PricewaterhouseCoopersCentral Asia & Caucasus B.V.

Georgia Branch

Transparencyreport

for the financial year ended30 June 2016

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This report is published in accordance with therequirements of article 40 of the European Union43rd Directive on Statutory audits of annual accountsand consolidated accounts (the Audit Directive)

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Content

Introduction - Letter from Country Managing Partner............................................................................................3

Legal Structure, Ownership and Network Arrangements ........................................................................................4

Governance & structure.............................................................................................................................................. 5

Internal Quality Control System and Statement of Effectiveness............................................................................6

Quality Control Standards...................................................................................................................... 6

Leadership Responsibilities for Quality within the Firm ......................................................................7

Ethical requirements ...............................................................................................................................7

Independence monitoring and disciplinary policy ............................................................................... 9

Acceptance & and continuance process ................................................................................................. 9

Learning and education .........................................................................................................................10

Human Resources ..................................................................................................................................10

Engagement Performance ..................................................................................................................... 11

Developed technology............................................................................................................................12

Monitoring of Assurance quality...........................................................................................................13

Management’s Statement on the effectiveness of internal quality control system functioning........15

Root cause analysis ................................................................................................................................15

Last Quality Assurance Review .............................................................................................................16

Independence Processes at PricewaterhouseCoopers Central Asia & Caucasus B.V. Georgia Branch.................17

Independence, Integrity and Objectivity .............................................................................................. 17

Management’s statement concerning independence practices........................................................... 17

Continuing Education of Statutory Auditors .......................................................................................................... 18

Financial information for the year ended 30 June 2016 ........................................................................................ 18

Public Interest Entities Audited for Statutory Purposes by PricewaterhouseCoopers Central Asia & CaucasusB.V. Georgia Branch in the Financial Year Ended 30 June 2016 ........................................................................... 18

Basis for Partners Remuneration............................................................................................................................. 19

Basis for Statutory Auditors Remuneration ............................................................................................................ 19

Declaration ................................................................................................................................................................20

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Introduction - Letter from Country ManagingPartner

Welcome to the 2016 Transparency Report of PricewaterhouseCoopersCentral Asia and Caucasus B.V. Georgia Branch (“PwC Georgia”) inwhich we share details about our strategy, our values and ourinvestments in audit quality.

We take our professional role in the Georgian community seriously. Asone of the largest accounting firm, we have a responsibility to build trustand confidence to ensure the overall health of the capital markets.Transparency is fundamental to building public trust and confidence inthe audit profession and broader community.

This report includes additional details on PwC’s global network, investments in ourprofessionals, performance management practices, our legal structure, governance, ethicalprinciples, quality control procedures and our financial performance.

PwC's transparency report demonstrates our commitment and approach to promoting andachieving audit quality on every PwC audit.

I trust that you find the report an informative read.

Altaf TapiaCountry Managing PartnerPricewaterhouseCoopers Central Asia and Caucasus B.V. Georgia Branch

At PwC, our purpose is to build trust in society and solve importantproblems. We’re a network of firms in 157 countries with more than208,000 people who are committed to delivering quality in assurance,advisory and tax services.

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Legal Structure, Ownership and NetworkArrangements

PricewaterhouseCoopers (hereinafter “PwC”)Central Asia & Caucasus B.V. Georgia Branch isa Branch office of PricewaterhouseCoopersCentral Asia & Caucasus B.V., a companyregistered under the laws of Netherlands,having its seat at Rotterdam, the Netherlands.That entity is ultimately owned by the partnersof PricewaterhouseCoopers in our Central andEastern European firms.

PricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch cooperateswith other Central and Eastern Europeanmember firms to provide services to local andmutual international clients operating in ourregion. This cooperation is organised through aregional management team which, in additionto ensuring the adherence of these regionalfirms to the policies and procedures of PwCInternational, enables resource sharing, theenforcement of risk management policies andquality standards.

Each national member firm also has its ownmanagement structure in place, in accordancewith relevant legal and operationalrequirements. This legal structure and networkarrangement gives each member firm theflexibility and autonomy to respond quickly andeffectively to conditions in its local market. Italso reflects the fact that regulatory authoritiesin most countries grant the right to practise asauditors to nationally based firms in whichlocally qualified professional auditors (or in theEuropean Union a combination of auditors andor EU audit firms) have at least a majorityownership and control.

PwC is a global network of separate firms,operating locally in countries around the world.PwC firms are members ofPricewaterhouseCoopers International Limitedand have the right to use thePricewaterhouseCoopers name. As members ofthe PwC network, PwC firms share knowledge,skills and resources. This membership facilitatesPwC firms to work together to provide high-quality services on a global scale to internationaland local clients, while retaining the advantagesof being local businesses – including beingknowledgeable about local laws, regulations,standards and practice’s.

Being a member of the PwC network meansfirms also agree to abide by certain commonpolicies and maintain the standards of the PwCnetwork.

Each firm engages in quality control andcompliance monitoring activities, coveringthe provision of services, ethics and businessconduct, and the compliance with specific,strict standards for independence monitoringand protection.

PwCIL is a UK private company limited byguarantee. PwCIL acts as a coordinatingentity for PwC firms and does not practiseaccountancy or provide services to clients.PwCIL works to develop and implementpolicies and initiatives to create a commonand coordinated approach for PwC firms inkey areas such as strategy, brand, and riskand quality. PwC firms use the PwC name anddraw on the resources and methodologies ofthe PwC network. In return, PwC firms arerequired to comply with common policies andthe standards of the PwC network.

