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                    GEORGIA HEALTHCARE GROUP ANNOUNCES INTENTION TO LAUNCH INITIAL PUBLIC OFFERING

Georgia Healthcare Group PLC (the "Group", or “GHG”), the largest healthcare service and medical insurance provider in Georgia today announces its intention to make an initial public offering (the “Offering”) of its ordinary shares on the premium listing segment of the Official List and to trading on the London Stock Exchange.

Group Highlights

• The clear market leader among healthcare services providers in Georgia, with substantial medium to long term growth prospects and significant barriers to entry
• Well positioned to take advantage of the expected long-term macroeconomic and structural growth drivers favourably influencing the Georgian healthcare services market
• An integrated, synergistic business model that allows access to a larger patient population and helps to manage utilisation effectively
• A model with significant cost benefits from economies of scale and a well-invested asset base
• A focus on service quality
• Strong and experienced management and an excellent track record of earnings growth
• High level of transparency and robust corporate governance

Group Strategy 

• Expand through the further development of both existing and recently acquired hospitals, focusing predominantly on the higher revenue referral hospital segments in Tbilisi The addressable hospital market is GEL 1.2 billion in 2015 and is forecasted to grow at a compound annual growth rate of 11.3% during the period 2014 to 2018. GHG’s market share was 14.0% and 22.1% by revenue and by bed capacity, respectively, at 30 June 2015. Following the acquisition of High Technology Medical Centre University Clinic (“HTMC”) in August 2015, our market share by beds grew to 26.6%, and (on a pro forma basis) our market share by revenue increased to 17.6%
• Increase share of healthcare revenues through the launch of a network of new ambulatory clinics across Tbilisi and in other major cities in Georgia

The addressable ambulatory clinic market is GEL 0.9 billion in 2015 and is forecasted to grow at a compound annual growth rate of 15.9% during the period 2014 to 2018. GHG’s market share was under 1% at 30 June 2015, with the rest of the market similarly fragmented, with no single player having more than 1% market share and comparable access to capital and management, allowing GHG to have a unique first-mover advantage in this highly-fragmented and underpenetrated ambulatory clinic segment

• Continue to grow over the medium to long term by developing new services and investing in medical technology to fill existing medical service gaps in the country and improve efficiencies Currently service gaps exist in a number of basic diagnostics areas and treatments, such as MRI, laparoscopic surgeries, oncology, paediatrics, neonatology, intensive care, cardiology, and rehabilitation services 
• More than double 2015 revenues by 2018 by capitalising on these growth opportunities The Georgian healthcare services market is expected to grow at 13.3% CAGR 2014-18, with a historic track record of growing at 13.5% CAGR 2011-14. GHG seeks to increase its market share to around 1/3 of the market by both revenue and number of beds 
• Continued focus on improving operational efficiency and utilisation to further improve margins GHG’s healthcare services EBITDA margin was 25.3% in the first half of 2015, improving compared to 23.1% for the same period last year toward a target of approximately 30%. GHG is in the process of integrating its newly acquired hospital facilities, and is targeting a second wave of integration which among other things will include the centralisation of engineering, archiving, and ERP roll-out 
• Continue to lead the market in the quality of medical care Institutionalising the industry; improving safety and quality by implementing JCI benchmarked standards; further development of own in-house personnel training centre 
• Leverage opportunities from the reform of the Georgian healthcare sector to increase private medical insurance customer base Medical insurance penetration currently at only approximately 1%, calculated as gross insurance premium as a % of GDP; GHG private medical insurance revenues grew at 30.0% year-on-year in the first half of 2015

Company Overview 

GHG is the largest healthcare services provider in the fast-growing, predominantly privately-owned, Georgian healthcare services market. Its leadership position is underpinned by offering the most comprehensive range of services targeting the mass market segment through its vertically integrated network of 41 healthcare facilities, and medical insurance products.

• Clear market leader. The healthcare services business had a 22.1% market share, more than four times that of the Group’s nearest competitor in Georgia, by number of beds as at 30 June 2015 (2,220 beds), which grew to 26.6% following the HTMC acquisition in August 2015 (450 beds). It is expected to grow to approximately 30.0% as a result of the renovation of recently acquired hospital facilities, scheduled for completion in 2016 and 2017 (an additional approximately 500 beds). 
• The Group also has the widest geographic coverage, with facilities currently located in six regions covering three quarters of the 4.5 million population of Georgia. GHG is primarily a hospital services provider, with over 95% of its healthcare services revenues coming from hospitals in the first half of 2015 
• The Group is also the largest provider of medical insurance in Georgia with a 38% market share, based on gross premium revenue, as at 30 June 2015. The Group had approximately 250,000 insurance customers as at 30 June 2015 
• Well positioned to take advantage of the significant market growth opportunities. Georgia lags significantly behind its emerging market peers and has outstanding growth momentum. Annual healthcare services spending per capita is currently at a very low base of only U.S.$217 with annual outpatient encounters only 2.7 per capita and GHG revenue per hospital bed only approximately U.S.$40,000 in 2014. Future growth is supported by the attractive macroeconomic environment, as Georgia is one of the fastest growing countries in Eastern Europe and is an open and easy emerging market in which to do business, with nominal GDP having

