RUSSIA - Facts and Figures - January 2014

January

2014

1Russian Federation Key Geographical Data

Capital MoscowRussia is located in the eastern part of Europe and in the northern part of Asia

Total area1 17,098.2 thousand km2 (as of 1 January 2010 agricultural acreage amounted to 13% of the total area, forests 51%, surface waters (including marsh) 13%)

Population as of 1 January 2013 143,369.8 thousand people

Density of the population as of 1 January 2013 8.4 people per km2

Maximum length, thousand km:Longitudinal direction 4 Latitudinal direction 9

Russia is surrounded by:

Arctic Ocean (Barents Sea, White Sea, Kara Sea, Laptev Sea, East Siberian Sea, Chukotka Sea)

Pacifi c Ocean (Bering Sea, Okhotsk Sea, Sea of Japan)

Atlantic Ocean (Baltic Sea, Black Sea, Sea of Azov)

State border:

North-west Norway and Finland;West Poland, Estonia, Latvia, Lithuania, and Belarus;

South-west Ukraine;South Azerbaijan, Georgia, and Kazakh-stan;

South-east China, Mongolia, Democratic Peoples Republic of Korea;

East (maritime) the USA and Japan

Longest rivers2, km:

Lena 4,337Yenisei (with Angara) 3,844Volga 3,694Ob 3,676Amur 2,824

Largest islands, thousand km2:

Novaya Zemlya Archipelago 82.6Sakhalin 76.4New Siberian Islands 38Severnaya Zemlya Archipelago 37

Largest lakes3, thousand km2:

Baikal 31.5Ladoga 17.7Onega 9.7

Highest elevation, m:

Elbrus 5,642

Average temperatures:

January from 0, -5 (Northern Caucasus) to -40, -50C (east of Sakha (Yakutia) where the lowest temperatures can reach -65, -70C);

July from 1 (northern Siberian coast) to 2425C (Caspian lowlands)

The Russian Federation has the largest land area in the world; it is eighth in population globally4 and sixth in GDP denominated in USD at purchasing power parity5.

1 Source: Federal State Statistics Service2 Data from statistical handbook of the Federal Agency for Water Recourses3 Source: Federal Agency for Water Recourses4 According to preliminary results of the 2010 AII-Russia population census5 Source: World Bank 2011.

1st in total land area,6th in GDP

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4Administrative Structure

The Interior

Civil Defence, Emergencies, and Disaster Relief

Foreign Affairs

Defence

Justice

Healthcare

Labour and Social Security

Culture

Education and Science

Natural Resources and Environmental Protection

Industry and Trade

EXECUTIVE BRANCH

LEGISLATIVE BRANCH JUDICIAL BRANCH

Deputy Prime Ministers

Coordinate activities of various federal executive power bodies, or all such bodies in a specifi c area (economy, social policy, etc.)

Some of the Deputy Prime Ministers are simultaneously heads of particular ministries

Deputy Prime Ministers are proposed by the Prime Ministers and appointed by the President

Cabinet of Ministers

Communications and Mass Media

Regional Development

Agriculture

Sport

Transport

Finance

Economic Development

Energy

Development of the Russian Far East

Coordination of Open Government

The Federal Assembly

Consists of two chambers: the Council of the Federation and the State Duma

The Council of the Federation includes two representatives from each subject of the Russian Federation: one from the legislative and one from the executive body of state authority

The State Duma consists of 450 deputies (parties present in the current Duma are United Russia, KPRF, LDPR, and A Just Russia), and shall be elected for a term of fi ve years

Constitutional Court (consists of two chambers, represented by 10 and 9 judges respectively, judges are selected by lot; main function is checking the laws for consistency with the Constitution)

The Supreme Court of the Russian Federation is the supreme judicial body for civil, criminal, administrative, and other cases under the jurisdiction of common courts, shall carry out judicial supervision over their activities and provide explanations on the issues of court proceedings

Government

Exercises the executive power in RussiaConsists of the Prime Minister, Deputy Prime Ministers and Federal Ministers

Prime Minister

Appointed by the President with the consent of the State Duma

President

Elected for 6 years by citizens of the Russian FederationHead of State; determines the guidelines of domestic and foreign policies

