By Korston Group

Sochi-World - Scope SOCHI OLYMPIC DEVELOPMENT Sport Complexes Hotel & Convention Entertainment Olympic Village Infrastructure Sochi-World Sport Complexes Hotel & Convention Entertainment Olympic Village Infrastructure Sochi 2014 Winter Olympic Sochi-World Worldwide Tourist Destination

Sochi-World - Timeline SOCHI OLYMPIC DEVELOPMENT Sochi-World Sochi 2014 Winter Olympic Sochi World Worldwide Tourist Destination Planning IOC Compliances General Management Logistics Sustainability Long Term Feasibility Support (Hotels, Resort) General Management

Sochi-World Goals – Mission Create Sochi-World as a world wide Exhibition, Convention and Leisure Tourism Destination Supporting Sport events beyond 2014 Winter Olympics Protection asset value Return on investment

Sochi-World Goals - Vision Became the Leading European Convention Exhibition, Sport and Entertainment Destination: – 10 Top International / European Sport Events per year. – Host National Sport Events and Championships – 35 World Exhibition per year. Total 3 million visitors. – One million Convention delegates per year. – One million Room nights.

Sochi-World Goals – SWOT Analysis STREANGTH All year destination Winter sport & summer sport destination Established VIP and official vacation destination OPORTUNITIES Russians favor for an own top truism destination Russia growing outgoing tourism market Olympic Games helps to create international brand WEAKNESS Unstable weather Underdeveloped City and regional infrastructure THREATS Too far from European center Visa regime Instability in the Caucasus Region

Sochi-World Goals – SWOT Analysis STREANGTH All year destination Winter sport & summer sport destination Established VIP and official vacation destination OPORTUNITIES Russians favor for an own top truism destination Russia growing outgoing tourism market Olympic Games helps to create international brand WEAKNESS Unstable weather Underdeveloped destination City and regional infrastructure THREATS Too far from European center Visa regime Instability in the Caucasus Region Integrated Infrastructure Gaming Zone Duty Free Zone Single Management Company Visa Free Zone

Sochi-World – Strategy Integrate infrastructure Single management company Duty Free status Visa Free regime Gaming zone

Strategy – Integrate Infrastructure Olympic Area – Sport Stadiums, Circus Resort Area I – Hotels (3*): 2100 rooms, family entertainment (Aqua park, Amusement Park, Shopping) Resort Area II – Hotels (4*, 5*) 2400 rooms, Convention space (20000 m 2 ) & Exhibition Center (40000 m 2), SPA, Shopping, Casinos Common Infrastructure – Internal transportation system CO 2 emission free – Supporting services: laundry, central warehouse, etc – Engineering systems (autonomy): electro-generation, boiler, etc

Strategy – Integrate Infrastructure Olympic Area Resort Area IResort Area II

Strategy – Single Management Company Manages all the facilities and staff – Runs the hotels, convention, exhibition and entertainment – Supports sport events Commercializes the facilities – Operates (hotel, entertainment, convention) – Rents facilities (shopping, sport) – Marketing (promotes and advertize) Provides Security and Safety and Regimes Ensures technical and engineering work

Sochi-World Strategy – Duty Free Status Applies to all Sochi-World territory Entitles retail selling only (no wholesale) Has a similar regime as in international airports Custom controls in the accesses Possibility of including or excluding the Olympic Area from the free zone

Sochi-World Strategy – Visa Free Status Applies to all Sochi-World territory Migration check-points at all accesses Foreign citizens can come without visa direct from Airport transit area by special transfer Russian and CIS citizens go in and out with internal or external passport Foreign citizens with visas can come or go according to their visa statuses Russian Consular officer on duty on the territory Possibility of including or excluding the Olympic and Resort I Areas from the free zone

Strategy – Gaming zone Gaming zone to be crated in part of Sochi- World territory – Excludes Olympic and Resort I Areas All gaming operated by Sochi-World Management Company Compliances with law – 18 y. o. – Possibility of exclude compulsive gamers by court order.

Strategy – complex approach Strategy Impact in Image Impact in Visitor Count Impact in Revenue Impact in Cost Impact in Profit Integrated Infrastructure Sochi-World perceived as one Destination Increases total headcount, Maximizing multiple use Up to 15% more Investment Savings up to 10%, Operating savings 5% Increases by 40% Single Management Stronger Promotion of the brand, by consolidating marketing resources Up to 25% more, by avoiding price dumping Savings up to 10% by pooling resources Increases by 230% (reduces pay back period three times)

Strategy – exploiting opportunities Strategy Impact in Image Impact in Visitor Count Impact in Revenue Impact in Cost Impact in Profit Duty Free Zone Positive associations modern special international Increase Local Up to 23% Up to 70% Visa Free Zone Positive associations visitor friendly international Increases International Up to 30%Up to 50% Gaming Zone Up to 80%Up to 300%

Sochi-World - Management Company proposal Korston Group is ready to form, finance and support the creation and operation of Sochi- World Management Company

Korston Group – Highlights More than 1000 Rooms under management More than m 2 Convention space 25 Restaurants m 2 in Entertainment Center m 2 Shopping Centers m 2 Under development in Russian Regions Shareholder of Nizhny Novgorod Trade Fair Employees: 1500 (3500 before July 1 st 2009)

Korston Group – Management Team

Korston Group – Key Factors Russian Company – Transparency Required experience – In all the Areas – International – Comparable sizes of operations Readiness – To deploy required manager team (7 days) – To supply 300 million Rubles to the Management company (5 days)

Schedule of Interaction – Three Stages SOCHI 2014 OLYMPIC COMITEE Sochi-World Management Company Sochi 2014 Winter Olympic Sochi World Worldwide Tourist Destination Planning IOC Compliances General Management Logistics Sustainability Long Term Feasibility Support (Hotels, Catering) General Management

Schedule of Interaction – Stage II (Games 2014) SOCHI 2014 OLYMPIC COMITEE Sochi-World Management Company Winter Games Sochi 2014 Security & Safety 2014 Winter Olympics Game Administration F&B Catering Hotel Management Logistics Korston Group Russian Government Sport Authorities Asset Owners Infrastructure Management Games Marketing Ticket Sales Transportation Olympic Village Management Accreditations Media Center

Schedule of Interaction – Stage I (till 2013) SOCHI 2014 OLYMPIC COMITEE Sochi-World Management Company Planning IOC Compliances 2014 Winter Olympics Requirements Long Term Feasibility Sustainability Logistics Sochi-World Brand Concept Korston Group Russian Government Sport Authorities Asset Owners General Planner Olympic Objects Planning Hotels & Other Facilities Planners Coordination Board

Sochi-World - Organization Structure Sochi-World Sport Complexes Hotel & Conventions Entertainment & Shopping Infrastructure & Security Sochi-World Management Company Korston Group Asset Owners Russian Government Supervisory Board Sport Authorities Asset Owners Sochi World Worldwide Tourist Destination

Next Steps Government act Management company to be created Management agreement Korston immediately assisting with planning and project management