Presentations : Northern Caucasus Resorts (NCR)

1. EXPANDING THE BOUNDARIES OF TOURISM

2. MAIN RUSSIAN EVENTS WORLD TOURISM INDUSTRY DATA
2014 WINTER OLYMPICS THE 2018 FIFA WORLD CUP
IN SOCHI
WHY CAUCASUS? EXCEPTIONAL NATURAL ENVIRONMENT
— Russia is expected to become one of the top ten destinations in the world by 2020 with 40 million visitors
— International tourist traffic to Caucasus resorts increasing by 10% annually
— Rising demand for vacation from Russian visitors due to progression of middle-class up to 20% annually
— Resorts ideally positioned to draw Russian and European visitors and benefit from increasing demand for ski leisure in Asia and the Gulf

4. INTRODUCTION
— With the upcoming 2014 Olympic Winter Games in Sochi and 2018 FIFA World Cup also in
Russia, the great potential of the North Caucasus is about to be revealed
— Russian Government has established a dedicated development company, Northern Caucasus
Resorts (NCR), to carry out the largest mountain tourism project in the world
— Sberbank and Vnesheconombank, the largest banks in Russia, are partners in the Project
— Requiring up to $30 billion ininvestments, the Project involves the creation of five world-
class ski resorts, 120 km of beach recreation and health & wellness resorts offering a large
variety services
— Scheduled to open progressively, the first stage of the resorts will be between
January 2013 and December 2015
— To capitalize on international know-how in the mountain tourism sector, NCR has set up a
partnership with the Caisse des Depots et Consignations (CDC), France, and Korean Western
Power, Korea

5. KEY INVESTMENT CONSIDERATIONS
STRONG OFFICIAL SUPPORT
— Russian Government to develop the region and improve the overall
environment through a $100bn economic and social renewal strategy
— Establishment of Special Economic Zones administered by NCR as single
point of contact for investors
— $2bn of investments from the Russian Government through NCR in the Project
infrastructure
— Simplified approvals and highly favorable land, corporate and VAT
tax regime
— State guarantees for up to 70% of investments for non-commercial risks
— Consistent official responsiveness for adjusting legislative and regulatory base to
keep pace with development project’s needs

6. INSTITUTIONAL SUPPORT
FAVORABLE TAX REGIME
— Creation of a special economic zone around the resorts with favorable tax regime
— Corporate tax: from 0% to 13.5% till 2023
(instead of 20%)
— Land tax: 0% for 5 years
— Property tax: 0% for 10 years
— Accelerated regime for depreciation
— Social taxes for resident entities reduced to 14% till 2017
(instead of 34%)

7. KEY INVESTMENT CONSIDERATIONS
EXCEPTIONAL NATURAL ENVIRONMENT
— Chain of most unspoilt European mountains stretching 1,200km from the Black
Sea to the Caspian - breathtaking contrast between warm seashores and
permanent glacial snows
— Mt. Elbrus, the tallest peak in Europe, stands at 5,642m
— Caucasus State Natural Biosphere Reserve included in
the UNESCO World Heritage List
— Long ski season spanning October to June
— Numerous mineral springs create thermal and spa facilities for summer-
winter health and wellness tourism

8. PRIME LOCATION TO BENEFIT FROM GROWING
DEMAND FOR SKI LEISURE IN RUSSIA, ASIA AND THE GULF
2 hours’ of flight from the Gulf
3 hours’ of flight from Central Europe

9. POTENTIAL RESORTS CHARACTERISTICS
All figures are preliminary and will be defined at stage of planning / construction
Resort
Main characteristics Lagonaki Arhyz Elbrus-Bezengi Mamison Matlas Total
Length of ski slopes 279 km 263 km 165 km 196 km 147 km 1050 km
Number of lifts 54 54 28 50 22 208
Total capacity of resort, 28.000 45.000 29.000 30.000 18.500 150.500
people/day*
Total number of beds 28.180 24.000 15.000 25.000 7.300
Elevation differences 1609-2450 1453-3071 1944-4164 2017-3732 1805-2767
* Capacity of ski slopes is 60% of the total capacity of resorts

10. Implementation of the Caspian sea coastal cluster to the
project for the development of a tourism; cluster

11. SPECIAL ECONOMIC ZONES

12. A SKI RESORT OPERATIONAL SCHEME (EXAMPLE)

13. SCHEMA FOR INTERNATIONAL INVESTMENS

14. INVESTMENTS IN LAGONAKI
Touristic traffic Hotel revenue, th. Euro Ski revenue, th. Euro
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

15. French Joint Venture
INTERNATIONAL CAUCASUS DEVELOPMENT (ICD)
A French - Russian joint venture
OJSC NORTHERN CAUCASUS CAISSE DES DEPOTS
RESORTS (NCR) (CDC)
51% 49%
— Owned 93,5% by the Russian state and — Key French public institution in the
6,5% by Vnesheconombank financial sector
and Sberbank — AAA rating
— — Consolidated assets of €269.5bn
Headquarters in Moscow, $2bn
equity capital — Experience of large infrastructure
and sustainable development
— Chairman A.G. Bilalov, vice-president projects through subsidiaries Egis
of the Russian Olympic Committee and CDC Infrastructures

16. French Joint Venture
INTERNATIONAL CAUCASUS
DEVELOPMENT (ICD)
ORGANIZATION MISSIONS
— Memorandum of Understanding signed — Conducting surveys
in September 2011 in Sochi: JV Agreement
— Monitoring of the project
— Russian-French Joint-Venture
— Coordination of
sub-contractors
— Staff : ca 25 persons
— Coordination of investments
Technical board includes leading
international mountain experts Relationships with investors