NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 THE RUSSIAN MARKET FOR ROOFING AND WATERPROOFING MATERIALS: WHAT LIES AHEAD?

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 2 AGENDA 1.A Crisis and the main Russias macroeconomic indicators 2.The current state and trends of the Russias construction market 3.The review of the Russias waterproofing materials market: productionproduction changes in consumer and producer priceschanges in consumer and producer prices exports and importsexports and imports market sizemarket size single ply polymer membranes marketsingle ply polymer membranes market 4.The forecast of market development for the period until 2013

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 3 Development of Russias GPD vs. crude oil price Former President Putin, 17/06/2010: Russia begins to come out of a recession GDP: + 4,0…4,4% (-7,9% in 2009) industrial production index: +2,5% (-10,8%) inflation rate: +7…8% (+8,8%) permanent investment: +2,5% (-16,2%) index of real wages: +3,6% (-2,9%) Weaknesses of Russias economy: overdependence on commodity production and exports low labor productivity poor infrastructure excessive regulation of businesses corruption weak rule of law

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 4 Permanent investment Industry production index Percentage change compared to the previous year, work.day adj. (sources: Eurostat, Rosstat)

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 5 TOTAL CONSTRUCTION OUTPUT Percentage change compared to the previous year, work.day adj. (sources: Rosstat, Eurostat, Euroconstract, FMI Corp.) Percentage change compared with the same quarter of the previous year, work.day adj. (sources: Rosstat, Eurostat)

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 6 CONSTRUCTION MATERIALS – TOTAL: production index PRICE INDEX CONSTRUCTION MATERIALS: PRODUCTION and PRICES Percentage change compared with the same month of the previous year, 2005=100%, work. day adj., (sources: Rosstat, Eurostat) Changes of end-of-period index, 2005=100%, versus prior period, producer price (source: Rosstat)

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 7 ROOFING AND WATERPROOFING MATERIALS: PRODUCTION ANNUAL OUTPUT Percentage change compared to the previous year, exclud. underlayment felts (sources: Rosstat, Russian Union of Industrialists and Entrepreneurs, NTCGidrol-Krovlja) QUARTERLY OUTPUT Percentage change compared with the same quarter of the previous year, exclud. underlayment felts (source: Rosstat) In 2009: output of waterproofing materials declined dramatically by about 20% the number of enterprises decreased by a third capacity utilization rate fell by 17% AVERAGE PERCENT UTILIZATION OF CAPACITY

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 8 ROOFING AND WATERPROOFING MATERIALS: PRICES PRODUCER PRICE INDEX for the different price brackets PRODUCER and CONSUMER PRICES INDEX Percentage changes of end-of-period index and growth compared with prior year, 2005=100%, (source: Rosstat) Percentage changes of end-of-period index, June 2009=100%, (source: Rosstat)

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 9 EXPORTS In 2009: export volume amounted to 58,6 mln.sq.m compared with 2007, it declined by almost 20% the materials were mainly exported to the former Soviet republics (67% of exports) Share of exports,% (source: Rosstat)

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 10 IMPORTS In 2009: imports total amounted to 4,9 mln sq.m (1,2% of domestic consumption) compared with 2007, imports declined by 40% share of single ply membranes in imports exceeded 75% the main supplier of bituminous materials was Finland, polymer materials – Germany and Switzerland

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 11 in mln. sq.m production exports 57,165,273,269,058,6 imports 11,18,612,011,34,9 apparent domestic consumption CHANGE OF MARKET FOR ROLL ROOFING AND WATERPROOFING MATERIALS in RUSSIA in (excl. underlayment films) MARKET SIZE CHANGE OF APPARENT DOMESTIC CONSUMPTION CHANGE IN PRICE BRACKETS STRUCTURE Shares of the different price brackets (in production; exclud. underlayment felts & organic felts for BUR) Percentage change compared to the previous year (exclud. underlayment felts)

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 12 SINGLE PLY POLYMER MEMBRANES MARKET DOMESTIC CONSUMPTION DOMESTIC PRODUCTION (mln.sq.m) and SHARE OF IMPORTS (%) CONSUMPTION OF MATERIALS BY POLYMER TYPES (2009)

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 CORRECTED FORECAST The Russian market for roofing and waterproofing materials: what lies ahead? 13 Growth, % YoY Annual average oil "Urals" price, USD/barr. 61, GDP growth 92, ,4 (104,2) 103,5 (103,9) 104,2 (104,5) Industry production 89,2 102,7 (107,6) 103,2 (103,9) 103,1 (103,8) 104,2 (104,9) Capital invesments 83,8 102,9 (102,5) 108,8 (110,1) 106,3 (103,5) 108,1 (107,4) Real wages97,2103,6102,5102,4103,1 GOVERNMENTS SCENARIO FOR THE RUSSIAN ECONOMY DEVELOPMENT FOR (Ministry of economy development, June 2010) PRODUCTION AND COMPSUNTION OF WATERPROOFING MATERIALS (in mln.sq.m) INITIAL FORECAST The values in parentheses are the corrected forecast made in September, 2010

NTC Gidrol-Krovlja ©, Moscow, Russia, 2008 The Russian market for roofing and waterproofing materials: what lies ahead? 14 Thank you for the attention