#1Georgia Global Utilities Investor presentation October 2017#2GGU October 2017 Contents General overview Water utility New energy projects Appendix page 2#3At a glance GGU Group Note: 1. Water production 2. Under operating lease GGU October 2017 Water GWP-Tbilisi Water Energy Operating HPPS Zhinvali HPP (130.0MW) Rustavi Water Mtskheta Water Gardabani WWTP Tetrikhevi HPP Saguramo HPP Pshavela HPP2 (12.0MW) (4.4MW) (2.9MW) 520 m³ p.a.1 3 Committed project Mestiachala HPP Zoti HPP (44.3MW) (50MW) (Under construction) (Under Development) page 3#4GGU structure by shareholders and activities Water Utility BGEO Group 100% GGU Energy RP Global 35% Tbilisi Rustavi Water Water Utility Utility Mtskheta Water Utility 149.3MW 150MW 150MW 50MW Gardabani WWTP 50MW 44.3MW Existing Hydro Pipeline Pipeline UC Hydro UD Hydro Hydro Wind Pipeline Solar • Natural monopoly in water supply and wastewater services for Tbilisi, Rustavi and Mtskheta Serves c. 548K customers - 1.4m people . (1/3 of Georgia) Total water production - c. 520m m3 Wastewater treatment plant serves customer base of water utility companies EXISTING 130MW Zhinvali HPP 12MW Tetrikhevi HPP 4.4MW Saguramo HPP 2.9MW Pshavela HPP under management UNDER CONSTRUCTION 50MW Mestiachala HPP Note: 1. UC refers to under construction 2. UD refers to under development 3. WWTP refers to wastewater treatment plant GGU October 2017 UNDER DEVELOPMENT 44.3MW Zoti HPP Information on renewable projects are provided separately on an indicative basis page 4#5Partnership in hydro & other renewables 1 BGEO Group Georgia focused investment platform 65% majority shareholder 2 RP Global Austria-based renewables IPP 35% shareholder Georgia's leading investment platform. Owns & operates 149.3 MW of hydro power capacity in Georgia in its GGU water utility and energy business. 30 years experience in developing, building, owning and operating renewable power plants, globally (hydro, wind & solar). BGEO Group and RP Global teamed up in 2014 with an initial focus on developing specific hydro power plants The partnership was deepened in Q1/2017 with the target to establish Georgia's leading renewables developer, as an integral part of BGEO's GGU water utility and energy business GGU's energy arm develops and implements a diversified renewable power portfolio in Georgia, split between the three main renewable technologies of hydro, wind and solar GGU selects best project opportunities from an identified potential for each technology and aims to develop additionally on top of the existing 149.3MW installed capacity about 400MW in the mid term, out of which 50MW are under construction and 44.3MW are ready to build GGU October 2017 page 5#61 GGU strategy CURRENT STANDING MEDIUM TERM GOAL TARGETING WATER UTILITY REVENUE 2016: GEL 117.1m EBITDA 2016: GEL 56.7m EBITDA 2019: GEL 70+ m DIVIDEND PROVIDER 2 REVENUE 2016: GEL 15.0m EBITDA 2016: GEL 11.8m ENERGY 149MW existing capacity GGU October 2017 EBITDA 2019: GEL 38+ m VALUE CREATION UPSIDE 200MW existing capacity page 6 IPO in 2-3 years time#7GGU GGU management team Archil Gachechiladze Chief Executive Officer - Joined GGU in November 2016 Previously served as Deputy CEO, Corporate & Investment Banking at Bank of Georgia (BOG), prior to that he served as BGEO Group CFO and Deputy CEO Investment management at BOG. Archil joined Bank of Georgia in October 2009 as Deputy CEO Corporate Banking. - Holds MBA degree from Cornell University and also is a CFA charterholder Giorgi Tskhadadze Head of Water Utility Joined GGU in December 2014 Previously held executive positions at several leading local companies, holding position of CFO at IDS Borjomi and Poti Sea Port. Prior to joining GGU, Giorgi was acting as a partner at Proxima Prime Partners Holds BSc degree in Economics and Engineering from Tbilisi State University Giorgi Bezhuashvili Head of Wind and Solar Power - Joined GGU in July 2016 - Previously held executive positions at several leading local