MAIL.

RU GROUP

VALUATION MATERIALS
Table of Contents
Executive Summary

Internet Industry Overview

Company Considerations
Share price performance
Recent Corporate Actions
Operating Performance
Valuation
Trade Idea
Appendix
EXECUTIVE SUMMARY
This presentation evaluates the internet services industry in which Mail.ru Group operates

In this analysis, I have identied the fundamental drivers of the industry and company to evaluate the intrinsic
price of Mail.ru Groups shares. I developed a fully integrated 5-Year nancial statements model and discounted
cash ow valuation

I have observed the following key drivers with respect to the Russian internet sector and the companys
operating performance:

In 2011 Russia became the largest internet market in Europe and has solidied its leadership ever since
As the number of mobile users is rising, Mail.ru group is encouraging their users to spent more time in
online, by making their services more mobile-friendly
Community IVAS sales has consistently grown since 2010. Mail.ru group is continuing to improve its value
added products, in addition to attracting a bigger pool of Online gamers and social network users
Mail.ru Group is expanding their business overseas to locations such as Silicon Valley. A new brand was
launched in 2013 my.com
Revenue growth in MMO gaming is expected to remain strong and a key driver of long-term growth is
focus on fewer, higher-quality titles

Mail.ru Group has continued to improve its nancial position through operational and nancial improvements
Over the last 12 months, Mail.ru signicantly underperformed its US internet peers (Facebook: +50,4%)
and (Zynga: +19,3%) due to political and macroeconomic headwinds
Mail.ru Group sold its stakes in Facebook, Zynga, Groupon and Qiwi in order to pay dividends and retain
its shareholders base

On a DCF basis, the company is intrinsically valued at $32,7 Mail.ru shares are currently trading on the London &
Moscow Exchanges: $35 per share
Applying diferent assumptions for terminal growth and WACC our valuation ranges from $30,5 35,4

INTERNET INDUSTRY
OVERVIEW
Internet Industry Overview
In 2011 Russia became the largest internet market in
Europe and has solidied its leadership ever since
By the end of 2013 the number of internet users in
Russia had risen to 73.8m
Signicant scope for expansion remains: overall internet
penetration is only 54%
Further developments in technology expands internet
penetration into users daily lives
During 2013, time spent online rose by 29% to 33.6
hours/month among the highest rates globally



No. Internet Users in Europe (m)
Internet User Penetration in Russia
(%)
No. internet users in Russia (m)

76
68
55
54
36
34
25
16
15
11


50.0%
54.4%
58.2%
61.3%
64.2%
66.3%
2012 2013 2014 2015 2016 2017
62
67.9
73.8
78.8
82.7
86.3
2011 2012 2013 2014 2015 2016
Social Networks - Market Snapshot
The internet is becoming multi-device driven. Increases
in mobile usage has not impacted desktop use
Mobile monthly usage has increased to 43,5% in
Russian cities with populations > 100k
Mobile continues to be a key focus
Aggregate segment Communi ty IVAS revenue
increased by 29.1 % to reach RUR 8,697 million (2012:
RUR 6,739 million)
The growth was achieved primarily through increase in
annual ARPU by c. 32% vs 2012 catalysed by growth
in user engagement
!"#$%& $( )"(*%+ $,-.&)&,*/% *" 0&(1*"2
345 6)& (2&,* #+ 2%/7".)8 #, )$,9*&(:

Community IVAS, thousands of
average monthly paying users*

Percentage of monthly active users
accessing via mobile devices
401
429
131
442
11
124
0
200
400
600
800
1000
1200
2010 2013
1ableL
SmarLphone
ueskLop
0
10
20
30
40
30
60
!un '12 Sep '12 uec ' 12 Mar '13 !un '13 Sep '13 uec '13
My world Cdnoklassnlkl
0
2000
4000
6000
8000
10000
P1 '10 P2 '10 P1 '11 P2 '11 P1 '12 P2 '12 P1 '13 P2 '13
# users,
Lhousands
MMO Games Market Overview
;<&./=& >"? @/+$,= 4(&.( $, !!A (&=)&,*
3BBB(:

192
227
234
263 261
481
565
Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13
Strong growth in the number of paying
users in gaming
Paying users in the MMO segment
doubled to 565,000 in 2013
Release of new high-quality titles bolstered
results in this segment
MMO games ar e s howi ng s t r ong
performance. Revenue growth of 39% in
1Q14 (vs 41% in 1Q13)
Revenue growth i n MMO gami ng i s
expected to remain strong and a key driver
of long-term growth is focus on fewer,
higher-quality titles
The launch of ArcheAge in 4Q13 was well
received by gamers. Lucky Fields,
launched in mid-2013, has also gained
traction. Warface remains Mail.rus biggest
revenue contributor in this segment: over 9
millions users registered within 12 month of
release
In 2014, Mail.ru expects to launch three
high-quality games as part of its strategy
Competitive Landscape
Zynga
King
Rovio
Electronic Arts
Valve
Nexon
Baidu
Tencent
Google
Yandex
Ramble
Vkontakte
Facebook
Google
Yandex
Yahoo
Hotmail
Email
Social
Networking
Gaming
E-
Commerce
COMPANY
CONSIDERATIONS
Key Company Considerations
Over the last 12 months, Mail.ru signicantly underperformed its US internet
peers (Facebook: +50,4%) and (Zynga: +19,3%) due to political and
macroeconomic headwinds
Sales growth will be driven by Online Games and Social Networking
Websites through community IVAS
Since 2009, Mail.ru Group has been highly active in corporate acquisitions
and disposals. It recently sold its 12% stake in Facebook and distributed a
cash dividend to shareholders

Its likely Mail.ru group will struggle to increase market share and revenues
within the highly competitive e-commerce and email portal segments
Share Price Performance vs
Competitors (Last 12 Months)
60
70
80
90
100
110
120
130
140
130
160
14/8/13 14/9/13 14/10/13 14/11/13 14/12/13 14/1/14 14/2/14 14/3/14 14/4/14 14/3/14 14/6/14 14/7/14
Mall.ru
lacebook
?andex
Zynga
Mail.ru Group Financial Forecasts
EBIT & Margin (14-18)
Prot & Margin (14-18) Sales & Growth (14-18)
33456 40610
51578
66782
80564
22%
21%
27%
29%
21%
0%
10%
20%
30%
40%
0
20000
40000
60000
80000
100000
2014E 2015E 2016E 2017E 2018E
Sales Growth (%)
11,769
13,953
18,633
24,119
32,700
35%
34%
36%
36%
41%
30%
32%
34%
36%
38%
40%
42%
0
10,000
20,000
30,000
40,000
2014E 2015E 2016E 2017E 2018E
Profit Margin (%)
13048
15432
20631
26713
36254
39%
38%
40%
40%
45%
34%
36%
38%
40%
42%
44%
46%
0
10000
20000
30000
40000
2014E 2015E 2016E 2017E 2018E
EBIT Margin (%)
Sales growth will be driven by Online
Games and Soci al Networki ng
Websites- through community IVAS
FY14-17 prot margins are expected
to decline vs 2012/13 as company has
no plans to dispose of its equity
holdings in VK or Qiwi

Headline Operational Metrics
Online games and social networks have exhibited huge potential. These two
segments will be a long term source of revenues for Mail.ru
Online games is set to increase revenue share from current year 26% to 33% in FY18
Social networks will see +5% revenue share over 5-year forecast period
Within the highly competitive e-commerce and email portal segments, Mail.ru
group will struggle to increase market share and revenues
Revenue Growth - by division Revenue Split - by division
2012 2013 2014 2013 2016 2017 2018
E-commerce, Search and other
Online Games
Social Networks
Email, Portal, and IM
0.0%
20.0%
40.0%
60.0%
2013 2014 2013 2016 2017 2018
Email, Portal, and IM
Social Networks
Online Games
E-commerce, Search and other
Acquisitions & Disposals
Since 2009, Mail.ru has acquired stakes in 5 global internet companies within gaming and social
networks
Mail.ru has beneted from high IRR exits on disposal and have immediately distributed gains in the
form of dividends to its existing shareholder base
Announced
Date
Target Description Deal
Value
May 2009 FB
Finance
driven
decision
$200m
n.a.
Qiwi Strategic
and nance
driven
decision
n.a.
n.a.
VK (51.99) Strategic n.a.
n.a.
Zynga (1.5%) Finance n.a.
n.a.
Groupon(5.1%) Finance n.a.
Announced
Date
Target Description Deal
Value
2012
FB
Finance
driven
decision
$750m
2013 FB Finance
driven
decision
$525m
2013 Qiwi Finance
driven
decision
10%
Sold
Acquisitions
Disposals
TRADE IDEA
Valuation Considerations
To evaluate the fundamental value of Mail.ru shares, I have developed a 5-year discounted cash ow
forecast for FY14-18E, incorporating my key assumptions about the future potential of the company in
the context of internet sector trends

