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TABLE OF CONTENTS

Table of Contents

Filed Pursuant 424(b)(5)
Registration No. 333-239560

Prospectus Supplement to Prospectus dated June 30, 2020

LOGO

5,000,000 American Depositary Shares

HeadHunter Group PLC

American Depositary Shares Representing
5,000,000 Ordinary Shares

$20.25 per ADS



        ELQ Investors VIII Limited, a subsidiary of The Goldman Sachs Group, Inc. (the "Selling Shareholder") is selling 5,000,000 of our American Depositary Shares ("ADSs") in this offering. Each ADS will represent one ordinary share. We will not receive any proceeds from the sale of ADSs by the Selling Shareholder. The public offering price is $20.25 per ADS.

        The underwriters may also exercise their option to purchase up to 750,000 additional ADSs from the Selling Shareholder at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus supplement.

        Our ADSs are listed on The Nasdaq Global Select Market ("Nasdaq") under the symbol "HHR." On July 15, 2020, the last reported share sale price of our ADSs on Nasdaq was $20.50.

        We are a "controlled company" under the corporate governance rules of Nasdaq. See "Prospectus Supplement Summary—Status as a 'Controlled Company."

        We are both an "emerging growth company" and a "foreign private issuer" under applicable U.S. Securities and Exchange Commission rules and are eligible for reduced public company disclosure requirements. See "Prospectus Supplement Summary—Implications of Being an 'Emerging Growth Company" and a "Foreign Private Issuer."

        Investing in our ADSs involves risks. See "Risk Factors" beginning on page S-29 of this prospectus supplement and the risk factors contained or incorporated by reference in this prospectus supplement and the accompanying prospectus.

        Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

 
  Per ADS   Total  

Public offering price

  $ 20.25   $ 101,250,000  

Underwriting discount(1)

  $ 1.01   $ 5,062,500  

Proceeds, before expenses to the Selling Shareholder

  $ 19.24   $ 96,187,500  

(1)
We refer you to "Underwriting (Conflicts of Interest)" for additional information regarding underwriting compensation.

        The underwriters expect to deliver the ADSs to purchasers on or about July 20, 2020 through the book-entry facilities of The Depository Trust Company.

Goldman Sachs & Co. LLC   Morgan Stanley   Credit Suisse   VTB Capital

   

Prospectus supplement dated July 15, 2020


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TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

ABOUT THIS PROSPECTUS SUPPLEMENT

 
S-ii

MARKET AND INDUSTRY DATA

  S-v

TRADEMARKS, SERVICE MARKS AND TRADENAMES

  S-vi

PROSPECTUS SUPPLEMENT SUMMARY

  S-1

THE OFFERING

  S-19

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

  S-22

RISK FACTORS

  S-29

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

  S-45

USE OF PROCEEDS

  S-47

CAPITALIZATION

  S-48

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  S-49

PRINCIPAL AND SELLING SHAREHOLDERS

  S-71

SHARES AND ADSs ELIGIBLE FOR FUTURE SALE

  S-73

MATERIAL TAX CONSIDERATIONS

  S-75

UNDERWRITING (CONFLICTS OF INTEREST)

  S-94

LEGAL MATTERS

  S-102

EXPERTS

  S-102

WHERE YOU CAN FIND MORE INFORMATION

  S-103

INCORPORATION BY REFERENCE

  S-104

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

  F-1


PROSPECTUS

ABOUT THIS PROSPECTUS

 
ii

OUR COMPANY

  1

RISK FACTORS

  2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

  3

USE OF PROCEEDS

  5

CAPITALIZATION

  6

SELLING SHAREHOLDERS

  7

DESCRIPTION OF SHARE CAPITAL

  8

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

  30

DESCRIPTION OF WARRANTS

  43

DESCRIPTION OF DEBT SECURITIES

  44

PLAN OF DISTRIBUTION

  46

EXPENSES OF THE OFFERING

  48

ENFORCEMENT OF CIVIL LIABILITIES

  49

MATERIAL TAX CONSIDERATIONS

  51

LEGAL MATTERS

  52

EXPERTS

  53

WHERE YOU CAN FIND MORE INFORMATION

  54

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

  55

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ABOUT THIS PROSPECTUS SUPPLEMENT

        This prospectus supplement and the accompanying prospectus form part of a registration statement on Form F-3 that we filed with the U.S. Securities and Exchange Commission ("SEC") using a shelf registration process. This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering of ADSs and certain other matters relating to us, our business and prospects. The second part, the accompanying prospectus, contains a description of our ordinary shares and our ADSs and certain other information.

        The information contained in this prospectus supplement may add, update or change information contained in the accompanying prospectus or in documents that we file or have filed with the SEC. To the extent the information contained in this prospectus supplement differs or varies from the information contained in the accompanying prospectus or documents incorporated by reference filed before the date of this prospectus supplement, the information in this prospectus supplement will supersede such information.

        For investors outside the United States: Neither we, the Selling Shareholder nor the underwriters have taken any action that would permit this offering or possession or distribution of this prospectus supplement or the accompanying prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our ADSs and the distribution of this prospectus supplement or the accompanying prospectus outside the United States.

        We are responsible for the information contained or incorporated by reference in this prospectus supplement. Neither we nor the Selling Shareholder have authorized anyone to provide you with different information, and neither we nor the Selling Shareholder take responsibility for any other information others may give you. We, the Selling Shareholder, and the underwriters are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus supplement and the accompanying prospectus or the documents incorporated herein or therein by reference is accurate as of any date other than its date regardless of the time of delivery of this prospectus supplement or of any sale of the ADSs.

        Except where the context otherwise requires or where otherwise indicated, the terms "Zemenik Trading Limited," "HeadHunter," the "Company," "Group," "we," "us," "our," "our company" and "our business" refer to HeadHunter Group PLC, together with its consolidated subsidiaries as a consolidated entity.

        We are incorporated in Cyprus, and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the SEC, we are currently eligible for treatment as a "foreign private issuer." As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

        All references in this prospectus to "rubles," "RUB" or " GRAPHIC " refer to Russian rubles, the terms "dollar," "USD" or "$" refer to U.S. dollars and the terms "€" or "euro" refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the treaty establishing the European Community, as amended.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

        We report under International Financial Reporting Standards ("IFRS") as adopted by the International Accounting Standards Board (the "IASB"). None of our financial statements were prepared in accordance with generally accepted accounting principles in the United States. We present our consolidated financial statements in rubles.

        On February 24, 2016, Zemenik Trading Limited, which we converted into HeadHunter Group PLC prior to our initial public offering on May 8, 2019 (our "IPO"), acquired all of the outstanding equity interests of Headhunter FSU Limited (the "Acquisition") from Mail.Ru Group Limited (LSE: MAIL) ("Mail.Ru").

        In March 2017, we divested the business through which we historically conducted operations in Estonia, Latvia and Lithuania, CV Keskus. In April 2018, we divested the business through which we historically conducted operations in Ukraine, HeadHunter LLC (Ukraine). Unless otherwise specified, our operational metrics presented in this prospectus supplement, including the number of curriculum vitae ("CVs") in our CV database and the number of job postings on our platform, exclude information from CV Keskus and HeadHunter LLC (Ukraine).

        Percentages and certain other figures in this prospectus supplement may not recalculate exactly due to rounding. This is because percentages and/or figures contained herein are calculated based on actual numbers and not the rounded numbers presented.

Use of Non-IFRS Financial Measures

        Certain parts of this prospectus supplement contain non-IFRS financial measures, including, among others, EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin. We define:

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        EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by our management to monitor the underlying performance of the business and its operations. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by us to EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by other companies. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted

        EBITDA Margin and Adjusted Net Income Margin are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin or Adjusted Net Income Margin as alternatives to net income, operating profit or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:

        Accordingly, prospective investors should not place undue reliance on EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin or the other non-IFRS financial measures contained in this prospectus supplement.

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MARKET AND INDUSTRY DATA

        We obtained the industry, market and competitive position data used or incorporated by reference in this prospectus supplement from our own internal estimates and research as well as from publicly available information, industry and general publications and research, surveys and studies conducted by third parties.

        We believe that it is important that we maintain as broad a view on industry developments as possible. We have retained consultants to prepare general industry and market studies for us, including individual analyses of the online recruitment markets in the markets in which we operate, including the report called "Online Recruitment Landscape in Russia" by J'Son & Partners, and such information is included in this prospectus in reliance on J'Son & Partners' authority as an expert in such matters. See "Experts." In addition, we have obtained certain industry and market data from the report called "Brand Awareness Study" by Socis MR Rus.

        To assist us in formulating our business plan and in anticipation of our IPO and this offering, we retained J'Son & Partners in 2017, 2018 and 2020 to provide an independent view of the online recruitment landscape in Russia, including an overview of recent macroeconomic and labor market dynamics, the evolution of the recruitment market over time and analysis of its underlying trends and potential growth factors, an assessment of the current competitive landscape and other relevant topics. In connection with the preparation of the J'Son & Partners' report, we furnished to J'Son & Partners certain historical information about our company and some data available on the competitive environment. J'Son & Partners, in conjunction with third-party experts with extensive experience in the Russian recruitment business, conducted research in preparation of the report, including a study of market reports prepared by other parties and a study of a broad range of secondary sources including other market reports, association and trade press publications, other databases and other sources. We use the data contained in J'Son & Partners' report to assist us in describing the nature of our industry and our position in it.

        Due to the evolving nature of our industry and competitors, we believe that it is difficult for any market participant, including us, to provide precise data on the market or our industry. However, we believe that the market and industry data we present in this prospectus supplement provide accurate estimates of the market and our place in it. Industry publications and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as other forward-looking statements in this prospectus supplement.

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TRADEMARKS, SERVICE MARKS AND TRADENAMES

        We have proprietary rights to trademarks used or incorporated by reference in this prospectus supplement that are important to our business, many of which are registered under applicable intellectual property laws.

        Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus supplement contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus supplement are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies' trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

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PROSPECTUS SUPPLEMENT SUMMARY

        This summary highlights information appearing elsewhere or incorporated by reference in this prospectus supplement and the accompanying prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our ADSs. You should carefully read the entire prospectus supplement, the accompanying prospectus and the financial data and related notes and other information incorporated by reference in this prospectus supplement and the accompanying prospectus before deciding whether to invest in our ADSs.


Overview

        We are the leading online recruitment platform in Russia and the Commonwealth of Independent States ("CIS") and focus on connecting job seekers with employers. We offer potential employers and recruiters paid access to our extensive CV database and job postings platform. We also provide job seekers and employers with a value added services ("VAS") portfolio centered around their recruitment needs.

        Our user base consists primarily of job seekers who use our products and services to discover new career opportunities. The majority of the services we provide to job seekers are free. Our customer base consists primarily of businesses using our CV database and job posting service to fill vacancies inside their organizations.

        The quality and quantity of CVs in our database attract an increasing number of customers, which leads to more job seekers turning to us as their primary recruitment and related services provider, creating a powerful network effect that has allowed us to continuously solidify our market leadership and increase the gap between us and our competitors.


Recent Developments

Impact of COVID-19 Pandemic

        The World Health Organization declared the novel coronavirus ("COVID-19") a global pandemic on March 11, 2020. Governmental authorities around the world have implemented measures to reduce the spread of COVID-19, including shutdowns and "shelter-in-place" orders suggested or mandated by governmental authorities or otherwise elected by companies as a preventive measure. These measures have adversely affected workforces, our customers, economies and financial markets, and the pandemic has had a significant impact of the economies in all of our markets.

        On March 25, 2020, the Russian government introduced a number of recommendations and restrictions, including declaring a "period of non-working days," which limited business activity from March 30, 2020 to April 3, 2020 and were subsequently extended to May 11, 2020, as well as other restrictions on the movement of citizens and a limitation on most commercial activities. For example, in the Moscow area, authorities recommended that employees work from home from mid-March and introduced further restrictions, including ordering retail and other businesses to temporarily close. These restrictions differed in scope across various regions of the Russian Federation and were also subject to continuous updating, resulting in the frequent strengthening and relaxation of such restrictions in different regions. In mid-June 2020, a gradual lifting of these restrictions in Russia commenced, including in Moscow.

        Although some businesses continued to work from home or in a limited capacity during the "period of non-working days," the COVID-19 pandemic caused significant disruption to the Russian economy and created significant uncertainty as to how the economy would recover from the pandemic. As a result, the COVID-19 pandemic has caused a significant decrease in business activities, including recruitment and hiring processes, as many companies put their hiring plans on hold, decreased the number of new hires they planned to make and/or laid off employees. Accordingly, the number of job

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postings advertised on our platform, the number of candidates browsing through our job postings database and our revenue has decreased since mid-March 2020.

        From the second half of April through June 2020, we saw a steady recovery on our platform as the Russian government began to gradually lift the restrictive measures. As of June 26, 2020, nearly all of our key operating measures have reached their pre-pandemic levels, specifically:

GRAPHIC


1)
Metrics shown only include business days and exclude weekends and public holidays.

2)
Week of June 22 to 26, 2020 compared to the week of May 25 to 29, 2020, adjusted for number of business days.

3)
Week of June 22 to 26, 2020 compared to the week of June 24 to 28, 2019, adjusted for number of business days.

4)
Source: LiveInternet

5)
Source: AppMetrica

        The Russian government introduced supportive measures intended to help to sustain household income levels and prevent further layoffs. These measures were aimed to support companies operating in industries that were severely impacted by the pandemic and in particular, their recruitment activity. We did not benefit from any of the supportive measures introduced by the Russian government.

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        To date, we have not experienced any material disruptions to our regular operations as a result of the COVID-19 pandemic. In compliance with governmental recommendations, we transitioned all of our employees to work from home and remained fully operational during the pandemic.

        Financially, we have a strong balance sheet, and our subscription-based business model is highly cash generative, with an Adjusted EBITDA margin of 50.5% in 2019. Pre-paid deferred revenue as of December 31, 2019 was GRAPHIC 2.4 billion, and we have low capex requirements. All of these factors allow us to maintain our cash position and preserve financial flexibility even in the case of a protracted economic downturn. However, given the uncertainty regarding the COVID-19 pandemic, we began implementing prudent operational control measures, including putting all non-essential hiring on hold, substantially reducing all non-essential and discretionary operating costs, optimizing marketing budgets and limiting non-essential capital expenditures, including office renovations. We have also engaged in discussions with various banks to refinance our debt, including extending the maturity, increasing the size and amending the covenants of the facility, in order to provide more capital allocation options available to us in the future. None of these actions are expected to impact business continuity, nor our ability to execute our long-term strategy. However, these measures are undertaken out of caution and to support our strategic objectives and will allow us to address potential temporary challenges that could arise as a result of the COVID-19 pandemic both in Russia and worldwide.

        We also previously announced the deferral of payment of our interim dividend. In order to ensure our stability, due to uncertainty of the impact of the COVID-19 pandemic, in April 2020, we announced the deferral of the payment of the interim dividend of $0.50 per share for the year ended December 31, 2019 (see Notes 16(d) included in the unaudited condensed consolidated interim financial information included elsewhere in this prospectus supplement). Both the amount of the dividend as well as the dividend record date of March 27, 2020 will remain unchanged. We will continue to monitor the impact of the COVID-19 pandemic on our business to determine when to resume our dividend payments. Since we believe there is a greater confidence in our near-term outlook compared to April 2020, our board of directors is planning to discuss the timing of the deferred dividend payment by the end of August 2020.

        Due to uncertainties that will be dictated by the length of time that the COVID-19 pandemic and related disruptions continue, there can be no assurances that our business will not continue to be adversely impacted going forward.

Preliminary Financial Results

        Set forth below are preliminary estimates of certain unaudited financial information for the three months ended June 30, 2020 and actual unaudited financial results for the comparative period ended June 30, 2019. We have provided ranges, rather than specific amounts, for the preliminary estimates primarily because our financial closing and review procedures for the three months ended June 30, 2020 are not yet complete. The estimated ranges are preliminary and have not been audited or reviewed and are inherently uncertain as a result of a number of factors. The estimated ranges remain subject to changes as we complete our financial closing and review procedures for the three months ended June 30, 2020 and the results may differ.

        The preliminary estimates set forth below have been prepared by, and are the responsibility of, our management. Although we currently expect that our final results will be consistent with the preliminary estimates set forth below, we caution you that the actual results may differ materially from those described herein. In addition, the estimated financial information for the three months ended June 30, 2020 is not a guarantee of future performance or outcomes.

        You should read this information together with Item 5. "Operating and Financial Review and Prospects" section of our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference in this prospectus supplement and the accompanying prospectus and with

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"Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus supplement. Factors that could cause actual results to differ from those described above are set forth in the risk factors discussed below and those contained in the section entitled "Risk Factors" contained herein and in our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein. For additional information, please see "Incorporation of Certain Information by Reference."

 
  Three Months Ended June 30,  
 
  2019   2020
(estimated and unaudited)
 
(in millions of RUB)
   
  Low   High  

Revenue

    1,902     1,483     1,532  

Net income

    275     64     261  

Adjusted EBITDA(1)

    989     599     686  

Adjusted Net Income(1)

    591     308     434  

(1)
Adjusted EBITDA and Adjusted Net Income are not measures of performance under IFRS or any other generally accepted accounting principles. See "Presentation of Financial and Other Information—Use of Non-IFRS Financial Measures" and the reconciliation to the most directly comparable IFRS measure, net income, provided below.

        For the three months ended June 30, 2020, we estimate our revenue to be in the range of GRAPHIC 1,483 million to GRAPHIC 1,532 million, as compared to GRAPHIC 1,902 million for the three months ended June 30, 2019. The estimated decrease in our revenue compared to the same period during 2019 is primarily the result of the reduced level of customer activity (including the number of job postings advertised on our platform and the number of candidates browsing through our job postings database) during the COVID-19 pandemic.

        For the three months ended June 30, 2020, we estimate our net income to be in the range of GRAPHIC 64 million to GRAPHIC 261 million, as compared to GRAPHIC 275 million for the three months ended June 30, 2019. The estimated decrease is primarily the result of the decrease in our revenue due to the COVID-19 pandemic.

        For the three months ended June 30, 2020, our Adjusted EBITDA is expected to be between GRAPHIC 599 million to GRAPHIC 686 million, as compared to GRAPHIC 989 million for the three months ended June 30, 2019. The estimated decrease in Adjusted EBITDA compared to the same period of 2019 is primarily driven by the decrease in our revenue due to the COVID-19 pandemic.

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        The following table provides a preliminary reconciliation of Adjusted EBITDA to the most directly comparable IFRS financial performance measure, which is net income:

 
  Three Months Ended June 30,  
 
   
  2020
(estimated and unaudited)
 
 
  2019  
 
  Low   High  
(in millions of RUB)
   
 

Net income

    275     64     261  

Add the effect of:

                   

Income tax expense

    175     106     67  

Net interest expense

    137     84     84  

Depreciation and amortization

    169     189     189  

EBITDA

    756     443     601  

Add to the effect of:

                   

Equity-settled awards, including related social taxes(1)

    68     59     45  

IPO-related costs(2)

    142          

Insurance cover related to IPO(3)

    23     17     17  

Income from the depositary(4)

    (5 )   (10 )   (10 )

Share of loss of equity-accounted investees(5)

    5     18     8  

Impairment charge(6)

        73     25  

Adjusted EBITDA

    989     599     686  

*
Items in this table may not sum up due to rounding.

(1)
Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity settled share based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.

(2)
In connection with our IPO, we incurred expenses related to legal, accounting and other professional fees that are not indicative of our ongoing expenses.

(3)
Subsequent to and in connection with our IPO, we purchased a one-year insurance policy for $2.7 million, of which we allocated $2.4 million to the cover related to our IPO, which we believe does not relate to our ordinary course of business, and $250 thousand to directors' and officers' insurance in the ordinary course of business, based on the estimate of our insurance provider. The cost of this insurance policy is expensed over the policy term on a pro-rata time basis and thus recurs in the reporting periods during its term. We may renew the policy, including the IPO-related cover, for an additional year or more.

(4)
In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.

(5)
On May 6, 2019, we acquired a 25.01% equity-accounted investee, LLC Skilaz. We believe that share of profit or loss in equity-accounted investees is not indicative of our core operating performance.

(6)
Represents non-cash expense related to the non-current assets impairment.

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        Other adjustments included in the calculation of Adjusted EBITDA were zero for the periods presented. The following table provides a preliminary reconciliation of Adjusted Net Income to the most directly comparable IFRS financial performance measure, which is net income:

 
  Three Months Ended June 30,  
 
   
  2020
(estimated and unaudited)
 
 
  2019  
 
  Low   High  
(in millions of RUB)
   
 

Net income

    275     64     261  

Add the effect of:

                   

Equity-settled awards and related social taxes(1)

    68     59     45  

IPO-related costs(2)

    142          

Insurance cover related to IPO(3)

    23     17     17  

Income from the depositary(4)

    (5 )   (10 )   (10 )

Share of loss of equity-accounted investees(5)

    5     18     8  

Amortization of intangible assets recognized upon the Acquisition(6)

    104     108     108  

Tax effect of adjustments(7)

    (21 )   (21 )   (21 )

Impairment charge(8)

        73     25  

Adjusted Net Income

    591     308     434  

*
Items in this table may not sum up due to rounding.

(1)
Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity settled share based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.

(2)
In connection with our IPO, we incurred expenses related to legal, accounting and other professional fees that are not indicative of our ongoing expenses.