companies, among them serving as General Director at Georgian Energy Development Fund. Before joining GGU, Giorgi served at GRPC as Deputy CEO, wind and solar Holds a master's degree from Paris-Sud University in Economics, Technology and Territories - Giorgi Vakhtangishvili Chief Financial Officer - Joined GGU in April 2015 - Previously held different managerial positions at BGEO Group's companies; before joining GGU, Giorgi served as CEO of m2 Real Estate, the leading real estate development company in Georgia Holds BBA degree from European School of Management (ESM) Zurab Gordeziani Head of Hydropower - Joined GGU in January 2015 - Joined BGEO Group in 2013 to develop hydro projects. Before that, he was involved in the energy sector of Georgia for 14 years and was part of the team that developed current legislative framework for the energy sector in Georgia. He also served on executive positions in JSC Energo-Pro Georgia, Georgian Electrosystem and Ministry of Energy - Holds degrees in Law and Economics from Tbilisi State University Eter Iremadze Head of Strategic Projects Joined GGU in February 2017 Joined BGEO Group in 2006 and held numerous executive positions at Bank of Georgia; among those are head of SOLO (Premium Banking) department and head of Blue Chip Corporate Banking Unit covering structured lending, M&As, significant buyouts in Georgia, and project financing. Overall, Eter has 18 years of experience in banking - Holds Dual MBA degree from Grenoble Graduate School of Business & Caucasus University Jaba Mamulashvili Chief Legal Officer - Joined GGU in February 2016 - Before joining GWP he held a position of a partner at Begiashvili & Co. Limited, one of the leading Georgian law firms. Jaba specializes in commercial law and has a notable experience in equity investments, corporate and project financing, etc. Holds a master's degree in International Business Law from University of Manchester Tina Simonishvili Head of Investor Relations - Joined GGU in February 2016 Previously worked for BGEO Group companies for more than 6 years, namely as an associate in department of DCM at Galt & Taggart leading investment bank in Georgia and as a principal corporate banker at Bank of Georgia Holds BBA degree from Caucasus School of Business and MSc in International Management from King's College London October 2017 page 7#8GGU October 2017 Contents General overview Water utility New energy projects Appendix page 8#9GGU - a privately-owned natural monopoly GGU is the only profitable water-utilities player in Georgia with plenty of efficiency rooms GGU is the largest privately owned water utility company in • 2 core activities: 1. 1. Georgia Water supply and sanitation (including wastewater collection and processing) - Provides water to 1.4m people (1/3 of Georgia) 2016A: 522M m3 Generation of electric power - Owns 3 HPPs and has 1 HPP under management with total installed capacity of 149.3MW. Generated power is primarily used by GGU's water business. The excess amount of generated power is sold to the third party clients every year • Revenue of GEL 127.2m in 2016, +7.6% y-o-y • EBITDA of GEL 68.5m in 2016, +11.0% y-o-y . • • . • Company has strong execution track record & financial strength Management team with extensive experience in utility business “BB-” rating affirmed by Fitch Ratings to major subsidiary of GGU - Georgian Water and Power in 2016 (currently Georgia's sovereign rating is "BB-" and the country ceiling is BB by Fitch) First bond placement by utility company in Georgia (GEL 8.6m) through Georgian Water and Power in 2015 GGU issued GEL 30m 5-year local currency bond- the largest amount ever issued in local currency by a non-financial institution in Georgia GGU attracted long-term IFI financing of EUR 81.5m in 2017 from FMO, DEG and EIB. For EIB this was first loan provided directly to a private corporate entity in Georgia EBITDA (in GEL m) & EBITDA margin (in %) GEL millions CAGR'14-18 +10.5% 