KazBuild and Aqua-Therm Almaty

KazBuild and Aqua-Therm Almaty
Strategic Review 5-8 September 2016 Almaty, Atakent IEC

5 - 8 September 2016 Almaty, Atakent IEC, Kazakhstan
23d International Construction and Interiors Exhibition 5 - 8 September 2016 Almaty, Atakent IEC, Kazakhstan 9th International Exhibition for domestic and industrial heating, water supply, sanitary, air-conditioning, ventilation, equipment for pools, saunas and SPA

Event Performance overview – KazBuild and Aqua-Therm Almaty dashboard
Commercial performance Average stand size, m2 Common data of KazBuild and Aqua-Therm Almaty are used in this analysis because sometimes the figures are only common Decrease in 2015 sales was due to poor visitors promotion of exhibition in 2014, i.e. the rebook expectations was bigger. The increase of number of exhibitors is due to new companies. In August, 2015 there was devaluation of tenge that reflected on buyers potential and might reflect on visitors quantity in 2015.

Financial performance CAGR = 4,92% CAGR = 4,07% CAGR = 4,58% Income structure Int / Nat: 2012 – 45% / 55% 2013 – 54% / 46% 2014 – 56% / 44% 2015 – 58% / 42% CAGR = -3,3%

Core Sector Overview - 4 year M2 performance CAGR = 12,4% CAGR =3,28% CAGR = 1,69% CAGR = 55,65% CAGR = 27,8% In 2014 from Fenestration sector facades and gates sections were moved to Building materials and Equipment sector and exterior doors section was totally removed to Interiors sector. In total 8 companies, sqm in 2014 and 16 companies, sqm in 2015. In 2014 dry mixes from Building materials and Equipment sector were moved to Interiors and finishing materials sector. In total 16 companies, 216 sqm in 2014 and 13 companies, sqm in 2015.

Core Sector Overview - 4 year number of companies performance CAGR = 3,99% CAGR = 12,09% CAGR = 5,57% CAGR =32,38% CAGR = 41,42% In Building materials and equipment section predominantly increase the number of exhibitors representing equipment. In Interiors and finishing materials section predominantly increased the number of exhibitors presenting doors and lighting. In Ceramics and stone section predominantly increased the number of exhibitors presenting finishing stone. On the same time Ceramics and stone companies prefer to be located in Interiors section pavilion as they mostly present finishing materials not building ceramics or building stone. In 2015 the number of exhibitors increased in spite of decrease of square meters because there were more sub-exhibitors.

Visitor & Exhibitor Satisfaction (very and fairly satisfied) Visitor Satisfaction 2015: KazBuild – 60% Aqua-Therm Almaty – 66% Visitor NPS of 2015: KazBuild - 14% Aqua-Therm Almaty - 7% Exhibitor NPS of 2015: KazBuild - – 33% Aqua-Therm Almaty - – 36% Interviewed number of visitors in 2015: KazBuild (CI = 95%) (Only Explori results are used) Aqua-Therm Almaty (Explori results) 110 (Onsite survey) Total: 237 (CI = 94%) Interviewed number of exhibitors in 2015: KazBuild - 57 (Explori results) 174 (Onsite survey) Total: 231 (CI = 95%) Aqua-Therm Almaty - 41 (Explori results) 58 (Onsite survey) Total: 99 (CI = 92,6%) Exhibitor Satisfaction 2015: KazBuild – 42% Aqua-Therm Almaty – 43% Visitor recommendation score 2015 (“Promoters” share): KazBuild – 44% Aqua-Therm Almaty – 37% Exhibitor recommendation score 2015 (“Promoters” share): KazBuild – 16% Aqua-Therm Almaty – 22% Visitor likelihood to attend * (definitely and probably come) Exhibitor likelihood to attend * (already booked, definitely and probably will) * common data of KazBuild and Aqua-Therm Almaty

Event Performance overview – KazBuild and Aqua-Therm Almaty
QUOTES FROM EXHIBITORS ABOUT NPS (event recommendation score): KazBuild 2015: Dmitry Tin, Director, “Test instruments” LLP (Passive - score point 7) “There are no colleagues, only competitors” Andrey Fadeev, Advertising Manager, “Story Ceramica Service” LLC (Critic - score point 1) “We don’t need competitors” Malika Tampieva, Head of Sales Department, “KazInterPlast Co. ltd” LLP (Critic - score point 6) “Lack of colleagues in the branch” Aqua-Therm Almaty 2015: Anastasia Maikova, Administrator, “Rosa” LLC (Critic - score point: 5) “Currently, there is no clear certainty in assessing the outcome of the exhibition. We are negotiating with new partners” Andrey Leshyov, Senior Manager , “Ostendorf Rus” LLC (Critic - score point: 5) “We will recommend the exhibition according to the goals and objectives of colleagues and acquaintances” Sergey Matukhin, Marketing Manager, “Vertro” LLC (Passive - score point: 7) “Good exhibition. Can be recommended” Commentary: The largest share of exhibitors marked the low scores in scale because: they do not want to see competitors; they do not understand the issue. In spite of a lot of exhibitors liked the event, marked scores of 7-8 "Passive“. A small proportion of exhibitors did not like the show. The share of surveyed exhibitors is small.