A PwC firm of PwCIL cannot act as agent ofPwCIL or any other PwC firm, and it is onlyliable for its own acts or omissions and notthose of PwCIL or any other PwC firm. PwCILhas no right or ability to control any memberfirm’s exercise of professional judgement. Thegovernance bodies of PwCIL are:

Global Board, which is responsiblefor the governance of PwCIL, theoversight of the Network LeadershipTeam and the approval of NetworkStandards. The Board does not have anexternal role. Board members areelected by partners from all PwC firmsaround the world every four years.

Network Leadership Team, whichis responsible for setting the overallstrategy for the PwC network and thestandards to which the PwC firms agreeto adhere.

Strategy Council, which is made upof the leaders of the largest PwC firmsof the network, agrees the strategicdirection of the Network and facilitatesalignment for the execution of strategy.

Network Executive Team isappointed by and reports to theNetwork Leadership Team. Itsmembers are responsible for leadingteams drawn from Network firms tocoordinate activities across all areas ofour business.

Olga Grygier-Siddons - the Chief Executive ofPwC CEE is a member of the Strategy Counciland maintains the relationships with theNetwork Leadership Team.

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Governance & structure

Within the Central and Eastern Europeangrouping of PwC member firms which includes 30national territories, a matrix system ofmanagement is operated. Each partner votes in a4 yearly election of a Chief Executive whoappoints a Management Board, comprising of amixture of territory Chief Executives andOperational leaders from functional and businesslines. This Board is responsible for setting broadbusiness objectives and ensuring compliance withPwC International policies.

Across geographical lines the policy and businessobjectives of each principal business line(assurance, taxation, legal and advisory) are set bythe business line management team.

Oversight of the Regional Management Boardon behalf of the partners is carried out by anelected regional Partner Council, whichapproves key policies and decisions whichaffect partners and the firm.

PricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch is managed bythe managing partner appointed byPricewaterhouseCoopers Central Asia &Caucasus B.V. (Netherlands).

StructureThe structure of PwC Georgia is a Branchoffice of PricewaterhouseCoopers CentralAsia and Caucasus B.V.. Only 1 Branch officeis represented in the capital of GeorgiaTbilisi, with 1 Country Managing Partner and2 directors – 1 Director each in Assuranceand TLS Departments.

The line of services represented in local officeare: Assurance, Tax & Legal and Advisory.

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Internal Quality Control System and Statementof Effectiveness

As a member firm of PwC International, we areobliged to abide by the common risk and qualitystandards approved by the organisation. Thesestandards are supplemented by local legalrequirements and the professional qualitystandards of Georgian Federation of ProfessionalAccountants and Auditors (GFPAA) and whereapplicable third country audit quality standards ifwe are required to report on an entity from such acountry.

Our detailed quality control procedures are set outin our PwC Audit Guide and in PwC RiskManagement policies and guidance.The following summarises the key policies,attitudes, behaviours and actions which ensurethat we maintain a consistently high level of auditquality:

Quality Control Standards

PwC International member firms arerequired by internal risk and quality policies,and National Auditing Regulations to enforcea system of quality controls over our auditingpractices.

Our quality control system is in fullcompliance with the International Auditingand Assurance Standards Board (“IAASB”)requirements and the standards/guidelinesset down by Georgian Federation ofProfessional Accountants and Auditors(GFPAA). This quality control system isembedded as part of our day to day activities.International Standard on Quality Control 1,issued by IAASB applies to all audit firmscarrying out audits and reviews of historicfinancial information in accordance withInternational Standards on Auditing. Thisstandard sets out the required elements ofthe quality control system which shouldoperate in an audit firm. The requirementscover:

Leadership responsibilities forquality within the firm

Ethical Requirements Procedures for acceptance and

continuance of client relationshipsand specific engagements

Human Resources Engagement Performance Monitoring

PricewaterhouseCoopers Central Asia& Caucasus B.V. Georgia Branchaddresses these requirements as follows:

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Leadership Responsibilities forQuality within the Firm

Tone at the Top: Our leadership is committedto taking all actions required to ensure that PwCcontinues to stand for quality, independence,objectivity and ethical behaviour. The firm’sleadership regularly sends communications topartners that include an emphasis on theimportance of "standing firm on quality". Thesame messages are contained in regularleadership communications to all staff members.Equally important is leadership's regularcommunications that alert our partners and staffabout new standards and related guidance toassist them in providing high-quality service toour clients. Communications from the top takeevery relevant opportunity to emphasize theimportance of maintaining quality standards on adaily basis. Our leadership team demonstrates byits behaviours that it firmly believes in our qualityassurance objectives and systems. This isevidenced by the appointment of partnersresponsible for independence, risk managementand audit quality who report to a regional orcountry Territory Senior Partner and/orAssurance Leader. These partners are individualsof experience and stature who consult and ifnecessary instruct client service partners on riskand quality matters.

Ethical requirements

Integrity and objectivityWe take pride in the fact that our services addvalue by helping to improve transparency, trustand consistency of business processes. In order tosucceed, we must grow and develop, both asindividuals and business. Our core values ofExcellence, Teamwork and Leadership help us toachieve this growth. We conduct our businesswithin the framework of applicable professionalstandards, laws, and regulations together withPwC policies and standards. This objectiveincorporates, inter alia, full compliance with theIESBA (International Ethics Standards Board forAccountants) Code of Ethics for ProfessionalAccountants. However, we also acknowledge thatthese standards, laws, and policies do not governall types of behaviour. As a result, we also have aPwC Code of Conduct which is applicable andissued to all PwC people and firms. This Code isbased on our values and takes them to the nextlevel – demonstrating our values in action. TheCode defines how we should behave and conductbusiness in a wide range of settings and situations.It also contains a “framework for ethical decisionmaking’’ to assist partners and staff in deciding onthe right course of action in addressing ethicaldilemmas they can come across.