Vladimir PutinPresident of the Russian Federation

Dmitry MedvedevPrime Minister of the Russian Federation

52007 2008 2009 2010 2011 2012

Production Indicators

GDP change (%), year-on-year 8.5 5.2 -7.8 4.5 4.3 3.4

GDP per capita, PPP ($) 14 816 15 939 14 834 15 687 16 767 17 709

Nominal GDP per capita ($) 9 101 11 631 8 567 10 674 13 335 14 247

Industrial output, change (%), year-on-year 6.8 0.6 -9.3 8.2 4.7 2.6

Manufacturing, change (%), year-on-year 10.5 0.5 -15.2 11.8 6.5 4.1

Extraction of mineral resources, change (%), year-on-year 3.3 0.4 -0.6 3.6 1.9 1.1

Fixed capital investment, change (%), year-on-year 22.7 9.9 -15.7 6.0 10.8 6.6

Fiscal and Monetary Indicators

Defi cit (surplus) of the federal budget, (% of GDP) 5.4 4.1 -6.0 -3.9 0.8 -0.1

Federal budget expenditures, USD Bn 243.9 257.7 319.4 331.9 339.7 424.6

Public debt (% of GDP) 7.2 6.5 8.3 9.0 9.6 10.4

M2, change (%), end year/end year 43.5 0.8 17.7 31.1 22.3 11.9

Infl ation (CPI), change (%), at year-end 11.9 13.3 8.8 8.8 6.1 6.6

GDP defl ator 13.9 18.0 2.0 14.2 15.5 8.5

Producer price index (PPI), (%), at year-end 25.1 -7.0 13.9 16.7 12.0 5.1

Nominal exchange rate, average, RUB/USD 25.58 24.85 31.75 30.37 29.39 31.09

Real effective exchange rate, change (%), year-on-year 4.2 5.1 -5.6 9.6 4.7 2.4

Reserve Fund, USD Bn, at the end of period 125.2 137.1 60.5 25.4 25.2 62.1

National Wealth Fund, USD Bn, at the end of the period 32.0 88.0 91.6 88.4 86.8 88.6

Reserves (including gold), USD Bn, at the end of the period 478.8 426.3 439.5 479.4 498.6 537.6

Key Macroeconomic Indicators

Source: IMF, Federal State Statistics Service, Central Bank of the Russian Federation, Ministry of Finance of the Russian Federation

62007 2008 2009 2010 2011 2012

Balance of Payment Indicators

Trade balance, USD Bn 123.5 177.6 113.2 147.0 196.9 192.3

Share of energy resources in export of goods, % 64.2 68.8 66.7 67.9 70.1 70.4

Current account, USD Bn 71.3 103.9 50.4 67.5 97.3 71.4

Export of goods, USD Bn 346.5 466.3 297.2 392.7 515.4 528.0

Import of goods, USD Bn 223.1 288.7 183.9 245.7 318.6 337.0

Gross foreign direct investments, USD Bn 57.0 74.8 36.6 43.1 55.1 51.4

Average export price of Russian crude oil, USD/bbl 69.4 94.4 61.1 78.2 109.3 110.5

Financial Markets Indicators

Weighted average corporate loan rate, % 10.0 12.2 15.3 10.8 8.5 9.1

CBR refi nancing rate, %, at the end of the period 10.0 13.0 8.75 7.75 8.0 8.25

Assets of Russian Banking System, USD Bn 821 953 975 1 108 1 293 1 578

Stock market index (RTS, in RUB, at the end of the period) 2.291 632 1.445 1.770 1.382 1.527

Capitalization of Russian stock market, USD Bn 1 463 370 751 942 770 794

Income, Poverty, and Labour Market

Real disposable income, change (%),year-on-year 12.1 2.4 3.0 5.9 0.5 4.4

Average wages in USD 531.4 695.8 587.0 689.9 795.1 856.5

Unemployment rate, % 6.0 6.2 8.3 7.3 6.5 5.5

Key Macroeconomic Indicators (Continued)

Source: Federal State Statistics Service, Central Bank of the Russian Federation, NAUFOR, Federal Customs Service.

