Group Ltd MAIL Preliminary Trading Update for Q3 2012 Group Ltd (MAIL) - Preliminary Trading Update for Q3 2012

RNS Number : 4802P Group Limited
25 October 2012


                            Mail.Ru Group Limited

                    Preliminary Trading Update for Q3 2012

25 October 2012. Mail.Ru  Group Limited (LSE:  MAIL, hereinafter referred  as 
"the Company" or "the Group"), a  leading Internet company in the  high-growth 
Russian-speaking Internet markets, today provides an update on the preliminary
unaudited segment revenues for Q3 2012.

Q3 2012 Performance Highlights

u Q3 2012 Group aggregate segment revenue grew 36.5% Y-o-Y to RUR 4,965
million (9 months 2012 Group aggregate segment revenue grew 44.4% Y-o-Y)

u Monthly audience (TNS Russia) of Mail.Ru portal in September 2012 reached
31.9 million Russian users with Q3 average monthly Y-o-Y growth of 16%

u Monthly audience (TNS Russia) of Odnoklassniki in September 2012 reached
21.8 million Russian users with Q3 average monthly Y-o-Y growth of 24%

Key Recent Developments

u Email service localisations for CIS countries (Kazakhstan, Belarus,

u New email list design with user profile pictures

u News@Mail.Ru applications for iPhone, Android and WP7

u New features for groups in OK: video, photo collages and recommendations
based on user interests

u OK introduced photo filters in applications for iPhone and WP7

u Ability to log into third party mobile applications with OK account (mobile

u Web Agent now supports calls to fixed-line and mobile phones and SMS

u Launched ICQ 8 for Windows featuring new design, better voice and video
calls and supporting calls to fixed-line and mobile phones

u Launched free-to-play MMORPG Dragon Nest

u Launched Allods in China

u Warface has exceeded 55,000 PCU

u Search market share was 8.2% in September 2012 (LiveInternet)

u Launch of own web-browser Amigo integrated with main social networks (OK, My
World, VK, Facebook)

u Money@Mail.Ru obtained a non-credit financial organisation status

u Two major events held - 2012 Russian Code Cup and Group Technology

u Mail.Ru Group moves to 100% ownership of Headhunter having acquired the
remaining 2.8%

u Free float increased to 36%

Commenting on the results of the Group, Dmitry Grishin, Co-Founder and CEO of
Mail.Ru Group, said:

"I am pleased that the Group  has continued the positive growth trajectory  of 
H1 2012 into Q3 2012. Aggregate segment revenues grew 36.5% Y-o-Y to RUR 4,965
million, contributing to  9 months  2012 aggregate segment  revenue growth  of 
44.4% Y-o-Y.

Our strategy has been  proving successful and we  continue executing on it  in 
our core Russian-speaking market. Increasing and continued focus on mobile  is 
evident in the growth  of our mobile  audience - 38%  of OK's average  monthly 
audience and 50% of Agent average monthly audience in Q3 accessed  the 
service from a mobile device. Continued product improvements across the  board 
drove audience  and engagement  growth  of OK  as  well as  increased  overall 
audience growth in our core email and portal service. 

Our core products generate increasingly diverse revenue streams - notably,  in 
Q3 2012 user generated  revenues (MMO and Community  IVAS) contributed 54%  of 
our aggregate segment revenue, compared with 49% in Q3 2011. At the same time,
online advertising contributed 34% of our revenue compared to 39% in Q3  2011. 
Community IVAS has  continued growing  rapidly at 72%  Y-o-Y in  Q3. The  main 
driver of this growth is unchanged - the increase of paying user engagement.