100 55.1% 56% 53.8% 53.7% EBITDA growth drivers: 54% 75 52.2% 52% 50 50% 82.3 75.3 68.5 48% 61.7 25 55.3 Cost saving from reduction in technical water losses Subsequent savings from freed-up 46% energy 45.2% 0 44% 2014 2,015 2016 2017F 2018F GGU October 2017 page 9#10GGU business lines Two revenue streams, each with solid cash generation capabilities Revenue 1 Power, 8.1% Water Supply and Sanitation 91.9% of total Revenues Revenue GEL 117.1m Number of customers - Collection rates - c. 95% Operating figures (2016A) -544K Overview Owns and operates entire network for water supply and sanitation services - pumping stations, reservoirs, collectors, wastewater treatment plant and complementary infrastructural elements GGU October 2017 Water supply and sanitation, 91.9% 2 Power 8.1% of total Revenues Revenue GEL 10.1m Total installed Capacity - 149.3MW Generation 386GWh Owns and operates 3 Hydro power plants, Zhinvali, Tetrikhevi and Saguramo (146.4MW in total) Leases and operates Pshavela HPP with 2.9MW installed capacity page 10#11- GGU water sales Overview Water is sourced from Zhinvali reservoir (90%) and Mukhrani/Natakhtari (10%) aquifer to feed the cities of Tbilisi, Rustavi and Mtskheta Customer pool includes both legal entities and households: • Legal entities metered clients. Water meters are read on a cyclical basis. Collection rates are close to 100% - Households significant portion of this client base remains non-metered (c. 75%). Non-metered customers are billed based on the number of individuals formally registered by the civil registrar and by application of the relevant tariff fixed per capita per month Water sales split per type of clients 2016 (in %) Legal entities, 72% GGU October 2017 Households, 28% 2011 456, 748 488,750 Number of clients 2011-2016 CAGR 3.5% 502,103 517.260 2012 2013 2014 2015 ■Number of households ■Number of legal entities Collection rates 2011-2016 527,137 99.5% 98.7% 97.4% 97.7% 98.0% 96.9% 91.0% 88.9% 95.0% 94.5% 94.0% 93.4% 2011 2012 2013 2014 2015 2016 Households -Legal entities page 11 2016 543,527#12GGU infrastructure network overview - Tbilisi GGU owns 100% of the infrastructure Company operates c. 2,700km of water supply and c. 1,700km of wastewater pipeline network which consists of: trunk lines, tunnels of potable water and aqueducts, distribution networks to customers Around 522m m³ of potable water is supplied from water production/treatment facilities in Bulachauri, Natakhtari, Saguramo, Samgori and Grmaghele on an annual basis Water quality monitoring is conducted on a daily basis, along with planned recurrent monitoring procedures in Tbilisi and its surroundings on 374 points of water supply network In total the enterprise has 45 pumping stations, 104 reservoirs of pure water with total capacity of approx. 300,000 m³. The most important reservoirs are equipped with level detectors monitored by central dispatch service GGU October 2017 Saguraro Bulachauri Choporti Mixakcieli Natakhtari Masrani Ksani Mekheta Nodoreti JANAGAL NTP. Thing New Lilo settlement Shindigi Cavkisi Tabakhmela Map symbols of water supply Chhneti and distribution system of the city of Tbilisi, Kiketi Kodjori page 12#13GGU P&L (2016) Numbers are given in GEL, thousand 2016A 2015A y-o-y % change REVENUES Revenue from water supply to legal enteties Revenue from water supply to individuals Revenue from electric power sales Revenue from technical support Other income Total revenue OPERATING EXPENSES 78,139 74,587 4.8% 31,264 30,170 3.6% 10,112 9,182 10.1% 4,573 3,683 3,151 647 24.2% 387.4% 127,239 118,268 7.6% Provision of trade receivables (2,198) (432) 408.4% Salaries and benefits (16,680) (20,920) -20.3% Electricity and transmission costs Total water sales increased by 4.4% as compared to LY comparative results Increase of electric power sales of 10.1% is due to the increased volume of sales due to higher electricity generation Increase of transmission cost compared to the LY is due to