1 Average weighted rate for RUB loans to non-fi nancial institutions up to 1 year.

7Russia and ROW Comparison

Russias global ranking in production of select industrial and agricultural products

Oil Production 2012mbpd

Gas Production 2012bcm

Coal Production 2012MM tons

Global Leader in Metal Reserves % of total global reserves

11.5 10.6 8.9

4.2 3.7 3.7 3.4 3.1 3.1 2.9

Saudi Arabia RussianFederation

US China Canada Iran United ArabEmirates

Kuwait Iraq Mexico

681 592

161 157 157 115 107 103 82 71

US RussianFederation

Iran Qatar Canada Norway China Saudi Arabia Algeria Indonesia

3,650

922 606 431 386 355 260 196 144 116

China US India AustraliaFederation

Indonesia Russian South Africa Germany Poland Kazakhstan

15%

2%

10%8%

4%

Iron ore PGM Gold Nickel Copper

3 2 4 4 7Russias ranking

Source: BP Statistical Review of World Energy June 2013



Source: US Geological Survey, 2013

One of the leading countries in crude oil and gas production

8Russia and ROW Comparison (Continued)

Wheat 2012MM tons

Centrifugal Sugar 2012MM tons

Milk 2012 MM tons

Poultry, Meat, Broiler 2012 MM tons

137.2117.4

86.956.2 54.4

29.9 25.3 25.0 22.7 22.3

EU-27 China India Russia USA Australia Canada Pakistan Kazakhstan Ukraine

37.525.6

16.414.6 9.9 8.0 6.0 4.9 4.7 4.3

Brazil India EU-27 China Thailand USA Mexico Russia Pakistan Australia

140.090.6

55.5 32.5 32.2 31.5 20.3 11.8 11.2 10.9

EU-27 United States India China Russia Brazil New Zealand Argentina Mexico Ukraine

13.7 12.89.5

3.2 2.9 2.8 1.9 1.7 1.6 1.5

China Brazil EU-27 India Mexico Russia Argentina Turkey Indonesia Thailand

Source: FAO (Food and Agriculture Organization of the United Nations)

Source: USDA

Source: USDA

Source: USDA

9Russian Exports

Goods Export Structure $524.9 Bn Volume in 2012

Source: Federal Customs Service

Exports of Goods By Direction of Trade


Crude Oil;34.5%

Petroleum Products;19.8%

Natural Gas;11.9%

Metals;8.4%

Other;15.8%

Fertilizers;2.1%

Machinery, Equipment &

Transport; 5.0%

Coal;2.5%

Othercountries;

55.2%

Netherlands;14.6%

China;6.8%

Germany;6.8%

Italy;6.2%

Ukraine;5.2% Turkey;

5.2%

10

Russian Imports

Structure of Imported Goods $316.7 Bn Volume in 2012


Imports of Goods By Origin of Trade


Machinery,Equipment &

Transport;50.0%

Other;21.1%

Clothing and footwear;

5.7%

Medicines;3.4%

Metals and steel;7.0%

Food products and agricultural raw

materials;12.8%

Othercountries;

51.1%

France; 4.4%

Japan; 5.0%

Ukraine; 5.7%

China 16.6%

Germany; 12.2%

USA; 4.9%

11

Employment and Education

Total Men Women

Employed total 100 100 100

Including people aged, years:

Less than 20 0.7 0.9 0.5

2024 8.3 9.2 7.5

2529 14.3 15.1 13.4

3034 13.3 13.6 12.9

3539 12.7 12.5 12.9

4044 11.6 11.2 12.1

4549 12.3 11.5 13.1

5054 13.4 12.3 14.5

5559 8.8 9.0 8.5

6072 4.6 4.6 4.6

Average age of employed population, years 40.1 39.6 40.6

Source: Federal State Statistics Service

Distribution of Employed Population by Education in 20121


1 According to a random poll of the population on employment issues.

Distribution of Employed Population by Age in 20121

Total Men Women

Higher professional educationSecondary education

Secondary professional educationPrimary education

Primary professional educationNo education

30.8%21.1%

33.5%

14.6%

25.9% 17.7%

3.1%5.0%

23.4%

24.3%

29.6%

4.1%

20.6%

19.5%

25.8%

0.3% 0.4% 0.2%

12

Economically Active Population

As percent of the total1

2000 2005 2006 2007 2008 2009 2010 2011 2012

Economically Active Population total 100 100 100 100 100 100 100 100 100

Including:

