportion of ownership and interest held by the group
	2020	2019
Bergman Healthcare Clinics B.V., Naarden the Netherlands	100.0%	100.0%
Malsquare B.V., Naarden the Netherlands	100.0%	100.0%
NL Healthcare Clinics B.V., Amsterdam the Netherlands	100.0%	100.0%
Bergman Clinics B.V., Naarden the Netherlands	100.0%	100.0%
Bergman Clinics Nederland B.V., Naarden the Netherlands	100.0%	100.0%
Bergman Zorghotel Naarden B.V., Naarden the Netherlands	100.0%	100.0%
Bergman Medical Care B.V., Naarden the Netherlands	100.0%	100.0%
Bergman Uninsured Care B.V., Naarden the Netherlands	100.0%	100.0%
Clinium Naarden B.V., Naarden the Netherlands	51.0%	51.0%
Bergman Huid en Vaten B.V., Naarden the Netherlands	100.0%	100.0%
Bergman Uiterlijk B.V., Naarden the Netherlands	100.0%	100.0%
Bergman UH Bilthoven B.V., Bilthoven the Netherlands	100.0%	100.0%
Bergman UH Den Haag B.V., Den Haag the Netherlands	100.0%	100.0%
Bergman UH Heerenveen B.V., Heerenveen the Netherlands	100.0%	100.0%
Bergman MediSpa Nederland B.V., Naarden the Netherlands	100.0%	100.0%
Bergman MediSpa Amsterdam B.V., Amsterdam the Netherlands	100.0%	100.0%
Bergman MediSpa Bilthoven B.V., Bilthoven the Netherlands	100.0%	100.0%
Bergman MediSpa Den Haag B.V., Den Haag the Netherlands	100.0%	100.0%
Bergman MediSpa Zwolle B.V., Zwolle the Netherlands	100.0%	100.0%
Dermicis Holding B.V., Hilversum the Netherlands	100.0%	100.0%
Dermicis Doetinchem B.V., Doetinchem the Netherlands	100.0%	100.0%
Dermicis Haarlem B.V., Haarlem the Netherlands	100.0%	100.0%
Dermicis Alkmaar B.V., Alkmaar the Netherlands	100.0%	100.0%
Stichting Dermicis, Haarlem the Netherlands	100.0%	100.0%
Bergman Bewegen B.V., Naarden the Netherlands	100.0%	100.0%
Bergman BZ Naarden B.V., Naarden the Netherlands	100.0%	100.0%
Bergman BZ Rijswijk B.V., Naarden the Netherlands	100.0%	100.0%
Orthopedium Holding B.V., Amersfoort the Netherlands	100.0%	100.0%
Medinova B.V., Amsterdam the Netherlands	100.0%	100.0%
Orthopedium B.V., Amsterdam the Netherlands	100.0%	100.0%
Nedspine B.V., Den Bosch the Netherlands	100.0%	100.0%
Stichting Klein Rosendael, Rozendaal the Netherlands	100.0%	100.0%
Stichting Kliniek Zestienhoven, Rotterdam the Netherlands	100.0%	100.0%
Stichting Medinova Kliniek Breda, Haarlem the Netherlands	100.0%	100.0%
Stichting Orthopedie Rijnmond, Delft the Netherlands	100.0%	100.0%
Stichting Orthopedium, Zeist the Netherlands	100.0%	100.0%
Stichting Nedspine, Ede the Netherlands	100.0%	100.0%
Bergman Inwendig B.V., Naarden the Netherlands	100.0%	100.0%
Bergman IZ Bilthoven B.V., Bilthoven the Netherlands	100.0%	100.0%
Bergman IZ Amsterdam B.V., Amsterdam the Netherlands	60.0%	60.0%
Bergman Ogen B.V., Utrecht the Netherlands	100.0%	100.0%
Bergman VisionClinics B.V., Naarden the Netherlands	100.0%	100.0%
Bergman OZ Ede B.V., Ede the Netherlands	100.0%	100.0%
Bergman OZ Den Bosch B.V., Den Bosch the Netherlands	100.0%	100.0%
Oogziekenhuis Zonnestraal Holding B.V., Hilversum the Netherlands	100.0%	100.0%
Oogheelkunde Zonnestraal Oost-Nederland B.V., Hilversum the Netherlands	100.0%	51.0%