(3)
Subsequent to and in connection with our IPO, we purchased a one-year insurance policy for $2.7 million, of which we allocated $2.4 million to the cover related to our IPO, which we believe does not relate to our ordinary course of business, and $250 thousand to directors' and officers' insurance in the ordinary course of business, based on the estimate of our insurance provider. The cost of this insurance policy is expensed over the policy term on a pro-rata time basis and thus recurs in the reporting periods during its term. We may renew the policy, including the IPO-related cover, for an additional year or more.

(4)
In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.

(5)
On May 6, 2019, we acquired a 25.01% equity-accounted investee, LLC "Skilaz". We believe that share of profit or loss in equity-accounted investees is not indicative of our core operating performance.

(6)
As a result of the Acquisition, we recognized the following intangible assets: (i) trademark and domain names in the amount of GRAPHIC

1,634,306 thousand, (ii) non-contractual customer relationships in the amount of GRAPHIC

2,064,035 thousand and (iii) CV database in the amount of GRAPHIC

618,601 thousand, which have a useful life of 10 years, 5-10 years and 10 years, respectively.

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(7)
Calculated by applying the statutory Russian tax rate of 20% to amortization of the assets recognized upon the Acquisition.

(8)
Represents non-cash expense related to the non-current assets impairment.


Our Strengths

        We are the leading online recruitment platform in Russia and CIS focused on providing comprehensive talent acquisition services. We operate in a high growth market, as HR services globally are undergoing continuous digitalization and the Russian market remains significantly underpenetrated in terms of the share of online recruitment spend relative to GDP. We believe the following competitive strengths have contributed to our success.

Number one online recruitment platform in Russia with a leading position in other CIS countries

        We are the leading online recruitment platform in Russia, focusing on facilitating the recruitment process and connecting millions of job seekers with hundreds of thousands of employers annually. We are also the leading player in Kazakhstan and Belarus and are among the top three players in Azerbaijan, Kyrgyzstan and Uzbekistan, which makes us a leader in online recruitment in the CIS region.

        We have more visible CVs in our database and more job postings on our platform than any of our direct competitors. We are also among the most visited online recruitment websites in our markets, with 21.9 million unique monthly visitors ("UMVs") coming to our website on average during the year ended December 31, 2019, which is nearly three times more than our closest peer, according to LiveInternet. We enjoy strong user traffic dynamics and are the fifth most visited job and employment website based on this metric globally, according to the latest data available from SimilarWeb as of May 1, 2020.

Powerful network effect reinforcing our market leading position

        Our extensive, high quality CV database (the owners of 20.2 million CVs, or 74% of our total visible CV database, excluding CVs acquired from Job.ru, have either applied at least once for a job posting or edited a CV in the last two years as of December 31, 2019), large database of job postings relevant to job seekers and significant user traffic create a strong network effect as employers and job seekers tend to use job classifieds resources that offer the widest range of options and the highest efficiency. This creates a cycle that has reinforced our market leadership position and increased the gap between us and our competitors, as demonstrated by the following key performance metrics:

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GRAPHIC

        We believe that our strong leadership position is highly defensible, and that it is becoming increasingly difficult for our competitors to overcome this competitive moat, as demonstrated by our consistent revenue growth linked to the growth of our key operating metrics presented above.

Most recognized brand and nationwide technology-empowered sales function creating strong customer relationships

        We believe that our brand and our sales function are distinct competitive

        advantages as we expand our product offering and enter new market segments. As one of the first online recruitment platforms in Russia (operating since 2000), we have established "HeadHunter" as a strong brand with top-of-mind brand awareness of 55% according to Socis MR Rus as of September 30, 2019, which differentiates us from our competitors. Our nearest competitor had top-of-mind brand awareness of 20%, and other market participants had top-of-mind brand awareness in the single digits, according to Socis MR Rus as of September 30, 2019. We are not only the leader in the white collar segment with a top-of-mind brand awareness of 64%, which traditionally is our strongest market, but we are also the leader in the blue collar segment with a top-of-mind brand awareness of 42%, according to Socis MR Rus as of September 30, 2019. We were ranked first among career-focused websites in Russia by SimilarWeb based on user traffic as of May 1, 2020. According to our internal data, as of December 2019, 93% of our traffic was free, which demonstrates strong user affinity for our brand and the high organic liquidity of our platform. Direct traffic, which is comprised of organic, type-in and email distributions traffic, accounted for 59% of our traffic. We intend to further increase the popularity of our brand and user loyalty through the efficient use of TV and online advertising in our markets and by focusing on the high quality of our user experience and customer service.

        Our sales function consists of a sales force with an established and extensive presence across Russia and the CIS, a well-developed customer support function and a fully integrated customer relationship management ("CRM") platform, incorporating predictive analytics tools.

        As of December 31, 2019, our sales force consisted of 199 sales professionals, which makes it, we believe, one of the largest and most experienced sales forces in our markets and has helped us to become the online recruiting platform of choice for Russian employers. We have also created strong

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relationships with the corporate HR departments of some of our key accounts, or customers that are organizations that, according to the Spark-Interfax database, have an annual revenue of GRAPHIC 2 or more billion or a headcount of 250 or more employees and are not recruiting agencies ("Key Accounts"). These strong relationships date back more than 10 years, positioning us to successfully cross sell and upsell our existing and developing services. Our sales team is efficiently organized and strategically placed in Moscow, St. Petersburg and other regional offices, and is further specialized by industry and customer type. We have 86 professionals, for example, who are dedicated to selling services to Small and Medium Accounts and 113 professionals covering Key Accounts, each with specialized expertise and training. This structure allows us to provide truly local, individualized, high quality service to our customers.

        Our CRM system serves as a powerful tool for our sales function. It is linked to our main platform and, combined with predictive analytics tools, provides real time analysis of customer activity on our website and suggests relevant actions to our sales force.

Robust business model generating diversified and growing revenue streams from a loyal customer base

        Our business model is built around four key pillars of monetization: subscription-based access to our CV database, job posting fees, bundled subscriptions and VAS. Our diversified revenue stream, including highly predictable, recurring subscription-based fees (for CV database access and bundled subscriptions) that accounted for 51.2% of our total revenue in the year ended December 31, 2019, allowed us to increase our revenue at a CAGR of 28.3% from 2017 to 2019 (including the revenue of HeadHunter LLC (Ukraine)) and achieve year over year growth at a rate of 27.7% from 2018 to 2019 (excluding the revenue of HeadHunter LLC (Ukraine), which we disposed of in April 2018), resulting in total revenue of GRAPHIC 7,789 million in the year ended December 31, 2019.

        We believe that our business model provides a substantial degree of protection from the volatility of economic cycles. Our customers are spread across many sectors of the Russian economy, diversifying our exposure and protecting our revenue from downturns and unfavorable developments in any single sector.

        Our business model and customer-oriented approach allow us to maintain high rates of customer retention. Given the relatively low cost of our services, underpinned by the relatively low elasticity of demand for our services, we believe there is still significant room for increased monetization.

Superior profitability and cash flow generation profile

        Capitalizing on our leading market position and the strong network effect, our scalable, asset-light, capital-efficient operating model allows us to expand our service offering and geographical footprint in our existing markets and increase our revenue from a growing customer base without significant investments, while maintaining negative working capital as we receive payments from customers for a number of our services in advance. Our net working capital as of December 31, 2017, 2018 and 2019 and March 31, 2020 was GRAPHIC (1,956) million, GRAPHIC (2,623) million, GRAPHIC (2,994) million and GRAPHIC (3,130) million, respectively. This is reflected in our attractive profitability and cash conversion profile, both in the Russian and in the global context. Our Adjusted EBITDA Margin in the years ended December 31, 2017, 2018 and 2019 and the three months ended March 31, 2020 was 47.7%, 46.7%, 50.5% and 52.5%, respectively, and we believe that, considering the high operating leverage of our business and inspired by the example of the leading international players in their respective markets, we have significant further upside in margins as we further grow our market share and revenue base.

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Strong technology foundation and scalable infrastructure to support future growth

        We have developed a sophisticated technology platform, focused on scalability and security, which allows us to create additional value, to improve monetization of our products and maintain our competitive edge.

        Extensively employing machine learning algorithms and artificial intelligence at all key stages of interaction with job seekers and customers.    AI lies at the core of our platform, moderating 100% of incoming CVs (with approximately 70% of all CVs ultimately approved for publication by AI and our heuristic system in the year ended December 31, 2019), and we use machine learning algorithms to rank CVs in our database and match candidates with the relevant vacancies. As a result, we save on costs associated with CV moderation while improving conversion throughout the job seeker's funnel, thereby increasing the value of core services to our customers and laying a solid base for monetization enhancement.

        Best mobile solution for job seekers and customers.    We believe we are the leading human resources ("HR") mobile platform in Russia, with the majority of our traffic currently coming from mobile users. With both customers and job seekers increasingly demanding on-the-go and on-demand access to recruiting and HR services, we consider our mobile platform to be a strategic pillar of our business. As we continuously enhance the user experience on our mobile apps, in 2019, we updated our first time user session experience and created simpler, more intuitive interactions on our apps in order to optimize user engagement and encourage more conversions. We are developing a sequenced "call-to-action" approach powered by AI in our mobile apps, which drives users through a funnel to the desired action. As of December 31, 2019, our mobile app was ranked among the top business-related applications in iOS and Android appstore generated lists in Russia, and since launch in 2012, our mobile applications have been downloaded 22.2 million times cumulatively as of December 31, 2019. The total number of cumulative downloads since launch for the year ended December 31, 2019 increased by 44.8% compared to the year ended December 31, 2018.

        Scalable and robust proprietary platform.    Our IT infrastructure was built to be highly agile and scalable enabling us to expand our product portfolio while significantly growing our user base. The scalability of our technology platform allows us to handle large volumes of traffic without significant incremental capital investment. In addition, we tend to avoid using third-party proprietary IT tools to prevent vendor lock, and instead we seek to utilize well known and proven open source tools.

        Continuously improving technology Key Performance Indicators ("KPIs").    We work to the highest technology standards and aim to constantly improve our platform. The number of technical bugs per release decreased by 11.3% in the year ended December 31, 2019 compared to the year ended December 31, 2017. Business continuity for our customers is paramount to us, and we have demonstrated an average uptime rate of 99.92%, 99.92% and 99.94% in the years ended December 31, 2017, 2018 and 2019, respectively. We create different types of user interfaces for different users and simplify user interface forms depending on the context, which we believe improves conversion rates and increases monetization.

        Data protection and security.    We take protection of job seekers' personal data and customers' corporate data extremely seriously. All data between our servers and customers' browsers is transmitted over secure protocols. We use monitoring and protection services to limit potential hacking attacks. Our application and database servers are located on an internal network that is isolated from the internet and is additionally protected by a dual firewall. We perform regular penetration testing under multiple scenarios. Roskomnadzor inspects our compliance with applicable personal data processing laws, and we fully comply with all such requirements.

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Strong and experienced management team supported by a highly competent board of directors and reputable shareholders

        Our experienced management team has a proven track record of delivering on our focused and ambitious strategy as evidenced by our operating and financial results. Since 2010, our management has successfully grown the traffic gap between us and our key competitors, guided us through periods of macroeconomic uncertainty, defended our market positions against aggressive new market entrants and positioned us as the undisputed market leader in Russia and the CIS. We believe that our management team has a proven ability to identify key market opportunities, as demonstrated by our success in introducing AI and machine learning into HR processes, capturing the mobile trend and moving our services further into HR funnels, and has positioned us to capitalize on global HR trends as they gain relevance in our market.

        We believe that the skills, industry knowledge and operating expertise of our senior executives, combined with the support of our board of directors, provide us with a distinct competitive advantage as we continue to grow.


Our Growth Strategy

        Consistent with the examples of the leading online classified businesses in both developed and emerging markets with certain "winner takes all" characteristics, we aim to continue growing faster than the Russian online recruitment market, thereby increasing our market share while maintaining profitability. To achieve our goals, we have designed our strategy around the following pillars:

Continue to broaden candidate reach

        We plan to continue strengthening our candidate sourcing capabilities by enhancing our coverage of the overall employable population of Russia and the CIS regions. In addition to our traditional white collar and Moscow and St. Petersburg based markets, we are increasingly emphasizing penetration into the blue collar segment and the other Russian regions, as well as other specific categories of job seekers, such as passive candidates and youth, where we are noticing an increase in customer demand. We have adopted a wide range of marketing channels and tools that aim to attract diverse candidate audiences to our platform and apps. These channels and tools include TV marketing, digital marketing, email distributions and other types of communications. In order to reach all job seeker candidate audiences, we also aim to build a presence across new communication channels, such as social networks and messengers.

Increase the share of candidates from Russian regions

        We see strong demand for both white collar and blue collar professionals in the Russian regions outside of Moscow and St. Petersburg. As of December 31, 2019, CVs from Russian regions accounted for 49% of our total visible CV database, compared to 48% as of December 31, 2018. We plan to further increase this share benefiting from our long-standing leadership by number of CVs in regions.

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Increase the share of blue collar job seekers

        We aim to continue diversifying our job seeker base and increase the number of blue collar professionals using our platform, who we believe are a segment of the Russian online job seeker market that has historically been hard to reach online, and therefore, represents significant potential. Our key initiatives in this regard include:

        In line with this strategy:

Increase the share of other categories of job seekers, such as passive and young candidates

        We believe that providing access to all job seekers, including both active candidates and passive candidates who may not be actively looking to change jobs, is crucial to making our platform more attractive to employers. Our extensive machine learning tools effectively identify specific types of passive job seeker candidates who may potentially be open to new opportunities. Although we consider the substantial majority of candidates on our platform to be active job seekers, we plan to focus further on tools that increase the engagement of passive candidates, as we believe these tools are particularly relevant for our customers who focus primarily on talent acquisition or high-frequency recruitment. We believe that competition for entry level professionals is set to intensify in the coming years due to demographic factors (i.e., low birth rates in Russia in the 1990s into the beginning of the 2000s). Hence, we consider it essential to ensure high engagement and retention of the younger audience on our platform.

        We aim to solidify our market leadership in this segment (by number of CVs of young professionals) by significantly increasing content targeted at youth (particularly internship postings), further improving our user interface and conducting selective marketing efforts aimed at young professionals (if considered necessary). We also intend to design innovative mobile solutions to suit young professionals' needs and employment habits, such as elevated turnover rate, the preference for temporary or remote employment and higher activity on-the-go.

Increase and enhance job advertisements database

        Our strategic goal is to be the leader by job advertisements across all regions of Russia and all customer segments.

Increase customer penetration in Russian regions

        We plan to capitalize on the relatively low penetration level of online recruitment services in Russia. We aim to continue expanding into Russian regions, focusing on cities with more than 50,000 inhabitants, where we believe high growth opportunities in our industry exist due to the ongoing shift from offline to online. The CAGR of our number of customers in the Russian regions, excluding Moscow and St. Petersburg, was 55% from 2015 to 2019, compared to 22% in Moscow and

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St. Petersburg during the same period, which demonstrates the importance of the regional focus of our geographical expansion strategy.

        Besides benefiting from a steadily growing online recruitment market, we aim to gain market share from other regional and multi-regional online job classifieds platforms due to our strong competitive advantages, including our highly trained, local sales force, ability to publish job postings and CVs across broad geographies, technological edge and expansion of social media, TV and other marketing programs to further increase our brand awareness and engagement of job seekers and customers.

Increase the share of Small and Medium Accounts

        We aim to substantially increase the number of Small and Medium Accounts on our platform, which we believe represent the most underpenetrated segment of the Russian job classifieds market. The number of our Small and Medium Accounts grew by 28.0% in the year ended December 31, 2019 compared to the year ended December 31, 2018, reaching approximately 285,000 accounts for the year ended December 31, 2019, while the number of Key Accounts grew by 3.6% during the same period, reaching approximately 11,000 accounts for the year ended December 31, 2019.

        Our key initiatives in this regard include:

Provide the most effective candidate delivery product by maintaining technological edge across all platforms

        As we continue to grow our candidate and employer databases and as traffic on our platform continues to increase, it is critical that we continue developing our technology and data capabilities to optimize job seeker and employer matching, thus enabling a streamlined and efficient recruitment process for both parties.

        We will continue to extensively use and develop AI technology and machine learning algorithms at all key stages of interaction with job seekers and employers. Our main goals for our AI and machine learning algorithms are to further enhance our smart search and matching functionalities in job postings and our CV database and make our recommendation system more tailored to specific qualities and recruitment criteria, each of which we expect will improve the quality of our recommendations and matches and in turn increase the number of people hired through our platform.

        We benefit from high barriers to entry combined with the ability to compile unique data based on the recruitment needs of our customers, which allows us to steadily develop innovative products. Our strategy is to continue collecting and using this data to feed into our Smart Matching and Machine Learning Recommendation systems, while also maintaining data protection standards and continuing to be in full compliance with all relevant personal data related regulations. In this regard, we will continue applying stringent information security standards and continue stress and access testing of our IT systems under different scenarios to meet evolving security challenges and ensure the safety and privacy of our job seekers' and customers' data.

        We plan to pursue a platform agnostic approach and boost usage of our mobile platform by developing and improving access to a larger range of our services on "all screens." Growing mobile

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internet and smartphone penetration in Russia is a major trend, and we aim to leverage this development to further increase our customer and job seeker reach. We consider mobile expansion to be not only a natural evolution of our desktop audience, but also a way to expand our ability to access such job seekers and customers who prefer mobile to desktop use. As of December 31, 2019, 71% of registered job seekers used our mobile platform only (including both mobile website and apps), while 17% used the desktop only. The share of registered job seekers only using our mobile applications increased from 19% in January 2017 to 41% in December 2019. We continuously seek to enhance the functionality of our mobile platform. Our mobile app for job seekers now provides full functionality and we continue to add functionality to our mobile app for customers. As a result, we see a growing share of our traffic from mobile devices, reaching 64% and 73% for the years ended December 31, 2018 and 2019, respectively, and improving conversions of mobile traffic into applications from job seekers.

Enhance customer monetization potential

        We believe there is significant untapped monetization potential in our business due to the relatively low costs of our services to our customers, in both absolute and relative terms as compared to foreign markets, and we believe this leads to relatively low elasticity of demand, particularly for large enterprises.

        We developed an individual pricing strategy designed to link the cost of our services to the value that we deliver to our customers. Our legacy tariff pricing structure involved high amounts of discounts, both for subscriptions and job postings, which enabled large enterprises to utilize our services at a disproportionally lower price per unit than smaller enterprises. As the first step towards linking the cost of our services directly to the value delivered to our customers, we removed our unlimited job posting package in 2016, and as a result, we gained substantial flexibility in up-selling job posting packages, which in turn drove the average revenue per customer ("ARPC") for our Key Accounts. Following this successful step, we announced the introduction of consumption limits for our subscription products starting from August 2020. All subscription contracts signed or renewed after this date will have a consumption limit based on contract duration. Upon reaching the consumption limit, clients would have to purchase additional contacts at a certain price per contact. We expect that transitioning from a flat fee model to an individual pricing model will allow us better capitalize on our competitive strengths without adversely affecting the lower end of the market, such as rapidly expanding areas like small and medium enterprises and the blue collar segment.

        We believe that there are also opportunities to change certain parts of our business to performance-based pricing models in order to increase the monetization of our services. For example, the introduction of our CPC-based Virtual Recruiter product (as described below) enabled us to increase the ARPC from certain of our customers by multiple times within a single year, and we plan to roll out this product further across suitable market segments, such as mass recruitment.

        We strive to continue to upsell our core services with value added products, such as branding and advertising, applicant tracking system ("ATS"), assessment and analytics and more, which helps to extend our portfolio of services across the recruitment value chain and grow both our ARPC and customer retention over time.

        We expect that these monetization changes will be supported by our strong pricing power, which we derive from our clear market leading position and product and service superiority on the back of powerful network effects.

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Continue to expand the scope and depth of our services to reach the entire recruiting value chain through acquisitions and internal development

        We plan to continue transforming our business into a comprehensive, integrated recruiting platform by broadening our product range along the recruitment services value chain (from sourcing to onboarding). We may seek out acquisitions of control of, minority stakes in or strategic partnerships in either our direct competitors or assets in adjacent markets, such as ATS and automation software, professional education and temporary workers. We continue to assess and we are regularly and actively exploring opportunistic acquisitions that are consistent with our growth strategy as we believe that being acquisitive is a key component of our long-term success. We will also continue to strive to expand the scope and depth of our services to job seekers and to complement our core product portfolio by introducing new products through internal development.

        Our goal is to capture and automate the entire recruiting process and seamlessly manage it through our platform. We believe that integrating our online classified, program-based, off-platform lead generation capabilities and process management software in one solution will increase our customer value proposition, enhance customer loyalty and increase customer spend within our recruitment ecosystem and ancillary businesses, which we believe will enhance our core product portfolio. We believe that our vast customer base, deep insight into its hiring needs as well as broad candidate sourcing capabilities give us advantages in creating value throughout the recruiting process while enhancing customer engagement and increasing our overall customer retention and ARPC.

        Our proprietary Software-as-a-Service ("SaaS") based ATS, Talantix, allows employers to automate candidate processing and talent acquisition, which is vital to creating value throughout the entire recruiting process. Talantix has been gaining traction among our midmarket customers that look for an end-to-end solution with minimal customization and integration requirements. This allows us to scale this offering across a broader customer base without embarking on long-lasting integrations.

        In order to address our customers' need for process automation and streamlining other work streams, we introduced our "Virtual Recruiter" product in 2017, which is predominantly aimed at mass recruitment vacancies or positions with limited qualifications that are mainly in the retail segment and are characterized by high employee turnover. Virtual Recruiter uses our sourcing capabilities (both on and outside of our platform) and chat bot technologies to help customers automatically attract a wide range of potential suitable candidates from various sources, run the pre-screening and scoring processes, schedule interviews and more, without any human involvement on the customer's side. We aim to continue developing this product and fully integrate it into our ATS solutions.