Employed 89.4 92.8 92.8 93.9 93.7 91.6 92.5 93.5 94.5

Unemployed 10.6 7.2 7.2 6.1 6.3 8.4 7.5 6.5 5.5

Men 100 100 100 100 100 100 100 100 100

Including:

Employed 89.2 92.7 92.5 93.6 93.4 91.0 92.0 93.1 94.2

Unemployed 10.8 7.3 7.5 6.4 6.6 9.0 8.0 6.9 5.8

Women 100 100 100 100 100 100 100 100 100

Including:

Employed 89.6 93.0 93.2 94.2 93.9 92.2 93.1 94.0 94.9

Unemployed 10.4 7.0 6.8 5.8 6.1 7.8 6.9 6.0 5.1


1 According to the data obtained from a random poll of the population on employment issues: 1992, 1995 as of the end of October; 20002008 as of the end of November; 20092011 average annual rate. Starting from 2006 data includes the Chechen Republic.

13

Eurasian Customs Union A Large Addressable Market

Population 2012 (in millions)

Nominal GDP 2012 ($ in billions)

Retail Market 2012($ in billions)

61240 21

673

-200400600800

Russia Kazakhstan Belarus Total

Source: Global Insight

Source: Global Insight

Source: Planet Retail

14316 10

169

-50

100150200


1,968204 50

2,221

-500

1,0001,5002,0002,500


14

Level of Education: gross enrolment ratio OECD Countries1 %

Human Capital

Highly educated labour force.

One of the 7 leading countries by the number of Nobel Prize winners, most prizes awarded for achievements in the fi eld of physics.

High level of basic education.

Signifi cant scientifi c research and technical resources base.

Substantial human capital supporting favourable opportunities for innovative growth.

Literacy Rate (% of population aged 15+) OECD Countries %

Source: World Bank, 2011

Source: Euromonitor, 2012

1 Gross enrolment ratio is the total enrollment in primary education, regardless of age, expressed as a percentage of the population of offi cial primary education age. GER is higher than the net enrolment ratio and can exceed 100% due to the inclu-sion of over-aged and under-aged students because of early or late school entrance and grade repetition.

120%

90%

60%

30%

0%Russia FranceGermany Japan UK USA OECD

average

Primary Secondary Tretiary (gross)

99%89%

76%

110% 113%102%103%

NA

103%107%

102% 105%102% 105%96% 95%

98%

57% 60% 60%67%

Russia USAUKJapan Germany France OECD average

99.6%99.9%100.0% 100.0% 99.9% 99.9%

98.9%

15

Infrastructure Investment USD Bn

Project Name SectorProject Budget,USD Bn

Short Description

North Stream O&G midstream 9.6 Two line 1,224 km 55 bcma pipelines from Russia (Vyborg) to Germany (Greifswald)

Sakhalin-Khabarovsk-Vladivostok pipeline

O&G midstream 10.0 Construction of 1,800 km Sakhalin Khabarovsk Vladivostok gas transmission system

BPS-2 O&G midstream 3.2 Construction of 1,000 km pipeline from Unechka on Belarus border to Ust Luga Port near St. Petersburg

Infrastructure Investment


Project Name SectorProject Budget, USD Bn

Short Description

Bovanenko O&G E&P 15.0 Construction of 572 km railway Obskaya-Bovanenko (almost complete) and 2400 km gas pipeline Bovanenko-Ukhta, Ukhta-Torzhok.

Moscow-St. Petersburg toll road

Roads 18.9 626 km 4-8 lane Moscow-St. Petersburg highway, of which the fi rst 43 Peters-burg toll road West km has been contracted.

Boguchansk Hydro Power and Aluminium Plant

Energy 5.8 The Boguchansk Dam in the middle of Siberia on the Angara River is one of the largest. Planned capacity is 3000 Mv. Length exceeds 2.5 km, artifi cial lake will cover 2,326 km.

Development of Sochi Region (Sochi 2014)

Transport 31.7 Besides sport venues and the construction of supporting facilities, development of the Sochi area will also include construction of a gas pipeline, the creation of area transport infrastructure (widening of existing rail road, construction of roads on the shore and in the mountains). More than half of the funds come from the private sector.