Key assumptions used include:
WACC: 14,5%
Long-term growth rate: 3,0%
Net Debt Position as at Dec 2013: RUB28,579m
No. outstanding shares: 209m
On a DCF basis, the company is intrinsically valued at $32,7 Mail.ru shares are currently trading on the
London & Moscow Exchanges at a discount: $35 per share
This implies FY15E EV/EBITDA multiple of 11,2x
Applying diferent assumptions for terminal growth and WACC
our valuation ranges from USD$30,5 35,4



LT Growth Rate
32,7 2,0% 2,5% 3,0% 3,5%
W
A
C
C

12% 38,8 40,3 42,0 43,8
13% 35,2 36,4 37,7 39,1
14% 32,2 33,2 34,2 35,4
15% 29,7 30,5 31,3 32,3
16% 27,6 28,2 28,9 29,7
17% 25,7 26,3 26,8 27,5
Discounted Cash Flow Analysis
Financial Year (Dec. Year end) 2013 2014 2015 2016 2017 2018 Terminal Period
Total Turnover 27070 33456 40610 51578 66782 80564
growth (%) 23,6% 21,4% 27,0% 29,5% 20,6%

EBIT 10269 13048 15432 20631 26713 36254
margin (%) 37,9% 39,0% 38,0% 40,0% 40,0% 45,0%

Depreciation & Amortisation 2722,0 2518,0 3345,6 4061,0 5157,8 6678,2

Tax @ 12,0% (1232,3) (1565,8) (1851,8) (2475,8) (3205,5) (4350,5)
Capital Expenditure 1582,0 3345,6 4061,0 5157,8 6678,2 8056,4
Capex/Sales (%) -5,8% -10,0% -10,0% -10,0% -10,0% -10,0%

Working Capital 0,0 798,3 969,1 1485,9 2059,6 1867,0
Working Capital / Sales (%) 0,0% -2,4% -2,4% -2,9% -3,1% -2,3%

Free Cash Flow 10176,7 11452,9 13833,7 18544,6 24046,5 32392,2 32392,2

Discount Factor 0,8732 0,7625 0,6658 0,5814 0,5077 0,5077

Terminal Value 289622

Present Value 10000,79 10548,17 12347,38 13980,68 16445,10 147037
Enterprise Value (m) 210359
Net Debt as at (Dec 2013) -28579
Market Capitalisation (m) 238938
No. Shares (m) 209
Share Price (RUB) 1143,2
Share Price (USD) 32,7