Principal subsidiaries	Proportion of ownership and interest held by the group
	2020	2019
Oogziekenhuis Zonnestraal Noord Holland B.V., Zaanstad the Netherlands	51.0%	51.0%
Oogziekenhuis Zonnestraal Flevoland B.V., Lelystad the Netherlands	60.0%	60.0%
Oogziekenhuis Amsterdam B.V., Amsterdam the Netherlands	51.0%	51.0%
Oogziekenhuis Zonnestraal Amersfoort B.V., Amersfoort the Netherlands	100.0%	100.0%
Oogziekenhuis Zonnestraal Refractiechirurgie B.V., Amersfoort the Netherlands	100.0%	100.0%
Oogheelkunde Zonnestraal B.V., Hilversum the Netherlands	100.0%	100.0%
Oogcentrum Haarlem B.V., Heemstede the Netherlands	100.0%	100.0%
Stichting Zorggroep Zonnestraal, Hilversum the Netherlands	100.0%	100.0%
Stichting Oogheelkundig Medisch Centrum Haarlem, Haarlem the Netherlands	-	100.0%
Bergman Vrouw B.V., Amsterdam the Netherlands	100.0%	100.0%
Bergman VZ Bilthoven B.V., Bilthoven the Netherlands	100.0%	100.0%
Bergman VZ Amsterdam B.V., Amsterdam the Netherlands	51.0%	51.0%
Bergman KNO B.V., Hilversum the Netherlands	100.0%	-
Stichting KNO Het Gooi & Omstreken, Hilversum the Netherlands	100.0%	-
Stichting KNO Mid-West, Hilversum the Netherlands	100.0%	-
Bergman Scandinavia B.V., Naarden the Netherlands	100.0%	100.0%
Bergman Scandinavia AB, Stockholm Sweden	97.6%	97.6%
Memira Holding AB, Uppsala Sweden	100.0%	100.0%
Memira AB, Uppsala Sweden	100.0%	100.0%
Memira AS, Oslo Norway	100.0%	100.0%
Memira ApS, Copenhagen Denmark	100.0%	100.0%
Memira GmbH, Hamburg Germany	-	100.0%
Stockholm Eye Center AB, Stockholm Sweden	100.0%	100.0%
Täby EyeCenter AB, Stockholm Sweden	100.0%	100.0%
StureOptikern AB, Stockholm Sweden	100.0%	100.0%
A6 Memira Eyecenter AB, Stockholm Sweden	100.0%	-
Øjenlægernes Hus ApS, Copenhagen Denmark	100.0%	-
Bergman Germany B.V., Naarden the Netherlands	100.0%	-
Bergman Germany Holdco B.V., Fulda Germany	100.0%	-
Bergman Acquisition 1 GmbH, Fulda Germany	100.0%	-
Bergman Deutsche Klinik Laufen GmbH, Laufen Germany	100.0%	-
Bergman MVZ Laufen GmbH, Laufen Germany	100.0%	-
Bergman Deutsche Klinik Aschaffenburg GmbH, Aschaffenburg Germany	100.0%	-
Bergman Deutsche Klinik Bad Bertrich GmbH, Bad Bertrich Germany	100.0%	-
Bergman Deutsche klinik Hilden GmbH, Hilden Germany	100.0%	-
MVZ Klinik im Park GmbH, Hilden Germany	100.0%	-
DV Venenliga Management GmbH, Bad Bertrich Germany	100.0%	-
Bergman MVZ Venenzenstrum Bad Bertrich GmbH, Bad Bertrich Germany	90.0%	-
GIB - Gesellschaft für Investitionen und Betrieb von Kliniken, Reha- und Senioreneinr. GmbH, Hilden Germany	94.0%	-
Bergman MVZ Aschaffenburg GmbH, Aschaffenburg Germany	100.0%	-
Bergman Grünewaldklinik GmbH, Aschaffenburg Germany	100.0%	-
Bergman Deutsche KliniK Büdingen GmbH, Büdingen Germany	100.0%	-
Mathilden-Hospital Büdingen Service GmbH, Büdingen Germany	100.0%	-
Bergman Mathilden-Hospital Büdingen Wohnen GmbH, Büdingen Germany	100.0%	-
Bergman MVZ am Mathilden-Hospital Büdingen GmbH, Büdingen Germany	100.0%	-
MVZ Universitätsallee Bremen GmbH, Bremen Germany	100.0%	-
Augenklinik Universitätsallee Bremen GmbH, Bremen Germany	100.0%	-
Augenzentrum Universitätsallee Bremen GmbH, Bremen Germany	100.0%	-
KIP Orthopädiehandel GmbH, Hilden Germany	100.0%	-