Ust-Luga Port Water transport 8.1 Harbour deepening, construction of quays, rail connections, and road connections from Novgorod. It is one of the largest infrastructure projects in Russia. Construction is planned to be completed in 2013.

Russian infrastructure investment as a percentage of GDP has grown by over 3.5 % of GDP over the last decade, and by about ten times in terms of US dollars, amounting to 7.2% of GDP ($145 Bn) in 2012.

The Russian government seeks to increase the role of the private sector in building, operating, and fi nancing infrastructure projects.

Source: Broker reports

Source: Broker reports

In Progress

Completed

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

8%

6%

4%

2%

0%

150

100

50

0

Infrastructure investment, % of GDP Infrastructure investment, Bn USD

16

Russia Investment Priorities

Diversifi cation of Economy Development Priority

Share of mineral resources sector in GDP and in export is still fairly high; however, specifi c measures are being taken in order to diversify the Russian economy, this should have a positive effect on Russias global competitiveness

2012 GDP Breakdown


Key areas of diversifi cation identifi ed by the Russian President:

Energy effi ciency;

Nuclear technologies;

IT and software;

Space technologies and telecommunications;

Medical technologies and pharmaceuticals. The goal is to modernize and to diversify the economy

Manufacturing12.9%

Electricity, gas and water production and supply

2.9%Construction5.5%

Wholesale and retail trade, repair of motor vehicles, motorcycles and personal

and household goods16.8%

Agriculture, hunting, forestry, fi shing and fi sh farms

3.1%

Net taxes on goods14.9%

Other4.9%

Public health and social work3.3%

Public administration and defence, compulsory

social security5.6%

Real estate, renting and service rendering

10.0%

Transport and communications

6.9%

Mining and quarrying9.3%

Financial activity3.7%

17

Priorities in Modernization of Russias Economy

Main Objectives

Reduce Russias energy intensity to GDP ratio by 40% through energy saving, improving energy efficiency and eliminating regulatory gaps by 2020

Energy Efficiency

Energy Intensity of GDP in 2012USD per Rg of oil equivalent1

Source: Enerdata

1 In 2005 prices

0.490.46

0.380.33 0.32 0.31 0.29 0.26 0.26 0.25

Uzbekistan Ukraine Kazakhstan Russia Nigeria SaudiArabia

SouthAfrica

Iran Kuwait China

18

Number of Blast-offs 2012

Main Objectives

Space Technologies and Telecommunications

Increase the efficiency and quality of information services Develop a modern information infrastructure in all sectors

of the national economy

Priorities in Modernization of Russias Economy (Continued)

Russia plays a leading role in space exploration

23

19

13

10

2 211

0Russia China USA Europe India Japan South Korea Iran

19

Main Objectives

Medical Technologies and Pharmaceuticals

Production of most medications and medical equipment in RussiaDevelopment and production of innovative medical products, expansion of Russian manufacturers into new markets


One of the fastest- growing health markets

While Russias healthcare spending is still low, funding has been increasing at a fast pace

Total HC Spending per Capita 2012($ per capita)

Source: Euromonitor

Total HC Spending per Capita, Growth CAGR 200012(%)

58

241

256

425

565

763

1 034

1 078

3 023

3 161

3 551

4 097

4 531

8 483

0 5 000 10 000

India

Ukraine

China

Kazakhstan

Russia

Brazil

Lithuania

Turkey

Spain

Italy

United Kingdom

France

Germany

USA

3.4%

4.2%

4.8%

5.1%

5.9%

6.4%

7.9%

9.4%

11.1%

12.9%

15.8%

16.2%

18.5%

19.9%

0% 10% 20% 30%

Italy

France

Germany

USA

Turkey

United Kingdom

Spain

India

Brazil

Lithuania

China

Russia

Ukraine

Kazakhstan

20

27% 29%

43%

49%53%

202530354045505560

2008 2009 2010 2011 2012


Develop a high-performance, application-oriented computing systems

Improve the efficiency and quality of information services Develop a modern social and industrial information

infrastructure

Information Technologies and Software

Main Objectives

By international standards, current Russian IT spending is low, but growing fast

IT Spending% of GDP, 2012

Source: Gartner, Global Insight, IDC

IT SpendingUSD Bn, 20102015

2545

9

45

9

19

1611

26

43

0

17

34

51

2010 12 2015Hardware SoftwareServices

17.4

18.1

19.0

CAGR %

World Market Growthin 201015: 6%

18% p.a.

