Georgia Healthcare Group PLC Annual Report 2018 Financial Statements Notes to Consolidated Financial Statements continued (Thousands of Georgian Lari unless otherwise stated) 40. Fair value measurements continued Fair value hierarchy continued Derivative financial instruments continued Movements in level 3 financial instruments measured at fair value The following tables show a reconciliation of the opening and closing amounts of level 3 financial assets which are recorded at fair value: 1 January Initial Remeasurement Remeasurement in Business 31 December 2017 Recognition in Equity Payment Income Statement combinations 2017 Level 3 financial assets Call option – – – – 10,106 – 10,106 Level 3 financial liabilities Payables for share acquisitions: put option – 54,921 6,591 – – – 61,512 Payables for share acquisitions: holdback for business acquisitions 10,986 – – (46,404) (74) 72,238 36,746 1 January Initial Remeasurement Remeasurement in Business 31 December 2018 Recognition in Equity Payment Income Statement combinations 2018 Level 3 financial assets Call option 10,106 – – – 6,863 – 16,969 Level 3 financial liabilities Payables for share acquisitions: put option 61,512 – 10,156 – – – 71,668 Payables for share acquisitions: holdback for business acquisitions 36,746 – – (16,626) (1,340) 1,026 19,806 Impact of changes in key assumptions on fair value of Level 3 assets measured at fair value Level 3 property at fair value Property and 31 December Valuation Significant unobservable Other key Sensitivity of the input equipment 2018 technique inputs Range information Range to fair value Land and office 18,524 Market Price per square 5-2,284 Square 123-1,770 Increase (decrease) in the price buildings approach metre, land, metres, per square metre would result in building building increase (decrease) in fair value Hospitals and 443,297 Market Price per square 3-1,106 Square 151-30,700Increase (decrease) in the price clinics and DRC metre, land, metres, per square metre would result in approaches building building increase (decrease) in fair value The following describes the methodologies and assumptions used to determine fair values for those financial instruments that are not already recorded at fair value in the consolidated Financial Statements. Assets for which fair value approximates carrying value For financial assets and financial liabilities that are liquid or have a short-term maturity (less than three months) as well as for all short-term state receivables it is assumed that the carrying amounts approximate their fair value. This assumption is also applied to variable rate financial instruments. Fixed rate financial instruments The fair value of fixed rate financial assets and liabilities carried at amortised cost is estimated by comparing market interest rates when they were first recognised with current market rates offered for similar financial instruments. The estimated fair value of fixed interest-bearing deposits is based on a discounted cash flow analyssusigpevailing money-market interest rates for debts with similar credit risk and maturity. 41. Related party transactions In accordance with IAS 24 Related Party Disclosures, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. In considering each possible related-party relationship, attention is directed to the substance of the relationship, not merely the legal form. Related parties may enter into transactions which unrelated parties might not, and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between unrelated parties. All transactions with related parties disclosed below have been conducted on an arm’s length basis. 174