Partners and staff are expected to not only live bythe Code values in their careers with PwC but toalso help others at PwC do the same.

CEE has a fully integrated Ethics & BusinessConduct network. Supervision over ethicalmatters in CEE is carried out by the regionalEthics and Business Conduct Leader. Eachcountry has a local Ethics and Business ConductTeam responsible for promoting ethics locally.This includes, but is not limited to,communication and training to local countrypartners and staff.

Each PwC office has access to the detailedsupplementary guidance to our Code of Conduct.This includes guidance on such matters as the

receipt of gifts from clients, close personal

relationships and how staff should proceed if theybecome aware of an unethical behaviour by anypartner or employee.

CEE has a region-wide tool accessible to allpartners and staff to enable the sending ofanonymous queries to a selected Ethics &Business Conduct Team. Individuals from outsideof PwC, including our clients’ personnel, cansubmit a query, including in an anonymousmanner, by using a global PwC communicationstool available from http://pwc.com. Whenpotential non-compliance with our Code ofConduct is reported or otherwise suspected, stepsare taken to investigate, and where appropriate,remedy the situation. Partners and staff areencouraged to report and express their concernsin an fair, honest and respectful manner. PwC iscommitted to protecting individuals againstretaliation.

Partners and staff at PwC are responsible foraddressing issues that are brought to theirattention. The CEE Complaints and AllegationsPolicy sets the protocols for investigating theissues reported. All amendments needed to thefirm’s systems or policies, identified during thecourse of an ethical investigation are addressed.

IESBA Code of Ethics andPricewaterhouseCoopers standards aresupplemented with the Ethical Rules of theGeorgian Federation of Professional Accountantsand Auditors (GFPAA).

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Independence

PricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch has adoptedthe PwC Global Independence Policy,complemented where necessary by morerestrictive local professional and regulatory rules.The PwC Global Independence Policy is basedupon and is consistent with the IESBA Code ofEthics for Professional Accountants.PricewaterhouseCoopers Central Asia & CaucasusB.V. Georgia Branch strictly monitors compliancewith regulatory, professional, and PwCindependence requirements related to financialinterests, scope of service matters, feearrangements and business relationships withthird parties.

The PwC Global Independence Policy is beingamended to capture and reflect on changes to theindependence rules pursuant to theimplementation of the EU audit legislation (TheDirective and The Regulation).

Further information on the procedures we enforceto maintain our independence is set out in the“Independence Practices ofPricewaterhouseCoopers Central Asia & CaucasusB.V. Georgia Branch” section of this report.

Independence-related tools

As a member of the PwC Network, the firm hasaccess to a number of tools which support PwCfirms and their personnel in executing andcomplying with our independence policies andprocedures. These include:

The Central Entity Service (‘CES’), whichcontains information about corporateentities including public interest auditclients and SEC restricted clients andtheir related securities. CES assists indetermining the independence status ofclients of the firm before entering into anew non-audit engagement or businessrelationship. This system drives the‘Independence List’ and also feedsIndependence Checkpoint;

‘Independence Checkpoint’ whichfacilitates the pre-clearance of publiclytraded securities by all partners, directorsand practise managers before acquisitionand records their subsequent purchasesand disposals. Where a PwC firm wins anew audit client, this systemautomatically informs those holdingsecurities in that client of the requirementto sell the security where required;

Authorisation for Services (‘AFS’) which isa global system that facilitatescommunication between a non-auditservices engagement leader and the auditengagement leader, documenting thepotential independence threats of theservice and proposed safeguards, and actsas a record of the audit partner’sconclusion on the acceptability of theservice; and

Global Breaches Reporting System whichis designed to be used to report anybreaches of external auditorindependence regulations (e.g. those setby regulation or professionalrequirements) where the breach hascross-border implications (e.g. where abreach occurs in one territory whichaffects an audit relationship in anotherterritory).

Independence training and confirmations

PricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch provides allpartners and staff with annual or on-goingtraining in independence matters. Also Partnersand staff receive computer-based training on PwCindependence policy and related topics.Additionally, face-to-face training is delivered tomembers of the practice on an as-needed basis byPwC Central Asia & Caucasus B.V. GeorgiaBranch’s independence specialists and risk andquality teams.

All partners and practise staff are required tocomplete an annual compliance confirmation,whereby they confirm their compliance with allaspects of the firm’s independence policy,including their own personal independence. Inaddition, all partners confirm that all non-auditservices and business relationships for which theyare responsible comply with policy and that therequired processes have been followed inaccepting these engagements and relationships.

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Independence monitoring anddisciplinary policy

PricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch is responsiblefor monitoring the effectiveness of its qualitycontrol system in managing compliance withindependence requirements. In addition to theconfirmations described above, as part of thismonitoring, we perform:

Compliance testing of independencecontrols and processes;

Personal independence compliancetesting of a random selection of, at aminimum, partners and managers as ameans of monitoring compliance withindependence policies; and

An annual assessment of the firm’sadherence with the PwC Network’sindependence risk management standard.