        On May 6, 2019, we acquired a 25.01% stake in a rapidly developing HR technology company, LLC Skilaz ("Skillaz"), which automates routine recruiting processes by implementing complex built-to-suit integration projects. This offering complements Talantix as it targets larger, high-end market customers who have a sophisticated recruitment function. We also entered into option contracts to purchase an additional 40.01% ownership interest in Skillaz, which are exercisable through the period from June 1, 2020 until June 30, 2021 and subject to certain option exercise procedures. These options will be exercised if we decide that this product gains traction with our customers and fits with our long-term strategy.

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Russian Online Recruitment Market Size

Recruitment Spend in Russia

        Total recruitment spend in Russia was estimated to be GRAPHIC 47 billion in 2019, according to J'Son & Partners. Total recruitment spend was evenly split between Moscow and St. Petersburg and other regions of Russia, or GRAPHIC 23.3 billion and GRAPHIC 24.2 billion, respectively. At the same time, large enterprises accounted for GRAPHIC 23.7 billion, and small and medium enterprises accounted for GRAPHIC 23.8 billion of total recruitment spend in 2019. In terms of split between white and blue collar positions, the white collar market represents P20.8 billion and the blue collar market was estimated to be GRAPHIC 26.6 billion in 2019.

Metric
  2015   2016   2017   2018   2019E  

Population employed, million

    72.3     72.4     71.8     72.5     72.1  

White collar

    30.9     30.9     30.7     30.8     30.6  

Blue collar

    41.4     41.5     41.1     41.7     41.4  

Employee turnover rate, %

    26.4 %   26.9 %   27.1 %   28.5 %   28.8 %

White collar

    14.2 %   14.5 %   14.6 %   15.3 %   15.5 %

Blue collar

    35.5 %   36.2 %   36.4 %   38.2 %   38.7 %

Filled in job positions, million

    19.1     19.5     19.5     20.7     20.8  

White collar

    4.4     4.5     4.5     4.7     4.7  

Blue collar

    14.7     15.0     15.0     16.0     16.0  

Job positions advertised (online and offline), million

    11.1     11.3     11.3     12.0     12.4  

White collar

    3.2     3.3     3.3     3.4     3.5  

Blue collar

    7.9     8.1     8.1     8.6     8.9  

Average cost per hire, '000 RUB

    3.9     3.9     3.9     3.9     3.8  

White collar

    6.0     6.0     6.0     6.0     6.0  

Blue collar

    3.0     3.0     3.0     3.0     3.0  

Total recruitment spend, RUB billion

    42.9     43.8     43.8     46.3     47.5  

White collar

    19.1     19.5     19.5     20.6     20.8  

Blue collar

    23.8     24.2     24.2     25.8     26.6  

Source: J'Son & Partners


Online Recruitment Market Structure

Metric
  2015   2016   2017   2018   2019E  

Online recruitment platforms revenue

    5,095     6,238     8,050     10,304     12,800  

from large enterprises

    3,204     3,638     4,560     5,691     6,904  

from small & medium enterprises

    1,891     2,600     3,490     4,613     5,896  

Online recruitment platforms revenue

    5,095     6,238     8,050     10,304     12,800  

from Moscow & St. Petersburg

    3,725     4,333     5,454     6,452     7,719  

from Other regions of Russia

    1,370     1,905     2,596     3,852     5,081  

Online recruitment platforms revenue

    5,095     6,238     8,050     10,304     12,800  

from white collar job positions

    3,887     4,717     6,019     7,541     9,185  

from blue collar job positions

    1,208     1,521     2,031     2,763     3,615  

Source: J'Son & Partners

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Russian Online Recruitment Market Landscape

 
  HeadHunter   SuperJob   Rabota   Avito   Zarplata  

Visible CV database, million (January 31, 2020)

    31.4     13.9     8.5     2.0     6.9  

30-day job postings, thousand (January 31, 2020)

    466     282     100     213     146  

UMVs, million (average, for 2019)

    21.9     6.3     6.1     N/A     3.3  

Year of foundation

    2000     2000     1998     2007 (1)   2013 (2)

Brand awareness (top-of-mind) (September 30, 2019)

    55 %   4 %   5 %   20 %   5 %

(1)
Year of Avito.ru foundation

(2)
Zarplata.ru web portal established in 1999. Merged core assets under Zarplata umbrella in 2013.

Source: J'Son & Partners, Socis MR Rus


Corporate Information

        We were incorporated in Cyprus on May 28, 2014 under the Cyprus Companies Law, Cap. 113 as Zemenik Trading Limited, and our registered office is located at 42 Dositheou Street, Strovolos, Nicosia, Cyprus. Our principal executive office is located at 9/10 Godovikova Street, Moscow, 129085, Russia. On March 1, 2018, Zemenik Trading Limited was converted from a private limited company incorporated in Cyprus into a public limited company incorporated in Cyprus, and the Company's name changed, pursuant to a special resolution at a general meeting of the shareholders, to HeadHunter Group PLC. The legal effect of this conversion under Cypriot law was limited to the change of legal form. On June 19, 2019, we completed the change of our strategic and day-to-day place of management from Cyprus to Russia, and as a result, we became a Russian tax resident. See "Material Tax Considerations—Material Cyprus Tax Considerations—Taxation of Dividends and Distributions." Our board of directors has also approved the secondary listing of our ADSs on the Moscow Exchange. Subject to the approval of the Moscow Exchange, we expect our ADSs to begin trading on the Moscow Exchange in the fourth quarter of 2020.

        The principal executive office of our key operating subsidiary, Headhunter LLC, is located at 9/10 Godovikova Street, Moscow, 129085, Russia. The telephone number at this address is +7 495 974-6427. Our website address is www.hh.ru. The information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus supplement. We have included our website address as an inactive textual reference only.


Implications of Being an "Emerging Growth Company" and a "Foreign Private Issuer"

        We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act (the "JOBS Act"). As such, we are eligible, for up to five years, to take advantage of certain exemptions from various reporting requirements that are applicable to other publicly traded entities that are not emerging growth companies. These exemptions include:

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        We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the completion of the IPO or such earlier time that we are no longer an emerging growth company. As a result, we do not know if some investors will find our ADSs less attractive. The result may be a less active trading market for our ADSs, and the price of our ADSs may become more volatile.

        Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act for complying with new or revised accounting standards. We have chosen to irrevocably opt out of this extended transition period and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Under federal securities laws, our decision to opt out of the extended transition period is irrevocable.

        We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenue exceeds $1.07 billion; (ii) the last day of the fiscal year during which the fifth anniversary of the date of the IPO; (iii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1.00 billion in non-convertible debt securities during any three-year period.

        We report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

        Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company, but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer.


Status as a "Controlled Company"

        Upon the completion of this offering, our shareholders, Highworld Investments Limited, an investment vehicle associated with Elbrus Capital, and ELQ Investors VIII Limited, an investment vehicle associated with The Goldman Sachs Group, Inc., will collectively own 26,249,995 ordinary shares, representing 52.2% of the voting power of our issued and outstanding shares (or 25,499,995 ordinary shares representing 50.7% of the voting power of our issued and outstanding shares if the underwriters exercise their option to purchase additional ADSs in full). As a result, we will remain a "controlled company" within the meaning of the listing rules and therefore we are eligible for, and, in the event we no longer qualify as a foreign private issuer, we intend to continue to rely on, certain exemptions from the corporate governance listing requirements of Nasdaq. See Item 6.C. "Directors, Senior Management and Employees—Board Practices—Controlled Company Exemption" of our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein.

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THE OFFERING

ADSs offered by the Selling Shareholder

  5,000,000 ADSs, each representing one ordinary share.

Ordinary shares to be outstanding after this offering

 

50,317,860 ordinary shares.

Option to purchase additional ADSs

 

The Selling Shareholder has granted the underwriters an option to purchase up to 750,000 additional ADSs within 30 days of the date of this prospectus supplement.

American Depositary Shares

 

The underwriters will deliver our ordinary shares in the form of ADSs. Each ADS, which may be evidenced by an American Depositary Receipt ("ADR") represents an ownership interest in one of our ordinary shares. As an ADS holder, we will not treat you as one of our shareholders. The depositary, JPMorgan Chase Bank, N.A., will be the holder of the ordinary shares underlying your ADSs.

 

You will have ADS holder rights as provided in the deposit agreement, dated as of May 8, 2019. Under the deposit agreement, you may only vote the ordinary shares underlying your ADSs if we ask the depositary to request voting instructions from you. The depositary will pay you the cash dividends or other distributions, if any, it receives on our ordinary shares after deducting its fees and expenses and applicable withholding taxes. You may need to pay a fee for certain services, as provided in the deposit agreement.

 

You are entitled to the delivery of the ordinary shares underlying your ADSs upon the surrender of such ADSs, the payment of applicable fees and expenses and the satisfaction of applicable conditions set forth in the deposit agreement.

 

To better understand the terms of the ADSs, you should carefully read "Description of American Depositary Shares." We also encourage you to read the deposit agreement, the form of which was filed as an exhibit to our Form 20-F for the year ended December 31, 2019, which is incorporated by reference herein.

Depositary

 

JPMorgan Chase Bank, N.A.

Use of proceeds

 

The Selling Shareholder will receive all of the net proceeds from the sale of the ADSs. We will not receive any proceeds from the sale of ADSs by the Selling Shareholder.

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Dividend policy

 

We have historically paid dividends, and while we have not adopted a formal dividend policy, we currently expect to continue to do so in the future. Subject to the recommendation of the board of directors and shareholder approval, we plan to annually distribute at least 50% of our Adjusted Net Income, as defined in "Presentation of Financial and Other Information," subject to our investment and debt repayment requirements. Any future determination regarding the payment of a dividend will depend on many factors, including the availability of distributable profits, our liquidity and financial position, our future growth initiatives and strategic plans, including possible acquisitions, restrictions imposed by our financing arrangements, tax considerations and other relevant factors. If we declare dividends on our ordinary shares, the depositary will pay you the cash dividend and other distributions it receives on our ordinary shares net of withholding tax, after deducting its fees and expenses. See Item 8.A "Consolidated Statements and Other Financial InformationDividend Policy" of our Form 20-F for the year ended December 31, 2019 incorporated by reference herein.

 

Due to the current uncertainty related to the COVID-19 pandemic and its ultimate effects on the Russian economy and our business, we previously announced that our board of directors decided to defer until further notice the previously announced payment of an interim dividend of $0.50 per share, which had been scheduled for payment by April 20, 2020. Both the amount of the dividend as well as the dividend record date of March 27, 2020 will remain unchanged. We will continue to monitor the impact of the COVID-19 pandemic on our business to determine when to resume our dividend payments. Since we believe there is a greater confidence in our near-term outlook compared to April 2020, our board of directors is planning to discuss the timing of the deferred dividend payment by the end of August 2020.

Risk factors

 

See "Risk Factors" and the other information included and incorporated by reference in this prospectus supplement for a discussion of factors you should consider before deciding to invest in our ADSs.

Lock-up agreements

 

We have agreed with Goldman Sachs & Co. LLC, as representative of the several underwriters, and Morgan Stanley & Co. LLC, subject to certain exceptions, not to sell or dispose of any of our ADSs or securities convertible into or exchangeable or exercisable for our ADSs until 90 days after the date of this prospectus supplement. The Selling Shareholder, Highworld Investments Limited, our executive officers and our board members have agreed to similar lockup restrictions for a period of 90 days. See "Underwriting (Conflicts of Interest)."

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Pre-emptive rights

 

Under the law of Cyprus, existing holders of shares in Cypriot public companies are entitled to pre-emptive rights on the issue of new shares in that company (if shares are issued for cash consideration). In addition, our shareholders authorized the disapplication of pre-emptive rights for a period of five years from the date of the completion of the IPO. See "Description of Share Capital and Articles of Association—Pre-emptive Rights."

Nasdaq trading symbol

 

"HHR."

        Unless otherwise indicated, all information contained in this prospectus supplement assumes no exercise by the underwriters of their option to purchase additional ADSs in this offering.

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following tables present our summary consolidated financial data as of and for the periods indicated. The summary consolidated statements of operations data for the years ended December 31, 2017, 2018 and 2019 are derived from our audited consolidated financial statements and related notes included in our Form 20-F for the year ended December 31, 2019 incorporated by reference herein. The summary consolidated financial data as of March 31, 2020 and for the three months ended March 31, 2020 and 2019 has been derived from our unaudited condensed consolidated interim financial information, which are included elsewhere in this prospectus supplement. The unaudited condensed consolidated interim financial information reflect, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for a fair presentation of the results of the unaudited interim periods. Our historical audited results are not necessarily indicative of the results that should be expected in any future period.

        The financial data set forth below should be read in conjunction with, and is qualified by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus supplement, Item 3.A "Selected Consolidated Historical Financial and Other Data" and the consolidated financial statements and notes thereto included in our Form 20-F for the year ended December 31, 2019 incorporated by reference herein.

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Income Statement Data

 
  For the year ended December 31,   For the three months
ended March 31,
 
(in thousands of RUB, except per share data)
  2017(1)(2)   2018(2)   2019   2019   2020  

Revenue

    4,732,539     6,117,773     7,788,741     1,678,437     1,990,409  

Operating costs and expenses (exclusive of depreciation and amortization)

    (2,788,576 )   (3,432,860 )   (4,300,263 )   (933,540 )   (1,138,619 )

Depreciation and amortization

    (560,961 )   (586,131 )   (683,317 )   (165,104 )   (184,406 )

Operating income

    1,383,002     2,098,782     2,805,161     579,793     667,384  

Finance income

    70,924     90,602     76,764     26,207     19,158  

Finance costs

    (706,036 )   (644,326 )   (603,280 )   (167,830 )   (118,833 )

Gain on disposal of subsidiary

    439,115     6,131              

Net foreign exchange gain/(loss)

    96,300     (8,742 )   (46,508 )   (22,641 )   75,313  

Share of loss of equity-accounted investees (net of income tax)

            (30,542 )       (9,544 )

Other income(3)

            23,853         9,689  

Profit before income tax

    1,283,305     1,542,447     2,225,448     415,529     643,167  

Income tax expense

    (820,503 )   (509,602 )   (644,422 )   (176,782 )   (231,429 )

Net income

    462,802     1,032,845     1,581,026     238,747     411,738  

Attributable to:

                               

Owners of the Company

    400,189     949,307     1,448,018     209,391     363,463  

Non-controlling interest

    62,613     83,538     133,008     29,356     48,275  

Earnings per share

                               

Basic

    8.00     18.99     28.96     4.19     7.27  

Diluted

    8.00     18.99     28.42     4.19     7.05  

Dividends declared per share

                               

RUB(4)

    67.5         22.29          

USD

    1.16         0.36          

(1)
We adopted IFRS 15 at January 1, 2018 using the full retrospective approach. Under the transition method chosen, certain comparative information has been restated. Please refer to Note 4 of our consolidated financial statements for the years ended December 31, 2017, 2018 and 2019.

(2)
We adopted IFRS 16 at January 1, 2019 using the modified retrospective approach. Under the transition method chosen, comparative information is not restated. Please refer to Note 4 of our consolidated financial statements for the years ended December 31, 2017, 2018 and 2019.

(3)
Other income includes income from the depositary. Please refer to Note 24 of our consolidated financial statements for the years ended December 31, 2017, 2018 and 2019.

(4)
For the year ended December 31, 2019, the amounts in this row have been calculated at the exchange rate of the Central Bank of Russia of $1 to GRAPHIC

61.91 as of December 31, 2019. As the distribution to shareholders was made in several tranches during the year ended December 31, 2017, the USD per share amount for the year ended December 31, 2017 was translated from the Russian Ruble amount using the average exchange rate for the year ended December 31, 2017 of the Central Bank of Russia of $1 to GRAPHIC

58.35.

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    Balance Sheet Data

(in thousands of RUB)
  As of March 31, 2020  

Total non-current assets

    10,707,790  

Total current assets

    3,302,016  

Total assets

    14,009,806  

Total equity

    1,991,010  

Total non-current liabilities

    4,661,946  

Total current liabilities

    7,356,850  

Total liabilities

    12,018,796  

    Non-IFRS Measures and Other Financial Information

 
  For the three months ended March 31,  
(in millions of RUB, except percentages)
  2019   2020  

Adjusted EBITDA(5)

    774     1,045  

Adjusted EBITDA Margin(6)

    46.1 %   52.5 %

Adjusted Net Income(7)

    373     613  

Adjusted Net Income Margin(8)

    22.2 %   30.8 %
(5)
We define Adjusted EBITDA as net income (loss), plus: (i) income tax expense; (ii) interest expense/(income); (iii) depreciation and amortization; (iv) transaction costs related to business combinations; (v) (gain)/loss on the disposal of subsidiary; (vi) transaction costs related to disposal of subsidiary; (vii) expenses related to equity-settled share-based awards, including social tax; (viii) IPO-related costs and other financing and transactional costs; (ix) insurance expenses related to the IPO; (x) (income) from the depositary; (xi) one-off litigation settlement and related legal costs; (xii) share of (profit)/loss of equity-accounted investees; and (xiii) non-cash expense related to the non-current assets impairment.

(6)
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.

(7)
We define Adjusted Net Income as net income/(loss), plus: (i) transaction costs related to business combinations; (ii) (gain)/loss on the disposal of a subsidiary; (iii) transaction costs related to the disposal of a subsidiary; (iv) expenses related to equity-settled share-based awards, including social tax; (v) IPO-related costs and other financing and transactional costs; (vi) insurance expenses related to the IPO; (vii) (income) from the depositary; (viii) one-off litigation settlement and related legal costs; (ix) share of (profit)/loss of equity-accounted investees; (x) amortization of intangible assets recognized upon the Acquisition; (xi) the tax effect of the adjustment described in (x); (xii) (gain)/loss related to the remeasurement and expiration of a tax indemnification asset; and (xiii) non-cash expense related to the non-current assets impairment.

(8)
We define Adjusted Net Income Margin as Adjusted Net Income divided by revenue.
 
  As of December 31,   As of March 31,  
(in millions of RUB, except ratios)
  2019   2020  

Net Working Capital(9)

    (2,994 )   (3,130 )

Net Debt(10)

    3,040     2,133  

Net Debt to Adjusted EBITDA Ratio(11)

    0.8x     0.5x  

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(9)
We define Net Working Capital as our trade and other receivables plus prepaid expenses and other current assets, less our contract liabilities, trade and other payables and other liabilities, in all cases, a current portion of a specific asset or liability.

(10)
We define Net Debt as current portion of our loans and borrowings, plus our loans and borrowings, less our cash and cash equivalents.

(11)
We define Net Debt to Adjusted EBITDA Ratio as Net Debt divided by Adjusted EBITDA. For the purposes of calculating this ratio as of March 31, 2020, Adjusted EBITDA is calculated on the last twelve months basis.

        Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by our management to monitor the underlying performance of the business and the operations. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by us to Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by other companies. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin or Adjusted Net Income Margin as alternatives to net income, operating profit or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:

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        We have provided a reconciliation below of net income, the most directly comparable IFRS measure, to EBITDA and Adjusted EBITDA.

 
  For the three months
ended March 31,
 
(in thousands of RUB)
  2019   2020  

Net income

    238,747     411,738  

Add the effect of:

             

Income tax expense

    176,782     231,429  

Net interest expense

    141,623     99,675  

Depreciation and amortization

    165,104     184,406  

EBITDA

    722,256     927,248  

Add the effect of:

             

Equity-settled awards and related social taxes(a)

    5,243     52,060  

IPO-related costs(b)

    46,027      

Insurance cover related to IPO(c)

        38,832  

Income from the depositary(d)

        (8,526 )

Other financing and transactional costs(e)

        26,039  

Share of loss of equity-accounted investees(f)

        9,544  

Adjusted EBITDA

    773,526     1,045,197  

(a)
Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity settled share based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.

(b)
In connection with our IPO, we incurred expenses related to legal, accounting and other professional fees that are not indicative of our ongoing expenses.

(c)
Subsequent to and in connection with our IPO, we purchased a one-year insurance policy for $2.7 million, of which we allocated $2.4 million to the cover related to our IPO, which we believe does not relate to our ordinary course of business, and $250 thousand to directors' and officers' insurance in the ordinary course of business, based on the estimate of our insurance provider. The cost of this insurance policy is expensed over the policy term on a pro-rata time basis and thus recurs in the reporting periods during its term. We may renew the policy, including the IPO-related cover, for an additional year or more.

(d)
In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.

(e)
Reflects legal, accounting and other professional fees incurred in connection with potential financing and strategic transactions that are not indicative of our ongoing expenses.

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(f)
On May 6, 2019, we acquired a 25.01% equity-accounted investee, LLC "Skilaz". We believe that share of profit or loss in equity-accounted investees is not indicative of our core operating performance.

        We have provided a reconciliation below of net income, the most directly comparable IFRS measure, to Adjusted Net Income.

 
  For the three months
ended March 31,
 
(in thousands of RUB)
  2019   2020  

Net income

    238,747     411,738  

Add the effect of:

             

Equity-settled awards and related social taxes(a)

    5,243     52,060  

IPO-related costs(b)

    46,027      

Insurance cover related to IPO(c)

        38,832  

Income from the depositary(d)

        (8,526 )

Other financing and transactional costs(e)

        26,039  

Share of loss of equity-accounted investees(f)

        9,544  

Amortization of intangible assets recognized upon the Acquisition(g)

    103,947     103,947  

Tax effect of adjustments(h)

    (20,789 )   (20,789 )

Adjusted Net Income

    373,175     612,844  

(a)
Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity settled share based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.