Percentage of individuals with Internet access

Source: International Telecommunication Union

20122015: 6%

0% 5%

Japan

Sweden

Russia

Finland

Denmark

France

Germany

United States

United Kingdom

6.3%6.3%

6.0%

7.6%

7.5%

7.4%

5.5%

5.2%

10%

4.5%

21


Ensure overall and consistent development of the national nuclear power potential

Guarantee long-term supply of cheap energy Maintain Russias leadership on the global nuclear market Substantially reduce uranium consumption Mitigate environmental impact and nuclear proliferation risk

Nuclear Technologies

Main Objectives

The Safest Nuclear Technology

2

1 3

4

Containment is a double leak-proof envelope that protects the reactor from outside impacts, both natural and technogenic

A fourphysical barrier defence-in-depth system that prevents the potential release of radioactive emissions outside the power unit

A safer two-loop steam cycle of the reactor that precludes the potential release of radioactive substance outside of the reactor hall

There are passive and active (power supply-dependent) safety systems in place at all the reactors, which, in combination, ensure the highest level of safety in all contingencies

22

Incentives for Investment Projects

Russian Direct Investment Fund (RDIF)The RDIF is a $10 billion fund established by the Russian government to make equity investments primarily in the Russian economy.

In all of its investments, the fund is mandated to co-invest alongside some of the largest and most sophisticated global investors, acting as a catalyst for direct investments in Russia.

RDIF invests between $50 and $500 million in equity per project. The fund targets company ownership of less than 50%.

RDIF has invested $3.6 billion into leading Russian companies, of which over $850 million were invested by RDIF and more than $2.8 billion came from international co-investors.

RDIF has also attracted over $10 billion of foreign capital into the Russian economy through long-term strategic partnerships: RDIF and Abu-Dhabis Department of Finance announced the creation of the partnership for

investing in Russian infrastructure projects and developing cross-border investment cooperation between Russia and UAE. Abu-Dhabis Department of Finance will contribute up to $5 billion.

RDIF and China Investment Corporation created a $2 billion Russia-China Investment Fund. An additional $1-2 billion is expected to be raised from Chinese and international investors.

RDIF and Mubadala Development Company agreed to launch a $2 billion co-investment fund to pursue opportunities in Russia. The fund will focus on long-term investment projects in a number of industries.

RDIF launched an automatic co-investment mechanism, with the fi rst $500 million from Kuwait Investment Authority. This vehicle allows international investors to automatically participate in every RDIF transaction on a pro-rata basis.

RDIF, Vnesheconombank (VEB) and the Japan Bank for International Cooperation (JBIC) have signed an MoU creating the Russian-Japanese Investment Platform. RDIF and JBIC will each invest $500 million. VEB will potentially provide fi nancing to fund projects to support the platform.

RDIF and Caisse des Dpts International (CDC International) have launched the Russia-France Investment Fund (RFIF). RFIF will seek attractive investments across a broad range of sectors and asset classes in Russia and France.

RDIF and the Korea Investment Corporation (KIC) have signed a memorandum to form the Russian-Korean Investment Platform. The investment platform will focus on cross-border investments, which fulfi ll Russian- Korean strategic interests.

RDIF and Fondo Strategico Italiano (FSI) agreed to establish a 1 billion Russian-Italian investment platform.

Additionally, RDIF has established partnerships with State Bank of India and Germanys Committee on Eastern European Economic Relations (CEEER).

Kirill DmitrievCEO of RDIF

23

RDIF (Continued)

Export Insurance Agency of Russia (EXIAR)

EXIAR is the national export credit agency of Russia. EXIAR mandate is to support Russian export and investment abroad. EXIAR covers short-, medium- and long-term risks. The charter capital makes up USD 1 billion. The Board of Directors consists of senior executives of the Russian Government and independent directors. The Agencys activities are backed by the Russian Federation in line with the budget legislation.