The results of PricewaterhouseCoopersCentral Asia & Caucasus B.V. GeorgiaBranch’s monitoring and testing are reported tothe firm’s management on a regular basis with asummary reported to them on an annual basis.

The firm has disciplinary policies and mechanismsin place that promote compliance withindependence policies and processes, and thatrequire any breaches of independencerequirements to be reported and addressed.

This would include discussion with the client’saudit committee regarding the nature of thebreach, an evaluation of the impact of the breachon the independence of the firm and the need forsafeguards to maintain objectivity. Although mostbreaches are minor and attributable to anoversight, all breaches are taken seriously andinvestigated as appropriate. The investigations ofany identified breaches of independence policiesalso serve to identify the need for improvementsin PricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch’s systems andprocesses and for additional guidance andtraining.

Acceptance & and continuance process

Considerations in accepting and continuing anaudit client relationship

Our principles for determining whether to accepta new client or continue serving an existing clientare fundamental to delivering quality which webelieve goes hand-in-hand with our purpose tobuild trust in society.

We have established policies and procedures forthe acceptance of client relationships and auditengagements that consider whether we arecompetent to perform the engagement and havethe necessary capabilities including time andresources can comply with relevant ethicalrequirements, including independence, and haveappropriately considered the integrity of theclient. We reassess these considerations indetermining whether we should continue with theclient engagement and have in place policies andprocedures related to withdrawing from anengagement or a client relationship whennecessary.

Client and Engagement Acceptance andContinuance

PricewaterhouseCoopers Central Asia & CaucasusB.V. Georgia Branch has implemented a process toidentify acceptable clients based on the PwCNetwork’s proprietary decision support systemsfor audit client acceptance and retention (calledAcceptance and Continuance (“A&C”).

The system involves a determination by theengagement team, business management,industry experts and risk managementprofessionals of whether the risks related to anexisting client or a potential client aremanageable, and whether or not we should beassociated with the particular company, itsmanagement and shareholders. Among the issuesthat we consider during the course of the A&Cprocess are: The reputation of the company and its

management The effectiveness of its Board The background and experience of the

company’s financial reporting personnel Any incentives or inclinations for

management to manipulate reported results Any significant transactions structured to

achieve revenue recognition Any unusually aggressive or creative

accounting Any transactions which are complex,

unusual or difficult to evaluate Any estimates that involve uncertainty or

subjective judgments Any transactions with related parties that

are not part of the consolidated group Any indications that the company might be

in financial difficulty The expertise necessary to carry out a

particular engagement

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A&C is a powerful enabler, but the real backboneof our client acceptance and continuance processis the significant time invested by our riskmanagement and other senior partners. Asdiscussed more fully in the EngagementPerformance section below, our risk managementpartners are senior partners with stature andindependence who provide key input into thedecision to accept or continue a clientrelationship.

Upon acceptance or retention of the client, theresults of these assessments are incorporated intoour audit process, impacting for example thescope of work and assignment of resources. Wedecline to propose, accept, or retain work whenthe risks are considered not to be manageable,when the company will not agree on the scope ofthe work required or the fee arrangement isotherwise unacceptable.

Learning and education

We, and the other PwC firms in the Network arecommitted to delivering quality audits around theworld. To maximise consistency in the Network, aformal curriculum developed at the Network levelprovides access to courses covering the PwC auditapproach and tools, updates on auditingstandards and their implications, and areas ofaudit risk and engagement quality.

This formal learning is delivered using blendedlearning, which includes remote access andclassroom learning. This learning supports ourfocus on audit quality and provides ourpractitioners with the opportunity to sharpentheir professional judgement, scepticism,technical and professional skills.

Our Learning & Education leader then considerswhat additional training is appropriate – formaland/or informal – to address specific local needsin the way of videos, workshops and forums forstaff to share their experiences.

This training is then supplemented with learningfrom others, whether by receiving and discussingfeedback, or by shadowing, observing and/orworking with others in order to support them onthe job.

Soft Skills training are also arranged on annualbasis.

Human Resources

Hiring: We maintain stringent hiring standardsfor both entry-level and experienced recruits,which include assessment not only of eachindividual's academic and work records, but alsointerviews, background checks, and references.We also assess the quality of those people we hirefrom colleges and universities, ensuring that wefocus our recruiting efforts on those institutionsthat have a track record of graduating high-qualitypeople who do well in our profession.

Professional Development: Training is an on-going process. Training starts when a person ishired and continues throughout his or her career.Our people participate in a variety of regional andlocal formal training courses and are also trainedcontinuously on the job. Both the broad corecompetencies in accounting, auditing, ethics andindependence and the specialized areas in whichthey work (a specific industry) are addressed. Ourpartners also receive continuous training,development and education, and they are anintegral part of the on-the-job training of our staff.A key partner responsibility is to work with staffmembers; coaching, reviewing, training, sharingexperience and setting an example for theprofessionals on their teams.

The Firm has established an environment inwhich our people are personally responsible fortheir own development over the course of theircareers and, to that end, we have developed broadcourse offerings and tools to help our people tailora personalized training curriculum to match theirroles and responsibilities with the unique aspectsof the clients they serve. In addition to attendanceat self-elected training, partners and staff arerequired to participate in mandatory courseswhich the firm considers to be fundamental totheir ability to perform their jobs within theappropriate technical and ethical frameworks. TheFirm also ensures compliance with professionalstandards on the periodic amount and type ofcontinuing professional education required. Ourlearning and education programs are continuallyupdated to ensure that they provide our peoplewith the development, skills and experiences theyneed as client service professionals.