(b)
In connection with our IPO, we incurred expenses related to legal, accounting and other professional fees that are not indicative of our ongoing expenses.

(c)
Subsequent to and in connection with our IPO, we purchased a one-year insurance policy for $2.7 million, of which we allocated $2.4 million to the cover related to our IPO, which we believe does not relate to our ordinary course of business, and $250 thousand to directors' and officers' insurance in the ordinary course of business, based on the estimate of our insurance provider. The cost of this insurance policy is expensed over the policy term on a pro-rata time basis and thus recurs in the reporting periods during its term. We may renew the policy, including the IPO-related cover, for an additional year or more.

(d)
In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.

(e)
Reflects legal, accounting and other professional fees incurred in connection with potential financing and strategic transactions that are not indicative of our ongoing expenses.

(f)
On May 6, 2019, we acquired a 25.01% equity-accounted investee, LLC "Skilaz". We believe that share of profit or loss in equity-accounted investees is not indicative of our core operating performance.

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(g)
As a result of the Acquisition, we recognized the following intangible assets: (i) trademark and domain names in the amount of GRAPHIC

1,634,306 thousand, (ii) non-contractual customer relationships in the amount of GRAPHIC

2,064,035 thousand and (iii) CV database in the amount of GRAPHIC

618,601 thousand, which have a useful life of 10 years, 5-10 years and 10 years, respectively.

(h)
Calculated by applying the statutory Russian tax rate of 20% to amortization of the assets recognized upon the Acquisition.

        We believe that Net Working Capital is a useful metric to assess our ability to service debt, fund new investment opportunities, distribute dividends to our shareholders and assess our working capital requirements. Calculation of our Net Working Capital is presented in the table below:

(in thousands of RUB)
  As of
December 31,
2019
  As of
March 31,
2020
 

Calculation of Net Working Capital:

             

Trade and other receivables

    57,908     67,007  

Prepaid expenses and other current assets

    119,249     130,671  

Contract liabilities

    (2,367,416 )   (2,584,278 )

Trade and other payables

    (780,219 )   (718,265 )

Other current liabilities

    (23,880 )   (25,145 )

Net Working Capital

    (2,994,358 )   (3,130,010 )

        We believe that Net Debt and Net Debt to Adjusted EBITDA Ratio are important measures that indicate our ability to repay outstanding debt. Calculation of our Net Debt is presented in the table below:

(in thousands of RUB)
  As of
December 31,
2019
  As of
March 31,
2020
 

Calculation of Net Debt:

             

Loans and borrowings

    4,064,501     3,798,227  

Loans and borrowings (current portion)

    1,064,554     1,439,064  

Cash and cash equivalents

    (2,089,215 )   (3,104,338 )

Net Debt

    3,039,840     2,132,953  

        We calculate our Net Debt to Adjusted EBITDA Ratio by dividing Net Debt by Adjusted EBITDA.

        Calculation of Adjusted EBITDA on the last twelve months basis as of March 31, 2020:

(in thousands of RUB)
   
 

Adjusted EBITDA for the year ended December 31, 2019

    3,930,747  

Less Adjusted EBITDA for the three months ended March 31, 2019

    (773,526 )

Add Adjusted EBITDA for the three months ended March 31, 2020

    1,045,197  

Adjusted EBITDA on the last twelve months basis as of March 31, 2020

    4,202,418  

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RISK FACTORS

        You should carefully consider the risks described below before making an investment decision, together with all of the other information included in or incorporated by reference into this prospectus supplement and the accompanying prospectus, including our Annual Report on Form 20-F for the year ended December 31, 2019, and other information in our consolidated financial statements included and incorporated by reference herein. See "Where You Can Find More Information." Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks. The trading price and value of our ADSs could decline due to any of these risks, and you may lose all or part of your investment. This prospectus supplement also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below.

Risks Relating to our Business and Industry

        Important information regarding risks related to our business, including risks related to our industry, legal and regulatory risks, among others, is set forth under "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2019, which is incorporated herein by reference. Additional risks include the following:

A regional or global health pandemic, including COVID-19, could severely affect our business, results of operations and financial condition due to impacts on our customers as well as impacts from actions taken to contain the disease or treat its impact and the speed and extent of the recovery.

        A regional or global health pandemic, depending upon its duration and severity, could have a material adverse effect on our business. For example, COVID-19, which was discovered in Wuhan, China in December 2019 and on March 11, 2020 was declared by the World Health Organization as a global pandemic, has had numerous effects on the global economy. Governmental authorities around the world have implemented measures to reduce the spread of COVID-19, including shutdowns and "shelter-in-place" orders suggested or mandated by governmental authorities or otherwise elected by companies as a preventive measure. On March 25, 2020, the Russian government introduced a number of recommendations and restrictions, including declaring a "period of non-working days," which limited business activity, from March 30, 2020 to April 3, 2020 and were subsequently extended to May 11, 2020, as well as other restrictions on the movement of citizens and a limitation on most commercial activities. These restrictions differed in scope across various regions of the Russian Federation and were subject to change, resulting in the frequent strengthening and relaxation of such restrictions in different regions. These measures have adversely affected workforces, our customers, economies and financial markets, and the pandemic has had a significant impact of the economies in all of our markets.

        As a result of the government's imposed "period of non-working days" and social distancing measures introduced across the country, some businesses continued to work from home, while many others ceased operating or began operating in very limited capacities. Accordingly, this period significantly impacted business activities across Russia, which includes recruitment and hiring processes, as many companies put their hiring on hold or decreased the number of new hires they originally planned. Due to this decrease in activity, the number of job postings advertised on our platform, the number of candidates browsing job postings on our database and our revenue decreased from mid-March. Although we started to see a recovery in the activity on our platform from the second half of April to June 2020, the level of activity has not reached pre-pandemic levels for all of our operational metrics, and there can be no assurance that such levels will return for the remainder of this year or at all. If the levels of activity do not increase on our platform, it could have a material adverse impact on our business, financial condition and results of operations.

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        As a result of the COVID-19 pandemic and upon the recommendation of the Russian authorities, we transitioned our employees to remote working arrangements and temporarily closed our offices in mid-March 2020. Although we benefit from being a fully digital business and have not experienced any material disruptions to our operations to date, it is possible that this could have a negative impact on the execution of our business plans and operations. If a natural disaster, power outage, connectivity issue, or other event occurred that impacted our employees' ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. The increase in remote working may also result in consumer privacy, IT security and fraud concerns, as well as increase our exposure to potential wage and hour issues, and our understanding of applicable legal and regulatory requirements, as well as the latest guidance from regulatory authorities in connection with the COVID-19 pandemic, may be subject to legal or regulatory challenge, particularly as regulatory guidance evolves in response to future developments.

        There can be no assurance that our indebtedness will not increase our vulnerability to general economic and industry conditions, including recessions and periods of financial market volatility, particularly in light of the COVID-19 pandemic. The COVID-19 pandemic may impact our ability to raise capital, if needed, on a timely basis and on acceptable terms or at all. As at March 31, 2020 (the most recent reporting date), we were compliant with all financial and other covenants under our bank loan agreement (see Note 18(a) of the unaudited condensed consolidated interim financial information included elsewhere in this prospectus supplement). Based on current projections, we expect to remain compliant with these covenants for at least 12 months from July 3, 2020. VTB Bank (PJSC), the lender under our Credit Facility, has demonstrated their willingness to temporarily relax our covenants to a degree that we expect would cover a reasonable deviation from our current financial projections, though we have not entered into a formal waiver or agreement to amend covenants. Although we expect to be able to obtain loan agreement amendments or waivers in the future as needed, there can be no assurance that we will be able to continue to comply with our covenants in the future if the negative impacts on our business and results of operations worsen as a result of the COVID-19 pandemic.

        We are unable to accurately predict the impact that COVID-19 will have on our operations going forward due to uncertainties that will be dictated by the length of time that the pandemic and related disruptions continue, the impact of governmental regulations that might be imposed in response to the pandemic and overall changes in our customers' behavior. At this point in time, there is significant uncertainty relating to the potential effect of COVID-19 on our business, including but not limited, to decreases in activity on our platform by both our customers and job seekers due to various cost saving measures undertaken by companies. Although certain countries have begun to reopen their economies again, including Russia, there can be no assurance that there will not be a "second wave" or that infections will not become more widespread, and as a result, we may experience an even more severe negative impact on our business, financial condition and results of operations. Given the uncertainties associated with COVID-19, it is difficult to fully predict the magnitude of potential effects on our business, financial condition and results of operations.

        To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the "Risk Factors" section contained herein and in our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein.

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Risks Relating to the Russian Federation and Other Markets in which We Operate

        Important information regarding risks related to the Russian Federation and other markets in which we operate, legal and regulatory risks, among others, is set forth under "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2019, which is incorporated herein by reference. Additional risks include the following:

Political risks could adversely affect the value of investments in the Russian Federation.

        While the political situation in the Russian Federation has been relatively stable since 2000, future policy and regulation may be less predictable than in less volatile markets. Any future political instability could result in a worsening overall economic situation, including capital flight and a slowdown of investment and business activity. In addition, any change in the Russian Government or its programs or lack of consensus between the Russian President, the Prime Minister, the Russian Government, the Parliament and powerful political, social, religious, regional, economic or ethnic groups could lead to political instability and a deterioration in Russia's investment climate that might limit our ability to obtain financing in the international capital markets, and our business, prospects, financial condition and results of operations could be materially and adversely affected. In January 2020, the current Russian President Vladimir Putin proposed a number of constitutional reforms aimed at altering the balance of power between the legislative, executive and judicial branches and introducing certain other changes to the Constitution of the Russian Federation. The suggested amendments to the Constitution of the Russian Federation envisaged, among other things, the prioritization of the Constitution of the Russian Federation over international treaties and the decisions of international bodies, strengthening of the Russian State Council as an advisory board to the Russian President and granting the Russian Federal Council with authority to terminate the powers of the judges of the Constitutional Court of Russia upon the recommendation of the Russian President. In addition, further amendments were proposed in March 2020, under which the previous and/or current President of the Russian Federation is allowed to participate in presidential elections for two terms following the amendment of the Constitution, with previous presidential terms, which were served or started prior to these amendments becoming effective, will not be accounted for. The amendments were approved in a nation-wide vote held from June 25, 2020 to July 1, 2020 and are effective from July 4, 2020. These amendments may have a significant impact on the Russian political landscape and regulatory environment and lead to other changes that are currently difficult to predict.

        According to some commentators, politically motivated actions, including claims brought by the Russian authorities and state-owned companies against several major Russian companies, as well as certain cases of confiscation or renationalization of assets, have called into question the security and enforceability of property and contractual rights, the independence of the judiciary and the certainty of legislation. This has, in turn, had a negative impact on foreign investments in the Russian economy, over and above the general market turmoil recently. Any similar actions by the Russian authorities which result in a further negative effect on investor confidence in Russia's business and legal environment could have a further material adverse effect on the Russian securities market and prices of Russian securities or securities issued or backed by Russian entities, including the shares.

        Russia is a federative state consisting of 85 constituent entities, or "subjects." The Russian Constitution reserves some governmental powers for the Russian Government, some for the subjects and some for areas of joint competence. In addition, eight "federal districts" (federal'nye okruga), which are overseen by a plenipotentiary representative of the President, supplement the country's federal system. The delineation of authority among and within the subjects is, in many instances, unclear and contested, particularly with respect to the division of tax revenues and authority over regulatory matters. Subjects have enacted conflicting laws in areas such as privatization, land ownership and licensing. For these reasons, the Russian political system is vulnerable to tension and conflict between

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federal, subject and local authorities. This tension creates uncertainties in the operating environment in Russia, which may prevent businesses from carrying out their strategy effectively.

        In addition, ethnic, religious, historical and other divisions have on occasion given rise to tensions and, in certain cases, military conflict. Moreover, various acts of terrorism have been committed within the Russian Federation. The risks associated with these events or potential events could materially and adversely affect the investment environment and overall consumer and entrepreneurial confidence in the Russian Federation, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

The FAS's determination that we hold a dominant position in the market where we operate, together with SuperJob and RDV-Soft (a company that operates the Rabota.ru recruiting website), and that we abused this dominant position through restricting access to our CV database for Stafori LLC's "Robot Vera" software may adversely affect our business, financial condition and results of operations.

        The Russian Federal Law No. 135-FZ "On Protection of Competition" dated July 26, 2006, as amended (the "Competition Law"), establishes certain restrictions on activities of companies that occupy a dominant position in any markets of their operation. When determining market dominance, the Federal Antimonopoly Service of Russia (the "FAS") needs to identify and define the relevant market, in which the entity in question operates. There are numerous aspects to be taken into account when making this determination, including the interchangeability or substitutability of the products and/or services for the consumer, their pricing and intended use, and then calculate market shares of companies operating in this market. Different approaches may be applied in this respect by the FAS and market participants.

        In April 2019, after a complaint filed by Stafori LLC, the FAS initiated an investigation in relation to us alleging a violation of antitrust legislation by restricting access to our CV database for Stafori LLC's "Robot Vera" software, which offers automated candidate search services. In December 2019, the FAS determined that Headhunter LLC, together with SuperJob and RDV-Soft, are currently occupying dominant positions in the market of internet-based services related to ensuring information coordination between employees, employers and staffing agencies in Russia, and that its actions prohibiting the use of third-party software lead to restriction of competition on the adjacent product markets (app stores). Headhunter LLC was found to have violated Russian antitrust legislation by abusing its dominant market position.

        On January 23, 2020, the FAS issued its final decision, which concluded that our actions did not limit overall competition in Russia's online recruitment market. At the same time, the FAS determined that we infringed on Stafori's interests by creating impediments on Stafori's ability to access the market of internet-based services for ensuring information coordination between employees, employers and staffing agencies in Russia and ordered us to consider their applications for registration of their products on our system, if Stafori submits such applications. We also are required to pay a fine of GRAPHIC 737,500 (approximately $10,300) in connection with the FAS's decision. We appealed the FAS decision in court, and the first hearing is scheduled for August 17, 2020. In addition, Stafori LLC may choose to claim for damages incurred as a result of infringement of its rights; however, Stafori LLC will have to prove the existence of such damages and that such infringement caused the damages. See also Item 3.D "Risk Factors—Risks Relating to the Russian Federation and Other Markets in which We Operate—Selective or arbitrary government action could have a material adverse effect on our business, financial condition, results of operations and prospects" and Item 8.A "Consolidated Statements and Other Financial Information" of our Annual Report on Form 20-F for the year ended December 31, 2019.

        The conclusion by the FAS that we hold a dominant position in one or more of the markets in which we operate could result in heightened scrutiny of our business and industry, and/or limit our ability to complete future acquisitions. In addition, the FAS could require that we pre-clear with them

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any antitrust compliance policies and programs or substantial changes to our standard agreements with merchants and agents, as well as maintain our current agreements with business partners. Russian legislation prohibits persons holding a dominant position from setting monopolistically high or low prices. We could be prohibited from setting different prices to the same products and services and could be ordered to pre-agree with the FAS our tariffs and pricing policies or any changes thereto. In addition, if we were to decline to conclude a contract with a third party this could, in certain circumstances, be regarded as abuse of a dominant market position. Any abuse of a dominant market position could lead to administrative penalties and the imposition of fines linked to our revenue.

        Russian legislation provides that the prohibition on the abuse of a dominant market position does not apply to the execution of exclusive rights in relation to intellectual property. There have been multiple discussions of proposed changes to the Russian antimonopoly legislation, including an initiative that would rescind intellectual property immunity; however, no such draft legislation to that effect has been proposed to the lower chamber of the Russian Parliament. Once there is more clarity in connection with this initiative and there is a more developed draft of any such legislation, we will be better placed to identify and assess the potential impacts, if any, on us and our business.

Risks Relating to Russian Taxation

Changes to Russian tax laws announced in 2020 could increase our tax burden.

        In 2020, the Russian President and Russian government announced some changes to Russian tax laws that may affect us or our shareholders.

        The Russian government was directed to revise the Russian double tax treaties, which are often used for tax planning so as to increase withholding tax rates up to 15% for Russian-sourced dividend and interest income or, if negotiations are unsuccessful, to terminate them. As reported, the Ministry of Finance of the Russian Federation initiated negotiations with the competent authorities of Malta, Cyprus and Luxembourg, and these negotiations are expected to be completed by the end of 2020. It is possible that the list of double tax treaties subjected to revisions may be expanded in the future. The revision or termination of the double taxation treaties may affect our investors from the relevant countries.

        It is further expected that for Russian tax-resident individuals, starting from January 1, 2021, income exceeding GRAPHIC 5 million per annum will be taxed at a rate of 15% personal income tax rate rather than the current 13%. Individual Russian tax resident investors should consult their tax advisors in this respect.

The mechanics of withholding tax on Russian-sourced income are not precise with respect to foreign companies with self-declared Russian tax residence.

        As a Russian taxpayer, we are now governed by the Russian Tax Code, which provides that dividends paid by us that are made up of Russian-sourced income are subject to Russian taxation. We act in the capacity of a tax agent and pay dividends net of the statutory withholding tax rate of 15% pursuant to Russian tax laws, which could be reduced depending on the tax status of each shareholder and pursuant to the double tax treaties concluded by the Russian Federation with other jurisdictions.

        Starting from January 1, 2015, the Russian Tax Code explicitly requires that in order to enjoy the benefits under an applicable double tax treaty, the person claiming such benefits must be the beneficial owner of the relevant income. Starting from January 1, 2017, in addition to a tax residence certificate, the Russian Tax Code requires the tax agent to obtain confirmation from the recipient of the income that it is the beneficial owner of the income. Russian tax law provides neither the form of such confirmation nor a list of documents that can demonstrate the beneficial owner status of the recipient with respect to the received income. In recent years, the Russian tax authorities started to challenge

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structures involving the payments outside of the Russian Federation, and in most cases, Russian courts tend to support the tax authorities' position. Thus, there can be no assurance that treaty relief at source will be available in practice.

        The concept of "beneficial ownership" was introduced into the Russian Tax Code as of January 1, 2015 as a part of the deoffshorization rules. In accordance with this concept, if a person serves as an intermediary and has an obligation to transfer part or all of the income received from the company to a third party (i.e., a person that is not able to act independently with respect to the use and disposition of the received income), such person may not be treated as the beneficial owner of income. The result of the denial of beneficial ownership would be the denial of tax treaty benefits (such as the reduced tax on dividends). Although the "beneficial ownership" concept as currently defined in the Russian Tax Code is in line with the relevant internationally known rules, the application of this concept in the Russian administrative and court practice currently shows rather broad and conflicting interpretations. Given the current conflicting interpretation of the "beneficial ownership" concept, the application of this concept may lead to excessive taxation of our retained earnings on their distribution, and additional taxation may also arise on the grounds of a permanent establishment in the Russian Federation.

        The mechanics of the application of Russian withholding tax on dividends by public companies that have migrated to the Russian Federation for tax purposes have not been tested, and there is a risk that we will not be in the position to apply reduced tax rates as applicable to Russian tax resident Holders or the reduced rates available under double tax treaties, therefore we will have to withhold the tax at the generally applicable 15% tax rate. See "Material Russian Tax Considerations—Taxation of Dividends and other distributions (including distributions in kind)."

        Moreover, certain Russian double tax treaties are currently being revised, and the possibility of applying the reduced tax rate depends on the investor's tax residence jurisdiction. See "—Changes to Russian tax laws announced in 2020 could increase our tax burden."

        In addition, the Russian Federation joined the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the "MLI"), with effect from October 1, 2019. On April 30, 2020, Russia officially submitted a notification to the OECD Depositary stating that its internal procedures had been completed, and the provisions of the MLI with respect to 27 out of the 71 double taxation treaties had entered into effect, including double tax treaties with Singapore, Luxembourg, Malta, the Netherlands and others. Subject to reservations made by Russia, the MLI for the respective tax treaties will come into effect from January 1, 2021, for both withholding tax and other taxes. However, there is no information regarding the application of MLI with respect to other Russian double taxation treaties, although it is anticipated that MLI will be applied to taxes levied with respect to taxable periods beginning on or after January 1, 2021, after notification of the completion of required domestic procedures. The implementation of MLI will introduce a variety of measures designed to modify application of covered double tax treaties and reduce opportunities for tax optimization. In particular and amongst others, MLI sets forth additional requirements for the application of reduced tax rates. Currently, it is not clear to what extent each individual double tax treaty to which the Russian Federation is a party would be affected by MLI. These developments may potentially have an adverse impact on the availability of double taxation treaty benefits to investors who hold securities of Russian companies.

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Risks Relating to this Offering and Ownership of our ADSs

We have identified a material weakness in our internal control over financial reporting. The material weakness in our internal control over financial reporting could result in material misstatements in our historical financial reports and, if not remediated, can adversely affect the accuracy and timing of our financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our ADSs may be materially and adversely affected.

        Although we are not yet subject to the certification or attestation requirements of Section 404 of the Sarbanes-Oxley Act, in the course of reviewing our financial statements, our management and our Independent Registered Public Accounting Firm identified deficiencies that we concluded represented a material weakness and significant deficiencies in our internal control over financial reporting. SEC guidance defines a "material weakness" as a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. SEC guidance defines a "significant deficiency" as a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant's financial reporting.

        In relation to our financial reporting as of the year ended December 31, 2018, we identified a material weakness relating to our information systems, whereby our information systems access, the segregation of duties and user access rights within our information systems and change management controls were not operating effectively.

        In relation to our financial reporting as of the year ended December 31, 2019, we identified a continuing material weakness relating only to our "1C" accounting system, our accounting system software, whereby the user access rights and change management controls were not operating effectively.