Major Facilities: Export Credit Insurance

Investment InsurancePeter Fradkov

Chairman of the Management Board & CEO

Transactions since inception: RDIF acted as the anchor investor in the IPO of the Moscow Exchange and attracted leading

international co-investors from the US and China. In addition, prior to the IPO RDIF brought a number of co-investors to the Exchange including the China Investment Corporation (CIC), BlackRock, the European Bank of Reconstruction and Development (EBRD), and Cartesian Capital.

Consortium of RDIF, Baring Vostok Capital Partners and UFG together with media entrepreneur Paul Heth acquired a controlling stake in Karo Film.

RDIF invested in the IPO of the MD Medical Group (MDMG) - No 1 private network of prenatal clinics bringing BlackRock, Russia Partners and other qualifi ed institutions as co-investors.

Consortium of RDIF, Macquarie Renaissance Infrastructure Fund (MRIF), AGC Equity Partners and Xenon Capital Partners acquired a blocking stake in Enel OGK-5, one of the leading power generating companies in Russia.

First investment of the Russia-China Investment Fund was in Russian Forest Products, the second largest Russian forestry company.

RDIF and General Electric (GE) signed an agreement to jointly invest $100 million in construction of power co-generation systems (up to 25 MW) to meet the growing energy demand of the Russian regions.

A consortium comprised of RDIF, One Equity Partners, and Titan International Inc. agreed to jointly invest in Voltyre-Prom, the largest producer of agricultural and industrial tyres in Russia & CIS.

RDIF led the consortium of investors including the European Bank for Reconstruction and Development (EBRD) and CapMan. The consortium invested $100 million in growth of MAYKOR, the leading player in the Russian IT servicing and outsourcing market.

RDIF and Baring Vostok Private Equity Fund V announced a joint investment Tigers Realm Coal Limited (TIG), an Australian listed company with coking coal assets in the Chukotka province in Russias Far East. The funds will be used by TIG to further develop and continue exploration of deposits in Chukotka.

RDIF and Deutsche Bank made a joint investment in one of Russias largest telecommunications company Rostelecom, which will be used to develop and strengthen the companys market position.

RDIF has attracted a number of leading foreign investors from North America, Middle East, Western and Northern Europe and Southeast Asia into a consortium to invest in the IPO of ALROSA, the worlds largest diamond producer.

24

Russian Inwards FDI Structure

By Country of Origin

6 2013

Source: Central Bank of the Russian Federation

By Sector

6 2013


Netherlands; 5.3%

UK; 28.2%

Cyprus;16.2%

Ireland;14.3%

Rest of the world; 12.4%

British Virgin Islands;10.5%

Luxembourg; 13.1%

Trade;18.7%

Funancial and insurance activities;

15.3%

Other;5.3%

Information and communication;

2.6%

Construction;4.4%

Mining and quarrying;17.6%

Manufacturing; 36.1%

25

Russian Outwards FDI Structure

By Recipient Country

6 2013


Cyprus;4.0%

Saint Kitts and Nevis;2.1%

Spain;0.8%

Rest of world;9.9%

Germany;1.0%Denmark;

1.2%

British Virgin Islands;81.1%

26

Capital Infl ow into Russia

Cumulative Stock of Inward FDIUSD Bn


No restrictions on free movement of capital in Russia

The only limitation is investment in strategic companies which have special importance for national security and economic stability

In comparison, there are restrictions on direct foreign investments in China and India, and Brazil is planning to limit the free movement of capital

Unlike China and India, in Russia there are no foreign currency limitations

There is a regime of a managed fl oating RUB exchange rate, with the rate largely determined by the market and the CBR only intervening to reduce volatility