Company Financial Statements

Company Statement of Profit or Loss

For the year ended 31 December	Notes	2020 € 000	2019 € 000
Share of profit (loss) of subsidiaries, net of tax	35	-3,641	4,698
Other results, net of tax		-2,986	-2,590
Profit (loss) for the year		-6,627	2,107

Company Statement of Financial Position as at 31 December

	Notes	2020 € 000	2019 € 000
Assets
Non-current assets
Equity-accounted subsidiary	35	86,839	89,627
Current assets
Other receivables		6	1
Cash and cash equivalents		740	4
Total current assets		746	5
Total assets		87,585	89,632
Equity and liabilities Equity
Share capital		-	-
Share premium		92,763	92,013
Other reserves		-46,099	-46,952
Accumulated losses (retained earnings)		-4,66	1,967
Equity attributable to equity holders of Bergman	36	42,004	47,029
Non-current liabilities
Preference shares	37	44,930	42,387
Provision equity -accounted subsidiary	35	-	-
Current liabilities
Trade and other payables		448	52
Group company liabilities		203	165
Total liabilities		45,581	42,604
Total equity and liabilities		87,585	89,632

Company Statement of Changes in Equity

		Attributable to the equity holders of the Company
	Note	Issued Capital € 000	Share premium € 000	Legal reserves € 000	Other reserves € 000	Retained earnings € 000
Balance at 31 December 2018		-	-	746	(746)	(140)
Change in accounting policy		-	-	-	(2,274)	-
Restated balance at January 2019		-	-	746	(3,020)	(140)
Profit (loss) for the period		-	-	-	-	2,107
Differences on translation of foreign operations		-	-	1,008	22	-
Total comprehensive income		-	-	1,008	22	2,107
Cash dividends		-	-		(11,390)	-
Contribution Legal Merger		-	92,013	-	(132,013)	-
Acquisition business
combination NLHCC	4	-	-	-	97,959	-
Acquisition business				-
combination Memira	4	-	-	-	-	-
Internal developed software	5	-	-	(433)	433	-
Purchase minority share		-	-	-	(264)	-
Balance at 31 December 2019 and 1 January 2020		-	92,013	1,321	(48,273)	1,967
Profit (loss) for the period		-	-	-	-	(6,627)
Differences on translation of foreign operations		-	-	2,319	-	-
Total comprehensive income		-	-	2,319	-	(6,627)
Issued share capital		-	750	-	-	-
Acquisition business
combination Capio	4	-	-	-	-	-
Internal developed software		-	-	49	(49)	-
Purchase minority share		-	-	-	(1,466)	-
Other		-	-	-	-	-
Balance at 31 December 2020		-	92,763	3,689	(49,788)	(4,660)