grown at a CAGR of 11.1% between 2005 to 2014. Although only 5.8% of GDP is spent on healthcare services, overall healthcare spending has grown at a 13.5% CAGR from 2011 to 2014, with spending by the Georgian Government (the "Government") more than doubling between 2011 and 2015. Recent supportive Government reforms and the significant engagement of private capital in the sector has boosted demand as a result of improved infrastructure and the increased financing of healthcare services by the Government

• Following the introduction of Universal Healthcare Programme (“UHC”) by the Government, as a result of which all Georgian citizens are eligible for the new Government-funded basic health coverage, with co-payment elements. Since the full introduction of UHC in mid-2014, Government expenditures on healthcare have increased over 65% from GEL 414.5 million in 2012 to GEL 692.9 million in 2014 and are expected to be further increased to GEL 768.3 million in 2015 according to the Government budget for 2015 announced by the Ministry of Finance of Georgia 
• Operating business model with cost and synergy advantage. GHG operates a unique cluster model to capture revenue along the patient pathway. Through its network of referral hospitals, community hospitals and ambulatory clinics the business seizes an increasing share of the high growth Georgian healthcare services market, especially following the recent introduction of UHC cover for Georgia’s entire population, whilst continuing to improve margins from scale benefits and operating efficiencies 
• GHG is the only large scale player in Georgia’s healthcare market. It has a significant cost advantage through scale in purchasing and the centralisation of administrative functions 
• Excellent execution track record and robust corporate governance – exceptional in Georgia’s healthcare sector. GHG has a strong business management team that has increased market share by beds from under 1% in 2009 to 26.6% currently, with additional organic development capacity up to approximately 30% from hospital renovations planned during 2016 and 2017. GHG acquired and integrated more than 25 and built and launched more than 10 healthcare facilities between 2006 and 2015. Currently, GHG is a 100% subsidiary of Bank of Georgia Holdings PLC ("BGH”), the only entity from Georgia listed on the premium segment of the main market of the London Stock Exchange (LSE:BGEO) and part of FTSE 250 index

The Group has grown rapidly in recent years, driven by the significant organic expansion of existing facilities, which has delivered compound annual organic earnings growth of 23.6% over the last three years, and by selectively acquiring and integrating a number of complementary businesses and assets. Total revenue has increased from GEL 119.4 million in 2012 to GEL 196.3 million in 2014, EBITDA from GEL 23.3 million to GEL 36.9 million, and number of beds from 1,041 to 2,140. In the first half of 2015, the Group further increased the number of beds to 2,220 (with additional 450 beds acquired in August 2015) and reported total revenue of GEL 108.8 million and EBITDA of GEL 23.6 million, with an EBITDA margin of 25.3% in healthcare services.

Nikoloz Gamkrelidze, CEO of Georgia Healthcare Group, added:

“The IPO on the LSE premium segment will enable us to finance our immediate growth plans and if necessary provide access to capital markets for our future growth. We are targeting to increase our market share within the GEL 2.1 billion healthcare services market in 2015E through revenue enhancement at our hospitals where our current market share is 17.6% of the GEL 1.2 billion hospital services market. GHG is also expanding into the GEL 0.9 billion ambulatory clinics services market, where our current market share is close to zero.

The IPO will enhance the Group’s profile with investors, business partners and patients. This move will increase the ability of the Group to attract and retain key management, physicians and other employees, and diversify the shareholder ba

Irakli Gilauri, Chairman of Georgia Healthcare Group, commented:

“The current management has taken remarkable advantage of their vital resource – access to capital and high quality management – and created the clear single largest player in the Georgian healthcare market; GHG is transforming the industry. The clear growth vision of the management, combined with GHG’s hospital expansion capabilities, first mover advantage in the highly fragmented and vastly underpenetrated ambulatory segment, creates a highly

attractive investment opportunity in Georgian healthcare services industry. Over the last few years, current management has delivered an excellent track record of earnings growth in the hospital business. Therefore I strongly believe in their ability, going forward, to deliver further outstanding growth, particularly in the ambulatory business.

At IPO, I personally, along with many of my colleagues on the Board and management team, intend to invest. Full details will be announced in due course. BGH has been a strong and committed shareholder to the development of the healthcare business for many years and intends to maintain this support over the next few years. The IPO will provide further capital for GHG’s exciting growth plans, whilst creating the opportunity for the Company to develop its own international institutional shareholder base. GHG’s culture of transparency and the adherence to robust corporate governance policies strongly positions the Group for a premium listing and the FTSE All-Share Index inclusion.”

