01 02 03 Financial Statements 04 35. Interest income and interest expense continued As at 31 December 2018 the amount of borrowing costs capitalised in relation to qualifying items of property and equipment was GEL 2,336 (2017: GEL 7,936). In 2018 the rate needed to determine the amount of borrowing costs eligible for capitalisation was 12.5% (2017: 12.2%), which is the effective interest rate of specific borrowings. 36. Net non-recurring expense The Group separately classifies and discloses those income and expenses that are non-recurring by nature. Any type of income or expense may be non-recurring by nature. The Group defines non-recurring income or expense as income or expense triggered by or originated from n unusual economic, business or financial event that is not inherent to the regular and ordinary business course of the Group and is caused by uncertain or unpredictable external factors. Net non-recurring expense for the year ended 31 December 2018 comprised: • GEL 783 one-off charity expense; • GEL 430 loss for remeasurement of contingent consideration payable; • GEL 331 prior period related professional service additional billing expense; • GEL 184 loss from employee dismissal compensation; and • GEL 459 loss from other individually insignificant transactions. Net non-recurring expense for the year ended 31 December 2017 comprised: • GEL 1,577 loss from one-off dismissal compensations to employees; • GEL 1,253 loss from one-off write-off of a loan related to LLC Regional Hospital acquisition; • GEL 687 loss from loan write-off; • GEL 638 expense from one-off charity related to fire in Borjomi, town in Georgia; • GEL 311 loss on contracts terminated in 2017; and • GEL 314 loss from other individually insignificant transactions. Near the end of 2017 the Board approved project aimed at cost optimisation. In scope of the project, the Group dismissed number of its employees mainly transferred from acquired entities that resulted in duplicated positions. The project started in 2017 and was mainly completed in the first quarter of 2018. 37. Share-based compensation Sanne Fiduciary Services (the “Trustee”) acts as the trustee of the Group’s Employee Benefit Trust, (“EBT”), which was founded in 2015. The EBT was established for the purposes of satisfying deferred share compensation awarded to Executive Directors and other members of executive and senior management. GHG senior executive plans In December 2017 the Board of Directors of GHG resolved to award 122,900 ordinary shares of GHG to the CEO of the Group. In February 2017 the Board of Directors of GHG resolved to award 107,200 ordinary shares of GHG to three executives. The shares were awarded with a three-year vesting period, with continuous employment being the only vesting condition for both awards. The Group considers 10 December 2017 as the grant date for the awards to the CEO and other executives. The Group estatesthat the fair value of the shares awarded was GEL 12.54 per share as at grant date. The fair values were identified based on market prices on grant date. As at 31 December 2018 no shares have been vested. In February 2017 the Board of Directors of GHG resolved to award 141,981 ordinary shares of GHG to the CEO of the Group. In February 2017 the Board of Directors of GHG resolved to award 128,070 ordinary shares of GHG to three executives. The shares were awarded with a three-year vesting period, with continuous employment being the only vesting condition for both awards. The Group considers 28 February 2017 as the grant date for the awards to the CEO and other executives. The Group estimates that the fair value of the shares awarded was GEL 11.68 per share as at grant date. The fair values were identified based on market prices on grant date. As at 31 December 2018, one-third of the discretionary shares have been vested. In February 2016, the Board of Directors of GHG resolved to award 237,500 ordinary shares of GHG to the CEO of the Group. In February 016, the Board of Directors of GHG resolved to award 281,000 ordinary shares of GHG to three executives. The shares were awarded with a three-year vesting period, with continuous employment being the only vesting condition for both awards. The Group considers 15 February 2016 as the grant date for the awards to the CEO and other executives. The Group estimates that the fair value of the shares awarded was GEL 6.28 per share as at grant date. The fair values were identified based on market prices on grant date. As at 31 December 2017, two-thirds of the discretionary shares have been vested. In January 2015, the CEO of the Group and the deputies signed five-year fixed contingent share-based compensation agreements for the total of 1,670,000 ordinary shares of GHG. The total amount of shares allocated to each executive will be awarded in five equal instalments during the five consecutive years starting January 2017, of which each award will be subject to a four-year vesting period with 20% of shares vesting during the first three years and 40% of shares vesting during the fourth year. The Group considers 1 January 2015 and 29 April 2015 as the grant dates for the awards to the CEO and deputies, respectively. The Group estimates that the fair value of the shares awarded was GEL 2.18 per share as at the respective grant dates. The respective fair values were estimated using appropriate valuation techniques based on market and income approaches. As at 31 December 2018, 12% of the shares have been vested. 163