Exhibitor Status* (Satisfaction vs. Loyalty) * Explori and Onsite surveys are used. KazBuild 2015 Aqua-Therm Almaty 2015 To produce this slide, show team need to collect satisfaction and loyalty measurements from post show survey to Exhibitors. If these data are not yet available they must be planned for the next edition and then added in the strategic report 2015 Loyalist 61% Mercenary 4% Hostage 12% Defector 15% Commentary: Most of Loyalists are exhibited in “Building materials and equipment” section “Terrorists” noted that this show is not their business field. Largest share of “Terrorists” are foreign exhibitors which exhibited in different sectors. Number of interviewed exhibitors: 223 2015 Loyalist 63% Mercenary 2% Hostage 19% Defector 9% Commentary: Most of Loyalists are presented in “Pumps and Water Supply” and “Heating” All “Terrorists” noted that this show is not their business field. Number of interviewed exhibitors: 99 SATISFACTION SATISFACTION Apostle 3% Apostle 2% Terrorist 5% Terrorist 6%

Visitors Status* (Satisfaction vs. Loyalty) * Only Explori results are used. KazBuild 2015 Aqua-Therm Almaty 2015 To produce this slide, show team need to collect satisfaction and loyalty measurements from post show survey to Visitors. If these data are not yet available they must be planned for the next edition and then added in the strategic report 2015 2015 Loyalist 64% Mercenary 0% Hostage 11% Defector 1% Commentary: Largest share of visitors are Loyalists (64%) and Apostles (23%), which are very satisfied and will definitely visit event next year. Number of interviewed visitors: 365 CI is 95% 2015 Loyalist 75% Mercenary 3% Hostage 8% Defector 1% Commentary: Largest share of visitors are Loyalists (75%) and Apostles (13%), which are very satisfied and will definitely visit event next year. Number of interviewed visitors: 127 CI is 91.3% SATISFACTION SATISFACTION Apostle 23% Apostle 13% Terrorist 0% Terrorist 0%

Customer Insight Overview - Summary evaluation of qualitative customer insight Key Issues and Needs Commentary Few visitors The latest devaluation of local currency held in August 2015 affected the buyers and there decision to visit exhibition and led to decreasing the number of visitors. Purchasing power was also decreased due to devaluation. High price of participation High price has led to decreasing the stand size of local companies. 36 companies (6%) of KazBuild and 7 companies (4%) of Aqua-Therm Almaty mentioned that high price may influence on their future participation. Devaluation happened in Russia in December, 2014 also influenced on Russia’s companies participation at KazBuild and Aqua-Therm Almaty. The participation for them became more expensive in almost twofold. Poor condition of exhibition center Many exhibitors complain on bad condition of venue (toilet rooms in the exhibition center that does not have locks on doors, towels, soap, ventilation and air-condition, leaking roof, not enough lights in pavilions). There had been negotiation with venue owner to solve the problem. Not enough street and mass advertising of the exhibition The advertising budget is directed on the targeted visitors. Because the exhibition is needed for B2B sector there is no need to use the tools of mass advertisement , which is targeting end-user. Few Kazakhstan producers among exhibitors Kazakhstan producers suffer from devaluation and high competition with Russian and foreign companies. There are only 14 (38%) of Kazakhstan producers from all rebooked companies for 2016. Difficult navigation inside pavilions It was not easy to find companies with certain products. It is planned to distribute spaces in pavilions according to products exhibitors present and also use more info desks and info kiosks. Sections of paints, dry mixes, tools and repair organizations are not well represented at KazBuld. Climate control equipment and industry ventilation not well represented at Aqua-Therm Almaty. Also it is planned to pay additional attention, development and promotion of these sections. Demonstration area at KazBuild was established in 2015 and there was an interest from painting , dry mixes and tools presenting companies to participate next exhibition. It is planned to attract more companies with Climate control equipment and industry ventilation to participate not only with stand but also at Practical Area special project, where visitors may obviously test the equipment. Exhibitor Visitor

QUOTES FROM EXHIBITORS – APOSTLES (local and CIS companies): Nodir Badalov, Director, NEOLIT company (Uzbekistan): I was very impressed. Everything is great. We have already found distributors in Almaty, Astana and Shymkent. People visited out stand and were interested in us, so we got positive feedback. Kazakhstan is ‘the door to Europe’ for us. It was a great exhibition. I'm ready to pay for our stand for next year right now. We are very satisfied. Money ... costs ... it's not the most important thing, what really matters is the results, and we are sure we will see them! Thanks to the organizers! Kamal Kurbanbaev, Director, DECO STONE company (Kazakhstan): I think it's a good exhibition and one of the biggest in Kazakhstan. We spoke to dealers from Kazakhstan, as well as from Russia and Bishkek. Over the 3 days, we have already signed several agreements. It was a very useful exhibition. We will definitely exhibit next year and expand our stand. Marina Plotnikova, Business development manager, DAS ERSTE HAUS company (Kazakhstan): This is our 3rd time exhibiting at KazBuild. It’s a very good exhibition. Everything is great. We have come to this exhibition to expand our customer base and introduce ourselves, as well as learn about new areas for development. The exhibition has met our expectations and there’s been a good turnout of visitors. We will definitely exhibit next year. Anatoliy Mozhaev, Customer service director, Business Inkubator group of companies (Russia): The exhibition is interesting. First of all, it’s international and we have made a lot of foreign contacts. We have already agreed to a meeting on building floors and supplying materials. We are very satisfied with the exhibition. Thanks to the organizers. Pavel Bezgin, Construction Director, NWC (Russia) We are first time exhibiting. We represent a plant producing sewage treatment and transfer equipment. We are also presenting equipment for biologically treating industrial waste. We brought our self-contained units represented by biological treatment facilities. Everything was perfect at the exhibition. We are very satisfied. We hope also that with the help of the organisers we will acquire a number of new acquaintances, customers and, most importantly, friends. We hope for long-term and effective cooperation. Bogush Lyubov, Marketing and Promotion Manager, Alta Group (Russia) In 2015, our company set the aim of entering the Kazakhstan market and has started to systematically move in that direction. Exhibiting our products here is just what we need and the demonstration and educational areas produced excellent results. It is hard to manage participating in the business program and working at the stand, but the format of the Practical Area really helps. Virtually every opportunity and space in the demonstration area was fully exploited. The support provided by the organisers was perfect.