        We are committed to taking measures to remediate the material weakness related to our financial reporting by limiting the number of super-users and improving the segregation of duties in the change management process of our "1C" accounting system. There can be no assurance that we have identified all of our material weaknesses or that we will not in the future have additional material weaknesses. If we fail to remediate the material weaknesses or to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results or report them within the timeframes required by law, and our consolidated financial statements may be restated, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our ADSs could be materially and adversely affected, our ADSs may be suspended or delisted from Nasdaq and our reputation, results of operations and financial condition may be adversely affected. Failure to comply with Section 404 could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.

As a foreign private issuer and "controlled company" within the meaning of the Nasdaq's corporate governance rules, we are permitted to rely on exemptions from certain of the Nasdaq corporate governance standards, including the requirement that a majority of our board of directors consist of independent directors. Our reliance on such exemptions may afford less protection to holders of our ordinary shares.

        As a company not listed on the regulated market of the Cyprus Stock Exchange, we are not required to comply with any corporate governance code requirements applicable to Cypriot public companies.

        The Nasdaq corporate governance rules require listed companies to have, among other things, a majority of independent board members and independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer, we are

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permitted to follow home country practice in lieu of the above requirements. As we rely on the foreign private issuer exemption to certain of the Nasdaq corporate governance standards, our board of directors approach to governance may be different from that of a board of directors consisting of a majority of independent directors, and, as a result, the management oversight of our Company may be more limited than if we were subject to all of the Nasdaq corporate governance standards.

        In the event we no longer qualify as a foreign private issuer, we may rely on the "controlled company" exemption under the Nasdaq corporate governance rules. A "controlled company" under the Nasdaq corporate governance rules is a company of which more than 50% of the voting power is held by an individual, group or another company. Our principal shareholders control a majority of the voting power of our outstanding ordinary shares, making us a "controlled company" within the meaning of the Nasdaq corporate governance rules. As a controlled company, we are eligible to elect not to comply with certain of the Nasdaq corporate governance standards, including the requirement that a majority of directors on our board of directors are independent directors and the requirement that our remuneration committee consist entirely of independent directors, which shall be mandatory for us in the event that we cease to be qualified in such capacity.

        Accordingly, our shareholders may not have the same protection afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance standards, and the ability of our independent directors to influence our business policies and affairs may be reduced.

We are an "emerging growth company," and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies make our ADSs less attractive to investors.

        We are an "emerging growth company," as defined in the JOBS Act, and we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. We cannot predict if investors will find our ADSs less attractive because we rely on these exemptions. If some investors find our ADSs less attractive as a result, there may be a less active trading market for our ADSs, and the price of our ADSs may be more volatile.

While we currently qualify as an "emerging growth company" under the JOBS Act, if we cease to be an emerging growth company, our costs and the demands placed upon our management will increase.

        We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenue exceeds $1.07 billion; (ii) the last day of the fiscal year during which the fifth anniversary of the date of the IPO; (iii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1.00 billion in non-convertible debt securities during any three-year period. Once we lose emerging growth company status, we expect the costs and demands placed upon our management to increase, as we will be required to comply with additional disclosure and accounting requirements. In addition, management time and attention, as well as the engagement of our auditors and/or other consultants, will be required in order for us to prepare to comply with the increased disclosure and accounting standards required of companies who are not emerging growth companies, most notably compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and related auditor attestation requirements.

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We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

        As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer's most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2021. We would lose our foreign private issuer status if, for example, more than 50% of our total assets are located in the United States as of June 30, 2021. If we lose our foreign private issuer status on this date, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange. These expenses will relate to, among other things, the obligation to present our financial information in accordance with U.S. GAAP in the future.

As we are a "foreign private issuer" and follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

        As a foreign private issuer, we have the option to follow certain Cypriot corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following. We rely on this "foreign private issuer exemption" with respect to the Nasdaq requirements to have the audit committee appoint our Independent Registered Public Accountants, Nasdaq rules for shareholder meeting quorums and record dates and Nasdaq rules requiring shareholders to approve equity compensation plans and material revisions thereto. We may in the future elect to follow home country practices in Cyprus with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

If we fail to establish and maintain proper internal controls as required by Section 404(a) of the Sarbanes-Oxley Act, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

        Section 404(a) of the Sarbanes-Oxley Act ("Section 404(a)") requires that beginning with our Annual Report on Form 20-F for the fiscal year ended December 31, 2020, management assess and report annually on the effectiveness of our internal control over financial reporting and identify any material weaknesses in our internal control over financial reporting. Although Section 404(b) of the Sarbanes-Oxley Act ("Section 404(b)") requires our Independent Registered Public Accounting Firm to issue an annual report that addresses the effectiveness of our internal control over financial reporting, we have opted to rely on the exemptions provided in the JOBS Act, and consequently will not be required to comply with SEC rules that implement Section 404(b) until such time as we are no longer an emerging growth company.

        As discussed above in "—We have identified a material weakness in our internal control over financial reporting. The material weakness in our internal control over financial reporting could result in material misstatements in our historical financial reports and, if not remediated, can adversely affect the accuracy and timing of our financial reporting, investors may lose confidence in the accuracy and completeness of

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our financial reports, and the market price of our ADSs may be materially and adversely affected," we and our Independent Registered Public Accounting Firm identified certain material weaknesses in connection with our December 31, 2018 and 2019 audits. The continued presence of these or other material weaknesses and/or significant deficiencies in any future financial reporting periods could result in financial statement errors that, in turn, could lead to errors in our financial reports, delays in our financial reporting, and that could require us to restate our operating results or our auditors may be required to issue a qualified audit report, and investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our ADSs could be materially and adversely affected. We might also not identify one or more material weaknesses in our internal controls in connection with evaluating our compliance with Section 404(a). In order to achieve and maintain compliance with the requirements of Section 404(a), we will need to expend significant resources and provide significant management oversight. Implementing any appropriate changes to our internal controls may require specific compliance training for our directors and employees, entail substantial costs in order to modify our existing accounting systems, take a significant period of time to complete and divert management's attention from other business concerns. These changes may not, however, be effective in maintaining the adequacy of our internal controls.

        If either we are unable to conclude that we have effective internal control over financial reporting or, at the appropriate time, our Independent Registered Public Accounting Firm is unwilling or unable to provide us with an unqualified report on the effectiveness of our internal control over financial reporting as required by Section 404(b), investors may lose confidence in our operating results, the price of our ADSs could decline, and we may be subject to litigation or regulatory enforcement actions. In addition, if we are unable to meet the requirements of Section 404, we may not be able to remain listed on Nasdaq.

The obligations associated with being a public company will continue to require significant resources and management attention.

        As a public company in the United States, we will continue to incur legal, accounting and other expenses that we did not previously incur as a private company. We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations will continue to increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase the demand on our systems and resources, particularly after we are no longer an "emerging growth company." The Exchange Act requires that we file annual and current reports with respect to our business, financial condition and results of operations. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting. Furthermore, the continuing need to establish and maintain the corporate infrastructure demanded of a public company may divert management's attention from implementing our growth strategy, which could prevent us from improving our business, financial condition and results of operations. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, these rules and regulations will continue to increase our legal and financial compliance costs and will make some activities more time consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

        In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs

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and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We will continue to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

        For as long as we are an "emerging growth company" under the JOBS Act, our Independent Registered Public Accounting Firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We could be an emerging growth company for up to five years. See "Prospectus Supplement Summary—Implications of Being an 'Emerging Growth Company' and a 'Foreign Private Issuer."' Furthermore, after the date we are no longer an emerging growth company, our Independent Registered Public Accounting Firm will only be required to attest to the effectiveness of our internal control over financial reporting depending on our market capitalization. Even if our management concludes that our internal controls over financial reporting are effective, our Independent Registered Public Accounting Firm may still decline to attest to our management's assessment or may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, in connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. Failure to comply with Section 404 could subject us to regulatory scrutiny and sanctions, impair our ability to raise revenue, cause investors to lose confidence in the accuracy and completeness of our financial reports and negatively affect the price of our ADSs.

An active trading market for our ADSs may not be sustained to provide adequate liquidity.

        We cannot predict the extent to which investor interest in our Company will lead to an active trading market on Nasdaq that may be sustained to provide adequate liquidity. If an active trading market is not sustained, you may have difficulty selling any ADSs that you purchase, and the value of such ADSs might be materially impaired.

HeadHunter Group PLC is a holding company and depends on its subsidiaries, who are separate legal entities, for cash to fund its operations and expenses, including future dividend payments, if any.

        As a holding company, distributions from our operating subsidiaries are our principal source of cash flow. Therefore, our ability to fund and conduct our business, service our debt and pay dividends, if any, in the future depends on the ability of our subsidiary to generate sufficient cash flow to make upstream cash distributions to us. Our operating subsidiaries are separate legal entities, and although they are directly or indirectly wholly owned and controlled by us, they have no obligation to make any funds available to us, whether in the form of loans, dividends or otherwise. The ability of our subsidiaries to distribute cash to us will also be subject to, among other things, restrictions that may be contained in our subsidiary agreements (as entered into from time to time), availability of sufficient funds in such subsidiary and applicable laws and regulatory restrictions. Claims of any creditors of our subsidiary generally will have priority as to the assets of such subsidiary over our claims and claims of

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our creditors and shareholders. In addition, as our material subsidiary generates profits and declares dividends in rubles and any dividends paid to holders of our ADSs in the future would be paid in U.S. dollars, any significant fluctuation of the value of the ruble against the U.S. dollar and other currencies may materially and adversely affect the dividend amounts received by holders of our ADSs. To the extent the ability of our subsidiary to distribute dividends or other payments to us is limited in any way, our ability to fund and conduct our business, service our debt and pay dividends, if any, could be harmed.

Anti-takeover provisions in our organizational documents and Cyprus law may discourage or prevent a change of control, even if an acquisition would be beneficial to our shareholders, which could depress the price of our ADSs and prevent attempts by our shareholders to replace or remove our current management.

        As we are incorporated in Cyprus, we are subject to Cypriot law. Our amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. In particular, our amended and restated memorandum and articles of association permit our board of directors to issue preference shares from time to time, with such rights and preferences as they consider appropriate.

        Our board of directors could also authorize the issuance of preference shares with terms and conditions and under circumstances that could have an effect of discouraging a takeover or other transaction. We are also subject to certain provisions under Cyprus law which could delay or prevent a change of control. In particular, any merger, consolidation or amalgamation of the Company would require the active consent of our shareholders and board of directors. Our board of directors may be appointed or removed by the holders of the majority of the voting power of our shares (which, upon completion of this offering, will be controlled by our principal shareholders). Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our ADSs.

Neither Cypriot nor the broader EU takeover laws apply to us, and the mandatory offer requirements in our amended and restated memorandum and articles of association do not apply to any of our existing shareholders or its affiliates as of the date of the adoption of our amended and restated memorandum and articles of association and do not preclude either of those shareholders from acquiring or re-acquiring, as the case may be, a majority of the voting rights in the Company. Accordingly, our minority shareholders do not benefit in such cases from the same protections to which the minority shareholders of a Cypriot company that is listed on an EU regulated market would be entitled.

        As of the date of this prospectus supplement, Cypriot law does not contain any requirement for a mandatory offer to be made by a person acquiring shares of a Cypriot company, even if such an acquisition confers on such person control, if such company's shares are not listed on a regulated market in the European Economic Area, unless the acquirer acquires 90% or more of all the shares of a target company or of any class of shares in the target company or acquires sufficient shares to aggregate, together with those which it already holds (in its own name or that of a nominee or held by its subsidiary) 90% or more of the target's shares. Neither our shares nor our ADSs are listed on a regulated market in the EEA. Consequently, a prospective bidder acquiring either our shares or ADSs may gain control over us in circumstances in which there is no requirement to conduct a mandatory offer under an applicable statutory takeover protection regime.

        Our amended and restated memorandum and articles of association contain a mandatory tender offer provision that requires a third party acquiror that acquires, together with parties acting in concert, 30% or 50% or more of the voting rights in our shares, either in the form of shares or ADSs, to make a tender offer to all of our other shareholders and ADS holders at the highest price paid for shares in the Company by that third party (or parties acting in concert) in the preceding 12 months. However, the provision does not apply to any of our existing shareholders or their affiliates as of the date of the

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adoption of our amended and restated memorandum and articles of association, which means such shareholders (including Highworld Investments Limited and ELQ Investors VIII Limited, and their respective affiliates) can individually or collectively go below 30% or 50% of the voting power, as the case may be, and subsequently acquire more than 30% or 50% of the voting power, as the case may be, without making a tender offer.

        Accordingly, the mandatory tender offer provision in our amended and restated memorandum and articles of association does not provide a minority shareholder with a right to dispose of its shares in a number of scenarios in which a shareholder, together with parties acting in concert if applicable, may acquire control over us. As a result, holders of our ADSs may not be given the opportunity to receive treatment equal to what may be received, in the event of an offer made by a potential bidder with a view to gaining control over us or by certain other holders of our ADSs or, as the case may be, shares at the relevant time.

The price of our ADSs might fluctuate significantly, and you could lose all or part of your investment.

        Volatility in the market price of our ADSs may prevent you from being able to sell your ADSs at or above the price you paid for such shares. The trading price of our ADSs may be volatile and subject to wide price fluctuations in response to various factors, including:

        These and other factors might cause the market price of our ADSs to fluctuate substantially, which might limit or prevent investors from readily selling their ADSs and may otherwise negatively affect the liquidity of our ADSs. In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies across many industries. The changes frequently appear to occur without regard to the operating performance of the affected companies. Accordingly, the price of our ADSs could fluctuate based upon factors that have little or nothing to do with our Company, and these fluctuations could materially reduce our share price. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company's securities. This litigation, if instituted against us, could result in substantial costs, divert our management's attention and resources, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Future sales of our ADSs, or the perception in the public markets that these sales may occur, may depress our stock price.

        As of June 30, 2020, we had 50,317,860 ordinary shares outstanding. If a substantial number of these ordinary shares (or ADSs representing these ordinary shares) were sold in the public market, or the market perceives that such sales may occur, the market price of our ADSs could be adversely affected.

        We have entered into a registration rights agreement pursuant to which we have agreed, under certain circumstances, such as this offering, to file a registration statement to register the ordinary

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shares, ADSs and any securities convertible or exchangeable into our ordinary shares or our ADSs held by certain principal shareholders, as well as to cooperate in certain public offerings of such registrable securities. If our principal shareholders sell, or indicate an intent to sell, substantial amounts of ordinary shares or ADSs in the future, the market price of our ADSs could decline. In addition, such secondary sales may impair our ability to raise capital through the sale of additional equity securities.

        All of our ADSs are freely tradable without restriction under the Securities Act, except for any of our ADSs that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted and/or control securities under the Securities Act. The ordinary shares held by our affiliates may also be publicly sold in accordance with the requirements of Rule 144 under the Securities Act, including the volume and manner of sale requirements of that rule, or otherwise in compliance with the Securities Act.

        We previously filed a registration statement on Form S-8 under the Securities Act to register ordinary shares subject to options or other equity awards issued or reserved for future issuance under our equity incentive plans. Sales of a substantial number of ordinary shares (or ADSs representing such ordinary shares) issued under these plans in the public market could have an adverse effect on the market price of our ADSs.

        In the future, we may also issue our securities if, for example, we need to raise capital to support our growth strategy or in connection with an acquisition. The amount of ADSs issued in connection with a capital raise or acquisition could constitute a material portion of our then-outstanding ADSs, and sales of such ordinary shares or ADSs by us could cause the market price of our ADSs to decline.

If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, or we fail to meet the expectations of industry analysts, our stock price and trading volume could decline.

        The trading market for our ADSs depends in part on the research and reports that securities or industry analysts publish about us, our business or our industry. We may have limited, and may never obtain significant, research coverage by securities and industry analysts. If no additional securities or industry analysts commence coverage of our Company, the trading price for our ADSs could be negatively affected. In the event we obtain additional securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our stock, the price of our ADSs will likely decline. If one or more of these analysts, or those who currently cover us, ceases to cover us or fails to publish regular reports on us, interest in the purchase of our ADSs could decrease, which could cause the price of our ADSs or trading volume to decline.

You may not be able to exercise your right to vote the ordinary shares underlying your ADSs.

        Holders of ADSs may exercise voting rights with respect to the ordinary shares represented by their ADSs only in accordance with the provisions of the deposit agreement. The deposit agreement provides that, upon receipt of notice of any meeting of holders of our ordinary shares, including any general meeting of our shareholders, the depositary will, as soon as practicable thereafter, fix a record date for the determination of ADS holders who shall be entitled to give instructions for the exercise of voting rights. Upon timely receipt of notice from us, the depositary shall distribute to the holders as of the record date a notice stating (i) final information particular to such vote and meeting and any solicitation materials, (ii) that each registered holder of ADRs on the record date set by the depositary will, subject to any applicable provisions of the laws of the Republic of Cyprus and our articles of association, be entitled to instruct the depositary as to the exercise of the voting rights pertaining to the ordinary shares represented by the ADSs evidenced by such registered holder's ADRs and (iii) the manner in which such instructions may be given, including instructions to give a discretionary proxy to a person designated by us.

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        If you qualify, you may instruct the depositary to vote the ordinary shares underlying your ADSs. Otherwise, you will not be able to exercise your right to vote unless you withdraw our ordinary shares underlying the ADSs you hold prior to our and the depositary's voting record date(s), which may be different. However, you may not know about the meeting far enough in advance to withdraw those ordinary shares. The depositary, upon timely notice from us, will notify you of the upcoming vote and arrange to deliver voting materials to you. We cannot guarantee that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the ordinary shares underlying your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote, and there may be nothing you can do if the ordinary shares underlying your ADSs are not voted as you requested.

You may not receive distributions on the ordinary shares represented by our ADSs or any value for them if it is illegal or impractical to make them available to holders of ADSs.

        The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it receives on our ordinary shares after deducting its fees and expenses. You will receive these distributions in proportion to the number of our ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. We have no obligation to take any other action to permit the distribution to any holders of our ADSs or ordinary shares. This means that you may not receive the distributions we make on our ordinary shares or any value from them if it is illegal or impractical for us to make them available to you. These restrictions may have a material adverse effect on the value of your ADSs.

You may be subject to limitations on the transfer of your ADSs.

        Your ADSs, which may be evidenced by ADRs, are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason.

It may be difficult to enforce a U.S. judgment against us, our directors and officers named in this prospectus supplement outside the United States, or to assert U.S. securities law claims outside of the United States.

        All of our current directors and senior officers reside outside the United States, principally in the Russian Federation. Substantially all of our assets and the assets of our current directors and executive officers are located outside the United States, principally in the Russian Federation. As a result, it may be difficult or impossible for investors to effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. See "Enforcement of Civil Liabilities." Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim because foreign courts may not be the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides.

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        In particular, investors should be aware that there is uncertainty as to whether the courts of the Russian Federation would recognize and enforce judgments of U.S. courts obtained against us or our directors or management as well as against the Selling Shareholder predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or entertain original actions brought in Russian courts against us or our directors or officers as well as against the Selling Shareholder predicated upon the securities laws of the United States or any state in the United States. There is no treaty between the United States and the Russian Federation providing for reciprocal recognition and enforcement of foreign court judgments in civil and commercial matters. As a result of the difficulty associated with enforcing a judgment against us, you may not be able to collect any damages awarded by either a U.S. or foreign court.

We may be treated as a passive foreign investment company, which could result in material adverse tax consequences for investors in the ADSs subject to U.S. federal income tax.

        Special U.S. federal income tax rules apply to U.S. persons owning shares of a "passive foreign investment company" as defined in the Internal Revenue Code of 1986 (a "PFIC"). If we are treated as a PFIC for any taxable year during which a U.S. Holder (as defined in "Material Tax Considerations—Material U.S. Federal Income Tax Considerations for U.S. Holders") holds the ADS (or ordinary shares represented by the ADSs), the U.S. Holder may be subject to certain material adverse tax consequences upon a sale, exchange, or other disposition of the ADSs (or such ordinary shares), or upon the receipt of distributions in respect of the ADSs (or such ordinary shares). Based on the current and anticipated composition of our income, assets and operations, we do not expect to be treated as a PFIC for the current taxable year or in the foreseeable future. This is a factual determination, however, that depends on, among other things, the composition of our income and assets from time to time, and thus the determination can only be made annually after the close of each taxable year. Therefore, there can be no assurance that we will not be classified as a PFIC for the current taxable year or for any future taxable year. U.S. Holders should consult their tax advisors about the potential application of the PFIC rules to their investment in the ADSs.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein contain forward-looking statements within the meaning of Section 27A of the Securities Act. All statements other than statements of historical facts contained or incorporated by reference in this prospectus supplement and the accompanying prospectus, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under "Risk Factors," which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

        In some cases, these forward-looking statements can be identified by words or phrases such as "believe," "may," "will," "expect," "estimate," "could," "should," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Forward-looking statements contained or incorporated by reference in this prospectus supplement and the accompanying prospectus include, but are not limited to, statements about:

        These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in "Risk Factors," including the following:

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        We operate in an evolving environment. New risks emerge from time to time, and it is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

        The forward-looking statements made or incorporated by reference in this prospectus supplement and the accompanying prospectus relate only to events or information as of the date on which the statements are made. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus supplement, the accompanying prospectus, the documents incorporated by reference herein and therein, and the documents that we have filed as exhibits to the registration statement to which this prospectus supplement relates completely and with the understanding that our actual future results or performance may be materially different from what we expect.