the hike of GCF by 238% Decrease of maintenance expenses compared to LY is due to prudent rehabilitation works (17,747) (11,554) 53.6% Raw materials, fuel and other consumables (2,856) (5,253) -45.6% Infrastructure assets maintenance expenditure (2,402) (4,251) -43.5% General and administrative expenses (3,101) (2,950) 5.1% Taxes other than income tax (3,298) (3,398) -2.9% Decrease of the income tax expense is due to the write-off of the accumulated deferred tax liability and retention of only those charges which may be realized before 1-Jan-2017 Professional fees (2,286) (2,475) -7.6% Insurance expense (793) (317) 150.1% Other operating expenses (7,363) (5,001) 47.2% Total operating expenses (58,724) (56,551) 3.8% EBITDA 68,515 61,717 11.0% EBITDA Margin 54% 52% Depreciation and amortisation (17,842) (17,919) -0.4% EBIT 50,673 43,798 15.7% EBIT Margin 40% 37% Finance income 220 180 22.2% Finance cost (10,985) (7,658) 43.4% Foreigns exchange gaines (losses) (462) (14,158) -96.7% EBT 39,447 22,162 78.0% Income tax expense (3,659) (6,948) -47.3% NET INCOME/LOSS FOR THE PERIOD 35,787 15,214 135.2% Net Income Margin 28% 13% GGU October 2017 page 13#14GGU P&L (1H17) Electric power sales declined due to lower generation of Zhinvali HPP Revenue from technical support increased because of doubled new connection applications compared to LY Other income increase is attributable to the sale of land plots and recognition of deferred income per IFRS 15 Finance income increase is due to the interest rate improvements on cash balances in banks Expenses Lower own consumption and Zhinvali HPP tail race construction works which completed 2 weeks ahead of time resulted in the decrease of electricity and transmission costs Maintenance expenditure decrease along with other consumables reduction is due to the preventive capital investments, that led to maintenance cost saving Numbers are given in GEL, thousand 1H17A 1H16A % y-o-y change Revenues REVENUES Revenue from water supply to legal entities 38,928 36,384 7.0% Revenue from water supply to individuals 16,053 15,132 6.1% Revenue from electric power sales 3,094 4,162 -25.7% Revenue from technical support Other income Total revenue OPERATING EXPENSES 1,412 792 78.2% 1,296 458 182.8% 60,783 56,929 6.8% Provision of trade receivables (1,125) (1,473) -23.6% Salaries and benefits (9,298) (8,605) 8.1% Electricity and transmission costs (8,885) (9,060) -1.9% Raw materials, fuel and other consumables (1,327) (1,961) -32.3% Infrastructure assets maintenance expenditure (658) (1,212) -45.7% General and administrative expenses (1,611) (1,553) 3.8% Taxes other than income tax (1,783) (1,557) 14.5% Professional fees (966) (953) 1.3% Insurance expense (529) (266) 98.7% Other operating expenses (3,401) (3,688) -7.8% Total operating expenses (29,583) (30,328) -2.5% EBITDA 31,199 26,601 17.3% EBITDA Margin 51% 47% 9.8% Depreciation and amortisation (9,820) (8,381) 17.2% EBIT 21,379 18,220 17.3% EBIT Margin 35.2% 32.0% 9.9% Finance income 499 171 191.6% Finance cost (5,624) (5,064) 11.1% Foreign exchange gains (losses) (63) (535) -88.2% EBT 16,191 12,792 26.6% Income tax expense (641) (1,741) -63.2% NET INCOME/LOSS FOR THE PERIOD 15,550 11,051 40.7% Net Income Margin 25.6% 19.4% 31.8% GGU October 2017 page 14#15GGU October 2017 Contents General overview Water utility New energy projects Appendix page 15#16Projects going forward in hydro & other renewables 2017 50 MW HPP (Svaneti Hydro) Status Under construction Project cost USD 62.7m Completion by the end of 2018. 