QUOTES FROM EXHIBITORS – APOSTLES (international companies): Kim Jeong Jae, Manager of International Trade, «FEROOF» (Korea): We manufacture metal roofs and participate at KazBuild exhibition for the first time. The exhibition is quite ambitious. We like that we see a lot of companies and competitors. Perhaps we will come next year, because we have distributors in Almaty. Alexander Ebener, Sales, Zenith Maschinenfabrik GmbH (Germany): Thank you for the excellent preparation of the KazBuild. Our staff had a good time during the exhibition and could establish new business relations with interested customers. Our participation was a success and we look forward to the next KazBuild. Jean-Marc Dosquet, Sales manager, Climatech (Belgium): We are well known as a manufacturer for air conditioning accessories. This is our first participation in this exhibition Aqua-Therm Almaty, because we have been requested by some people from very huge job site in Astana. So we brainstormed what possibly we can do in your country. The main reason of our visit is - to have some meetings, which we are dealing with. There is an interest of the visitors and knowledge about the products. Thank you very much! Giuseppe Teofilo, Export Manager, Serramenti F.Lli Teofilo S.R.L. (Itaty): High quality of visitors.

DETRACTORS: Natalya Vasilyeva, Head of "Interior doors“, Company "Eurostyle Global Trade“ There were much more professional visitors at the exhibition in almost all regions were able to come to the exhibition, a lot of designers searching for new interior features, and it was a sufficient number of retail customers who were looking for items to repair their apartments. In 2015 there were much fewer visitors at the exhibition. (According to negotiations with Eurostyle Global Trade they plan to exhibit at KazBuild 2016 if there won’t be deep crisis on construction market) Sergey Shugayev, Head of sales department, “Terra Water Group” It seems that there were not enough wholesalers and representatives of large companies (in our field), mostly we had retail customers and curious people at our stand. Perhaps the reason was that our stand wasn’t that much interesting and attractive for them. We will make conclusions. So for today we don’t’ have any new potential client/partner. I also think that one of the reasons is the absence of our representative in Kazakhstan. Advices from Exhibitors: • More advertisement and street signs for visitors is needed. • Number and quality of visitors need to be increased. • Compared to Germany, extremely high prices for such services as logistics, handling on site, cleaning. • Condition of toilets must be corresponding the international level of exhibition.

QUOTES FROM VISITORS – APOSTLES: Kaldar Auezov, Vice-President, Talan Construction LLP: We are a fast-growing construction company. We are involved in building high-rise residential complexes. KazBuild is a great opportunity to showcase ourselves and to do valuable business. It is a very useful and profitable exhibition. We are still a young company, but it does not prevent us competing with large and long-established companies. Thank you for the exhibition. Evgeniya Uvalieva, Director, Fiammata Company: For me, personally, this is my first visit. Such a large exhibition! I am impressed. Everything is perfectly organized. We found companies and exchanged contact details in every pavilion. I hope we will see some positive results. Tatyana Antonenko, Director, SHYN Company: We have a branch of our company in Shymkent. We are involved in building and installation, manufacturing metal structures, and performing general building and concrete works. Of course, KazBuild presents exactly our company’s field. We are visiting because we are interested in finding out what competitors we have on the market. We are also talking with our old partners as well. It is really useful to have them all in one place. Zhenis Karimov, Director General, Ideal Trade LLP: We love visiting Iteca’s exhibitions. We plan our visit in advance, as we know which companies will be there. We can say “I came, I saw, I closed a deal”. It is really convenient doing this at the exhibition. We also noted the new companies exhibiting. We are grateful to the organizers for the opportunity to develop our company. Larissa Kozlova, leading engineer, Institute of Engineering Design Project City: We visit Aqua-Therm Almaty and KazBuild shows every year. This year the exhibition has increased, more foreign companies took participation in it. There was also a new project – Practical Area. This kind of project is very useful and allowed us to see firsthand a product demonstration. The show is really interesting and meets our business needs. We will come next year for sure. Visitors (detractors): Lack of local producers, dry mixes, painting and window companies were presented at KazBuild 2015. Lack of local producers climate control equipment and industry ventilation were presented Aqua-Therm Almaty 2015. There was no advertisement of exhibition on TV and radio, accidentally found out information in the internet.

Follow up on issues / initiatives highlighted in previous review Initiatives and Actions Resolution Current status and next steps Developing of Demonstration area in frames of KazBuild and Practical area in frames of Aqua-Therm Almaty Brings more companies and visibility at KazBuild and Aqua-Therm Almaty exhibitions. Make exhibitions more vivid and interactive. Established in 2014 but was not promoted well and beforehand. Enlarge promotion period and make it from January till July. Engage international companies to take part at Demonstration and Practical areas. Start sales from January. Find partners. Developing of “Consultations of designers and architects”. Brings more customers to KazBuild, enlarges visibility of usage of modern finishing materials and makes exhibition more vivid and interactive. Works since KazBuild Enlarge promotion period and make it from January till August. Start partnership with design and architect bureaus, interior salons and interiors media partners earlier at least in June. Segmentation of exhibitors on sections inside pavilions. Helps to simplify visitor navigation within the exhibition halls as well as exhibition promotion visitors targeting. Also helps to develop and highlight sections. Began in 2014. Locate all individual companies according to pavilion theme. Italian national group divide in two blocs (construction and interiors) inside one pavilion. Locate construction companies of Italian national group closer to the end of interior pavilion that neighbors with construction one. Promote sections of exhibition according to pavilion sections. Make Pre-exhibition newsletter Helps to promote exhibition, announce exhibitors, its novelties, exhibition program (Demonstration and Practical areas, Symposium, workshops) , etc. as well as invite visitors . Issued since KazBuild and Aqua-Therm Almaty 2015. Edition according to exhibition main sectors for distribution among appropriated associations, state agencies, repair and installation companies, design and architect bureaus, interior salons , etc. from 32 pages