Evidenced by  ongoing improvement  in Q3  Y-o-Y revenue  growth of  30.8%,  we 
continue to  execute  on  our MMO  games  strategy.  Most of  our  core  games 
continued their robust performance during Q3. In addition, Warface (now a  top 
4 game) has seen increasing traction in  terms of both users and revenues  and 
we have also launched our second licensed AAA game this year (Dragon Nest)  in 

While context advertising continued to grow at a healthy rate, we have seen  a 
slowdown of growth in  display revenue. In  Q3 this was  mainly driven by  the 
previously discussed  planned  reduction in  advertising  inventory.  However, 
during late Q3 and early  Q4 we have also  noted deterioration in the  display 
advertising market. As a result, we expect the weakness in the display revenue
growth rate to continue into Q4 2012.

Notwithstanding the  more challenging  conditions in  the display  advertising 
market, the diversity of our  revenue base, the underlying structural  drivers 
and the ongoing execution on our strategy  allows us to reiterate our FY  2012 
guidance of  Group  aggregate  segment revenue  growth  of  40%and  aggregate 
segment EBITDA margin percentage in the low fifties."

Conference call

The Group  management team  will host  an analyst  conference call  at 
14.00 UK  time  (17.00  Moscow  time, 9.00U.S.  Eastern  Daylight  Time),  on 
Thursday 25th October 2012, including a Question and Answer session.

To participate  in  this conference  call,  please use  the  following  access 

Confirmation Code:                       39610947
Participant Toll Free Telephone Numbers:
Russia Free Phone                        810 800 2232 2044
UK Free Phone                            0800 694 8016
USA Free Phone                           1866 691 1171
Standard International Call              +44 (0) 1452 557535

Investor Relation Contacts:

Matthew Hammond

Managing Director Mail.Ru Group

Phone:+971 505 56 1315

Press Contacts:

Ksenia Chabanenko

Phone: +7 916 0906626

Cautionary Statement regarding Forward Looking Statements

This  press   release   contains   statements   of   expectation   and   other 
forward-looking statements  regarding future  events or  the future  financial 
performance of the Group. You can identify forward looking statements by terms
such as "expect", "believe",  "anticipate", "estimate", "forecast",  "intend", 
"will", "could",  "may" or  "might",  the negative  of  such terms  or  other 
similar expressions including  "outlook" or  "guidance". The  forward-looking 
statements in  this  release  are  based upon  various  assumptions  that  are 
inherently subject to  significant uncertainties and  contingencies which  are 
difficult or impossible  to predict and  may be beyond  the Group's  control. 
Actual results could  differ materially  from those discussed  in the  forward 
looking statements herein. Many factors could cause actual results to differ
materially from those  discussed in  the forward  looking statements  included 
herein,  including  competition  in  the  marketplace,  changes  in   consumer 
preferences, the  degree of  Internet penetration  and online  advertising  in 
Russia,  concerns  about  data  security,  claims  of  intellectual   property 
infringement, adverse media speculation,  changes in political, social,  legal 
or economic conditions in Russia, exchange rate fluctuations, and the  Group's 
success in identifying and responding to these and other risks involved in its
business, including  those  referenced under  "Risk  Factors" in  the  Group's 
public filings. The forward-looking statements contained herein speak only as
of the date they were made, and the  Group does not intend to amend or  update 
these statements except to  the extent required by  law to reflect events  and 
circumstances occurring after the date hereof.

About Mail.Ru Group

Mail.Ru Group (LSE:MAIL, listed since November 5, 2010) is a leading  Internet 
company in  the  high-growth  Russian-speaking  Internet  markets  (Russia  is 
Europe's largest  Internet  market measured  by  number of  users,  comScore). 
Mail.Ru Group's sites reach approximately 82%  of Russian Internet users on  a 
monthly basis (comScore, August 2012) and the Company is in the TOP 5  largest 
Internet business,  based on  the  number of  total pages  viewed  (comScore, 
August 2012).

In line with the Communitainment (Communications + Entertainment) strategy the
Company  is  moving   rapidly  to  build   an  integrated  communication   and 
entertainment platform. The Company operates two of the three largest  Russian 
language online social  networking sites  (Odnoklassniki and Moi  Mir (or  "My 
World")). The Company also operates the two largest Instant Messaging networks
in Russia (Mail.Ru Agent and ICQ), Russia's leading email service and Russia's
largest Internet portal, and  the Company  operates Russia's  largest 
online games platform.