Supervision and direction: Each engagementleader is responsible, in consultation with othersas necessary, for ensuring that partners and staffassigned to the engagement have the professionalcompetence and experience required in thecircumstances. Further, on the engagement theyare ultimately responsible for determining theextent of direction, supervision and review of thework of more junior staff to whom work isdelegated.

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Advancement: Partner and staff performance isevaluated annually through a review process thatincludes peers, subordinates and superiors.Partners and client service staff are recognizedand rewarded for performing as good, well-rounded accountants and auditors. Ourperformance evaluation and compensationprocesses have been aligned to address the rulesprohibiting a partner from being compensated orevaluated on the basis of their success in sellingnon-assurance services to their own audit clients.We also encourage, recognize and rewardteamwork. Staff are provided with formalperformance feedback for each project where theyspend 80 or more hours. All staff are formallyevaluated at least annually with input frompartners and superiors with whom they haveworked on an engagement. Additionally, our auditmethodology provides built-in opportunities forinformal feedback and coaching throughout anengagement. Our methodology is designed toensure both a quality work product and thecontinued development of our people. All of thisleads into an annual assessment of how well eachof our people has performed relative to our values,the goals each has set for the year and their peers.Our staff move up in their careers only when theyare ready for the next level of responsibility.

Engagement Performance

Consistent Global Audit Methodology: AllPwC firms use an audit methodology and processfor all audit engagements to ensure uniformityand consistency in approach. The methodology isenhanced as necessary to respond to the changingenvironment. All partners and staff receive on-going training in this methodology.

Our methodology is sufficiently flexible to allowthe incorporation of any additional procedureswhich may be required by local regulations.

PwC Audit

As a member of the PwC Network,PricewaterhouseCoopers Central Asia & CaucasusB.V. Georgia Branch has access to and uses PwCAudit, a common audit methodology and process.This methodology is based on the InternationalStandards on Auditing (ISAs), with additionalPwC policy and guidance provided whereappropriate. PwC Audit policies and proceduresare designed to facilitate audits conducted incompliance with all ISA requirements that arerelevant to each individual audit engagement. Ourcommon audit methodology provides theframework to enable PwC member firms toconsistently comply in all respects with applicableprofessional standards, regulations and legalrequirements.

The PwC Audit Guide explains PwC’smethodology. The Guide along with PwC'stechnology-based audit support tools, templatesand content support engagement teams inconducting assurance and related servicesengagements.

Aura

As a member of the PwC Network,PricewaterhouseCoopers Central Asia & CaucasusB.V. Georgia Branch has access to and uses Aura,which is the application that powers PwC's auditsand supports its Assurance practices. It providesengagement teams with an application thatintegrates a broad range of capabilities, includingbuilt-in tools to promote audit quality, consistencyand ease of documentation. Aura also integrateswith a variety of other tools and applications,creating one work space for client work. Our auditwork is planned, executed and documented usingAura which supports teams in applying ourmethodology effectively, by creating a transparentlinkage between risks identified and the workdone to address those risks, as well as providingcomprehensive project management capabilities.

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Developed technology

We continue to invest in audit technology thatbuilds quality into the audit and enhances ourability to provide insights to our clients. Ourtechnology is built and implemented globallyensuring consistency across the PwC Network.These new tools that enhance audit quality andefficiency through automation, connectivity andmobility include:

Aura Now is an online, multi-engagementdashboard tool that allows teams tomonitor progress towards completion andother key information across theirportfolio of Aura engagement databases.It visualises the progress of anengagement, which enables our people topriorities their efforts. It also providesinformation regarding readiness for filearchiving to assist in preparing for andtiming of archiving the audit file.

Count is an electronic portal that allowsour teams to create instructions for ourteams to execute and document allaspects of an inventory count observationelectronically. It was built by PwC inresponse to feedback from teams thatusing a mobile device would improve thequality and execution of inventory counts.

Connect is our collaborative workflowtool, providing fast, efficient and secureinformation sharing at every stage of theaudit. It monitors the status of requestsand information between our clients andthe engagement team on a real time basis.Connect provides visibility for both ourclients and us to be able check progress onthe go, anytime, anywhere.

Halo is our new data auditing suite oftools allowing us to identify and assessrisks and determine where to focus auditefforts. The analytical and visualisationcapabilities allow us to analyses patternsand trends, identifying unusual and high-risk transactions, and providinginvaluable insight to both ourselves andour clients. Halo comprises of three keycomponents – acquisition of client data,transformation of data and applicationsfor automated testing and analysis ofdata, for example, Halo for Journalsallows engagement teams to gather alljournal entries and utilise built-infunctionality to apply engagement-specific criteria designed to focus testingon higher risk entries.

Consistent Global Audit Methodology: AllPwC firms use an audit methodology and processfor all audit engagements to ensure uniformityand consistency in approach. The methodology isenhanced as necessary to respond to the changingenvironment. All partners and staff receive on-going training in this methodology.

Our methodology is sufficiently flexible to allowthe incorporation of any additional procedureswhich may be required by local regulations.

Comprehensive Policies and Procedures:We have comprehensive policies and proceduresgoverning our accounting and auditing practicethat are constantly updated to reflect newprofessional developments and our local operatingenvironment, and to address emerging issues, aswell as the needs and concerns of the practice.These policies cover not only professional andregulatory standards, but also reflect the guidancethat we provide to our professionals about howbest to implement them. They are available inelectronic files and databases, are regularlyupdated or supplemented for all currentdevelopments and are accessible to our peopleremotely at any time.