2018 44.3 MW HPP (Zoti Hydro) Status Under development Project cost- USD 57.5m Completion by the end of 2020. Long-term pipeline¹ Hydro Capacity - up to 100 MW Project cost per MW USD 1.2 - 1.5m Wind Capacity - up to 150 MW Project cost per MW: up to USD 1.3m Solar Capacity up to 50 MW Project cost per MW: up to USD 1.1m Note 1. Pipeline projects are at a very early stage of development, therefore given information is highly indicative GGU October 2017 page 16#17Mestiachala / 50 MW Project main characteristics Project highlights Total project cost (US$ k) 62,720 • Location near city Mestia, Svaneti region Total cost per MW (US$ k) 1,254 • Cascade of 2 power plants Nominal installed capacity (MW) 50.1 • Penstock routes - 10 km • Total 2 powerhouses with 20 and 30 MWs installed capacity Net annual generation (GWh) 174.3 PPA for 8 months (cents) 5.5c Debt/Equity structure BCR (%) 70/30 10.1% Bolshoy Sechi Сочи Адлерский Adiergery ბურა ბიჭგინთავ Pisanda სოხუმი 87 Suchumi Gudouta Kanchayevsk Нальчик Niche Гера Эльбрус Тырныаул Туглувих Manolex Эльхотово Malgobek Назрань Чикола Chikola Apto Amon Алагир Владикавказ Vladikavkaz ტყვარჩელი ოჩანირე Octanchire Anaklia ზუგდიდი mon RoomBum Chihontsku 50 ქობულეთი Kuo ხათუმი Datum Kemalpa Mestia რაჭა-ლეჩხუმ-ქვემო "სვანეთის, კ Sant Paucal Park Tsagen სენაკი გუთის ქუთაისი Senale ხელვაჩაური Kelradauri Hopa Bercia Murgul Artvin სამტრედია Samtredia Chokhatauri Ardanu Kutasi ამბროლაური მ Ambrolauri vani ზესტაფონი. Zestafoni ხორომ-ხარაგაულის Savsat Sachkhere საქართველო Georgia ეროვნული პარკი Em ბორჯომი ანალციხე Almal she maba Bakuran წალ ქა ახალქალაქ Demali Hanak ნინოწმინდა Ninotsminds Dmanisi Ardahan Haskov Findik Pazar Ardeşen Akçaabat Rize Camishemsin GGU October 2017 Адиль-Янсикорт Ассиновская Assinovskaya Червленная Chervennaye Акнад Aknad Грозный Гудермес Gudemes Хасавюрт Костен Курчалой hasmyurt Kurcheloy Kostek Ypyc-Mapras rus-Marian Зандак Швтой Shatoy Monthly generation (%) and price (USD/MWh) Zindak Ведено Vedeno Any Mexcufe Andi Melcheka 200 Gimry Алвали Agvall 150 20% თუშეთის ეროვნული პარკი 100 ახალგორი Akhalgori გრო Dusheti Kasp ბოლნისი Bolnis Akhmeta დუშეთი თბილისი Tbilisi 0 ისანი-სამგორი დიდგორი Vani-Smoon მარნეული Marreui Gardaban Tieneti 10% 43 magn Kvarel 50 გურჯაანი Gurjaan Lagoceni 153 Tenori pana Октатор Muxax 0 LH Market price (67.5%) 0% „სარდაბანი დედოფლისწყარო მაbod Dedoplis Takaro Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Alaverdi PPA Generation page 17#18Rize 0 Zoti / 44.3 MW Project main characteristics • • Location - village of Zoti, Guria region in Western Georgia Cascade of 2 power plants • 2 tunnels - 1.2 km and 1.6 km • • Penstock routes - 7.5 km Grid connection - available by 2020 Project highlights Total project cost (US$ k) Total cost per MW (US$ k) Nominal installed capacity (MW) Net annual generation (GWh) PPA for 8 months (cents) Debt/Equity structure BCR (%) Poti ფოთი E97 E70 Batumi ბათუმი a Hopa Racha-Lechkhum-Kvemo Svaneti Planned National Park Nazran Назрань Vladikavkaz Владикавказ E60 Kutaisi ქუთაისი Georgia Borjomi ბორჯომი Gori გორი Zoti Tbilisi თბილისი Artvin Ardahan GGU October 2017 1 розный Knasavyurt Хасавюрт Buynake Буйнакс Monthly generation (%) and price (USD/MWh) 57,485 1,297 44.3 164.3 Nov-Feb: 4.4c Mar-Apr-Sep-Oct: 5.5c 70/30 11.0% 180 20% 150 15% 120 90 10% 55 55 55 Sighnaghi სოღწალო 60 44 44 44 44 Rustavi Market price (48%) 5% ”რუსთავი 30 0 0% Jan Feb Mar Apr May Jun PPA Jul Aug Sep Oct Nov Dec Generation page 18#19Wind projects Identifying wind project opportunities Feasibility MoUs signed with government for all 7 projects in early 2017 Land securing for Tkibuli, Kutaisi and Tbilisi projects to be finalized by December, 2017 Based on preliminary findings 3 main locations are defined as stage 1 development with total capacity of 100MW, targeting construction in 2019 Tkibuli Wind Farm 100 MW Kutaisi Wind Farm-20 MW Plevi Wind Farm Further development stage Feasibility study stage Existing government-owned wind farm GGU October 2017 30 MW Kaspi Wind Farm -50 MW Tbilisi Wind Gori Wind Farm Farm 100 MW 20 MW Didgori Wind Farm-100 MW обл Martkopi Wind Farm 100 MW page 19#20Solar projects Akhaltsikhe I Further measurement stage Early feasibility stage Akhaltsikhe II Kaspi - 50 MW Identifying solar project opportunities Ksani Marneuli 50 MW Gldani Saakadze Gardabani I Algeti Gardabani II Exclusivity Feasibility MoU with the Government was