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USE OF PROCEEDS

        The Selling Shareholder is selling all of the ADSs being sold in this offering. Accordingly, we will not receive any proceeds from the sale of ADSs in this offering. We will bear all costs, fees and expenses in connection with this offering, except for the underwriting fees to be paid by the Selling Shareholder on a per ADS basis, which are estimated to be approximately $1.3 million.

        In connection with the Acquisition, Highworld Investments Limited entered into a profit sharing arrangement with an affiliate of Ivan Tavrin, and ELQ Investors VIII Limited in turn entered into a pro rata arrangement with Highworld Investments Limited, pursuant to which Mr. Tavrin's affiliate will receive approximately 9% of any profit that Highworld Investments Limited and ELQ Investors VIII Limited realize with regard to their investment in the Company, including any profit realized upon the sale of its ADSs in this offering. Pursuant to this arrangement, Mr. Tavrin's affiliate will receive approximately $9.1 million from the sale of ADSs by the Selling Shareholder in this offering (or approximately $10.5 million if the underwriters exercise their option to purchase additional ADSs in full). Neither Mr. Tavrin nor his affiliate provided services in connection with the Acquisition or to the Company. Neither Mr. Tavrin nor his affiliate is a shareholder of the Company and neither has rights in the Company or its shares or with regard to its management. Instead, the profit sharing arrangement with Mr. Tavrin settles the Selling Shareholder's obligation to Mr. Tavrin arising from his relinquishing a previously existing position as the preferred purchaser in the Acquisition. Mr. Tavrin is a well-known Russian telecom, media and technology entrepreneur who was a founder, shareholder and head of a number of Russian companies. He was CEO of Megafon from 2012 to 2016. Mr. Tavrin previously held a position on the board of directors of Mail.Ru (but did not hold such position at the time of the Acquisition) and affiliates of Highworld Investments Limited have historically had and continue to have joint investment projects with Mr. Tavrin in other businesses that are not related to the Company. Neither Mr. Tavrin nor his affiliate is otherwise affiliated with the Selling Shareholder or the Company, and the Company has no obligations to Mr. Tavrin or his affiliate.

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CAPITALIZATION

        The table below sets forth our cash and cash equivalents and capitalization as of March 31, 2020, derived from our unaudited condensed consolidated interim financial information and notes thereto included elsewhere in this prospectus supplement.

        Investors should read this table in conjunction with our audited financial statements and Item 3.A "Selected Consolidated Historical Financial and Other Data" included in our Form 20-F for the year ended December 31, 2019 incorporated by reference herein, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our unaudited condensed consolidated interim financial information and notes thereto included elsewhere in this prospectus supplement.

( GRAPHIC in thousands)
  Actual as of
March 31,
2020
 

Cash and cash equivalents

    GRAPHIC 3,104,338  

Loans and borrowing, including current portion

    GRAPHIC 5,237,291  

Shareholders' equity:

       

Share capital:

       

Ordinary shares

    8,547  

Share premium

    1,896,875  

Foreign currency translation reserve

    (82,642 )

Retained earnings

    150,640  

Total equity attributable to owners of the Company

    1,973,420  

Non-controlling interest

    17,590  

Total capitalization

    GRAPHIC 7,228,301  

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

        The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes thereto included or incorporated by reference in this prospectus supplement. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. Please see "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements." Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed elsewhere in this prospectus supplement and the accompanying prospectus. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Overview

        We are the leading online recruitment platform in Russia and the CIS region and focus on connecting job seekers with employers. We offer potential employers and recruiters paid access to our extensive CV database and job postings platform. We also provide job seekers and employers with a value added services portfolio centered around their recruitment needs. Our brand and the strength of our platform allow us to generate significant traffic, over 93% of which was free for us as of December 2019, according to our internal data, and we were the fifth most visited job and employment website globally as of May 1, 2020, according to the latest available data from SimilarWeb. Our CV database contained 26.4 million, 36.2 million, 41.8 million and 44.6 million total CVs as of December 31, 2017, 2018 and 2019 and June 30, 2020, respectively, and our platform hosted a daily average of approximately 398,000, 559,000 and 588,000 job postings in the years ended December 31, 2017, 2018 and 2019, respectively. For the years ended December 31, 2017, 2018 and 2019, our platform averaged 17.5 million, 20.0 million and 21.5 million unique visitors per month, respectively, according to LiveInternet.

        Our user base consists primarily of job seekers who use our products and services to discover new career opportunities. The majority of the services we provide to job seekers are free. Our customer base consists primarily of businesses using our CV database and job posting service to fill vacancies inside their organizations.

        We were founded in 2000 and have successfully established a strong, trusted brand and the leading market position, which have enabled us to achieve significant growth in recent years. We had approximately 190,000, 253,000, 322,000 and 164,000 paying customers on our platform for the years ended December 31, 2017, 2018 and 2019 and for the three months ended March 31, 2020, respectively. We have a highly diversified customer base, representing the majority of the industries active in the Russian economy.

        Our total revenue was GRAPHIC 4,733 million, GRAPHIC 6,118 million, GRAPHIC 7,789 million and GRAPHIC 1,990 million in the years ended December 31, 2017, 2018 and 2019 and the three months ended March 31, 2020, respectively. During the same periods, our net income was GRAPHIC 463 million, GRAPHIC 1,033 million, GRAPHIC 1,581 million and GRAPHIC 412 million, respectively. In addition to our growth, we have consistently maintained strong profitability.

Impact of COVID-19 Pandemic

        We are closely monitoring how the COVID-19 pandemic is affecting our business. While we have not experienced any material disruptions to our regular operations, our financial results in the second half of March 2020 and in the second quarter of 2020 were significantly affected by the COVID-19

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pandemic. A decrease in the number of job postings and the number of new CV database subscriptions resulted in a decrease in our revenue, which was partially offset by our efforts to reduce costs. These cost saving measures included, but were not limited to, decreasing marketing expenses and administrative costs, refraining from hiring new employees or replacements, changes to the bonus structure for the sales team and other personnel and pausing renovation plans. We have recently begun to see the start of a recovery in our revenue, and we are gradually removing our cost-saving restrictions.

        As a result of the measures taken by the Russian government, including declaring a "period of non-working days" from March 30, 2020 to May 11, 2020 and requiring businesses to transition employees to work from home or temporarily close, there has been a significant decrease in business activity across Russia and other markets in which we operate, including recruitment and hiring processes, as many companies pause or decrease their hiring plans. As a result, the number of job postings advertised on our platform, the number of candidates browsing through our job postings and our revenue has decreased since mid-March 2020. From the second half of April through May and June 2020, we saw a steady recovery on our platform as the restrictive measures as a result of COVID-19 began to be gradually lifted. As of June 26, 2020, nearly all of our key operating measures have reached their pre-pandemic levels, including increases in the amount of traffic to our website, the inflow of new CVs to our platform, the number of mobile application downloads and the daily number of average job postings on our platform.

        Financially, we have a strong balance sheet, and our subscription-based business model is highly cash generative, with an Adjusted EBITDA margin of 50.5% in 2019. Pre-paid deferred revenue as of December 31, 2019 was GRAPHIC 2.4 billion, and we have low capex requirements. All of these factors allow us to maintain our cash position and preserve financial flexibility even in the case of a protracted economic downturn. However, given the uncertainty regarding the COVID-19 pandemic, we began implementing prudent operational control measures, including putting all non-essential hiring on hold, substantially reducing all non-essential and discretionary operating costs, optimizing marketing budgets and limiting non-essential capital expenditures, including office renovations. We also previously announced the deferral of payment of our interim dividend. In order to ensure our stability, due to uncertainty in the impact of the COVID-19 pandemic, in April 2020, we announced the deferral of the payment of the dividend for the year ended December 31, 2019 (see Notes 16(d) included in the unaudited condensed consolidated interim financial information included elsewhere in this prospectus supplement). We have also engaged in discussions with various banks to refinance our debt, in order to provide more capital allocation options available to us in the future. None of these actions are expected to impact business continuity, nor our ability to execute our long-term strategy. However, these measures are undertaken out of caution and to support our strategic objectives and will allow us to address potential temporary challenges that could arise as a result of the COVID-19 pandemic both in Russia and worldwide.

        We did not see any specific immediate impact of COVID-19 on our financial position as of March 31, 2020. Our goodwill and intangible assets relate mainly to the acquisition of the Headhunter business from Mail.ru Group in 2016. As of March 31, 2020, we concluded there was no requirement for the impairment of either goodwill or intangible assets, as there is significant headroom between the fair value of the "Russia" CGU, to which the majority of assets are allocated (calculated by reference to our market share price), and the carrying value of these assets. Our property and equipment mainly relate to improvements, furniture and IT equipment in our office in Moscow. We do not foresee an increase in our expected credit loss, as our cash and cash equivalents are kept with the highest-ranking Russian banks with stable credit ratings.

        As a natural consequence of the "period of non-working days" in Russia, some payments that would usually be made at the end of the first quarter 2020, for example, our quarterly Credit Facility repayment, shifted to the second quarter of 2020 as the payment due for our Credit Facility was due on

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March 30, 2020, which was designated a non-working day due to the COVID-19 pandemic. As a result, as of March 31, 2020, the current portion of our loans and borrowings were unusually high, as it included the amount of the first quarter 2020 payment, which was paid in the second quarter 2020. We have requested deferral of certain income tax payments amounting to GRAPHIC 164 million for six months. If our request is not granted, we will have to pay a penalty; for example, the penalty for a three month period is estimated to be GRAPHIC 4 million.

        Our liquidity analysis based on our recent performance and current estimates shows that we have adequate resources to finance our operations for the foreseeable future.

        Due to uncertainties that will be dictated by the length of time that the COVID-19 pandemic and related disruptions continue, there can be no assurances that our operations will not continue to be adversely impacted going forward.

        See "Risk Factors—Risks Relating to our Business and Industry—A regional or global health pandemic, including COVID-19, could severely affect our business, results of operations and financial condition due to impacts on our customers as well as impacts from actions taken to contain the disease or treat its impact and the speed and extent of the recovery."

Segments

        For management purposes, we are organized into operating segments based on the geography of our operations. Our operating segments are "Russia," "Belarus," "Kazakhstan," "Estonia, Latvia and Lithuania," "Ukraine" and "Azerbaijan." We divested the business through which we historically conducted operations in Estonia, Latvia and Lithuania in March 2017 and the business through which we conducted operations in Ukraine in April 2018. As each operating segment, other than Russia, individually comprises less than 10% of revenue, we combine all segments other than Russia into "Other segments" in our financial statements and elsewhere in this prospectus supplement, the accompanying prospectus and in our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein. In addition, when reviewing our Russia segment, we disaggregate revenue in this segment by customer location (including large cities, Moscow and St. Petersburg, and other regions in Russia) and type of customer account (Key Accounts and Small and Medium Accounts) to review relevant key operating performance measures within each group.

Key Indicators of Operating and Financial Performance

        Our management monitors and analyzes certain operating and financial performance indicators. This process ensures timely evaluation of the performance of our business and the effectiveness of our strategies, enabling our management to react promptly to the changing requirements of job seekers and customers and evolving market conditions. We believe that many online businesses monitor similar indicators, however, there are inherent challenges with respect to gathering and assessing the data underlying our performance indicators. See Item 3.D "Risk Factors—Risks Relating to Our Business and Industry—Real or perceived inaccuracies of our internally calculated or third-party sourced user metrics may harm our reputation and adversely affect our business and operating results" of our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein.

Key Operating Performance Indicators

        We use the following key operating performance indicators to assess the performance of our online recruitment services, from which we generate substantially all of our revenue. These measures include the number of paying customers, the number of job postings on our websites, ARPC, the average number of UMVs to our website, and the number of CVs and visible CVs in our database. The following table sets forth our key operating performance indicators as of the dates (number of CVs and

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number of visible CVs) or for the periods indicated (number of paying customers, ARPC, number of job postings and average UMVs):

 
  As of and for the year ended
December 31,
  As of and for the
three months
ended March 31,
 
 
  2017(2)   2018   2019   2019   2020  

Number of paying customers

                               

Russia segment

                               

Key Accounts, total

    9,482     10,736     11,125     9,138     9,661  

Moscow and St. Petersburg

    5,224     5,538     5,368     4,694     4,695  

Other regions of Russia

    4,258     5,198     5,757     4,444     4,966  

Small and Medium Accounts, total

    158,993     222,843     285,300     128,119     140,761  

Moscow and St. Petersburg

    87,666     109,498     123,295     58,999     61,730  

Other regions of Russia

    71,327     113,345     162,005     69,120     79,031  

Foreign customers of Russia segment

    1,229     1,937     1,253     1,622     719  

Russia segment, total

    169,704     235,516     297,678     138,879     151,141  

Other segments, total

    20,105     17,437     24,715     10,918     12,750  

Total number of paying customers

    189,809     252,953     322,393     149,797     163,891  

ARPC (in RUB)(1) Russia segment

                               

Key Accounts, total

    198,340     208,973     237,897     62,497     71,250  

Moscow and St. Petersburg

    278,384     306,216     369,217     93,175     105,516  

Other regions of Russia

    100,137     105,369     115,451     30,094     38,855  

Small and Medium Accounts, total

    14,249     14,302     14,700     7,056     7,489  

Moscow and St. Petersburg

    18,721     19,641     20,922     9,614     10,169  

Other regions of Russia

    8,751     9,143     9,965     4,872     5,395  

Other segments, total

    18,605     23,935     23,345     11,259     11,935  

Job postings (in thousands)

    398     559     588          

Average UMVs (in millions)

    17.5     20.0     21.9          

Number of CVs (in millions)

    26.4     36.2     41.8          

Number of visible CVs (in millions)

    19.1     27.2     31.4          

(1)
ARPC is calculated by dividing revenue by the number of paying customers, respectively, for the period.

(2)
We adopted IFRS 15 at January 1, 2018 using the full retrospective approach. Under the transition method chosen, certain comparative information has been restated. Please refer to Note 4 of our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019.

        We sell our services predominantly to businesses that are looking for job seekers to fill vacancies inside their organizations. We refer to such businesses as "customers." In Russia, we divide our customers into (i) Key Accounts and (ii) Small and Medium Accounts, based on their annual revenue and employee headcount. We define "Key Accounts" as customers who, according to the Spark-Interfax database, have an annual revenue of GRAPHIC 2 billion or more or a headcount of 250 or more employees and have not marked themselves as recruiting agencies on their page on our website, and we define "Small and Medium Accounts" as customers who, according to the Spark-Interfax database, have both an annual revenue of less than GRAPHIC 2 billion and a headcount of less than 250 employees and have not marked themselves as recruiting agencies on their page on our website. Our website allows several legal entities and/or natural persons to be registered, each with a unique identification number, under a single account page (e.g., a group of companies). Each legal entity registered under a single account is

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defined as a separate customer and is included in the number of paying customers metric. Natural persons registered under a single account are assumed to be employees of the legal entities of that account and thus, are not considered separate customers and are not included in the number of paying customers metric. However, in a specific reporting period, when only natural persons used our services under such account, they are collectively included in the number of paying customers as one customer.

        On occasions when information from the Spark-Interfax database is not available, we define Key Accounts as customers who have subscribed to our CV database for 180 or more consecutive days at any point since their initial registration and Small and Medium Accounts as customers who do not match these criteria.

        Information from the Spark-Interfax database may change from time to time as companies file their new financial and other reports every year. As a result, a customer may be included in a different customer group in a subsequent accounting period.

        We also derive a small portion of our revenue from the provision of our services to: (i) recruiting agencies looking for job seekers on behalf of their clients, (ii) job seekers who are willing to pay for premium services, such as promoting their CV in the search results and (iii) online advertising agencies, all of which we refer to collectively as "other customers." Each customer is assigned a unique identification number on our platform.

        Our revenue is driven primarily by the number of database subscriptions active in a period and the number of jobs postings on our website. In addition, our revenue is impacted by the frequency with which customers pay to refresh their job postings (where a customer pays for the same job posting again so that it appears at the top of the job posting list), pay for premium placement of their job posting (where a customer pays for their job posting to appear at the top of search results) or purchase other value added services, such as display advertisements.

        We use average revenue per customer ("ARPC") to track the average revenue we receive per customer during a specified period. We calculate ARPC by dividing revenue from customers during a specific period by the number of customers who received paid services during the same period. In Russia, we calculate ARPC separately for Key Accounts and for Small and Medium Accounts. ARPC is impacted by the type of customer and the duration of our relationship with our paying customers. Key Accounts use our services more and typically purchase longer subscriptions. Small and Medium Accounts purchase less usage or purchase shorter or one-off subscriptions. As a result, an increase in Key Accounts typically results in a higher ARPC, while an increase in Small and Medium Accounts typically results in a lower ARPC. In addition, newer customers tend to purchase less usage and therefore, lower priced services, resulting in a lower ARPC, whereas more established customers typically purchase more usage, and therefore, higher priced services, resulting in a higher ARPC. In addition to the factors described above, ARPC in our other segments is also impacted by foreign exchange fluctuations as we translate local currency amounts into our reporting currency, the ruble.

        The number of "job postings" refers to the total daily average number of jobs advertised by our customers on our website during a specified period. The number of job postings shows the volume of job postings available to job seekers on our website on average during a period. It does not reflect the total number of actual vacancies filled or offered through our website during a period. Customers are primarily charged on a per posting basis or a flat fee subscription basis for a capped number of postings over a specific period of time. Customers may refresh job postings before the expiration of the 30 day standard display period for the same fee as the initial posting to generate more job seeker applications. An increase in the number of customers and number of job postings by these customers increases our ability to attract and retain job seekers.

        Our "average unique monthly visitors" ("average UMVs") refers to the average number of unique visitors to our website during a calendar month. The "number of CVs" refers to the number of CVs

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completed by job seekers and uploaded to our website following the completion of an automated or human-assisted pre-moderation process. Once a job seeker's CV has been uploaded to the website, he or she may choose to hide their CV while, for example, he or she is not actively searching for a job. A CV may be made visible again by a job seeker at any time. When a job seeker hides his or her CV, it remains in our database and we may reach the job seeker with direct marketing efforts, but it is not discoverable by our customers who have purchased a subscription to use our CV database. The "number of visible CVs" represents the number of CVs discoverable by our customers who have purchased a subscription to use our CV database. The number of CVs represents the total volume of data related to job seekers available to us, and the number of visible CVs represents the value of our services to our customers.

        We view average UMVs and the number of CVs as key indicators of growth in our brand awareness among job seekers and as measures of our ability to attract job seekers to register on our website. Historically, an increase in the average UMVs has resulted in an increase in the number of new registered job seekers, which in turn, has resulted in an increase in the number of CVs added to our database. Although we do not directly generate revenue from job seekers uploading their CVs to our database or replying to job postings, the size of our database is a key indicator of the scale of our platform, which enables us to attract new customers and encourages our existing customers to purchase additional services.

        The size and growth of the number of UMVs, the number of CVs and the number of jobs advertised increase the value we deliver to customers looking to fill their vacancies through our platform, resulting in an increase in the number of paying customers, ARPC and the growth of revenue from our online recruitment services. This growth is also driven by an overall expansion of the online recruitment market in Russia and the other countries in which we operate, our ability to retain customers and up-sell our services, and our efforts to attract new customers and job seekers. These efforts include continuously improving our website and other platforms to enhance the job seeker experience, tracking the effectiveness of our marketing and brand promotion activities and expanding into new market segments. In addition, during times of economic slowdown, we are usually able to grow the size of our CV database, which becomes even more attractive to our customers as the economy improves, enabling us to encourage our existing customers to purchase additional services as well as attract new customers due to the scale of our database.

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Key Financial Performance Indicators

Revenue by customer type

        The following table sets forth the revenue from our customers broken down by region for the periods indicated.

 
  For the year ended
December 31,
  For the three months
ended March 31,
 
(in thousands of RUB)
  2017(1)   2018   2019   2019   2020  

Key Accounts in Russia

                               

Russia segment

                               

Moscow and St. Petersburg

    1,454,278     1,695,823     1,981,959     437,363     495,398  

Other regions of Russia

    426,384     547,710     664,649     133,739     192,953  

Sub-total

    1,880,662     2,243,533     2,646,608     571,102     688,351  

Small and Medium Accounts in Russia

                               

Russia segment

                               

Moscow and St. Petersburg

    1,641,225     2,150,685     2,579,517     567,219     627,759  

Other regions of Russia

    624,200     1,036,346     1,614,359     336,771     426,407  

Sub-total

    2,265,425     3,187,031     4,193,876     903,990     1,054,166  

Other customers in Russia

    192,050     238,353     329,893     66,316     79,852  

Foreign customers of Russia segment

    20,342     31,507     41,385     14,107     15,875  

Total for "Russia" segment

    4,358,479     5,700,424     7,211,762     1,555,515     1,838,244  

Other segments, total

    374,060     417,349     576,979     122,922     152,165  

Total Revenue

    4,732,539     6,117,773     7,788,741     1,678,437     1,990,409  

(1)
We adopted IFRS 15 at January 1, 2018 using the full retrospective approach. Under the transition method chosen, certain comparative information has been restated. Please refer to Note 4 of our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019.