P E S T Event Performance overview – KazBuild and Aqua-Therm Almaty
POLITICAL ECONOMIC As indicated in the political factors, the global political situation, probably can be reflected both in the construction industry of Kazakhstan, as well as the overall economic situation, as follows: The trend of increasing oil production by OPEC countries, therefore, reduced the price for a barrel of oil. In view of the Republic of Kazakhstan as a significant source of raw materials, respectively, a decrease in revenues from the sale of oil, which is likely to adversely affect the economic situation in general, where a significant proportion also holds construction industry, therefore, possible to reduce the number of exhibitors and visitors. In view of the close cooperation in almost all fields of Kazakhstan with neighboring countries, unstable factors such as the rate of the ruble to the Russian Federation and the sanctions imposed in the area of trade turnover of the Russian Federation, may have a negative impact both on the economic situation, therefore, the construction industry of Kazakhstan. Accordingly, similarly can have an effect on the show. The entry of the Republic of Kazakhstan to the WTO and the expansion of the Eurasian Economic Union may affect the increase of foreign presence in the industry that may have an impact on local construction companies and manufacturers of building materials, it is possible with such a position, as a replacement from the market and a positive build-up of its own facilities and access to export markets the changing competitive environment. In general, in the world market due to a variety of factors, the prevailing situation is not clear character that is likely to affect somehow the building industry in Kazakhstan. Changes in monetary policy may have a negative effect on organizations conducting or having payments in foreign currency, but it can also have a positive impact on the investment area, but in general it can somehow impact on sales for exhibition. The impact of global political situation: the situation with sanctions on neighboring countries of Kazakhstan, the political situation of the euro area, the dynamics of the unstable exchange rate of the Russian Federation, the policy of the OPEC countries in the oil price. (see also Economic factors) Accession of Kazakhstan to the WTO, expansion of cooperation in the framework of the Eurasian Economic Union (see also Economic factors) Considering the construction industry, as the primary sector of the economy that has a significant share in the GDP of Kazakhstan, political factors in the Republic of Kazakhstan are positive: There is a significant number of state programs directly aimed at support and development of the construction industry in the Republic of Kazakhstan; All government programs indirectly positive effect on the construction industry; There are a significant number of projects that are not specifically related to the programs, such as Expo 2017, the objects of the Universiade 2017 in Almaty, Metro Almaty, and other important projects; 4) Changes in monetary policy in the Republic of Kazakhstan, the transition to a floating exchange rate since August, P E S T There is a stable growth trend in key social indicators such as population, the proportion of economically employed population and income levels and wages, respectively: There is a necessity to increase the residential areas; Increasing the number of jobs that indirectly have a significant impact on the construction industry; Improvement of infrastructure and its development. Accordingly, it is necessary to increase both the range of construction and related materials, products and services, as well as the number of organizations working in the industry as a whole that is a positive factor for the development of building exhibitions. In the context of such global trend, as the continuous improvement of the technological bases in almost all sectors of the economy in general, manufacturers of building materials and construction companies, requires constant monitoring and improvement of the technological bases. It is worth noting now popular technology based on modular construction prefabricated metal and sandwich panels as wall material; Also, increase the range of goods - substitutes for traditional materials, for example, the building blocks of new materials, new polymer structures and materials that exceed the quality of traditional materials. Consequently, there is the positive impact on the innovative solutions presented at building exhibitions. SOCIAL TECHNOLOGICAL

S W O T SWOT ANALYSIS STRENGTH WEAKNESS THREAT OPPORTUNITY
The largest specialized exhibition in Kazakhstan and Central Asia, covering all regions of Kazakhstan; The vast geography of the exhibition, the participants (32 countries in 2015); Coverage of almost the entire industry sectors; 28% of exhibitors rated positively and 48% are satisfied with their overall return on investment from exhibiting at KazBuild and Aqua-Therm Almaty (based on exhibitors questionnaire during exhibition period in 2015) Large coverage of the professional audience among exhibitors at the exhibition; High indicator (75%) of exhibitors participation likelihood in 2016 High indicator (85%) of visitor attend likelihood in 2016 High percentage of visitors loyalty (64% Kazbuild and 75% Aqua-Therm Almaty loyalists) Considerable range of the product; It has a positive effect, and provides a great opportunity to expand business contacts and business in general, for exhibitors and visitors. Lack of key buyers concentration (developers, wholesaler and retailers chains); Lack of concentration of visitors in general and from local government agencies; The technical component and the condition of venue; Insufficient number of human resources: pre-exhibition work with exhibitors, special events (Demonstration and Practical areas, Consultations of designers and architects) development and promotion; The high price of participation in the exhibition; The high cost of participation in the exhibition including logistics exhibits (high cost, particularly foreign). STRENGTH WEAKNESS S W O T Threats due to the strengthening of positions of competitor exhibitions in Astana (Su Arnasy; Promsroyindustia-Astana; ZHKH_EXPO; Village); Large amount of companies have an interest in Astana EXPO 2017 project, due to companies may prefer to participate in AstanaBuild Threats with a future appearance on the market of exhibition «Coatings» by the company DMG Events; The uncertainty of economic trends, as a result can affect both the number of exhibitors and visitors, as well as the intentions of targeted visitors to interact with the exhibitors; The threat due to the change in the brand WorldBuild, consequently, a drop recognition; Changes in monetary policy in the Republic of Kazakhstan, the transition to a floating exchange rate since August, 20 – 2015 Reduced quality of the exhibition due to lack of budget and human resources; Reducing the number of exhibitors, since the increase of the competitive environment of international organizations, in particular Russian companies and companies within the Eurasian Economic Union; Many Kazakhstan companies buy foreign equipment and components in foreign currency (euro and usd), consequently a demand on foreign products is decreasing and companies have to reduce the budget of exhibition participation and visits (business trips). Improved and increased work with government agencies; Possibility of specifying in the clarity on the division of the exhibition sector, hence the creation of amenities for visitors; The increase of exhibition, including additional sections: Paints and coatings, Construction equipment, Concrete and cement, Low-rise buildings; Improving the business content of the exhibition: specialized and themed activities, consequently, an increase in targeted visitors; Increase the marketing budget of exhibition; Increasing the number and searching for new suppliers of services, especially logistical services; Active support of the industry, the state, therefore, the possibility of a positive impact on all aspects of the exhibition Increasing the number of custom-build stands. THREAT OPPORTUNITY