Engagement-Specific Quality Controls:There are a number of other quality controlprocedures that are performed specifically withrespect to a particular engagement. For example,on all of our publicly listed clients and a widerange of certain other high profile or higher riskclients, we appoint an independent quality reviewpartner (“QRP”) who discusses all significantissues with the engagement partner and who isresponsible for independently assessing the auditplan, its execution, the resolution of significantissues, the financial statements and disclosuresand the appropriateness of the Firm's report.Specific criteria are set forth in PwC's policies toensure that the assigned QRP has the appropriatelevel of experience and industry expertise toperform that role.

Our policies require consultations with firm-widetechnical experts and industry specialists forspecified transactions and circumstances that mayinvolve the application of significant judgment.Our "consultative culture", which is discussedfurther below, means that our engagement teamsregularly have consultations with such experts andothers beyond those that are formally required.Engagement partners and QRPs on each publicinterest entity audit client are rotated to addressany potential familiarity issues without sacrificinginstitutional knowledge about the client.

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Furthermore, the PwC Global Audit Methodologyis built on the principle that work performed byeach member of the engagement team is reviewedby another member of the team, of at least equalcompetence to consider whether the work hasbeen performed as intended, competently, and toensure that the correct conclusions have beendrawn.

Accounting and Auditing Resources:Consultation is a key element of quality control inour Firm. Our Accounting Technical group isstaffed by partner(s) and staff who are experts inaccounting and auditing. If an engagementpartner disagrees with the advice provided by ourtechnical experts, we have a formal process forcontinuing the discussion within our chain-of-command until the matter is resolved with dueregard for the view of such technical experts.

With the wider introduction of InternationalFinancial Reporting Standards as adopted by theEU (IFRS) we have set up a system to ensure thatour clients’ financial statements are evaluated byour audit teams in a way that is consistent and inaccordance with the full intent of the Standards.

The key element of the system is the review workcarried out independently by our regionalAccounting Consulting Services team (“ACS”)which is geographically located throughoutCEE/CIS. Depending on the complexity and riskassociated with particular industry sectors, clientsize and listed/non-listed status, ACS will carryout a review of clients’ IFRS statements. Thefinancial statements of listed financial servicesclients for example will be regularly reviewed by aspecialist team with a final review being carriedout by one of our ACS partners. All IFRS financialstatements that are used in the capital markettransactions would also be subject to a mandatoryreview. Other IFRS accounts are reviewed onrotational / sample basis. During the review theaudit team will be required to explain thejustifications for the IFRS treatments anddisclosures in the financial statement and discusswith the client and its governing bodies instanceswhere treatments and disclosures are assessed bythe ACS team as being non-compliant with thestandards. In addition, audit teams are requiredto formally consult with an ACS consultant andACS partner on a number of defined accountingmatters that are assessed as higher risk formisapplication by clients.

Risk and Quality Function: Our Firm's riskmanagement, consulting and policy resources area central function, comprising both full and parttime personnel, internally referred to as Risk andQuality (“R&Q”). The R&Q includes the followingkey functions: Risk Management, Independence,Accounting Consulting Services, Regulatory, AuditServices, Learning and Development, Ethics andBusiness Conduct, Quality Monitoring. Eachfunction is led by a partner assisted by otherexperienced personnel. These partners are alsoassisted by other partners from other larger PwCpractices when the need arises.

The Risk management function use, promotes andapplies the global PwC risk management policies,guidance and procedures approved within PwCglobal network, which are enhanced and tailoredto local needs. A key responsibility of the riskmanagement partners is to be an integral part ofthe client acceptance and retention process,responsible for assessing risk on both a qualitativeand quantitative basis. In addition, riskmanagement partners are required to be integrallyinvolved with engagement teams, wherenecessary, for consultations on issues andjudgments, such as going concern considerations.

We have developed formal protocols setting outthe circumstances under which engagement teamsmust consult with the R&Q function. This group ofindependent and experienced partners is focusedon quality, prompting changes to policy andprocedures when and as appropriate.

Monitoring of Assurance quality

We recognize that quality in the Assuranceservices we deliver to clients is key to maintainingthe confidence of investors and other stakeholdersin the integrity of our work. It is a key element toour Assurance strategy.Responsibility for appropriate qualitymanagement lies with the Leadership ofPricewaterhouseCoopers Central Asia andCaucasus B.V. Georgia Branch (“our firm”).This includes effective monitoring processesaimed at evaluating whether the policies andprocedures which constitute our QualityManagement System are designed appropriatelyand operating effectively to provide reasonableassurance that our audit engagements areperformed in compliance with laws, regulationsand professional standards.

Our firm’s monitoring program is based on thePwC Network’s Global Assurance Quality Review(GAQR) Program.

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This program which is based on professionalstandards relating to quality control includingISQC1, contains policies, procedures, tools andguidance which are used by PwC Network firms.The GAQR program is coordinated by a centralteam which consists of a GAQR Leader with agroup of International Team Leaders (ITL) whoare senior partners seconded to the GAQR centralteam by PwC member firms. Provision ofoversight by the ITLs and their continuousinvolvement and support enable a consistent andeffective performance of reviews across the PwCnetwork.

Our firm’s monitoring procedures include anongoing assessment of the design andeffectiveness of our quality management system,as well as a review of completed engagements(Engagement Compliance Reviews - ECR). Theresults of these procedures form the basis for thecontinuous improvement of our qualitymanagement system.