        We generated 92.1%, 93.2%, 92.6% and 92.4% of our total revenue from our Russia segment for the years ended December 31, 2017, 2018 and 2019 and for the three months ended March 31, 2020, respectively. In this segment, we generated 43.1%, 39.4%, 36.7% and 37.4% of total segment revenue for the years ended December 31, 2017, 2018 and 2019 and the three months ended March 31, 2020, respectively, from our Key Accounts and 52.0%, 55.9%, 58.2% and 57.3% of total segment revenue from Small and Medium Accounts for the same periods. Our Key Accounts are characterized by high customer retention rates, with 87% of customers who purchased our services in the year ended December 31, 2018 also purchasing our services in the year ended December 31, 2019, compared to 88% of customers who purchased our services in the year ended December 31, 2017 also purchasing our services in the year ended December 31, 2018. Our Small and Medium Accounts have historically grown faster than the number of our Key Accounts, as smaller businesses are increasingly discovering the efficiency and cost advantages of online recruiting and moving from offline forms of advertisements to online advertisements, assisted by our brand awareness campaigns. In addition, due to the nature of our business, a substantial portion of our customers pay upfront for subscriptions, resulting in substantial contract liabilities on our balance sheet.

        We believe that our revenue will continue to be driven by broad macroeconomic factors in Russia, such as the rate of general economic growth, the state of the Russian job market reflected in such metrics as the unemployment rate, and employee turnover. In addition, we expect our revenue to continue to be positively impacted by the ongoing structural shift from an "offline" to "online" HR

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environment and the increasing number of businesses using online advertisements. Although our revenue growth may slow down in a weakened economy, the growth in the number of UMVs on our website and the increase in the number of CVs in our database during a downturn positions us to grow when economic conditions improve, as we believe our leading platform has attracted and will continue to attract customers to post their job postings when they are searching for candidates.

        We set the prices for access to our CV database based on the length and breadth of access to our database and for job postings based on the volume of job postings our customers post on our website. The price of a subscription to our CV database is defined by the geographical and professional segment of the database to which a customer wishes to purchase access (for example, access to CVs of job seekers residing in Moscow and looking for a job in the professional area of marketing) and the duration of the subscription, which can be one day, one week, two weeks, one month, three months, six months or one year. The price of the specific geographic and professional segments of the CV database is set according to the relative size of the database measured by the number of visible CVs (however, not always pro rata). The longer the duration of the subscription, the lower the price is per day.

        The following table sets forth the revenue we generate per customer type, broken down by region as a percentage of our total revenue for the periods indicated.

 
  For the year ended
December 31,
  For the three
months ended
March 31,
 
 
  2017(1)   2018   2019   2019   2020  

Key Accounts in Russia

                               

Russia segment

                               

Moscow and St. Petersburg

    30.7 %   27.7 %   25.4 %   26.1 %   24.9 %

Other regions of Russia

    9.0 %   9.0 %   8.5 %   8.0 %   9.7 %

Sub-total

    39.7 %   36.7 %   34.0 %   34.0 %   34.6 %

Small and Medium Accounts in Russia

                               

Russia segment

                               

Moscow and St. Petersburg

    34.7 %   35.2 %   33.1 %   33.8 %   31.5 %

Other regions of Russia

    13.2 %   16.9 %   20.7 %   20.1 %   21.4 %

Sub-total

    47.9 %   52.1 %   53.8 %   53.9 %   53.0 %

Other customers in Russia

   
4.1

%
 
3.9

%
 
4.2

%
 
4.0

%
 
4.0

%

Foreign customers of Russia segment

    0.4 %   0.5 %   0.5 %   0.8 %   0.8 %

Total for "Russia" segment

    92.1 %   93.2 %   92.6 %   92.7 %   92.4 %

Other segments, total

    7.9 %   6.8 %   7.4 %   7.3 %   7.6 %

Total

    100.0 %   100.0 %   100.0 %   100 %   100 %

(1)
We adopted IFRS 15 at January 1, 2018 using the full retrospective approach. Under the transition method chosen, certain comparative information has been restated. Please refer to Note 4 of our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019.

Russia Segment

        Key Accounts Revenue.    Key Accounts in Russia accounted for 34.6% and 34.0% of our total revenue for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively. Key Accounts tend to purchase higher volumes of services and more frequently use our additional value added services, such as ad displays and company-style branded pages than Small and Medium Accounts. Although the number of our Key Accounts has grown at a slower pace than Small

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and Medium Accounts over the last two years, we are increasing our ARPC in this group consistently over the last two years. For example, since September 1, 2015, we introduced a cap on our flat fee subscription service, which previously allowed customers to post an unlimited number of job postings over a specific period of time. This allowed us to generate additional revenue from Key Accounts gradually over the subsequent years. In our Key Accounts, for the three months ended March 31, 2020, our number of paying customers remained flat in Moscow and St. Petersburg and increased by 11.7% in Other regions of Russia compared to the same period in the prior year. ARPC in this segment has increased by 13.2% in Moscow and St. Petersburg, compared to the three months ended March 31, 2019, driven by the increase in prices and cancellation of discounts, and by 29.1% in Other regions of Russia for the same period, driven by the increase in prices that became effective on January 1, 2020 and the increase in average usage of our services per paying customer. Within Key Accounts, we derived 24.9% and 9.7% of our total revenue from Moscow and St. Petersburg and other regions of Russia, respectively, for the three months ended March 31, 2020. We believe that we will be able to grow our revenue from our Key Accounts by enhancing monetization of existing customers as well as by increasing the number of customers in this segment, particularly in the other regions of Russia, coupled with increasing the number of Key Accounts who purchase our value added services, such as display advertisements and branded websites. See Item 4.B "Business Overview—Our Services—Human Resource Value Added Services" of our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein for additional information on our value added services.

        Small and Medium Accounts Revenue.    Small and Medium Accounts in Russia accounted for 53.8% and 53.0% of our total revenue for the year ended December 31, 2019 and for the three months ended March 31, 2020, respectively. In our Small and Medium Accounts, for the three months ended March 31, 2020, the number of paying customers has increased by 4.6% in Moscow and St. Petersburg and by 10.7% in Other regions of Russia compared to the same period in the prior year. ARPC in this segment has increased by 5.8% in Moscow and St. Petersburg compared to the three months ended March 31, 2019, and by 10.7% in Other regions of Russia for the same period, driven by the increase in prices, while average usage of services per paying customer has slightly decreased. Within Small and Medium Accounts, we derived 31.5% and 21.4% of our total revenue from Moscow and St. Petersburg and other regions of Russia, respectively, for the three months ended March 31, 2020. We believe that we will be able to grow our revenue from Small and Medium Accounts by further promoting our brand with wide-scale TV, online and outdoor campaigns, offering competitive pricing on our products and retaining and migrating our Small and Medium Accounts customers to higher priced products over time. In addition, we are working to grow the number of our Small and Medium Accounts customers by increasing the number of CVs from blue collar job seekers in our database.

        Other Customers in Russia Revenue.    Other customers revenue is comprised of revenue from recruiters and ad agencies who purchase access to our CV database and advertising products, and job seekers who purchase a premium service such as CV highlight, which places their CV at the top of a search in our CV database. Other customers revenue accounted for 4.0% of our total revenue for the three months ended March 31, 2020.

Other Segments

        We generated 7.4% and 7.6% of our total revenue from our other segments for the year ended December 31, 2019 and for the three months ended March 31, 2020, respectively.

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Operating costs and expenses (exclusive of depreciation and amortization)

        Our operating costs and expenses (exclusive of depreciation and amortization) consist primarily of personnel and marketing expenses. The following table sets forth our operating expenses as a percentage of our revenue for the periods indicated.

 
  For the year ended
December 31,
  For the three
months ended
March 31,
 
 
  2017   2018   2019   2019   2020  

Personnel expenses

    31.8 %   28.1 %   28.7 %   28.6 %   29.2 %

Marketing expenses

    14.6 %   15.4 %   13.4 %   15.4 %   16.0 %

Other general and administrative expenses

                               

Subcontractor and other costs related to provision of services

    2.5 %   3.1 %   2.4 %   2.7 %   1.9 %

Office rent and maintenance

    4.0 %   3.9 %   2.7 %   2.6 %   2.3 %

Professional services

    4.4 %   4.2 %   4.5 %   4.8 %   4.0 %

Insurance services

            1.4 %       2.2 %

Hosting and other website maintenance

    0.5 %   0.5 %   0.5 %   0.5 %   0.6 %

Other operating expenses

    1.1 %   0.9 %   1.6 %   1.0 %   1.1 %

Total other general and administrative expenses

    12.5 %   12.7 %   13.1 %   11.7 %   12.0 %

Operating costs and expenses (exclusive of depreciation and amortization)

    58.9 %   56.1 %   55.2 %   55.6 %   57.2 %

Personnel Expenses

        Our personnel expenses consist primarily of salaries and benefits to our sales staff, who represent 26% of our total number of employees, and salaries and benefits of our development team, who represented 20% of our total number of employees as of December 31, 2019. In addition to a fixed base salary, which the majority of our staff receive, our sales staff derive a substantial portion of their salary from commissions based on performance. For all periods presented, the majority of compensation paid to our sales personnel was performance based.

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        We anticipate that our personnel expenses will continue to increase in absolute terms as we hire additional personnel and incur additional costs in connection with the expansion of our business operations in other regions of Russia, enhancing our product and services development.

 
  For the year ended December 31,   For the three months
ended March 31,
 
Personnel expenses*
  2017   2018   2019   2019   2020  
(in thousands of RUB)
   
   
   
   
   
 

Sales

    (387,079 )   (379,790 )   (402,971 )   (96,286 )   (96,703 )

Marketing

    (78,479 )   (96,396 )   (129,375 )   (29,926 )   (27,774 )

Production

    (86,828 )   (101,120 )   (133,621 )   (28,512 )   (33,543 )

Development

    (229,310 )   (305,440 )   (390,774 )   (89,535 )   (108,933 )

Product

    (98,715 )   (114,030 )   (119,396 )   (31,187 )   (30,768 )

Administrative

    (133,425 )   (187,887 )   (256,012 )   (55,117 )   (61,684 )

Senior management

    (95,558 )   (116,928 )   (140,657 )   (31,046 )   (16,128 )

Board of directors

            (16,341 )       (6,915 )

Subtotal

    (1,109,394 )   (1,301,591 )   (1,589,148 )   (361,610 )   (382,449 )

Tax and social

    (311,491 )   (372,087 )   (457,182 )   (100,994 )   (119,705 )

Capitalized R&D

    47,248     48,072     31,261     8,987     3,239  

Total

    (1,373,637 )   (1,625,606 )   (2,015,069 )   (453,616 )   (498,915 )

*
Adjusted for Disposal of CV Keskus OU and HeadHunter LLC (Ukraine), share-based payments and unused vacation provision.

        Our personnel expenses comprised 31.8%, 28.1%, 28.7% and 29.2% as a percentage of revenue for the years ended December 31, 2017, 2018 and 2019 and for the three months ended March 31, 2020, respectively.

        Our personnel expenses, excluding share-based payments, comprised 30.2%, 26.8%, 26.0% and 26.2% as a percentage of revenue for the years ended December 31, 2017, 2018 and 2019 and the three months ended March 31, 2020, respectively.

Marketing Expenses

        We continue investing in our brand awareness in Russia with robust TV and online advertising campaigns. Our total marketing expenses for the years ended December 31, 2017, 2018 and 2019 and for the three months ended March 31, 2020 were GRAPHIC 693 million, GRAPHIC 940 million, GRAPHIC 1,047 million and GRAPHIC 318 million, respectively.

        Marketing expenses vary from city to city, depending on local competition, our strategic objectives in each market and the marketing channels we use to support our growth and promote our brand. We plan to continue investing in marketing activities, including offline channels, in order to strengthen our brand recognition and grow our job seeker and customer base. Due to the impact of the COVID-19 pandemic, we reduced our marketing expenses in April and May 2020, but we discontinued these reductions in June 2020. Please see "—Impact of COVID-19 Pandemic" above for more information.

        As a result of our strategy to expand our business operations and create greater brand awareness, we expect that our marketing expenses will continue to increase in absolute terms as we invest in marketing in new and existing geographic areas. If we can leverage our strong brand and utilize the scalability of our business model, our marketing expenses may decrease as a percentage of our revenue. Our marketing expenses comprised 14.6%, 15.4%, 13.4% and 16.0% as a percentage of revenue for the

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years ended December 31, 2017, 2018 and 2019 and for the three months ended March 31, 2020, respectively.

Other general and administrative expenses

        Our other general and administrative expenses consist primarily of professional services, insurance costs and office rent and maintenance costs. Our general and administrative expenses comprised 12.5%, 12.7%, 13.1% and 12.0% as a percentage of revenue for the years ended December 31, 2017, 2018 and 2019 and for the three months ended March 31, 2020, respectively.

        As a result of becoming a public company in 2019, our professional services and insurance costs increased as a percentage of revenue, which were partly offset by a decrease in our office rent and maintenance costs, primarily due to the application of IFRS 16 "Leases." Please refer to Note 4 to our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein.

Key Factors Affecting Comparability

        Our historical results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future for the reasons discussed below.

Divestments

        On March 29, 2017, we completed the sale of our wholly owned subsidiary CV Keskus OU, through which we conducted operations in our Estonia, Latvia and Lithuania segment (our "Estonia, Latvia and Lithuania operations") to Ringier Axel Springer Media AG as part of our strategy to focus on our core markets. In the agreement relating to the sale of CV Keskus OU, we agreed to indemnify the purchaser for an amount equal to up to 40% of the total consideration paid in respect of certain potential regulatory liabilities and other potential claims against CV Keskus OU. As of the date hereof, no claims have been raised. The divestment resulted in a gain on disposal of GRAPHIC 439 million, which is reflected in our results of operations for the year ended December 31, 2017. Our Estonia, Latvia and Lithuania operations accounted for GRAPHIC 54 million, or 1.1%, of our total revenue for the year ended December 31, 2017. As a result of the sale, our historical financial information for the year ended December 31, 2017 includes the results of our Estonia, Latvia and Lithuania operations only for the period prior to completion of the sale and, therefore, is not directly comparable with the subsequent period.

        On April 26, 2018, we completed the sale of our 51% share in our subsidiary HeadHunter LLC (Ukraine), through which we conducted operations in our Ukraine segment (our "Ukraine operations"), to the minority shareholders for a consideration of GRAPHIC 3 million. In the agreement relating to the sale of HeadHunter LLC (Ukraine), we agreed (i) the purchase price would be paid in installments on a payment schedule beginning on October 1, 2020 and ending on March 31, 2023; (ii) the acquired participatory interests shall be pledged to us as security of payment obligations of the purchasers; (iii) HeadHunter LLC (Ukraine) will assign all exclusive rights to the Ukrainian trademarks and domain names to us; and (iv) we shall grant HeadHunter LLC (Ukraine) a non-exclusive license to use these trademarks and domain names until May 2020. The divestment resulted in a gain on disposal of GRAPHIC 6 million, which is reflected in our results of operations for the year ended December 31, 2018. Our Ukraine operations accounted for GRAPHIC 39 million and GRAPHIC 16 million of our total revenue for the years ended December 31, 2017 and 2018, respectively, or 0.8% and 0.3% of total revenue for the same periods, respectively. As a result of the sale, our historical financial information for the year ended December 31, 2018 includes the results of our Ukraine operations only for the period prior to completion of the sale and, therefore, is not directly comparable with the prior period.

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Withholding Tax on Dividends

        Our operating entity in Russia routinely pays intra-group dividends to our Cypriot holding company. Beginning from January 1, 2018, we have applied a 0% rate of taxation on intra-group dividends to estimate deferred tax liabilities on any unremitted earnings in Russia, as we were considering changing the place of management of HeadHunter Group PLC from Cyprus to Russia, which we completed on June 19, 2019, compared to a 15% rate applied before January 1, 2018. As a result, our withholding tax liability and expense is not directly comparable between the years ended December 31, 2019 and 2018 and the year ended December 31, 2017. See "Material Cyprus Tax Considerations—Taxation of Dividends and Distributions."

Seasonality

        We generally do not experience seasonal fluctuations in demand for our services. Our revenue remains relatively stable throughout each quarter, however, our first quarter revenue is typically slightly lower than the other quarters due to a winter holiday period in Russia, which results in lower business activity in this quarter.

Operating Results

        For a discussion of the year ended December 31, 2018 compared to the year ended December 31, 2017, see our final prospectus filed pursuant to Rule 424(b)(4) (File No. 333-224065), filed with the SEC on May 9, 2019, under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Comparison of the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

 
  For the three months
ended March 31,
 
(in thousands of RUB)
  2019   2020  

Revenue

    1,678,437     1,990,409  

Operating costs and expenses (exclusive of depreciation and amortization)

    (933,540 )   (1,138,619 )

Depreciation and amortization

    (165,104 )   (184,406 )

Operating income

    579,793     667,384  

Financial income

    26,207     19,158  

Financial costs

    (167,830 )   (118,833 )

Other income

        9,689  

Net foreign exchange loss

    (22,641 )   75,313  

Share of loss of equity-accounted investees (net of income tax)

        (9,544 )

Profit before income tax

    415,529     643,167  

Income tax expense

    (176,782 )   (231,429 )

Net income

    238,747     411,738  

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Revenue

        Our revenue was GRAPHIC 1,990 million for the three months ended March 31, 2020 compared to GRAPHIC 1,678 million for the three months ended March 31, 2019. Revenue for the three months ended March 31, 2020 increased by GRAPHIC 312 million, or 18.6%, compared to the three months ended March 31, 2019, primarily due to an increase in revenue in our Russia segment.

        Russia revenue.    Revenue in our Russia segment was GRAPHIC 1,838 million for the three months ended March 31, 2020 compared to GRAPHIC 1,556 million for the three months ended March 31, 2019. Revenue in our Russia segment increased by GRAPHIC 283 million, or 18.2%. This was primarily due to an increase in prices which resulted in the increase in ARPC across all customer segments, an increase of 10% in the number of paying customers in our Small and Medium Accounts segment and an increase of 12% in the number of paying customers in our Key Accounts in Other Regions.

        Other segments revenue.    Our revenue in our other segments was GRAPHIC 152 million for the three months ended March 31, 2020 compared to GRAPHIC 123 million for the three months ended March 31, 2019. Revenue for the three months ended March 31, 2020 increased by GRAPHIC 29 million, or 23.8%, compared to the three months ended March 31, 2019, primarily due to an increase in the number of paying customers in our Kazakhstan segment.

Operating costs and expenses (exclusive of depreciation and amortization)

        Operating costs and expenses (exclusive of depreciation and amortization) were GRAPHIC 1,139 million for the three months ended March 31, 2020 compared to GRAPHIC 934 million for the three months ended March 31, 2019. Operating costs and expenses (exclusive of depreciation and amortization) increased by GRAPHIC 205 million, or 22.0%, compared with the three months ended March 31, 2019. These increases were primarily attributable to an increase in personnel expenses of GRAPHIC 101 million and an increase in marketing expenses of GRAPHIC 60 million driven by an increase in online marketing expenses and TV marketing expenses.

        The main factors that contributed to the increase in personnel expenses are: (i) an increase in share-based compensation by GRAPHIC 51 million, primarily due to the grant of new options under the 2016 Unit Option Plan and 2018 Unit Option Plan in the second quarter of 2019; (ii) hiring 77 people during the second, third and fourth quarters of 2019 and the first quarter of 2020, primarily in the development, sales and production teams in our Russia segment, thus increasing headcount in our Russia segment to 729 people as of March 31, 2020; and (iii) the indexation of wages effective from the first quarter of 2020. The increase was partly offset by a decrease of performance-based and discretionary bonuses in the first quarter of 2020 as a part of our cost-cutting initiatives in response to COVID-19.

Depreciation and amortization

        Depreciation and amortization was GRAPHIC 184 million for the three months ended March 31, 2020, compared to GRAPHIC 165 million for the three months ended March 31, 2019. Depreciation and amortization increased by GRAPHIC 19 million, or 11.7%, primarily due to additional depreciation charge related to leasehold improvements recognized in the second, third and fourth quarters of 2019 due to redesign of our offices in Moscow and Yaroslavl.

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Finance income and costs

        Finance income was GRAPHIC 19 million for the three months ended March 31, 2020 compared to GRAPHIC 26 million for the three months ended March 31, 2019, primarily due to a decrease in available cash balances that were deposited.

        Finance costs were GRAPHIC 119 million for the three months ended March 31, 2020, compared to GRAPHIC 168 million for the three months ended March 31, 2019. Finance costs decreased by GRAPHIC 49 million, primarily due to a decrease of Central Bank of Russia Key Rate from 7.75% to 6% through the period from March 31, 2019 to March 31, 2020 as well as a decrease in the loans and borrowings balance by GRAPHIC 688 million from March 31, 2019 to March 31, 2020.

Net foreign exchange gain/(loss)

        Net foreign exchange gain was GRAPHIC 75 million for the three months ended March 31, 2020 compared to a loss of GRAPHIC 23 million for the three months ended March 31, 2019. The change was mostly due to the weakening of the RUB to USD currency exchange rate as at March 31, 2020 in comparison with the rate as at December 31, 2019, resulting in the foreign exchange gain on USD-denominated cash balances, partly offset by the foreign exchange loss on USD-denominated dividends payable in the three months ended March 31, 2020.

Income tax expense

        Income tax expense was GRAPHIC 231 million for the three months ended March 31, 2020 compared to GRAPHIC 177 million for the three months ended March 31, 2019. The effective tax rate was 36.0% for the three months ended March 31, 2020 and 42.5% for the three months ended March 31, 2019.

        The effective tax rate for the three months ended March 31, 2020 was affected by the non-deductible foreign exchange loss on dividends payable occurred in our Cyprus holding company (see "—Net foreign exchange gain/(loss)" above). Without this effect, the effective tax rate for the three months ended March 31, 2020 would have been 29.4%. The effective tax rate for the three months ended March 31, 2019 was affected by withholding tax expense associated with our tax restructuring. Without this effect, the effective tax rate for the three months ended March 31, 2019 would have been 32.6%.