APPENDIX
Operating Assumptions
Sales Actual Actual Actual Forecast Forecast Forecast Forecast Forecast
2012 2013 2014 2015 2016 2017 2018
Email, Portal, and IM 4052 4599 5059 5565 5843 6135 6442
Social Networks 7856 10221 12572 15715 20744 29041 36301
Online Games 5329 7249 9424 11968 16157 21004 25205
E-commerce, Search and other 3914 5335 6402 7362 8835 10602 12616
Total 15215 21151 27404 33456 40610 51578 66782 80564
Divisional Revenue Split
Email, Portal, and IM 19% 17% 15% 14% 11% 9% 8%
Social Networks 37% 37% 38% 39% 40% 43% 45%
Online Games 25% 26% 28% 29% 31% 31% 31%
E-commerce, Search and other 19% 19% 19% 18% 17% 16% 16%
Divisional Revenue Growth
Email, Portal, and IM 13,5% 10,0% 10,0% 5,0% 5,0% 5,0%
Social Networks 30,1% 23,0% 25,0% 32,0% 40,0% 25,0%
Online Games 36,0% 30,0% 27,0% 35,0% 30,0% 20,0%
E-commerce, Search and other 36,3% 20,0% 15,0% 20,0% 20,0% 19,0%
Operating Prot (EBIT) Actual Actual Actual Forecast Forecast Forecast Forecast Forecast
2011 2012 2013 2014 2015 2016 2017 2018
EBIT 6903 10269 13048 15432 20631 26713 36254
EBIT Margin (%) 33% 37% 39% 38% 40% 40% 45%
EBIT Growth (%) 49% 27% 18% 34% 29% 36%
Income Statement
Mail.ru Hist. Hist. Hist Proj. Proj. Proj. Proj. Proj.
Income Statement 31..11 31..12 31..13 31..14 31..15 31..16 31..17 31..18
Net Sales 15215,0 20905,0 27070,0 33456,4 40610,0 51578,2 66781,8 80564,0
COGS 0,0 0,0 0,0 0,0 0,0
SG&A 11889,0 14227,0 (20408,4) (25178,2) (30946,9) (40069,1) (44310,2)
EBIT 6903,0 10269,0 13048,0 15431,8 20631,3 26712,7 36253,8
Depreciation 2703,0 2722,0 2518,0 3345,6 4061,0 5157,8 6678,2
Amortization 0,0 0,0 0,0 0,0 0,0
EBITDA 9606,0 12991,0 15566,0 18777,4 24692,3 31870,6 42932,0
Non-recurring items 0,0 0,0 0,0 0,0 0,0
Interest Income 356,6 460,3 590,8 757,6 989,6
Interest Expense 0,0 0,0 0,0 0,0 0,0
Prot before taxes 41289,0 29778,0 13404,6 15892,1 21222,0 27470,3 37243,4
Taxes 3013,0 3189,0 1635,4 1938,8 2589,1 3351,4 4543,7
Prot after tax 38256,0 26589,0 11769,3 13953,3 18633,0 24118,9 32699,7
Net income 38256,0 26589,0 11769,3 13953,3 18633,0 24118,9 32699,7
Shareholder information
Diluted weighted average shares
outstanding 209,0 209,0 209,0 209,0 209,0 209,0 209,0
Diluted earnings per share 183,04 127,22 56,31 66,76 89,15 115,40 156,46
Dividends per share 120,45 132,34 0,00 0,00 0,00 0,00 0,00
Dividends 25174,0 27660,0 0,0 0,0 0,0 0,0 0,0
Balance Sheet
Mail.ru Hist. Hist. Hist. Proj. Proj. Proj. Proj. Proj.
Balance Sheet 31..11 31..12 31..13 31..14 31..15 31..16 31..17 31..18
Assets
Current assets
Cash and cash equivalents 27690 30987 40340 51727 66423 85087 112840
Accounts receivable 2724 2957 3613 4386 5570 7212 8701
Income Tax refund 0 0 0 0 0 0 0
Other current assets 1997 1604 1958 2377 3019 3909 4716
Total current assets 0 32411 35548 45912 58489 75013 96208 126257
Non-current assets
Net PP&E 1619 2518 3346 4061 5158 6678 8056
Goodwill 32969 32969 32969 32969 32969 32969 32969
Other intangibles 10567 10056 10056 10056 10056 10056 10056
Other assets 21557 10806 13193 16013 20338 26334 31768
Total assets 0 99123 91897 105475 121589 143534 172245 209106
Liabilities
Current liabilities
Short term debt 0 0 0 0 0 0 0
Accounts payable and accruals 5685 7932 9669 11736 14906 19300 23283
Accrued income taxes 348 363 435 528 671 868 1047
Total current liabilities 0 6033 8295 10104 12264 15577 20168 24330
Non-current liabilities
Total long-term debt 2975 2408 2408 2408 2408 2408 2408
Other long-term liabilities 0 0 0 0 0 0 0
Total liabilities 0 9008 10703 12512 14672 17985 22576 26738
Equity
Common stock 46216 46283 46283 46283 46283 46283 46283
Retained earnings 44510 35383 47152 61106 79739 103857 136557
Treasury stock (611) (472) (472) (472) (472) (472) (472)
Total equity 0 90115 81194 92963 106917 125550 149668 182368
Total Liab.& Equity 0 99123 91897 105475 121589 143534 172245 209106
Balance? OK OK OK OK OK OK OK OK
Cash Flow Statement
Mail.ru Hist. Hist. Hist. Proj. Proj. Proj. Proj. Proj.
Cash Flow Statement 31..11 31..12 31..13 31..14 31..15 31..16 31..17 31..18
Net Income 11769 13953 18633 24119 32700
Depreciation 2518 3346 4061 5158 6678
Amortisation 0 0 0 0 0
Change in OWC 798 969 1486 2060 1867
Change in other assets -2387 -2821 -4325 -5995 -5435
Change in other liabilities 0 0 0 0 0
Cash from Operating Activities 12699 15447 19855 25341 35810
Capex 3346 4061 5158 6678 8056
Cash from Investing Activities -3346 -4061 -5158 -6678 -8056
Change in Common Stock 0 0 0 0 0
Change in Treasury Stock 0 0 0 0 0
Dividends 0 0 0 0 0
Long Term Debt Repayment 0 0 0 0 0
Cash from Financing Activities 0 0 0 0 0
Net Cash Flow 9353 11386 14697 18663 27754
Beginning Cash 30987 40340 51727 66423 85087
Ending Cash 30987 40340 51727 66423 85087 112840



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