ECRs are risk-focused reviews of completedengagements covering, on a periodic basis,individuals in our firm who are authorized to signaudit or non-audit assurance reports. The reviewassesses whether an engagement was performedin compliance with PwC Audit guidance,applicable professional standards and otherengagement related policies and procedures. Eachsigner is reviewed at least once every three years.

Reviews are led by experienced Assurancepartners, supported by independent teams ofpartners, directors, and senior managers andother specialists. Review teams receive training tosupport them in fulfilling their responsibilities,and utilize a range of GAQR-approved checklistsand tools when conducting their reviewprocedures.

The results of the quality reviews are reported toour firm’s leadership who are responsible foranalysing the findings and implementing remedialactions as necessary.

In situations where adverse quality issues onengagements are identified, based on the natureand circumstances of the issues, the responsiblepartner or our firm’s Assurance leadershippersonnel may be subject to [additionalmentoring, training or sanctions] in accordancewith our firm’s accountability framework.

Partners and employees of our firm are informedabout the review results and the actions taken toenable them to draw the necessary conclusions forthe performance of engagements. In addition, theGAQR Leader informs engagement partners ofour firm who are responsible for group auditsinvolving cross-border work about relevantquality review findings in other PwC firms whichenables our partners to consider these findings inplanning and performing their audit work.

We have a formal pre- and post-issuance quality-monitoring program, which is run as part of aPwC global program. This comprehensiveprogramme consists of Engagement ComplianceReviews (“ECR’s”) and Quality ManagementReviews (“QMR’s”) and also Audit QualityAssessment (“AQA”) comprising hot and coldreviews. The program includes inspection of apartner’s and other non-partner’s with delegatedsigning rights work and all aspects of our qualitycontrol system to ensure that our quality controlsare functioning properly and to providereasonable assurance that we comply with allapplicable professional standards and our ownFirm policies and procedures. This program ismanaged and supervised by R&Q.

Engagement reviews are conducted byexperienced partners and senior managers withappropriate industry experience who are notconnected either with the office that performs theaudit or the audit itself. Members of each reviewteam receive the necessary training and guidanceto perform their role. Each partner must bereviewed at least once in five years and twice in sixyears for higher profile clients. More timelyreviews are performed when there is a possibilityof increased risk. Our inspection process alsoinvolves periodic testing of the effectiveness of ourquality management system in all ISQC1functional areas. Annual testing of compliance ofthe Firm’s policies and procedures in each of thecomponent areas of ISQC1, covering the regionaland territory (on rotation basis) controls andmonitoring procedures is in place.

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Quality monitoring is an integral part of ourcontinuous improvement program. We constantlyevaluate inputs from formal programs such asthis and a variety of informal sources in an on-going effort to improve our policies, proceduresand the consistency of the quality of our work.The findings resulting from quality reviews arecommunicated to partners and staff vianewsletters and webcasts. Every instance offailure to meet performance standards is treatedseriously - the partner responsible is counselled toimprove performance and the work of the partneris reviewed in the following year. Poor technical,risk management, independence or ethicalperformance would result in a negativeadjustment to the partner's compensation; insome cases the partner is no longer permitted tosign audit opinions in the Firms' name and inserious cases the partner is requested to leave theFirm. Quality Improvement Plans needs to beprepared based on results of any of the qualityreviews.

Root cause analysis

We perform analyses to identify potential factorscontributing to our firm’s audit quality so that wecan take actions to continuously improve. One ofour primary objectives when conducting suchanalyses is to identify how our firm can providethe best possible environment for ourengagement teams to deliver a quality audit. Welook at audits both with and withoutdeficiencies—whether identified through our owninternal inspections process or through externalinspections—to help identify possible distinctionsand learning opportunities.

For individual audits, a team of reviewers that isindependent from the engagement team identifiespotential factors contributing to the quality of theaudit. We consider factors relevant to technicalknowledge, supervision and review, professionalscepticism, engagement resources, and training,among others. Potential causal factors areidentified by evaluating engagement information,performing interviews, and reviewing auditworking papers, as appropriate to understand thefactors that may have contributed to audit quality(the “why of the why”).

In addition, the data compiled for audits bothwith and without deficiencies is compared andcontrasted to identify whether certain factorsappear to correlate to audit quality. Examples ofthis data include the hours incurred on the audit,whether key engagement team members are inthe same geography as the client, the number ofyears that key engagement team members havebeen on the engagement, the number of otheraudits that engagement partners are involved in,whether the engagement was subject to a pre-issuance review, and the timing of when the auditwork was performed.

Our goal is to understand how quality audits maydiffer from those with deficiencies, and to usethese learnings to continuously improve all of ouraudits. We evaluate the results of these analysesto identify enhancements that may be useful toimplement across the practice. We believe theseanalyses contribute significantly to the continuingeffectiveness of our quality controls.

Management’s Statement onthe effectiveness of internalquality control systemfunctioning

The Management Board ofPricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch believes thatthe quality control environment describedabove is in compliance with all applicableregulations and that it provides a reasonablebasis for believing that statutory auditscarried by PricewaterhouseCoopers CentralAsia & Caucasus B.V. Georgia Branchconsistently meet the required qualitystandards.

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Last Quality Assurance Review

As per Georgian legislation PricewaterhouseCoopers Central Asia & Caucasus B.V. Georgia Branch is notsubject of any external quality assurance reviews.

