Georgia Healthcare Group PLC Annual Report 2018 Financial Statements Notes to Consolidated Financial Statements continued (Thousands of Georgian Lari unless otherwise stated) 1. Background continued Material partly owned subsidiaries The following subsidiary has material non-controlling interest: 2018 Ownership rights Profit allocated to Dividends paid to held by non-controlling non-controlling non-controlling interests interests interests, % during the year during the year JSC GEPHA 33 14,978 9,801 2017 Ownership rights Profit allocated to Dividends paid to held by non-controlling non-controlling non-controlling interests interests interests, % during the year duringthe year JSC GEPHA 33 11,173 553 JSC GEPHA’s accumulated non-controlling interest balance is zero due to the put option on (Note 25). The summarised financial information of these subsidiaries is presented below. This information is based on amounts before inter-company eliminations. JSC GEPHA 31 December 2018 31 December 2017 Total assets 285,477 248,421 Total liabilities 154,331 128,749 Equity 131,146 119,672 For the year ended For the year ended JSC GEPHA 31 December 2018 31 December 2017 Revenue 518,578 450,315 Total comprehensive income for the year 45,389 39,247 Net cash flows from operating activities 32,755 16,201 Net cash flows from investing activities 4,967 (39,511) Net cash used in financing activities (31,781) 31,276 Net increase in cash and cash equivalents 5,941 7,966 2. Basis of preparation Basis of preparation In accordance with the exemption permitted under section 408 of the Companies Act 2006, the stand-alone Income Statement of the Company is not presented as part of these accounts. The Company’s and Group’s consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) and IFRS Interpretations Committee (“IFRIC”) interpretations endorsed by the European Union (“EU”), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The principal accounting policies applied in the preparation of these consolidated Financial Statements are set out below. The consolidated Financial Statements have been prepared on a historical cost basis, except for investment properties, land and office buildings and hospitals and clinics classified as property and equipment and derivative financial instruments that have been measured at fair value. These consolidated financial statements have been presented in thousands of Georgian Lari (“GEL”), except otherwise stated. Going concern GHG’s Board of Directors has made an assessment of the Group’s ability to continue as a going concern and is satisfied that it has the resources to continue in business for a period of at least 12 months from the approval of the Financial Statements. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going concern. Therefore, the Financial Statements continue to be prepared on the going concern basis. 3. Summary of significant accounting policies Changes in accounting policies The accounting policies adopted in the preparation of the annual consolidated Financial Statements are consistent with those followed in the preparation of the Group’s annual consolidated Financial Statements for the year ended 31 December 2017 apart from IFRS 9 as presented below. Basis of consolidation The consolidated Financial Statements comprise the financial statements of GHG and its subsidiaries as at 31 December 2018. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. 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; and • the ability to use its power over the investee to affect its returns. 130