Details of the Offering and Use of Proceeds

• The Offering will comprise an offer of new ordinary shares by Georgia Healthcare Group PLC 
• The Group intends to raise approximately US$ 100 million of primary proceeds at IPO together with a sale of ordinary shares by BGH through its wholly-owned intermediate holding company, the amount of which is to be decided. In addition, further ordinary shares will be made available by the selling shareholder pursuant to an over-allotment option of up to 10% of the total number of shares in the Offering
• The Group intends to use the net primary proceeds it receives from the Offering of new Shares to: 
  • Renovate and develop recently acquired healthcare facilities
  • Finance current expansion plans, especially the roll-out of the Group’s planned network of ambulatory clinics
  • Reduce level of existing debt 
• The Offering of new and existing Shares is being made: (i) to certain institutional investors in the United Kingdom and elsewhere outside the United States in reliance on Regulation S under the US Securities Act of 1933, as amended (the "Securities Act") and in accordance with locally applicable laws and regulations, and (ii) in the United States, only to Qualified Institutional Buyers as defined in, and in reliance on, Rule 144A under the Securities Act or pursuant to another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act 
• BGH's wholly-owned intermediate holding company agree to certain shareholding lock-up arrangements for 180 days following completion of the Offering 
• The Group will also be subject to lock-up arrangements for 180 days following completion of the Offering 
• The Directors agree to certain shareholding lock-up arrangements for 180 days following completion of the Offering 
• Citigroup Global Markets Limited and Jefferies International Limited have been appointed as Joint Financial Advisers and Joint Global Coordinators. Numis Securities, Renaissance Capital, and Galt & Taggart (a subsidiary of BGH) are acting as Co-lead Managers

Enquiries

The contents of this communication, for which the Group is responsible, have been approved by Citigroup Global Markets Limited and Jefferies International Limited who are regulated by the United Kingdom Financial Conduct Authority, solely for the purposes of Section 21 of the United Kingdom Financial Services and Markets Act 2000. Citigroup Global Markets Limited, Jefferies International Ltd, Numis Securities, Renaissance Securities (Cyprus) Limited and JSC Galt & Taggart are acting for the Group and no one else in relation to the proposed offer of the Group's securities and will not be responsible to anyone other than the Group for providing the protections afforded to their clients nor for giving advice in relation to the proposed offer.

This communication is being distributed only to, and is directed only at (a) persons outside the United Kingdom, (b) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), and (c) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as "relevant persons"). Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this communication or any of its contents In connection with the offer or sale of securities referred to herein, Citigroup Global Markets Limited and Jefferies International Limited may over-allot securities or effect transactions with a view to supporting the market price of the securities at a level higher than that which might otherwise prevail. Any stabilisation action or over-allotment will be conducted by Citigroup Global Markets Limited and Jefferies International Limited in accordance with all applicable laws and rules.

This document is an advertisement and is not a prospectus for the purposes of EU Directive 2003/71/EC, as amended, (the "Directive") and/or Part VI of the United Kingdom Financial Services and Markets Act 2000. A final form prospectus will be prepared and made available to the public in accordance with the Directive. Investors should not subscribe for any securities referred to in this document except on the basis of information contained in the final form prospectus. The final form prospectus, when published, will be available on the website of the Group.

Forward-Looking Statements

This communication contains certain forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events, and can be identified by the use of such words and phrases as “according to estimates”, “aims”, “anticipates”, “assumes”, “believes”, “could”, “estimates”, “expects”, “forecasts”, “intends”, “is of the opinion”, “may”, “plans”, “potential”, “predicts”, “projects”, “should”, “to the knowledge of”, “will”, “would” or, in each case their negatives or other similar expressions, which are intended to identify a statement as forward-looking. This applies, in particular, to statements containing information on future financial results, plans, or expectations regarding business and management, future growth or profitability and general economic and regulatory conditions and other matters affecting the Group.

Forward-looking statements reflect the current views of the GHG's management on future events, which are based on the assumptions of the management and involve known and unknown risks, uncertainties and other factors that may cause the Group’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. The occurrence or non-occurrence of an assumption could cause the Group’s actual financial condition and results of operations to differ materially from, or fail to meet expectations expressed or implied by, such forward-looking statements.

GHG’s business is subject to a number of risks and uncertainties that could also cause a forward-looking statement, estimate or prediction to differ materially from those expressed or implied by the forward-looking statements contained in this prospectus. The information, opinions and forward-looking statements contained in this communication speak only as at its date and are subject to change without notice. GHG does not undertake any obligation to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this communication.

GHG announces intention to launch initial public offering