	Total € 000
Balance at 31 December 2018	(140)
Change in accounting policy	(2,274)
Restated balance at January 2019	(2,414)
Profit (loss) for the period	2,107
Differences on translation of foreign operations	1,030
Total comprehensive income	3,137
Cash dividends	(11,390)
Contribution Legal Merger	(40,000)
Acquisition business
combination NLHCC	97,959
Acquisition business
combination Memira	-
Internal developed software	-
Purchase minority share	(264)
Balance at 31 December 2019 and 1 January 2020	47,028
Profit (loss) for the period	(6,627)
Differences on translation of foreign operations	2,319
Total comprehensive income	(4,308)
Issued share capital	750
Acquisition business
combination Capio	-
Internal developed software	-
Purchase minority share	(1,466)
Other	-
Balance at 31 December 2020	42,004

Notes to the Company Financial Statements

32 Significant accounting policies to the Company Financial Statements

The company financial statements have been prepared in accordance with the provisions of the Dutch Civil Code, Book 2, Title 9. Hippocrates uses the facility to apply the accounting policies used in the consolidated financial statements in its company financial statements. As a result the equity and net result included in the consolidated financial statements are included in the company financial statements.

The Company income statement is presented in accordance with the exemption of article 2:402 of the Dutch Civil Code.

Reference is made to the accounting policies as included in the consolidated financial statements, note 2 Significant accounting policies with the exception of the valuation of subsidiaries. Subsidiaries are valued at net asset value.

Receivables to and from group companies are measured at amortised cost.

33 Employee benefit expenses

During 2020, as 2019, the company did not employ any staff.

34 Taxation

The company is not part of the fiscal unity of Bergman Healthcare Clinics and its subsidiaries. As management does not expect to be able to carry forward tax losses of the company, the company did not recognise a deferred tax asset and consequently did not recognise a tax benefit in the profit or loss statement.

35 Equity-accounted subsidiary

The company holds an interest of 100% in its subsidiary Bergman Healthcare Clinics B.V., which has been valued at net asset value. The table below shows the movements during the year:

	2020 € 000	2019 € 000
As at January 1	89,627	-
Direct equity movements	853	85,061
Share in result of subsidiary, net of tax	-3,641	4,698
Provision equity -accounted subsidiary	-	-
Release provision	-	-132
As at December 31	86,839	89,627

36 Equity attributable to equity holders of Bergman

On 13 November 2020 Hippocrates renamed the existing 100 ordinary shares to ordinary shares "A" and issued 21 new ordinary shares "B". Both categories shares have a nominal value of € 0.01 each and the shares have been fully paid. Only shares A have voting rights.

The 21 shares B have been granted to the STAK Hippocrates Capital and subsequently the STAK granted certificates on shares to key personnel.

As of 3 January 2019, shareholders A contributed € 92,013 on the ordinary shares A through contribution of the companies Malsquare and NL Healthcare Clinics. This contribution on the ordinary shares has been recognised as share premium.

As of 13 November 2020, shareholders B contributed € 750 on the ordinary shares B. This contribution on the ordinary shares has been recognised as share premium. Key personnel contributed € 375 in cash and € 375 via a loan to Key personnel.

For a total overview of changes in equity, reference is made to the "Consolidated statement of changes in equity".

Legal reserve

The legal reserve has been recognised due to the internally developed software under the intangible fixed and the currency translation of foreign operations.

37 Preference shares

	2020 € 000	2019 € 000
As at January 1	42,387	-
Contribution via legal merger	-	40,000
Finance costs accrual 6%	2,543	2,387
As at December 31	44,930	42,387
Current	-	-
Non-current	44,930	42,387

On 13 November 2020 Hippocrates renamed the existing 100 cumulative preferences shares "A" and issued 21 new preference shares "B". Both categories preference shares have a nominal value of € 0.01 each, without voting rights.

Cumulative preference shares A are held by the Shareholders which contributed € 40,000 on these preference shares, as of 3 January 2019. The shares are entitled to dividends at a rate of 6% per annum over the total outstanding balances.