signed in early 2017 for 18 months Based on preliminary findings 2 main locations are defined for further development (measurement stage) GGU October 2017 page 20#21GGU October 2017 Contents General overview Water utility New energy projects Appendix page 21#22Utilities in Georgia - largely private, reforms in progress Utility sector in is largely privatized with high barriers to entry; reforms in progress for approximating the sector with the EU regulations Utilities sector represents -3% of total economic output in Georgia and is constantly growing at a sustainable rate (CAGR 8.3% in 2006 -2016) 1,800 mn, GEL 1,600 1,400 1,200 1,000 800 600 400 Large part of the industry is privatized, except for the fraction of WSS utilities and irrigation 200 0 Bulk of sector players are natural monopolies and the barriers to entry are high CAGR 8.3 % 1,589 Reforms are in progress in utilities sector to approximate the sector with EU energy regulations in accordance to Georgia's undertaking under the Association Agreement with the EU Output of economy, Utilities Source: Geostat Georgia's utility sector is regulated by an independent regulator that sets tariffs, manages licenses, mediates disputes and imposes sanctions Georgian National Energy and Water Supply Regulatory Commission (GNERC) is an independent body that regulates the utilities market GNERC is independent from the Government of Georgia and has no direct supervision from any state authorities and its independence is guaranteed by a legally mandated, self-sufficient revenue stream from the regulation fees paid by utility market participants (0.3% of the utility revenues) The sector is regulated by the set of laws, by-laws and government decrees on tariff setting, utilities (water, electricity, natural gas) market rules, grid/network codes, legislation on licensing, resource extraction and environmental accountability GGU October 2017 Tariff regulation Elements of regulatory discretion GNERC MoEn MRDI MoA MENR Resource extraction Infrastructure development Licensing Drinking water quality control National policy development Dispute mediation Sanction imposition MRDI - Ministry of Regional Development and Infrastructure MoEn - Ministry of Energy MoA Ministry of Agriculture MENR- Ministry of Environment and Natural Resources page 22#23Water utilities - capitalizing on efficiency gains Underdeveloped industry offers ample potential for efficiency gains and long-term sustainable growth Water balance (m³), 2015 Significant funding-gap in the past has led to largely depreciated water and sanitation infrastructure with an average technical water losses at 50% (4-5 times higher than in western Europe) which sets the ground for significant efficiency gains in the future under well managed operations and infrastructure planning Water losses are also caused due to aging assets in the residential buildings and excessive water consumption, usually symptomatic to non-metered customers (~70% of the customer base) GGU has introduced extensive measures against resource dissipation (e.g. zoning, bulk metering) and has motivational schemes for staff to identify water larceny and is continuously implementing resource efficient practices within its infrastructure 7% 33% 833mn m³ ■Water losses ■Water sales 60% ■ Own consumption Source: GNERC GGU is the only profitable player on Georgia's WSS market with over 95% average collection rates 6% of the customer base for water utilities in Georgia are commercial entities, the rest are households Snapshot of Georgia's WSS market Average collection rates from households in Georgia 50%, while GGU's average Company Coverage area Country coverage Ownership type collection rates are around 95% GGU Tbilisi, Rustavi, Mtskheta 28.3% Private Water utilities other than GGU operate on state subsidies due to low collection rates and unauthorized water consumption BWC Batumi 3.7% Public 45.7% of the population gets serviced on the municipal level with