Georgia Healthcare Group PLC Annual Report 2018 Financial Statements Notes to Consolidated Financial Statements continued (Thousands of Georgian Lari unless otherwise stated) 27. Net insurance premiums earned Net insurance premium earned comprises: Year ended Year ended 31 December 2018 31 December 2017 Gross premiums written 55,292 49,220 Change in unearned premiums reserve (1,145) 4,521 Total net insurance premiums earned 54,147 53,741 28. Cost of healthcare services and pharmaceuticals Year ended Year ended 31 December 2018 31 December 2017 Cost of salaries and other employee benefits (105,440) (92,744) Cost materials and supplies (34,012) (34,015) Cost of utilities and other (13,248) (11,113) Cost of providers (3,226) (1,854) Total cost of healthcare services (155,926) (139,726) Retail (275,887) (246,310) Wholesale (110,265) (93,150) Total cost of sales of pharmaceuticals (386,152) (339,460) Cost of utilities and other comprise electricity, natural gas, cleaning, water supply, fuel supply, repair and maintenance of medical equipment. Indirect salaries that were not included in the cost of healthcare services amounted in the year ended 31 December 2018 to GEL 84,509 (2017: GEL 75,430) and were presented as a separate line item in profit or loss. The total amount of salaries and other employee benefits recognised as an expense in profit or loss in the year ended 31 December 2018 amounted to GEL 189,949 (2017: GEL 168,174). 29. Cost of insurance services and agents’ commissions Cost of insurance services and agents’ commissions comprises: Year ended Year ended 31 December 2018 31 December 2017 Insurance claims paid (33,651) (36,466) Change in insurance contract liabilities 867 1,313 Net insurance claims incurred (32,784) (35,153) Agents, brokers and employee commissions (2,843) (3,373) Cost of insurance services and agents’ commissions (35,627) (38,526) 30. Other operating income Other operating income comprises: Year ended Year ended 31 December 2018 31 December 2017 Gain from call option (Notes 16, 40) 6,863 10,106 Payables derecognised 3,881 – Rental income 1,190 731 Fee income 944 – Litigation reserve reversal 817 – Gain from property and equipment sold 490 563 Revenue from sale of medicaments 447 947 Income from residency programme 291 169 Share of profit of associate 247 375 Gain from lease derecognition – 2,702 Gain from rent liability derecognition – 514 Gain from revaluation of investment property – 395 Revenue from realised stationary – 301 Other 2,950 4,680 Total other operating income 18,120 21,483 160