Though per PricewaterhouseCoopers global quality and risk management standards, the internal PwCquality Assurance reviews are conducted on an annual basis.

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Independence Processes atPricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch

Independence, Integrity andObjectivity

The Regional Independence Leader with thesupport of the country Partners Responsible forIndependence monitor compliance with strictregulatory, professional, and PwC independencerequirements related to financial interests in,services to and business relationships withassurance clients (audit and non-audit assuranceclients). The Firm has implemented anindependence compliance program monitoringsystem and controls with the following keyelements:

1. Written independence policies andprocedures

2. An automated financial interest trackingsystem and global restricted entity list

3. On-going independence training4. Self-assessment/confirmation process that

is done by all partners and staff on annualbasis

5. Internal monitoring of our system ofindependence and the related controlsincluding annual testing of partner anddirectors independence

6. Responsibility for independence and oursystem and controls vested in seniormanagement

7. An appropriate "tone at the top" andculture relating to independence

8. Prompt reporting of personnel employmentnegotiations with clients

9. Reporting by personnel of perceived andreal independence violations

10. Disciplinary policies and processes11. Controls over joint business relationships,

non-audit relationships with audit clientsand fee arrangements.

This program requires that partners and staffexamine and document any concerns over thefirm’s independence either in relation to theacceptance of a new client or a particularengagement. Before any non-assuranceengagement is accepted for an audit client, anenquiry is made with the respective audit partneras to the permissibility of providing such servicesto that client. The assignment can only beaccepted once the respective audit partnerconfirms that the proposed engagement isconsistent with the applicable independencerequirements.

An important aspect of our independence cultureis the central support provided to partners andstaff in respect of independence relating topersonal matters, non-audit services, feearrangements or other types of relationships.

Should a client not accept clear accountingguidance, audit results on material issues orbehave in an unethical manner, the firm willsupport the engagement partner in making theappropriate reporting decision even if that mayresult in disengaging from or not accepting anassignment.

Management’s statementconcerning independence practices

The Management Board ofPricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch declares thatthe procedures for ensuring independence areconsistent with applicable regulations.

The last internal independence review was carriedout on a region-wide basis onPricewaterhouseCoopers CEE and took place inJanuary - February 2016.

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Continuing Education of Statutory Auditors

The Management Board of PricewaterhouseCoopers Central Asia & Caucasus B.V. GeorgiaBranch declares that, as referred to in the section above on audit quality, our Statutory Auditors are fullyinvolved in the firm's continuing education programme. In addition to participation in on-going internallydesigned training our statutory auditors are required to take part in the annual obligatory trainingorganised by Georgian Federation of Professional Accountants and Auditors (GFPAA) which covers IFRS,ISA (International Standards on Auditing) and tax legislation updates and lasts for 5 days.

Financial information for the year ended 30 June2016

(unaudited) 000’ GEL

Statutory Audit 3,602Other Assurance Services 2,776Tax Advisory Services 2,890Other non-audit services 61Total Turnover in Georgian Lari 9,329

Public Interest Entities Audited for StatutoryPurposes by PricewaterhouseCoopers CentralAsia & Caucasus B.V. Georgia Branch in theFinancial Year Ended 30 June 2016

JSC TBC Bank - transferable securities listed on the Main Market of the LondonStock Exchange.

Non listed PIEs

JSC Basis Bank

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Basis for Partners Remuneration

Partners are remunerated out of the profits of the firm and are personally responsible for fundingpensions and other benefits such as medical care. The partner evaluation and compensation process isfully compliant with independence ramifications of the IESBA Code of Ethics for ProfessionalAccountants which disallow a partner to be assessed or rewarded for selling non-assurance services toown audit clients. A partner’s remuneration is allocated by the Regional Management Board afterevaluating each partner's contribution to the firm during the year and following the completion of theannual audits for the national firms. The allocations made by the Management Board are reviewed andapproved by the Partner Council. Each partner’s remuneration comprises of three interrelated profitdependent components:

Responsibility Income, reflecting the partner’s sustained contribution and responsibilities;Performance Income, reflecting how a partner and the teams he works with perform in a given year, andEquity Unit income which represents a share in the profits after the allocation of the first two elements.

Equity units are allocated to partners on the basis of a matrix which primarily takes account of thepartner’s current role within the firm. Performance income is determined by assessing a partner’sachievements against an individually tailored balanced scorecard of objectives based on the partner’srole. These objectives include the realisation of the firm's audit quality standards and absolute adherenceto our integrity and independence regulations.

Basis for Statutory Auditors Remuneration

The remuneration of registered auditors, who are partners is described above. The remuneration of thoseregistered auditors who are employees of PricewaterhouseCoopers Central Asia & Caucasus B.V. GeorgiaBranch but not partners is based on an annual performance review process, which considers amongstother factors professional skills (technical, risk, independence and ethical), experience and managementskills.

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Declaration

To the best knowledge and belief of PricewaterhouseCoopers Central Asia &Caucasus B.V. Georgia Branch, the information contained in this report is correctand is compliant with the requirements of article 40 of the European Union 43rd

Directive on Statutory audits of annual accounts and consolidated accounts (theAudit Directive) as at the date of publication of this document.

Altaf Tapia

Country Managing PartnerPricewaterhouseCoopers Central Asia & Caucasus B.V. Georgia Branch

27 September 2016

© 2016 PricewaterhouseCoopers Central Asia and Caucasus B.V. Georgia Branch. All rights reserved. "PwC" is the brand under which member firms of

PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the

network is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is

not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in

any way.