Summary health evaluation / Key issues & opportunities to address Key issues Overall assessment Commentary Health of geographic market The devaluation of the national currency more than 62% in The increase in the cost of production of building materials and products and services in the construction sector. Falling consumer demand, increased competition. Health of industry and trading trends State programs in construction industry: “Dostupnoye zhiliyo 2020”; Industry program of modernization of housing and communal services resources of the Republic of Kazakhstan for years; The state program of infrastructure development "Nurly Zhol“ for years; The program of single-industry towns for ; Program "Regional Development“. There are also Universiade 2017 planed in Almaty and Expo 2017 in Astana that are significant internationally important projects that contribute more building and finishing materials for construction of corresponding objects. According to the Ministry of Economics, the volume of construction works increased by 3.8% for the first 10 months of Production of building materials rose by 4.2%. Investments in the construction sector grew by 13.4%. On the same time there is a decreasing of purchasing power as a result of devaluation (all the real estate of Kazakhstan trades in foreign currency (USD) and most of construction materials and equipment are imported). Competitor position There are competitive shows in Astana by other organizer but the position of KazBuild is stronger. Though some sections of competitive shows are more saturated than at Aqua-Therm Almaty for example water treatment technologies. Relationship with Key clients Relationship with manufacturers of building materials, aluminum profile, doors, lighting Key clients. Relationship with distributors of ceramic tile, heating, water supply and ventilation key clients. These clients support in visitors promotion. Venue Positive relationship with the exhibition center but the condition of exhibition halls are poor – shabby repair of ceiling, toilets, dim lighting. The quantity of street signs at the territory of exhibition center are not enough. Content development Business program of both exhibitions develops year by year. Symposium (2012); Consultations of designers and architects (2014) Demonstration and Practical areas for presentation materials, tools, equipment (2015) Workshop for green building and energy efficiency held with Kazakhstan Green Building Council (2015) Workshops, seminars are also regularly held in frames of exhibitions on different themes. Support of professional associations and agencies Support of Ministry of National Economy, Ministry of Investment and Development, Committee for construction, housing utilities and land resources, National Chamber of Entrepreneurs, Association of the construction materials’ manufacturers (informative support). Positive Neutral Negative

Competitor Sector Mapping Event/Category Construction Roofing Facades Heat insulation, waterproofing Brick, wall materials Windows Dry mixes, cement, gypsum Varnishes and paints Equipment and machinery Interior and design Landscape Doors Flooring Lighting Electric equipment Ventilation and air conditioning Boilers, pipes, radiators, fittings Gates, automation, enclosures Natural, artificial stone, Stone processing ZHKKH Expo PromStroy Astana Su Arnasy Eurasian Congress of Construction Industry Village Central Asia Coatings Show Weak/Nonexistent Medium Strong New Development

Eurasian Congress of Construction Industry Central Asia Coatings Show
Event Performance Overview Competitor Threat Assessment (rate for 1 January 2015 – 222 tenge for 1 euro ) Event Overall threat Date M2 Price M2, euro Exhibitors Visitors Commentary ZHKKH Expo November 3 672 211 91 3 205 Strong in professional visitors; government participation in housing and utilities sphere; business program. Low prices for participation with high efficiency according to exhibitors’ point of view. PromStroy Astana March 1 400 113 140 4 628 Construction sector competitors. Strong dumping. Su Arnasy May 2 154 144 72 1 090 Heating, ventilation and water technologies competitor. Strong in professional visitors; government participation in housing and utilities sphere; business program. Low prices for participation. Eurasian Congress of Construction Industry December n/a n/a 57 More than 800 delegates Unique specialized congress for construction in Kazakhstan with active support and participation of government. Gathers all contractors of Kazakhstan and some of Russia and Belarus. Village April 2 996 188 63 6 361 Dumping, unique specialized exhibition for low-rise building, many buyers among visitors Central Asia Coatings Show 651 sqm planned 525 New exhibition planed by DMG for November 2016 for Paints and coatings. Paints and coatings is a sector of Interiors section of KazBuild with lack of exhibitors. *Information is taken from web sites of exhibitions – not audited not confirmed High Medium Low

KazBuild and Aqua-Therm Almaty – Show Position on the Value Chain
Summary of Key ‘Markets’ between Buyers and Sellers Manufacturers, Importers, Sellers Dealers, Distributors Consumers Legend 1 Exhibitors only Manufacturers of construction materials Building supermarkets and shops Visitors only Investors, developers, general contractors, insurance companies. Both exhibitors & visitors Dealers, distributors, suppliers of building and finishing materials, products, building equipment, tools, wholesalers, retailers. Developer companies Building repair and installation companies Manufacturers of the equipment for the CM production Designers, architects, suppliers Legend 2 Importers of construction materials, products, equipments To reinforce as exhibitors End customer To intensify as visitors mostly and exhibitors 22

