Latvijas Gaze

Share Issue/Capital Change • Jul 13, 2017

Grant Thornton

An instinct for growth"

To: Shareholders and management of AS Latvijas Gāze

To: Register of Enterprises of the Republic of Latvia

Grant Thornton Baltic SIA Blaumana iela 22, LV-1011, Riga Latvia

Ph +371 6721 7569 F +371 6721 7567 E info@lv.gt.com www.grantthornton.lv

Reg. No.50003619401 VAT Reg. No.LV50003619401

29 June 2017 No. GT2017-71n

Regarding the sufficiency of property to be transferred from AS Latvijas Gaze to establish the equity capital of the acquiring company (the operator of the natural gas distribution network)

In accordance with the Agreement No. 38B/2017 entered into on 16 June 2017, we have performed a valuation of the property of AS Latvijas Gaze to be transferred, and of its sufficiency, to establish the equity capital of the acquiring company - the operator of the natural gas distribution network (hereinafter - Acquiring company), in the amount of EUR 39,900,000. The opinion will be submitted to the Enterprise Register of the Republic of Latvia for the purpose of reorganisation of AS Latvijas Gāze. The valuation was conducted as of 30 June 2017.

The valuation report uses the information provided by the management of AS Latvijas Gaze. This report is based on the information obtained from AS Latvijas Gaze, which may be outside the control of the valuator. Although all the possible measures have been taken to ensure that the information is obtained from reliable sources, we are not able to make any claims about the accuracy of the information obtained from AS Latvijas Gaze, or that such information fully corresponds to the actual situation.

Article 377 Paragraph 1 of the Commercial Law states that "If the aquiring company is a stock company which as a result of a reorganisation must increase its equity capital or which is a new company, a valuation shall be conducted of the property of each of the iaquired companies or the dividing company, in order to determine whether the property is sufficient to increase the equiring company or for its founding". Furthermore, Paragraph 2 of the same Article states that "The valuation shall be conducted and a written report compiled by the person who has examined the reorganisation agreement in the case referred to in Section 340, Paragraph three of this Law the valuation shall be conducted and a written report shall be provided by a person who has been included in the list of valuators of property contributions".

According to the draft decision on the division of AS Latvijas Gaze, reorganisation of AS Latvijas Gāze as the dividing company shall be performed in accordance with Article 336 Paragraph 4 of the Commercial Law by separating a part of the Company's property - the commercial activity of distribution of natural gas (hereinafter - Property) and which consists of the following:

• intangible assets (IT software), which are necessary for operation of natural gas distribution network;
• · intangible assets (IT software), which are necessary for management processes of the Acquiring company;
• · fixed assets, which ensures process of distribution of natural gas (technological equipment, buildings and constructions, and pipelines;
• · fixed assets, which are necessary for management processes of the Acquiring company (incl. land and buildings in Riga, Vagonu street 20);
• · stocks, which are directly related to distribution of natural gas;
• · cash which is necessary to provide operations of the Acquiring company in 4 months, adjusting this amount for sum of receivables and short-term liabilities, which are directly related to distribution of natural gas;
• · liabilities revaluation reserve of fixed assets, which will be transferred to the Acquiring company;

Audit Accounting Tax Legal Financial advisory Valuation

An instinct for growth"

• · liabilities long-term borrowed funds, which are directly related to distribution of natural gas;
• · liabilities deferred corporate income tax, which is related to the transferred fixed assets;
• · liabilities, related to costs of the collective employment contract, for transferred staff.

A more detailed description of the Property is included in the Reorganisation Prospectus, Section 4.1 "Property composition", and the Property Division Form of AS Latvijas Gaze (draft).

Thus, as a result of the reorganisation, the commercial activity of distribution of natural gas of AS Latvijas Gaze will be transferred to the Acquiring company as an independent part of the company and as a totality of things within the meaning of Article 18 of the Commercial Law. The company and as totality of
transfered as a complete commercial Law. The Company's independent part will be transferred as a complete commercial unit, composed of assets and liabilities.