Cumulative preference shares B are indirectly held by Key personnel via STAK. Key personnel contributed the nominal value in total of € 0.21, these share are entitled to dividends of 7% per annum over the total outstanding balances.

If sufficient profits are not available in a particular financial year, the dividends accumulate and are payable when sufficient profits are available.

Since the preference shares include a contractual obligation for Hippocrates to deliver cash (dividends) to the preference shareholders, they are recognised as liabilities and consequently dividends are recognised as interest expenses.

38 Commitments

403-statements

Hippocrates Capital B.V. has provided a statement in accordance with section 2:403 of the Dutch Civil Code (Burgerlijk Wetboek) in relation to its (indirect) Dutch subsidiaries in which a 100% interest is held, pursuant to which Hippocrates Capital B.V. declares itself to be jointly and severally liable for the legal acts performed by aforementioned entities.

Fiscal Unity

Hippocrates Capital B.V. is not part of the fiscal unity of Bergman Healthcare Clinics and its subsidiaries.

Bergman Healthcare Clinics B.V. and its Dutch subsidiaries form a tax group for corporate income tax and value added tax (VAT) and as a result are jointly and severally liable for the fiscal unity's corporate income tax and VAT liabilities. For further information refer to note 27 Commitments and contingencies of the consolidated financial statements.

39 Audit fees

PriceWaterhouseCoopers Accountants N.V. (PWC) and other PWC lines of services charged the following fees pursuant to section 2:382a(3) of the Dutch Civil Code to Hippocrates, its subsidiaries and other consolidated entities.

	2020 € 000	2019 € 000
Audit of the financial statements, including the statutory financial
statements and other statutory audits of subsidiaries	461	236
Other audit services	19	-
Tax advisory services	83	93
Other non-audit services	2,560	205
	3,123	534

The audit fees regarding the financial statements relate to the total costs for the fiscal year, including the accruals for invoices to be received. The other non-audit services relates mainly to financial due diligences for business combinations and a vendor due diligence.

40 Result Appropriation

The Executive Board proposes to the General Meeting of Shareholders to withdrawn the result for 2020 attributable to Equity holders of the Company of € -6,627 from the retained earnings of Hippocrates Capital B.V. In anticipation of the approval of the General Meeting of Shareholders, the proposal has already been incorporated in the financial statements.

41 Subsequent events

Refer to note 30 Subsequent Events of the consolidated financial statements.

Naarden, 29 April 2021

Executive Board

w.g. T.J.M. van der Heijden

w.g. P.H.J. Degenhart

w.g. I. Piest

w.g. G.B. Malenstein

Supervisory Board

w.g. R.L. de Bakker

w.g. M. Sint

w.g. W. Malenstein

w.g. F.C. Breedveld

w.g. J.R. Ruigrok

Other Information

Provisions in Articles of Association governing the appropriation of Profit or Loss

The profit appropriation takes place in accordance with article 23 of the articles of association. The profit remaining after the application of articles 23.2 and 23.3 shall be at the free disposal of the general meeting. If the general meeting does not decide to allocate the profit prior to or at the latest immediately after the decision to adopt the annual accounts, the profit will be reserved.

Independent auditor's report

To: the general meeting and the supervisory board of Hippocrates Capital B.V.

Report on the financial statement 2020

Our opinion

In our opinion:

- the consolidated financial statements of Hippocrates Capital B.V. together with its subsidiaries ('the Group') give a true and fair view of the financial position of the Group as at 31 December 2020 and of its result and cash flow for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union ('EU-IFRS') and with Part 9 of Book 2 of the Dutch Civil Code;

- the company financial statements of Hippocrates Capital B.V. ('the Company') give a true and fair view of the financial position of the Company as at 31 December 2020 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

What we have audited

We have audited the accompanying financial statements 2020 of Hippocrates Capital B.V., Naarden. The financial statements include the consolidated financial statements of the Group and the company financial statements.