Implications for KazBuild and Aqua-Therm Almaty
KazBuild and Aqua-Therm Almaty- Industry Evolution - Key Trends Driving Evolution of Industry Key Trends Implications for KazBuild and Aqua-Therm Almaty The amount of entered in the operation real estate tends to increase but there are optimization and reduction of business processes and costs for construction Reduction of costs might be due to decreasing of purchasing power. It is essential to identify the real reasons for cutting costs and meet with key companies. Offer cost-effective solutions and additional promotion programs for exhibiting. The largest number of commissioned houses in are cottages built up by individuals As the reflection of trend it is planned to develop low- rise building section content and business program at exhibition (Demonstration area and Practical area). This slide communicates key industry trends and their implications for the show. The most popular construction materials are bricks, concrete and reinforced concrete. The increasing number of companies with construction equipment and concrete at exhibition as the most popular components of construction materials market make worth having the section of Concrete and Cement at KazBuild. 23

KazBuild and Aqua-Therm Almaty - Event Strategy Summary
Defining Context: Reinforce the status of the leading construction and interiors exhibition of Kazakhstan and Central Asia. Key Challenge: Need more content ,exhibitors and professional visitors. What Goals? Where to Play? How to Win? Competitive position goals ( ): Reinforce the status of the leading construction and interiors exhibition of Kazakhstan and Central Asia. Develop more sections , especially those that are stronger at competitors events. Development of content business program Commercial goals ( ): 5% of exhibitors growth per year ; 5% of visitors growth per year ; 7% of square meters average growth per year; Price per square meter growth per year: according to economic situation in Kazakhstan; Enlargement of number of exhibition partners. Financial goals ( ): 2016 – keep Revenue & GP on same level Revenue average growth 5% per year Gross average Profit 3.7% per year Show positioning: Creation of segmented exhibition; Attraction of more local producers. Expanding of geography of exhibitors and visitors Emphasis across existing exhibitors: Increase the space of stands; Promotion of the novelties of exhibitors before the exhibition; Discount and motivation program - a package of possibilities. Emphasis across new exhibitors: Usage of demonstration area; New Exhibitors promotion program - a package of possibilities. Emphasis across existing and new visitors: Hosted buyers program Expanding the regions of promotion Industry important workshops Development of sections: Reinforce of existing sections of the exhibition. Meetings with key companies; Development of new sections; Implementing of New Exhibitors’ promotion program. 2. Focus on exhibitors: - Breakdown on relevant segments; Define the needs of the segment; Search for the new exhibitors; Increase Kazakhstan producers number as exhibitors; Create discount and motivation program. 3. Focus on visitors: Renewing the data base; Enhance media support; Hosted buyers program; Development of content; Supporting visitors promotion campaign. 4. Service improvement: Digital improvement; Navigation improvement; Improvement of technical condition of the venue . 24

KazBuild and Aqua-Therm Almaty - Broad set of “Where to Play” strategic options
Reinforce the status of the leading construction and interiors exhibition in Kazakhstan and Central Asia Create new and develop existing sectors of exhibition New sectors of KazBuild: Stone and Technostone; Low-Rise Buildings (including wooden construction and woodworking). Development of existing sectors of Kazbuild: Construction materials and equipment; Concrete and Cement; Interiors and finishing materials; Paints and coatings; Ceramics and stone; Fenestration. Segmentation of the exhibition (locating companies according its product and theme of pavilion) New sectors of Aqua-Therm Almaty: Pools and saunas equipment; Water treatment (from water supply). Development of existing sectors of Aqua-Therm Almaty: Sanitary ware and bathrooms; Water supply; Pumping equipment; Ventilation and air-conditioning; Heating systems Expanding the geography of exhibitors (Development of National Groups) and visitors (new regions for promotion) Development of content, business program Demonstration and Practical areas, Symposium, Seminars and Workshops, Consultations of designers and architectures. The next few slides are examples of how to complete a decision tree for the “Where to Play” (or “What do we need to do”) strategic options. This first slide is an overview of the strategic options and then each of the subsequent slides delve into further detail on the break out branches of the tree. 5.3 BROAD SET OF “WHERE TO PLAY” / “WHAT DO WE NEED TO DO” INITIATIVES STRATEGIC OPTIONS The purpose of this slide is to communicate the high level growth options for the show in a logical and structured format and should be done using the “decision tree format” shown above. A decision tree is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility. Decision trees are excellent tools for helping you to choose between several courses of action. They provide a highly effective structure within which you can lay out options and investigate the possible outcomes of choosing those options. They also help you to form a balanced picture of the risks and rewards associated with each possible course of action. Be specific in the commentaries inside each box. “Value Services” refers to the value created for clients, including commercial deals, business deals, contacts and brand support. One branch represents existing “value services” and another branch new to show “value services”. The new to show “value services” is further split into “at existing shows” and “at new events”. This method allows the team to categorise options and think about a broad set of options. The options should be generated by the show teams based on their understanding of the industry. Teams may need to “brainstorm” to generate more options and think more broadly. 25

KazBuild and Aqua-Therm Almaty - Where to Play: Attendees Initiatives Structured Around attendee Growth Meeting with key clients Segmented Telemarketing Segmented Post and mail campaigns Promo activities Outdoor advertising Almaty and Almaty region Relevant Geographic Segments Hosted buyers programme More closer work with Ministry and other government structures in Astana Telemarketing Post and mail campaign Promo activities Astana and regions of Kazakhstan Kyrgyzstan Uzbekistan Tajikistan Afghanistan VIP delegations / Hosted buyers programme More closer work with local offices in Bishkek and Tashkent (cross-promo) Increase media support More closer work with government structures Which Visitor Group to Target? Meeting with key clients Updating database Mail campaign Transfer to the exhibition by shuttle buses from other region of Kazakhstan Segmented of distribution pre-exhibition newsletter Dealers and distributors This slide is to present which initiatives the show team will execute to grow the number and quality of visitors Updating database Telemarketing Mail campaign Segmented of distribution pre-exhibition newsletter Relevant Segments by Job Function Wholesalers and retailers General contractors, developers Updating database Meeting with key clients (Identify the needs of segment) Business program Architects, designers and repair and installation companies Updating database Segmented of distribution pre-exhibition newsletter Invitation to visit Practical and Demonstration areas