Within the meaning of the Latvian Valuation Standard LVS 401:2013, the object of valuation is considered to be par of the business (LVS 401:2013, Paragraph 5.1.6.1) and is to be assessed in accordance is considered to
requirements set out in LVS 401:2013, Paragraph 5.1.6.1) accorda requirements set out in LVS 401:2013, Paragtaph 5.1.6.1) and 1s to be assessed in accordance with the International Valuation Standards, Standard 200 "Business and business interests").

Assessment of the part of business should be cartied out by using the market approach and/or income approach. Taking into account that the acquiring company has not yet been established at the ime of the ime of the valuation, using the market approach in the Propetty assessment would be difficult, and within the scope of this opinion, the Propexty value has been determined based on the income and mithin the scope of
long-term cash flow for the activity tros "Gas distribution" long-term cash flow for the activity type "Gas distribution".

According to Article 154 Paragraph 3 of the Commercial Law of Latvia, "The propriy ontiributions shall be valued aconding to the usual value of the volunt property or right" - Leo proprem ontributions shall be vaued " Normal value is determined on the basis of the benefit which to Arthele 871 of the Civil Law of Larvia, I Larvia, I of their personal relationship".

The usual value of the Property corresponds to the market value definition provided in LVS 401:2013, i.e. "Market value is the estimated an asses should exchange on the valuation date between a willing byer a a willing siller in an am's length and assess on the valuation date between a willing byer and barbed bywyed by prudently and without compulsion."

Taking into account the applicable provisions of the Commercial Law, we have assessed the sufficiency of the Property (part of the commercial activity) for establishing equity capital of the sufficiency of the amount of EUR 39,900,000 by detectining the market value of the Property as of 30.06.2017,

Our assessment is based on the cash flow forecasts for 2017-2031 prepared by AS Latvijas Gaze, for the activity type "Gas distribution" separately, by checking what assumptions have been used in the forecast and whether use is justified, as well as checking the forecast calculations. The discount rate tased in the forecast and "PricewaterhouseCoopers", and we have certified additors. The discount rate used in the "PricewaterhouseCoopers", and we have examined the discount rate calculation and the information sources used. We have not identified essential mit casamined the calculation and the information sources
in the documents submitted by A.S. Largies Gaze, end assumptions, which would in the documents submitted by AS Latvijas Gaze, and could materially influence the calculated with the Property and its sufficiency for establishing of the equity capital of the Acquiring company.

It was not part of our assignment, and we have not performed any financial, commercial or legal due diligence
of AS Latvijas Gāze or separate activities thereof, nor have we of AS Latvijas Gize or separate activities thereof, not have any type of marketing may of the company's products and services and second and to C AS Laryias Gaze; and we do accessor and we do not provide any any and program and services, not ally miancal addit of AS Latvijas Gize; and we do not provide any do not provide any minutes on

Based on the analysis performed, we believe that the Property to be transferred from As Latvijas Gāze
lis sufficient to establish equity capital of the acquiring company of t is sufficient to establish we beleve that the Property to be transfered from AS Larvijas Gaze
distribution network in the acquiring company - the operator of the natural gas distribution network in the acquiring company – the mailion nine hundred the natural gas
euros).

We hereby certify that the assessed property corresponds to the type of commercial activity of the Acquiring

Audit Outsourcing Tax Legal Financial advisory

D

Member of Grant Thornton International Ltd

Grant Thornton

An instinct for growth"

We performed our valuation based on internationally recognised valuation methods and in accordance with Latvian Property Valuation Standard LVS 401:2013 and the Latvian Appraisers Code of Ethics, as well as in accordance with the applicable Latvian legislation. The report reflects the value of the property as of 30 June 2017 and is valid only for the purpose thereof, subject to the restrictions specified in the report.

Kaspars Rutkis Chairman of the Board Certified auditor's certificate No.171

Aleksandrs Vellers

Head of the Valuation and Financial Advisory Department Business valuator's certificate No.15

Audit Outsourcing Tax Legal Financial advisory