1 Disclaimer This presentation contains forward-looking statements - - PowerPoint PPT Presentation

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Disclaimer

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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 LLC Georgian Water and Power’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. LLC Georgian Water and Power undertake 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.

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Content

Key features of the bond Company overview Ownership structure Privatization Market overview Use of proceeds Historical financial information

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Content

Key features of the bond Company overview Ownership structure Privatization Market overview Use of proceeds Historical financial information

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Key features of the bond

Issuer LTD Georgian Water and Power Bonds Unsecured and unsubordinated obligation Issue size GEL 5,000,000 Duration 2 years Placement date August 2015 Coupon* 12%-14% Coupon payment Semi Annual Listing GSE’s official list * 5% income tax applies in most cases

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Content

Key features of the bond Company overview Ownership structure Privatization Market overview Use of proceeds Historical financial information

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Company overview

GWP, a wholly owned subsidiary of Georgian Global Utility Ltd (GGU), supplies water and provides wastewater services to 1.2 million people (approximately 1/3 of Georgia’s total population) in Tbilisi. GWP is the biggest revenue contributor to GGU (c. 90%) GGU was founded through privatization process in 2008. Rustavtskalkanali (Rustavi Water), Mtskhetatskalkanali (Mtskheta Water), Saktskalkanal and Tbilisi Water (Tbilisi Water) were acquired by GGU (formerly Multiplex Energy Ltd) GWP’s Three core activities are:

• Supply of potable water – The Company has a monopolistic position in water supply in Tbilisi and its

surroundings

• Generation of Electric power – The Company operates 3 HPPs (2 of them owned) with total installed

capacity of 143MW (Jinvali HPP 130MW, Tetrikhevi HPP 12MW and Pshavela HPP 1MW). 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

• Wastewater collection and processing – The Company collects and processes wastewater via

Gardabani wastewater treatment facility

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Company overview, cont’d

Customer pool includes both legal entities and population:

• Legal entities: Metered clients. Meters are read on a cyclical basis. Collection rate is close to 100%
• Population: Significant portion of this client base remains non-metered. Non-metered customers are billed

based on the number of individuals formally registered by the civil register and by application of the relevant tariff fixed per capita per month. Collection rates have been improved significantly (+42%) in 2009-2011. This improvement was notably due to new legislation allowing the electricity distribution company to disconnect power supply to customers who are overdue in their water supply payments.

Househol ds Legal entities, 30% Househol ds Legal entities, 68% Water Sales Split per Group of Clients 2014 (in %) 47% 61% 89% 91% 95% 93% 98% 98% 97% 100% 99% 98% 0% 20% 40% 60% 80% 100% 120% 2009 2010 2011 2012 2013 2014 Households Legal entities Collection rates 2009-2014

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Company overview, cont’d

Water sales 88% Electricity sales 9% Other sales 3%

The Company’s total revenue reached c. GEL 102 mln in 2014 and major portion was attributable to water sales. Water Sales – c. GEL 90.3 mln in 2014

• Water is sourced from Zhinvali reservoir (90%) and

Mukhrani/Natakhtari (10%) aquifer. Water is used to serve Tbilisi. Power Sales – c. GEL 8.7 mln in 2014

• Average electricity generation of 450 m kWh
• Large portion of generated power is used for water

delivery to consumers (about 280 m Kw/h per year). All additional power generated by the Group is sold to external customers Other Sales – c. GEL 2.9 mln in 2014

• Revenue from technical support
• Revenue from installation of water meters
• Other Sales include income from reconstruction of

the network (paid by municipality), income from rent and disposal of non-core PP&E

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Company overview

86,603 88,301 91,506 99,230 101,809 75,000 80,000 85,000 90,000 95,000 100,000 105,000 2010 2011 2012 2013 2014 43,740 50,435 43,127 50,486 49,773 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 38,000 40,000 42,000 44,000 46,000 48,000 50,000 52,000 2010 2011 2012 2013 2014 EBITDA EBITDA margin Revenue for last 5 years (thsd) EBITDA and EBITDA margin for last 5 years (thsd)