KazBuild and Aqua-Therm Almaty - How To Win – New Value Proposition
New Value Proposition for Visitors: The place to learn from, discuss and do business with, the most informed and best connected local and international manufacturers and dealers and distributors of construction industry in Kazakhstan. New Value Proposition for Exhibitors: The ideal place to meet and stay connected with a target select group of professionals in growing market. It is an opportunity to increase sales, enlarge the data base of leads and develop export potential in one place. Commentary: There was only one common Value Proposition before. This slide is primarily for if the value proposition of the show will change as a result of a new strategic direction or if the show has no clear value proposition. Enter the new value proposition for visitors and exhibitors, together with a commentary on the changes and the reasons behind. For some more segmented shows or clusters then it might be necessary to identify value propositions for the different segments. Old Value Proposition. KazBuild is Central Asia’s largest building industry and with visitors over 4 days, the place where you can meet more buyers than any other trade event in the region. It is the industry’s main forum for new products, ideas and solutions. The event delivers high levels of business activity in a market full of opportunities for growth. from 32 pages 27

Sequencing over Three Year Planning Horizon
KazBuild and Aqua-Therm Almaty - Sequencing of How to Win Actions Sequencing over Three Year Planning Horizon How to win actions 2016 2017 2018 H1 H2 Development of sections: Reinforce of existing sections of the exhibition Development of new sections Implementing of New Exhibitors’ promotion program 2. Focus on exhibitors: - Breakdown on relevant segments Define the needs of the segment Search for the new exhibitors Increase Kazakhstan producers number as exhibitors Create discount and motivation program 3. Focus on visitors: Renewing the data base Enhance media support Hosted buyers program Development of content Supporting visitors promotion campaign 4. Service improvement: Digital improvement Navigation improvement Improvement of technical condition of the venue Develop the sales strategy. Structuring exhibition Create special content for each Develop new content plan Structuring exhibition Meetings with key companies Contact with industry Associations and Unions as well as regional Akimats Start individual promotion and make it on a constant base every year According to the needs of clients Meetings with key buyers. The purpose of this slide is to graphically show the timeline (start and end) of the “How to win” actions listed in the right column of the previous slide. Each action might have multiple initiatives as shown in the first action example in this slide. This slide is a summary of the dates and initiatives described earlier This slide should only be created after the actions slides have been completed. New partners according to segmentation. Create special content. Define the theme of workshop according to industry trends of current year Increase customer awareness Change partner Work with sales and marketing team Together with pavilion owner 28

KazBuild and Aqua-Therm Almaty - How To Win Initiatives – Core business
1. Exhibition development. Development of the sections. Key Initiative / Sub-Components for this action Potential benefit / cost saving Priority level Planned activities Timing Investment required (one-off & recurring costs, total and incremental, by year) (€K) Reinforce of existing sections of the exhibition Helps in retaining existing and return of major companies to the exhibition, and also contributes to an understanding of what needs to change for the better at the exhibitions Brings more exhibitors and visitors High Marketing research inside exhibitions: why do companies exhibit or not exhibit at exhibitions and why are key buyers (visitors) interested or not interested in exhibitions Meetings with key clients: discuss the key needs and problems of market players that might be solved within the exhibition. Starting in 15, January and during the whole year not required Development of new sections Covering new territories, bringing new companies and visitors to the exhibition Collection of database for each separate section for targeted campaign Expand barters deals with media partners for these sections Make additional promotion of new sections. Attract more international exhibitors and international associations. Meetings with key clients and buyers, governmental agencies of each section Identify the needs of each segment clients Starting from 15, January 2016 7 000 £ Implementing of New Exhibitors’ promotion program Motivates new companies to exhibit, promote their participation. Create flyer with details of what is “New Exhibitors’ promotion program and send it to potential exhibitors; Make separate promotion of new sections, its exhibitors and novelties. Assign a status “New comer” to existing new exhibitors and potential. Prepare special label “NEW” for usage in list of exhibitors, official catalogue, route planner and on official web-site. Publish Newcomers ‘ novelties on official web-site, in Pre-exhibition newspaper include them at mail campaign, press releases, etc. Starting from 15, January 2016 1 900 £ Following 4 Slides detail the “How to Win?” actions, breaking each action into sub-components. The number and complexity of actions for your show will determine how many slides you will need to detail them in your report. Keep this list of initiatives / subcomponents at a high level (e.g. initiatives usually involve resource allocation choices) appropriate for the review audience (e.g Russell Taylor, Neil Jones, Regional Director, Vertical head), . The show team can add (for its own reference) to the end of the last section (“Supporting Data & Analysis”) a longer list of more detailed activities. “Investment Required” should state estimated one-off costs and recurring costs indicating: Total cost: how much this will cost in absolute terms. Incremental cost to the previous budget (total cost minus what the show team will off-set internally) The detail should be restricted to strategic amounts which cannot be accommodated within the existing show budget. 29

