Georgia Healthcare Group PLC Annual Report 2018 Financial Statements Notes to Consolidated Financial Statements continued (Thousands of Georgian Lari unless otherwise stated) 33. Impairment of healthcare services, sales of pharmaceuticals, insurance premiums and other receivables The movements in the allowance for healthcare services, insurance premiums receivables and other receivables are as follows: Insurance and reinsurance Receivables from Receivables from Other receivables healthcare services Pharma receivabesl Total 1 January 2017 2,519 11,030 – 3,201 16,750 Impairment charge/(reversal) 479 4,424 – (728) 4,175 Impairment of receivables due to litigations – 1,883 – – 1,883 Write-off (669) – – – (669) 31 December 2017 2,329 17,337 – 2,473 22,139 Impairment charge/(reversal) 362 4,351 (220) (45) 4,448 IFRS 9 adoption effect – 5,536 1,491 – 7,027 Impairment of receivables due to litigations – 2,801 – – 2,801 Write-off (300) (10,836) (686) – (11,822) 31 December 2018 2,391 19,189 585 2,428 24,593 In 2018, the Group adopted IFRS 9. Impact of the adoption comprised GEL 7,027 and was attributable to the forward-looking nature of the standard. As at 31 December 2018 gross amount of written-off enforceable receivables equalled GEL 30,798 (2017: GEL 18,976). 34. Other operating expense Year ended Year ended 31 December 31 December 2018 2017 Repair and maintenance expense (2,880) (1,756) Impairment of receivables due to litigations (2,801) (1,883) Client referral fee expense (1,898) (535) Penalties and impairment of tax assets (1,118) (3,314) Cost of realised medicaments (694) (697) Charity (225) – Impairment of prepayments (115) (225) Loss from property and equipment sold (110) (515) Impairment of intangible assets (260) (606) Impairment expense on inventory – (323) Loss from litigations – (289) Cost of realised stationary – (197) Expense on corporate event – (168) Loss from receivables write-off – (141) Other (953) (2,462) Total other operating expense (11,054) (13,111) In 2018 and 2017 years the penalty expenses mainly related to procedural violations in medical documentation as well as billing and invoicing process. 35. Interest income and interest expense Interest income and interest expense comprise: Year ended Year ended 31 December 31 December 2018 2017 Interest income Interest income from loans issued 197 404 Interest income from amounts due from credit institutions 942 1,707 Total interest income 1,139 2,111 Interest expense Interest expense on borrowings (29,332) (22,240) Interest expense on debt securities issued (9,125) (4,257) Interest expense on finance lease (858) (1,046) Total interest expense (39,315) (27,543) 162