The consolidated financial statements comprise:

- the consolidated statement of financial positions as at 31 December 2020;

- the following statements for 2020: the consolidated statement of profit and loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows; and

- the notes, comprising significant accounting policies and other explanatory information.

The company financial statements comprise:

- the company statement of financial positions as at 31 December 2020

- the company statement of profit and loss for the year then ended;

- the notes, comprising the accounting policies applied and other explanatory information.

The financial reporting framework applied in the preparation of the financial statements is EU-IFRS and the relevant provisions of Part 9 of Book 2 of the Dutch Civil Code for the consolidated financial statements and Part 9 of Book 2 of the Dutch Civil Code for the company financial statements.

The basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. We have further described our responsibilities under those standards in the section 'Our responsibilities for the audit of the financial statements' of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of Hippocrates Capital B.V. in accordance with the 'Wet toezicht accountantsorganisaties' (Wta, Audit firms supervision act), the 'Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten' (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the 'Verordening gedrags- en beroepsregels accountants' (VGBA, Dutch Code of Ethics).

Report on the other information included in the annual report

In addition to the financial statements and our auditor's report thereon, the annual report contains other information that consist of:

- the board report including the Group Profile, the Report of the Supervisory Board and the Report of the Executive Board;

- the other information pursuant to Part 9 Book of 2 of the Dutch Civil Code.

Based on the procedures performed as set out below, we concluded that the other information:

- is consistent with the financial statements and does not contain material misstatements;

- contains the information that is required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and the understanding obtained in our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements.

By performing our procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of such procedures was substantially less than the scope of those performed in our audit of the financial statements.

The executive board is responsible for the preparation of the other information, including the board report and the other information in accordance with Part 9 of Book 2 of the Dutch Civil Code.

Responsibilities for the financial statements and the audit

Responsibilities of the executive board and the supervisory board for the financial statements

The executive board is responsible for:

- the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code; and for

- such internal control as the executive board determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, the executive board is responsible for assessing the Company's ability to continue as a going concern. Based on the financial reporting frameworks mentioned, the executive board should prepare the financial statements using the going concern basis of accounting unless the executive board either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so. The executive board should disclose events and circumstances that may cast significant doubt on the Company's ability to continue as a going concern in the financial statements.

The supervisory board is responsible for overseeing the Company's financial reporting process.

Our responsibilities for the audit of the financial statements

Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence to provide a basis for our opinion. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high but not absolute level of assurance, which makes it possible that we may not detect all material misstatements. Misstatements may arise due to fraud or error. They are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

A more detailed description of our responsibilities is set out in the appendix to our report.

Utrecht, 18. May 2021

PricewaterhouseCoopers Accountants N.V.

Original has been signed by A.C. Mulder RA

Appendix to our auditor's report on the financial statements 2020 of Hippocrates Capital B.V.

In addition to what is included in our auditor's report, we have further set out in this appendix our responsibilities for the audit of the financial statements and explained what an audit involves.

The auditor's responsibilities for the audit of the financial statements

We have exercised professional judgement and have maintained professional scepticism throughout the audit in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit consisted, among other things of the following:

- Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the intentional override of internal control.

- Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

- Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the executive board.

- Concluding on the appropriateness of the executive board's use of the going concern basis of accounting, and based on the audit evidence obtained, concluding whether a material uncertainty exists related to events and/or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report and are made in the context of our opinion on the financial statements as a whole. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluating the overall presentation, structure and content of the financial statements, including the disclosures, and evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Considering our ultimate responsibility for the opinion on the consolidated financial statements, we are responsible for the direction, supervision and performance of the group audit. In this context, we have determined the nature and extent of the audit procedures for components of the Group to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole. Determining factors are the geographic structure of the Group, the significance and/or risk profile of group entities or activities, the accounting processes and controls, and the industry in which the Group operates. On this basis, we selected group entities for which an audit or review of financial information or specific balances was considered necessary.

We communicate with the supervisory board regarding, among other matters, the planned scope and the timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.