2. Exhibition development. Focus on exhibitors. Key Initiative / Sub-Components for this action Potential benefit / cost saving Priority level Planned activities Timing Investment required (one-off & recurring costs, total and incremental, by year) (£ K) Breakdown on relevant segments Effective, high-quality processing of potential exhibitors It solves the problem with navigation for visitors, which in turn creates a more efficient working environment to exhibitors High Allocation of rebook and new sales companies in pavilions according to its theme. Selections from CRM according to the segment for further promotion. Locating of Italian National Group companies in two blocks: one is for interior companies and the other for construction ones. Promotion of exhibition halls according to its theme January 2016 May - June 2016 All promotion period not required Define the needs of the segment (a segment of companies) Understanding the needs of the market Possibility to satisfy the needs of exhibitors, creating the motivation to exhibit Meetings and negotiations with key clients Work with exhibitors at the competitors exhibitions Consultations / negotiations with professional associations Participation in the activities of the construction industry More closer work with exhibitors (to understand Visitors Portrait, to involve exhibitors in exhibition promotion programme, to publish news and novelties of exhibitors on exhibition web-site) From January 2016 and during the whole year 1 000 £ (including business trips for meetings with major industry companies in Astana , governmental agencies) Searching for new exhibitors Attracting companies who are not yet in our database Digital recourses Specialized media Partners’ professional building events Competitor and ITE exhibitions During the whole cycle of preparation for the exhibition 2 800 £ (publications in regional and CIS specialized media, attending business events) Increase Kazakhstan producers number as exhibitors Helps to enlarge the exhibition and new target audience To identify the motivation to exhibit To develop special offer and motivations programme Enhance relations with government structures and profile associations To provide a separate space to Kazakhstan producers January – May 2016 Create discount and motivation program Helps to encourage to exhibit or to exhibit with more sqm to hit several goals while participating Encourage companies from potential new markets for developing at exhibition or in a difficult financial or economy situation (for example Ukraine) to exhibit. Identify the markets and sectors that are potential or in a difficult economy situation for exhibiting at exhibition Announcing the special discount and motivation program and its conditions and duration. From January 2016 Not required Following 4 Slides detail the “How to Win?” actions, breaking each action into sub-components. The number and complexity of actions for your show will determine how many slides you will need to detail them in your report. Keep this list of initiatives / subcomponents at a high level (e.g. initiatives usually involve resource allocation choices) appropriate for the review audience (e.g Russell Taylor, Neil Jones, Regional Director, Vertical head), . The show team can add (for its own reference) to the end of the last section (“Supporting Data & Analysis”) a longer list of more detailed activities. “Investment Required” should state estimated one-off costs and recurring costs indicating: Total cost: how much this will cost in absolute terms. Incremental cost to the previous budget (total cost minus what the show team will off-set internally) The detail should be restricted to strategic amounts which cannot be accommodated within the existing show budget. 30

3. Exhibition development. Focus on visitors. Key Initiative / Sub-Components for this action Potential benefit / cost saving Priority level Planned activities Timing Investment required (one-off & recurring costs, total and incremental, by year) (£) Renewing the base of potential clients according to the segments of the exhibition Enlarging the number and quality of targeted visitors in the exhibition, clear segmentation according to their activities High Updating the data base (Kazakhstan and CIS regions) Segmented telemarketing (based on Visitors Portrait) From April 2016 1 200 £ Enhance media support Enlarging informing about the exhibition among professional audience Enlarging the publications in specialized magazines, web-portals etc. Closer work with the main industry (local, CIS International) media During a year 4 600 £ Hosted buyers program Attracting more target visitors. Satisfaction of exhibitors with bigger quantity and quality of visitors Personal meetings with the leaders of industry in order to attract them to the show VIP delegations composed of representatives of the major companies of industry from different regions of Kazakhstan, Uzbekistan , Kyrgyzstan, Tajikistan and Afghanistan (flights and accommodation paid by Iteca) Promotion of special offer among the clients to sell additional marketing actions for regional VIP delegation. May – August 2016 9 500 £ Development of content and business program Development of exhibition content and attracting more qualified specialists Conducting of negotiations with governmental agencies (ZHKH, Ministry, regional Akimats and Regional Chamber of Enterprises) for discussion of their support of role in workshops and development of Demonstration and Practical areas. Identifying and announcing of theme of workshops in frames of KazBuild and Aqua-Therm Almaty. Promotion the workshops for potential visitors and exhibitors. January September (annually) 3 100 £ Supporting visitors promotion campaign Spot coverage of the main persons, procurement managers, professional associations, installers, designers, etc. Post campaign Outdoor advertising On-site banners and signs at the exhibition territory TV/Radio advertising Promo activities Printing materials April 2016 – August 2016 9 360 £ 31

4. Exhibition development. Service improvement. Key Initiative / Sub-Components for this action Potential benefit / cost saving Priority Level Planned activities Timing Investment required (one-off & recurring costs, total and incremental, by year) Digital improvement To satisfy needs of exhibitors and visitors (especially foreign); Using what's up” campaigns as reminder about exhibition Possibility to use exhibition mobile apps To make push notifications about business program schedule High To find a better quality Internet supplier To arrange free Wi-Fi zones June September 8 000 £ Navigation improvement To simplify the navigation at the exhibition By means of: Information desks Mobile Apps Virtual catalogue Route planner Signs to the stand «made in Kazakhstan» and «New comer» June September Improvement of technical condition of the venue Arranging more comfortable condition for exhibitors and visitors Negotiations with venue owners regarding Venue refreshment (repair of toilets, flooring, roof, fixing climate control system) Find better quality cafes April September £ 32

Summary of financial impact of How to Win Actions
Total incremental spending (sum of one time and recurring incremental costs) (£K) 2015 2016 <IF POSSIBLE TO FORECAST> 2017 <IF POSSIBLE TO FORECAST> 1. Development of sections 8 900 £ 2. Focus on exhibitors 3 800 £ 3. Focus on visitors £ 4. Service Improvement 192 £ £ Total costs £ Expected show growth Revenue growth in absolute value Revenue growth in %: 33

Should include any market information, data, trends
Appendix APPENDIX Should include any market information, data, trends supporting the event strategy

KazBuild and Aqua-Therm Almaty

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