Figure 3: Key Regulatory Outputs STRATEGIC OVERVIEW (1) In the regulatory year ended March 31, 2013. District Heating We hold a 33.3% equity interest in Värmevärden, a district heating business in Sweden operating in 10 communities that serves residential customers, which includes multi-residential complexes and municipal users, and also has long-term contracts with industrial customers. Our key performance drivers for Värmevärden in 2014 are to: A P3 is a partnership between the public and private sectors, built on the expertise of each partner, which best meets clearly defined public infrastructure needs through an optimal allocation of resources, risks and rewards, resulting in higher long-term infrastructure quality and value for  taxpayers. There are a variety of P3 models available for delivery of public infrastructure, ranging from designing, building and financing an asset to designing, building, financing, maintaining and operating an asset. P3 models are used to deliver a variety of large-scale infrastructure, from roads to energy or government buildings such as schools and hospitals. For investors, P3s with a strong project rationale offer predictable, government-backed cash flow with limited volatility. Public-Private Partnerships  Transportation Transportation infrastructure includes toll roads, railways, public transportation systems, ports and airports, all of which are required to support passenger and freight travel. Over the next four decades, the International Energy Agency estimates global passenger and freight travel will double  over 2010 levels, requiring new infrastructure to be built at significant cost. In addition, many cities require significant investments to modernize and expand their transit systems to deal with increasing gridlock. A 2013 study by the CD Howe Institute estimated that traffic and transit gridlock costs the Greater Toronto Area up to $11 billion each year. More innovative funding and financing approaches will be required in many jurisdictions given government fiscal constraints and competing demands on limited budget resources. MARKET FUNDAMENTALS Effective infrastructure supports economic growth and ensures a high quality of life. Globally, infrastructure investment requirements are significant  and growing, driven by underinvestment as well as major factors of change such as global economic growth, technological progress, climate change,  urbanization and growing congestion. It is estimated that US$57 trillion in infrastructure investment is required between 2013 and 2030 simply to keep up with projected growth in global gross domestic product ("GDP"), including investments for transport (road, rail, ports and airports), power, water and telecommunications. (1) Reaching this level of investment will require a 60% increase in the level of infrastructure investment globally from current expenditures, and may still be insufficient to address major infrastructure deficiencies. (1) In Capstone’s targeted jurisdictions, there is a significant gap between the infrastructure investments required for the future and the capacity of the public sector to meet those requirements from traditional sources. (1)  "Infrastructure Productivity: How to save $1 trillion a year," McKinsey Global Institute, January 2013. " 14 CAPSTONE INFRASTRUCTURE CORPORATION Targeted Platforms • Manage fuel costs, Värmevärden’s largest operating expense, by using cost-effective fuels. • Maintain strong customer relationships by providing highly reliable, quality service to customers, thereby increasing potential for contract  renewals and the signing of new customers.  •  Ensure high plant availability and operational efficiency, which helps to maximize revenue potential while minimizing the use of more expensive  peak fuel. Key Regulatory Output AMP5 Objective Actual Performance (1) Reduce amount of water that leaks from the network's pipes and mains Reduce water leakage to 49 million litres of water per day ("Ml/d") with a 2014 target of less than  49Ml/d Achieved water leakage of 42 Ml/day Save water Achieve a base service water efficiency target of 4.0 Ml/d over the regulatory period Cumulative 3.77 Ml/d since the start of the AMP5 period in 2010 Strong performance on regulator's security of supply index, which measures reliability of water supply Achieve a 100% grade 100% Stable serviceability Maintain stable serviceability Achieved stable serviceability Exceptional customer service as measured by regulator's Service Incentive Mechanism ("SIM") Deliver top-quartile performance as measured through customer satisfaction surveys and quantitative data Bristol Water ranked 4th out of 19 companies in the industry