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Content

Key features of the bond Company overview Ownership structure Privatization Market overview Use of proceeds Historical financial information

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Ownership structure

Georgian individuals Non-resident individuals US Utilities Ltd BVI Garnet Services Limited BVI 15% 85% Bank of Georgia Holdings PLC Garissa Ltd BVI 25% 75% Georgian Global Utility 100% Georgian Water and Power

GWP is 100% owned by Georgian Global Utility. Ultimately 63.75% of shares of the GWP are controlled by non-resident individuals, 11.25% - by Georgian individuals and 25% of shares were recently acquired by the Bank of Georgia Holding PLC (December 2014).

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Content

Key features of the bond Company overview Ownership structure Privatization Market overview Use of proceeds Historical financial information

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In 2008, the Government of Georgia, Ministry of Economic Development of Georgia and the Government

• f Tbilisi sold 100% shares in Rustavtskalkanali, Mtskhetatskalkanali, Saktskalkanal and Tbilisi Water.

These companies were acquired by Georgian Global Utilities Ltd BVI (formerly Multiplex Energy Ltd)

Privatization – contractual obligations

Uninterrupted (24h) water supply in Mtskheta Rehabilitation of sewage system in Gardabani Uninterrupted (24h) water supply in Tbilisi (new borders) Elimination of effluent discharge into Mtkvari river Uninterrupted (24h) water supply in Tbilisi (old Rehabilitation of wastewater treatment plant in Gardabani

July, 2011 November, 2013 July, July, 2015 June, 2015 November,

Water quality corresponding to WHO standards in Tbilisi and Mtsekheta Investment obligation of not less tnan USD 220 mln completed investment Outstanding investment May 2008 Signing PA

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Content

Key features of the bond Company overview Ownership structure Privatization Market overview Use of proceeds Historical financial information

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Market overview, cont’d

A significant portion of the Georgian population lacks access to a functional WSS system. According to a survey from ADB, only 57% of the surveyed households are connected to water supply networks, 33% of the households have home water supply from alternative sources, and 10% of the households do not have water supply at home and obtain water from surface waters. Only about 40% of the surveyed households are connected to a functional central sewage system; As GGU serves 30% of total population of Georgia, out of which 87% is served by GWP (26% of total population), The Group and The Company itself hold leading positions in the sector; Businesses and population is mainly concentrated in capital city of Tbilisi, serving area of The Company and their number gradually increases from year to year.

11.7 16.9 20.2 28.9 30.2 32.0 36.2 0.0 10.0 20.0 30.0 40.0 50.0 2008 2009 2010 2011 2012 2013 2014

Number of legal entities in Tbilisi (thsd)

1,137 1,137 1,153 1,162 1,173 1,171 1,175 1,100 1,110 1,120 1,130 1,140 1,150 1,160 1,170 1,180 1,190 1,200 2008 2009 2010 2011 2012 2013 2014

Population in Tbilisi (thsd) Source: Geostat

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Market overview

2.31 1.92 1.64 1.36 1.14 1.05 1.02 1.01 0.93 0.54 0.44 0.12 0.5 1 1.5 2 2.5

Average revenue WSS (US$/m3 water sold)

610 554 284 264 171 168 167 153 152 133 117 97 100 200 300 400 500 600 700 Total water consumption Residential consumption

Water consumption (l/person/day) Source: World Bank Group, The IBNET WSS Blue Book 2014 (the data is collected from different years for different countries ranging from 2005-2012)

In developed countries, where WSS service is available for almost 100% of population and is in a good condition,

• perates

without significant interruptions, tariff is high; Reason to high service tariff is high maintenance capital expenditures and heavy investments associated with introduction of new technologies for proper and up to date operations. Compared to our peer countries, like Albania, Moldova etc. our water tariff is the lowest and water consumption highest, second after United States; Such figures indicate potential for growth of service tariff and room for consumption improvement.