bad service quality, frequent and lengthy interruptions and poor coverage UWSCG Part of Georgia 20.7% Public Other Rest of Georgia 47.3% Municipal Source: GNERC GGU October 2017 page 23#24Water and Energy Tariff Setting Methodology Existing assets + Net book value WACC New CAPEX Costs for water supply Costs for waste water 不 Return on assets + Depreciation + Total operating and maintenance expenses + Taxes GGU October 2017 Regulated revenue (annual determination) page 24#25Electricity market update Current installed capacity by types, MW HPP More than 70 HPPs are under operation currently, with 3,164MW of total installed capacity. 7 conventional dam HPPs make up 68% of installed capacity. Run-of-river plants make up the rest. TPP - On top of supporting the security of supply, natural gas-fired plants also fill winter deficits. There are six TPPs, with installed capacity of 925MW. 3 TPPs have a remaining average lifetime of 12 years and will need to be replaced in the nearest future. Wind 1% TPP's 22% 1,400 1,200 1,000 800 600 400 200 0 HPP's 77% Source: Galt & Taggart Research Electricity import-export balance Electricity supply and consumption Forecasted consumption Source: ESCO 23,000 MW Forecast MW 1,400 21,000 1,200 19,000 1,000 17,000 1,5% Consumption, 5 800 15,000 600 13,000 400 200 11,000 0 9,000 Jan-15 Mar-15 May-15 Jul-15 Nov-15 Jan-16 Mar-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 TPPS HPPS Imports Internal Demand Demand on electricity in Georgia peaks in winter and the shortage that the country faces is filled by direct imports. Up to 25% of Georgia's electricity needs are imported, with up to 20% natural gas and the rest - direct electricity imports. Supply peaks in summer and the surplus is exported to neighboring countries. Electricity exports and prices, 2011-2017 Consumptions 5% Consumption growth is forecasted to be at 5% CAGR in coming 15 years. If the anticipated growth is realized and current supply does not get upgraded, Georgia will have a deficit of 9.1 tWh (more than 75% of current consumption) left to fill creating an ample room for generation resource development. Gross electricity demand in Turkey, 2000-2030 Source: Turkish market outlook 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 9.1 TWh Source: Galt & Taggart Research Source: ESCO, Geostat, EPIAS US$ '000 TWh MW 900 60,000 1,000 700 800 900 50,000 600 700 800 219 600 40,000 500 500 700 30,000 400 600 400 300 20,000 500 200 79 300 10,000 0 419 236 100 400 294 200 712 149 0 2013 2014 2015 2016 1H17 300 100 Import Export IM, US $'000 EX, US $'000 200 449 450 309 100 240 265 282 Favorable weather conditions in 2017 resulted in excess power generation and increase in the amount of exported electricity. Notably, the electricity trade balance in US$ terms remains negative. GGU exported electricity to Turkey for the first time throughout its operations. 0 2011 2012 2013 2014 2015 2016 1H17 ■Export to other countries, GHS) ■Export to Turkey, GWh (LHS) GGU October 2017 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Realized Demand Demand projection (MENR Base scenario) page 25#26Disclaimer – forward looking statements - This presentation contains forward-looking statements that are based on current beliefs or expectations, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words similar meaning. Undue reliance should not be placed on any such statement because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and GGU and its subsidiaries (the "GGU Group")'s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are various factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, legal, business and social environment. The forward-looking statements in this presentation speak only as of the date of this presentation. The GGU Group undertakes no obligation to revise or update any forward-looking statement contained within this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise. GGU October 2017 page 26