The Company holds strategic minority  equity stakes in VKontakte (39.99%)  and 
Qiwi, formerly OE Investments (21.35%). The Company also holds small  minority 
stakes  in  international   Internet  companies   including  Facebook   (20.4m 
shares/0.75%*), Zynga (10.4m shares/1.17%*) and Groupon (28.0m  shares/4.12%*) 
as well as a number of  small venture capital investments in various  Internet 
companies in Russia and Ukraine.

*As of October 25th, 2012, percentages based on estimated fully diluted  share 

Q3 2012 Trading Update*

RUR millions                    Q3 2011 Q3 2012 Growth
Display advertising                 999   1,075   7.6%
Context advertising                 422     624  47.7%
MMO games                           892   1,166  30.8%
Community IVAS                      874   1,503  72.0%
Other**                             450     598  32.8%
Group aggregate segment revenue   3,637   4,965  36.5%

(*) The numbers in this table and further in the document may not exactly foot
or cross-foot due to rounding

(**) Including Other IVAS revenues

Note: Group aggregate segment revenue is calculated by aggregating the segment
revenue of the  Group's operating segments  and eliminating intra-segment  and 
inter-segment revenues. This measure differs in significant respects from IFRS
consolidated net  revenue. See  "Presentation of  Aggregate Segment  Financial 
Information" below.


As of  30September  2012,  the  Group's  net  cash  balance  (including  term 
deposits) was RUR 8,185 million, or USD  265 million[a], and the Group had  no 
debt outstanding.

Presentation of Aggregate Segment Financial Information

The  Group  aggregate  segment  financial  information  is  derived  from  the 
financial information used  by management  to manage the  Group's business  by 
aggregating the segment financial data  of the Group's operating segments  and 
eliminating intra-segment  and  inter-segment revenues  and  expenses.  Group 
aggregate  segment  financial  information  differs  significantly  from   the 
financial information  presented  on  the face  of  the  Group's  consolidated 
financial statements in accordance with IFRS. In particular:

• The Group's segment financial information excludes items that management
believes  obscure  the  core  operating  performance  of  the  business.  Such 
adjustments affect such major  areas as revenue  recognition, deferred tax  on 
unremitted earnings of subsidiaries,  share-based payment expense,  impairment 
of investments, business  combinations, fair  value adjustments,  amortisation 
and impairment  thereof,  net foreign  exchange  gains and  losses,  share  in 
financial results of non-core associates,  as well as irregular  non-recurring 
items that occur from  time to time  and are evaluated  for adjustment as  and 
when they occur.  The tax effect  of these adjustments  is also excluded  from 
segment reporting.

• The segment financial  information is presented for  each period on  the 
basis of an ownership interest as of the date hereof and consolidation of each
of the Group's subsidiaries, including for periods prior to the acquisition of
control of the entities in  question, so long as the  Group held at least  one 
share of  such  entities during  such  periods.The financial  information  of 
subsidiaries disposed of prior to the date hereof is excluded from the segment
presentation starting from the beginning of the earliest period presented.

• Segment revenues do not reflect certain other adjustments required  when 
presenting consolidated  revenues under  IFRS.  For example,  segment  revenue 
excludes barter revenues  and adjustments  to defer online  gaming and  social 
network revenues under IFRS.


[a] The USD number represents a convenience translation. The RUR amounts have
been translated into USD using an exchange rate of RUR30.9169 to USD1.00,
the official exchange rate quoted as of September 30, 2012 by the Central Bank
of the Russian Federation

                     This information is provided by RNS
           The company news service from the London Stock Exchange


MSCVZLFLLBFBFBE -0- Oct/25/2012 06:00 GMT
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