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Content

Key features of the bond Company overview Ownership structure Privatization Market overview Use of proceeds Historical financial information

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Use of proceeds

Net proceeds from Bonds issuance intend to support two main goals of GWP As business is capital intensive, net proceeds from bonds will facilitate proper and on time capital investments As previously source of financing of capital investments or any other initiatives of GWP were net cash generated by The Company or commercial Bank loans, net proceeds from bonds will facilitate diversification of funding base of The Company.

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Content

Key features of the bond Company overview Ownership structure Privatization Market overview Use of proceeds Historical financial information

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Historical financial information

Statement of Profit or loss and Comprehensive Income

2014 2013 2012 Revenue 101,968 99,230 91,506 Other income 5,595 5,029 3,411 Provision of trade receivables (1,127) (1,517) (2,032) Salaries and benefits (23,395) (20,711) (21,448) Depreciation and amortisation (16,998) (17,567) (16,887) Electricity and transmission costs (8,673) (8,829) (9,943) Raw materials, fuel and other consumables (5,036) (4,740) (3,891) General and administrative expenses (2,594) (2,179) (2,662) Infrastructure assets maintenance expenditure (3,523) (2,329) (2,063) Disposal of construction in progress items

• (2,043)

Other operating expenses (14,535) (11,425) (9,751) Operating profit 31,682 32,919 26,240 Finance income 667 950 1,805 Finance costs (5,836) (2,105) (1,148) Profit before income tax 26,513 31,764 26,897 Income tax expense (5,509) (7,191) (6,739) Profit for the year 21,004 24,573 20,158 Other comprehensive income for the year

• Total comprehensive income for the year

21,004 24,573 20,158

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Historical financial information

Statement of Financial position

Amounts expressed in thousands of Georgian Lari) 31-Dec-14 31-Dec-13 31-Dec-12 EQUITY Charter capital 208,469 208,469 208,469 Accumulated deficit

• 97,020
• 48,252
• 45,614

Revaluation reserve 58,250 59,286 59,788 TOTAL EQUITY 169,699 219,503 222,643 LIABILITIES Non-current liabilities Long term borrowings 78,573 11,788 3,916 Deferred income tax liability 20,564 18,344 16,746 Total non-current liabilities 99,137 30,132 20,662 Current liabilities Current borrowings 356 8,544 4,475 Trade and other payables 16,671 18,928 18,946 Provisions for liabilities and charges 2,005 4,525 1,842 Other taxes payable 733 492 1874 Total current liabilities 19,765 32,489 27,137 TOTAL LIABILITIES 118,902 62,621 47,799 TOTAL LIABILITIES AND EQUITY 288,601 282,124 270,442 31-Dec-14 31-Dec-13 31-Dec-12 ASSETS Non-current assets Property, plant and equipment 244,027 226,886 226,945 Non-current trade receivables 571 1,667 2,320 Non-current loan issued

• 2,394
• Other non-current assets

1,491 787 1,040 Deposit in bank 2,460 2,460

• Total non-current assets

248,549 234,194 230,305 Current assets Inventories 11,124 11,812 8,331 Trade and other receivables 15,513 16,505 15,447 Loans Issued 1,716 1,430 8,436 Current income tax prepayments 2,213 640 1712 Restricted cash

• 1,207
• Deposits in bank
• 2460

Cash and cash equivalents 9,486 16,336 3,751 Total current assets 40,052 47,930 40,137 TOTAL ASSETS 288,601 282,124 270,442

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Historical financial information

Capitalization and indebtedness

Amounts expressed in thousands of Georgian Lari As at 31 December 2014 (GEL thousands) Cash and cash equivalents

9,486

Indebtedness: Current loans and borrowings

356

Non- current loans and borrowings

78,573

Total loans and borrowings

78,929

Equity: Charter capital

208,469

Accumulated deficit

(97,020)

Revaluation reserve

58,250

Total equity

169,699

Total capitalisation

248,628