In comparison, there are foreign currency limitations in China and India

Foreign direct investments over the last 10 years amounted to US $382 Bn

US $50.6 Bn in 2012

VIRTUALLY no restrictions on free movement of capital

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

8 2336 66

121

196232

275

331

382

0

100

150

200

250

300

350

400

50

27

Top Russian Inbound M&A Deals

20112012 YTD

Date Target Acquirer Value, USD Bn % Acquired

Sep-13 2.0 12.5

Dec-12 1.2 24.5

Dec-12 4.8 5.66

Nov-12

1.4 49

Jun-12 1.6 100

May-12 1.15 15.28

Apr-12 AF Telecom Holding 1.45 26.1

Apr-12

AF Telecom Holding

3.7 25.1

Mar-12 1.2 100

Jan-12 1.1 100

Aug-11 1.2 43.1

Apr-11 4.0 12.1

Feb-11 1.4 23.0

Source: MergerMarket, S&P Capital IQ, DealWatch, Bloomberg

28

Date Issuer Value, USD MM

Oct-13 1,180

Oct-13 1,087

Jun-13 70

May-13

213

Jan-13 500

Nov-12

1,700

Oct-12 270

Sep-12 1 5,200

Jan-12

250

Jul-11 565

Jun-11 588

May-11 1,435

Apr-11 375

Apr-11 782

Apr-11 575

Feb-11 360

Source: Dealogic

Recent Russian IPOs

29

Case Study Pharmaceutical Industry

The Russian pharmaceuticals market in 2012 reached a value of US$ 29.6bn (including VAT) in consumer prices

Russian market is among the ten largest pharmaceutical markets in the world (7th place in 2012)

Novartis is the leading drug manufacturer, generating a 6.1% share of the markets value

The Russian pharmaceutical market is characterized by fairly strong buyer power, with the ease of market entry strongly affected by legal and regulatory frameworks

TOP-3 drug manufacturers in RussiaUSD MM

Source: DSM Group research

Pharmstandard

Sanofi

Novartis

319

478

470

4.3%

5.4%

6.1%

570

703

797

12

8

11

2007 2012 CAGR, % Market share, 2012

30

Share of Own Funds in Banking System %

Russian Banking System

As of 1 December 2013, total assets of the Russian banking system amounted to approximately $1 722 Bn

Relatively low deposit activity in banking among BRIC countries 45% in Russia vs. 77% in China

Share of deposits in liabilities %

78% 77%69%

0255075

100

India China Russia

Sources: CBR, National Reserve Bank of India, Central Bank of China

13% 9%8% 6%

05

101520

Russia Brazil India China

Sources: CBR, The World Bank, National Reserve Bank of India, Central Bank of China

Relatively Low Competition Average Number of Branches of One Bank

477

1082,3

0

250

500

India Brazil Russia

Sources: CBR, National Reserve Bank of India, Government of Brazil

117 Russian banks are controlled by non-resident entities, representing around 18% of all banking assets

The scope of anti-crisis measures taken by the Bank of Russia in 20082009 has been estimated at 14% of the total banking assets

THE HIGHEST share of own funds in the banking system among BRIC countries

31

Taxes in Different Countries

Income Tax2

Country Corporate Income TaxPersonal Income

Tax VAT

China 25 % 3 45 % (progressive) 17 %

Brazil 25 % 7.5 27.5% (progressive) 20 %

India 30 % 7.5 30 % (progressive) 12.5 %

South Africa 28 % up to 40 % (progressive) 14 %

Russia 20 % 13 % 18 %

Taxes in Different Countries in 2013, as % of GDP3

Belarus 25.6 % Italy 43.0 %

Brazil 32.5 % Japan 28.8 %

Canada 31.0 % Kazakhstan 13.4 %

China 18.2 % South Africa 23.8 %

France 42.9 % South Korea 25.1 %

Germany 36.3 % United Kingdom 34.3 %

India 7.4 % USA 24.8 %

Russia 27.2 %

Russia has the most liberal and favourable tax regime among all other BRIC countries:

Lowest corporate income tax 20%

Personal income tax of 13%, regardless of income size

Opportunity to have a one-time write-off of 30% of depreciation costs for tax purposes

Zero profi t tax for educational and health care institutions

No capital gain tax in case of long-term direct investments

Cut in social contributions (payroll tax) from 34% to 30% from January 1, 2012

LOW corporate and personal taxes

1 Source: The Heritage Foundation 2013 Index of Economic Freedom.2 Source: Deloitte Global Services Limited3 Source: The Heritage Foundation 2013 Index of Economic Freedom.

Taxes in Russia vs. Other BRICS Countries, as % of GDP (2013)1

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RUSSIA - Facts and Figures - January 2014

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