Net Income

        Net income was GRAPHIC 412 million for the three months ended March 31, 2020 compared to GRAPHIC 239 million for the three months ended March 31, 2019. Net income increased by GRAPHIC 173 million compared to the three months ended March 31, 2019 primarily due to the reasons described above.

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Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018

 
  For the year ended
December 31,
 
(in thousands of RUB)
  2018(1)   2019  

Revenue

    6,117,773     7,788,741  

Operating costs and expenses (exclusive of depreciation and amortization)

    (3,432,860 )   (4,300,263 )

Depreciation and amortization

    (586,131 )   (683,317 )

Operating income

    2,098,782     2,805,161  

Financial income

    90,602     76,764  

Financial costs

    (644,326 )   (603,280 )

Other income

        23,853  

Gain on disposal of subsidiary

    6,131      

Net foreign exchange loss

    (8,742 )   (46,508 )

Share of loss of equity-accounted investees (net of income tax)

        (30,542 )

Profit before income tax

    1,542,447     2,225,448  

Income tax expense

    (509,602 )   (644,422 )

Net income

    1,032,845     1,581,026  

(1)
We adopted IFRS 16 at January 1, 2019 using the modified retrospective approach. Under the transition method chosen, comparative information is not restated. Please refer to Note 4 of our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019.

Revenue

        Our revenue was GRAPHIC 7,789 million for the year ended December 31, 2019 compared to GRAPHIC 6,118 million for the year ended December 31, 2018. Revenue for the year ended December 31, 2019 increased by GRAPHIC 1,671 million, or 27.3%, compared to the year ended December 31, 2018. In April 2018, we completed the sale of our Ukraine operations. The revenue from our Ukraine operating segment was GRAPHIC 16 million for the year ended December 31, 2018. Excluding the effect of the disposal of our Ukraine operations, revenue for the year ended December 31, 2019 increased by GRAPHIC 1,687 million, or 27.7%, compared to the year ended December 31, 2018, primarily due to an increase in revenue in our Russia segment.

        Russia revenue.    Our revenue in our Russia segment was GRAPHIC 7,212 million for the year ended December 31, 2019 compared to GRAPHIC 5,700 million for the year ended December 31, 2018. Revenue in our Russia segment increased by GRAPHIC 1,512 million, or 26.5%, for the year ended December 31, 2019 compared to the year ended December 31, 2018, primarily due to the growth in the number of paying customers in our Small and Medium Accounts (by 12.6% in Moscow and St. Petersburg and 42.9% in the other regions of Russia), as we continued investing nationwide in our brand awareness campaigns. This was also due to an increase in ARPC in all customer segments driven by (i) an increase in effective prices for our services as a result of list price increases and a reduction of discounts and (ii) the increase in the usage of service, which was driven by the increase in the average number of job postings per customer, while the average number of subscription days per customer (total for Bundled Subscriptions and CV Database access) remained flat.

        Other segments revenue.    Our revenue in our other segments was GRAPHIC 577 million for the year ended December 31, 2019 compared to GRAPHIC 417 million for the year ended December 31, 2018. Revenue increased by GRAPHIC 160 million, or 38.2%, compared to the year ended December 31,2018. Excluding the

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effect of the disposal of our Ukraine operations, revenue from other segments for the year ended December 31, 2019 increased by GRAPHIC 176 million, or 43.9%, compared to the year ended December 31, 2018, primarily due to an increase in the number of paying customers in our Belarus and Kazakhstan operating segments, partially offset by a decrease in the ARPC in our Kazakhstan operating segment on the back of a weakening exchange rate of local currency to Russian rubles.

Operating costs and expenses (exclusive of depreciation and amortization)

        Operating costs and expenses (exclusive of depreciation and amortization) were GRAPHIC 4,300 million for the year ended December 31, 2019 compared to GRAPHIC 3,433 million for the year ended December 31, 2018. Operating costs and expenses (exclusive of depreciation and amortization) increased by GRAPHIC 867 million, or 25.3%, compared with the year ended December 31, 2018. The main factors that contributed to such increases were an increase in personnel expenses of GRAPHIC 517 million, an increase of our professional and insurance services of GRAPHIC 204 million, primarily due to the increase in the professional services related to the IPO and purchase of insurance cover related to the IPO; and an increase in marketing expenses of GRAPHIC 107 million driven by an increase in online marketing expenses. Our personnel expenses for the year ended December 31, 2019 increased as a result of: (i) an increase in share-based compensation expense by GRAPHIC 133 million compared to the year ended December 31, 2018, primarily due to the grant of new options under the Management Incentive Agreement and the HeadHunter Unit Option Plan in the second quarter of 2019; (ii) hiring 80 people primarily in our development, sales and production teams in our Russia segment and thus, increasing the headcount in our Russia segment from 618 as of December 31, 2018 to 698 as of December 31, 2019 and (iii) the indexation of wages effective from the first quarter of 2019.

Depreciation and amortization

        Depreciation and amortization was GRAPHIC 683 million for the year ended December 31, 2019 compared to GRAPHIC 586 million for the year ended December 31, 2018. Depreciation and amortization increased by GRAPHIC 97 million, or 16.6%, compared with the year ended December 31, 2018, primarily due to a depreciation charge of GRAPHIC 74 million related to right-of-use assets recognized as of January 1, 2019 under the new standard IFRS 16 "Leases."

Finance income and costs

        Finance income was GRAPHIC 77 million for the year ended December 31, 2019 compared to GRAPHIC 91 million for the year ended December 31, 2018. Finance income decreased by GRAPHIC 14 million, or 15.4%, compared to the year ended December 31, 2018, primarily due to a decrease in available cash balances throughout the year ended December 31, 2019 as compared to the year ended December 31, 2018 that were deposited, as we used cash to pay dividends to shareholders for the year ended December 31, 2018 in July 2019.

        Finance costs were GRAPHIC 603 million for the year ended December 31, 2019 compared to GRAPHIC 644 million for the year ended December 31, 2018. Finance costs decreased by GRAPHIC 41 million, or 6.4%, compared with the year ended December 31, 2018, primarily due to a decrease of outstanding loans and borrowings by GRAPHIC 1,309 million from December 31, 2018 to December 31, 2019, due to the partial repayment of our Credit Facility, partially offset by interest expense of GRAPHIC 33 million related to lease liabilities recognized as of January 1, 2019 under the new standard IFRS 16 "Leases."

Net foreign exchange loss

        Net foreign exchange loss was GRAPHIC 47 million for the year ended December 31, 2019 compared to a loss of GRAPHIC 9 million for the year ended December 31, 2018. Net foreign exchange loss for the year ended December 31, 2019 reflects mainly the foreign exchange loss on USD-denominated cash balances.

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Income tax expense

        Income tax expense was GRAPHIC 644 million for the year ended December 31, 2019 compared to GRAPHIC 510 million for the year ended December 31, 2018. The increase of GRAPHIC 134 million in income tax expense was primarily due to expansion of our profit before income tax from GRAPHIC 1,542 million in the year ended December 31, 2018 to GRAPHIC 2,225 million in the year ended December 31, 2019.

        The effective tax rate for the year ended December 31, 2019 was 29.0%, and it differed from the statutory tax rate in the Russian Federation of 20% primarily due to the non-deductible interest expense on our bank loan and other non-deductible expenses, which were partly offset by the reversal of withholding tax on unremitted earnings. We consider this factor to be mid-term, and it may decrease in the future as we deleverage, provided that we do not acquire new debt.

Net Income

        Net income was GRAPHIC 1,581 million for the year ended December 31, 2019 compared to GRAPHIC 1,033 million for the year ended December 31, 2018. Net Income increased by GRAPHIC 548 million compared with the year ended December 31, 2018, primarily due to the reasons described above.

Critical Accounting Policies and Significant Judgments and Estimates

        We prepare financial statements in accordance with IFRS as adopted by the IASB, which requires us to make judgments, estimates and assumptions that affect the reported amounts of our assets and liabilities and the disclosure of our contingent assets and liabilities at the end of each fiscal period and the reported amounts of revenue and expenses during each fiscal period. We continually evaluate these judgments and estimates based on our own historical experience, knowledge and assessment of current business and other conditions, and our expectations regarding the future based on available information and assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

        The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements. We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.

Basis of consolidation

Nonrecurring valuations

        Our nonrecurring valuations are primarily associated with (i) the application of acquisition accounting; (ii) share-based payments; and (iii) impairment assessments, all of which require that we make fair value determinations as of the applicable valuation date. In making these determinations, we are required to make estimates and assumptions that affect the recorded amounts, including, but not limited to expected future cash flows, market comparables and discount rates, and remaining useful lives of long-lived assets. To assist us in making these fair value determinations, we may engage third party valuation specialists. Our estimates in this area impact, among other items, the amount of depreciation and amortization, impairment charges and income tax expense or benefit that we report. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain. A significant portion of our long-lived assets were initially recorded through the application of acquisition accounting and all of our long-lived assets are subject to impairment

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assessments. For additional information, see Notes 6 and 14 to our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019.

        We regularly review whether changes to estimated useful lives are required in order to accurately reflect the economic use of our intangible assets with finite lives.

Revenue

        We earn revenue primarily from granting access to our CV database and displaying job advertisements on our website. The payment terms for most contracts require a full prepayment. Unearned revenues are reported in the consolidated statement of financial position as contract liabilities.

        In our bundled subscriptions, the allocation of the consideration received between the CV database access component and the job postings component is based on the relative standalone selling prices and expected usage of job postings. The expected usage of job postings in our bundled subscriptions is estimated based on the historical data for specific categories of customers and is remeasured at each reporting date. Revenue attributable to the CV database access component is recognized over the period of subscription and revenue attributable to the job postings component is recognized over the display period of a job posting on our website.

Income Tax Accounting

        In determining the amount of current and deferred tax, we take into account the impact of uncertain tax positions and whether any additional taxes, penalties and late-payment interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that could cause us to change our judgment regarding the adequacy of existing tax liabilities, and such changes to our tax liabilities will impact the tax expense in the period that such a determination is made.

Recent Accounting Pronouncements

        See Note 31 to our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019 for information regarding recent accounting standards issued that are of significance, or potential significance to us.

Liquidity and Capital Resources

        Our principal financial instruments are comprised of cash and cash equivalents and our Credit Facility (as described further below under the heading "—Indebtedness."). Other financial assets and liabilities include trade and other receivables, deposits with financial institutions and trade and other payables. Substantially all of our financial assets are neither past due nor impaired.

        As of December 31, 2019, our current liabilities exceeded current assets by GRAPHIC 2,426 million. Our current liabilities were mainly represented by deferred revenue. Due to the nature of our business, a substantial portion of our customers pay upfront for subscriptions, thus deferred revenue arises. We expect that deferred revenue will continue to exceed the amount of inventories and trade receivables on our balance sheet, resulting in negative working capital in future periods.

        We did not receive any proceeds from the sale of ADSs in the IPO. We bore all costs, fees and expenses in connection with the IPO, which were GRAPHIC 423,234 thousand, excluding underwriting commissions, which were paid by the selling shareholders.

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        For information about our material capital expenditures as of December 31, 2019, see Item 4.D. "Information on the Company—Property, Plant and Equipment" of our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein.

Cash flows

 
  For the year
ended December 31,
  For the three months
ended March 31,
 
(in thousands of RUB)
  2018   2019   2019   2020  

Net cash generated from operating activities

    2,096,688     2,611,054     374,765     942,362  

Net cash (used in) investing activities

    (174,548 )   (637,117 )   (290,475 )   (101,224 )

Net cash (used in) financing activities

    (497,629 )   (2,653,440 )   (573,941 )   (58,892 )

Net increase/(decrease) in cash and cash equivalents

    1,424,511     (679,503 )   (489,651 )   782,246  

Net cash generated from operating activities

        For the three months ended March 31, 2020, net cash generated from operating activities was GRAPHIC 942 million compared to GRAPHIC 375 million for the three months ended March 31, 2019. The change between the periods of GRAPHIC 568 million was primarily driven by: (i) an increase in sales, which resulted in an increase in net income (adjusted for non-cash items and items not affecting cash flow from operating activities), (ii) a decrease of interest and income tax paid due to the shift of our Credit Facility quarterly interest payment and certain tax payments from the first quarter of 2020 to the second quarter of 2020 due to the non-working days period, as well as a decrease of income tax paid given the deferral of certain income tax payments, each due to the COVID-19 pandemic; (iii) an increase in the movement of contract liabilities for the three months ended March 31, 2020 due to timing of customer advances in this year; (iv) a decrease in trade and other payables mainly due to settlement of payables to employees, including annual bonuses for 2019.

        For the year ended December 31, 2019, net cash generated from operating activities was GRAPHIC 2,611 million compared to GRAPHIC 2,097 million for the year ended December 31, 2018. The increase of GRAPHIC 514 million was primarily driven by an increase in sales and the advanced payment we received from the depositary (see Note 24 to our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019). These changes were partially offset by (i) the increase in income taxes paid due to increased tax base, (ii) the decrease in the movement of contract liabilities for the year ended December 31, 2019 as compared to year ended December 31, 2018, and (iii) the advance payment for the insurance cover related to the IPO in the year ended December 31, 2019 not occurring in the year ended December 31, 2018.

        The growth in contract liabilities for the year ended December 31, 2019 was adversely affected by our decision not to offer customers the opportunity to renew a contract for the same price if they paid us before January 1, 2020, the effective date of our new price list, as we did in the year ended December 31, 2018. This resulted in a substantial amount of prepayments shifting from the fourth quarter of 2019 to the first quarter of 2020.

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Net cash used in investing activities

        For the three months ended March 31, 2020, net cash used in investing activities was GRAPHIC 101 million compared to GRAPHIC 290 million for the three months ended March 31, 2019. The change between the periods of GRAPHIC 189 million was primarily due to the acquisition of a 25.01% ownership interest in LLC "Skilaz" for GRAPHIC 235 million in the first quarter of 2019, partially offset by an increase in capital expenditures in the first quarter of 2020.

        For the year ended December 31, 2019, net cash used in investing activities was GRAPHIC 637 million compared to GRAPHIC 175 million for the year ended December 31, 2018. The increase of GRAPHIC 462 million was primarily due to the acquisition of a 25.01% ownership interest in LLC Skilaz for GRAPHIC 235 million and an increase in capital expenditures.

Net cash used in financing activities

        For the three months ended March 31, 2020, net cash used in financing activities was GRAPHIC 59 million compared to GRAPHIC 574 million for the three months ended March 31, 2019. The change between the periods was primarily due to timing of a repayment of our Credit Facility, which was paid in the second quarter 2020 as the due date of March 30, 2020 was designated as a non-working day due to the COVID-19 pandemic, as well as a loan repayment of GRAPHIC 270 million to the associate of a non-controlling shareholder in the three months ended March 31, 2019.

        For the year ended December 31, 2019, net cash used in financing activities was GRAPHIC 2,653 million compared to GRAPHIC 498 million for the year ended December 31, 2018. The increase of GRAPHIC 2,155 million was primarily due to (i) the dividends paid to shareholders of GRAPHIC 1,134 million; (ii) receipt of GRAPHIC 270 million loan from the associate of a non-controlling shareholder in the year ended December 31, 2018 and its full repayment in the year ended December 31, 2019; (iii) an increase of a loan repayment to VTB Bank by GRAPHIC 365 million in accordance with the repayment schedule; (iv) a repayment of lease liabilities of GRAPHIC 61 million; and (v) an increase in the dividends paid to non-controlling shareholders by GRAPHIC 54 million as the net income of our subsidiaries in Belarus and Kazakhstan has increased.

Indebtedness

        In connection with the financing of the Acquisition, through our wholly owned subsidiary Zemenik LLC, on May 16, 2016, we entered into a syndicated credit facility with VTB Bank (PJSC), dated May 16, 2016, borrowing GRAPHIC 5 billion. On October 5, 2017, we entered into an amendment to the Credit Facility pursuant to which we increased the maximum principal amount to GRAPHIC 7 billion by borrowing an additional GRAPHIC 2 billion. The applicable interest rate on the GRAPHIC 7 billion principal amount was decreased from 3.7% to 2.0% above the Key Rate of the Central Bank of Russia, and certain key financial covenants were amended. An additional GRAPHIC 2 billion was then distributed to our shareholders. See Item 7. "Major Shareholders and Related Party Transactions, B. Related Party Transactions—Relationship with Elbrus Capital and The Goldman Sachs Group, Inc.—Loans to Shareholders" of our Annual Report on Form 20-F for the year ended December 31, 2019.

        On April 22, 2019, we signed Amendment No. 5, which provided, among other things, that HeadHunter Group PLC can withdraw the additional Tranche E, within 120 days from the date of Amendment No. 5, the interest rate on which amounts to 2.4% (and in certain circumstances, 2.9%) above the Key Rate of the Central Bank of Russia. As of the date of our Annual Report on Form 20-F for the year ended December 31, 2019, we have not requested to utilize Tranche E or any portion thereof, and Tranche E's availability period has expired. In order to simplify our intra-group arrangements, in accordance with Amendment No. 5, the outstanding debt related to Tranches C and D in the total principal amount of GRAPHIC 1.9 billion as well as any interest accrued thereon and outstanding as of the date of Amendment No. 5, were assigned to HeadHunter Group PLC. Matching amendment

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agreements were also signed to the security documentation. Capitalized terms in this paragraph have the definitions provided in the Credit Facility.

        On March 11, 2020, we signed Amendment No. 6 to the Credit Facility, which, among other things, contains the consent of VTB Bank (PJSC) to proceed with a securities offering prior to December 31, 2020 and allows us to give indemnities in connection with any such offering. Amendment No. 6 also decreases the change of control threshold, in case we proceed with any such offering, from 50% to 35% of the aggregate shareholding power of our shareholders, Highworld Investments Limited, an investment vehicle associated with Elbrus Capital, and ELQ Investors VIII Limited, an investment vehicle associated with The Goldman Sachs Group, Inc., so long as Highworld Investments Limited continues to hold more than 17.5% of our outstanding share capital.

        The Credit Facility may be terminated at any time in the event of a default, or likely default, by the lender and matures pursuant to a quarterly schedule with final maturity in October 2022. Headhunter FSU Limited, HeadHunter Group PLC (formerly Zemenik Trading Limited) and Headhunter LLC also provided guarantees in favor of VTB Bank (PJSC) in connection with the Credit Facility. The Credit Facility includes various legal restrictions including change of control provisions, restrictions and limitations on shareholder distributions, a prepayment penalty, as well as financial covenants. As of December 31, 2019, the Group complied with all financial and other covenants in the Credit Facility agreement. The Credit Facility was collateralized with the shares of Headhunter FSU Limited, HeadHunter Group PLC, and participation interests in Headhunter LLC and Zemenik LLC. The Credit Facility was amended by Amendment No. 4 dated December 29, 2017 simultaneously with the guarantee agreement to which we are a party, to allow us for a definite period, subject to customary conditions, to proceed with offering-related matters including, inter alia, changing our corporate name and converting to a public company, splitting shares, issuing additional shares, providing indemnities in connection with the IPO and making changes to our charter documents. Simultaneously with Amendment No. 4, we executed a release of the security over the shares of HeadHunter Group PLC. Under Amendment No. 5, we were given consent to proceed with matters relating to the IPO.

        The Credit Facility contains certain restrictions on our ability to declare and pay dividends, including that we cannot declare and pay dividends to our shareholders without the prior written consent of VTB Bank (PJSC), except for in certain circumstances, including, inter alia, dividends not exceeding 100% of the Adjusted Consolidated Net Profit of the Group, provided that the pro-forma Net Debt to EBITDA ratio immediately after the payment calculated under terms of the Credit Facility does not exceed 2.75:1. As of March 31, 2020, we were compliant with our covenants under the Credit Facility.

        Based on current projections, we expect to remain compliant with these covenants for at least 12 months from July 3, 2020. VTB Bank (PJSC), the lender under our Credit Facility, has demonstrated their willingness to temporarily relax our covenants to a degree that we expect would cover a reasonable deviation from our current financial projections. Although we expect to be able to obtain loan agreement amendments or waivers in the future as needed, there can be no assurance that we will be able to continue to comply with our covenants in the future if the negative impacts on our business and results of operations worsen as a result of the COVID-19 pandemic.

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PRINCIPAL AND SELLING SHAREHOLDERS

        The following table sets forth information relating to the beneficial ownership of our ordinary shares as of June 30, 2020 (i) prior to the completion of this offering and (ii) as adjusted to reflect the sale of our ADSs in this offering for:

        For further information regarding material transactions between us and principal shareholders, see Item 7.B. "Related Party Transactions" of our Annual Report on Form 20-F for the year ended December 31, 2019 incorporated by reference herein.

        The number of ordinary shares beneficially owned by each entity, person, executive officer or board member is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power, or the right to receive the economic benefit of ownership, as well as any shares that the individual has the right to acquire within 60 days of June 30, 2020 through the exercise of any option, warrant or other right. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power and the right to receive the economic benefit of ownership with respect to all ordinary shares held by that person.

        ELQ Investors VIII Limited and Highworld Investments Limited have agreed to act together to vote for the election of each of their director nominees to the board. Upon the completion of the IPO, ELQ Investors VIII Limited and Highworld Investments Limited were deemed a "group" under the rules of the SEC. Upon the closing of this offering, ELQ Investors VIII Limited and Highworld Investments Limited as a group will continue to control a majority of our outstanding shares.

        The percentage of shares beneficially owned before the offering is computed on the basis of 50,317,860 of our ordinary shares outstanding as of June 30, 2020. The percentage of shares beneficially owned after the offering is based on the number of our ordinary shares to be outstanding after this offering, including the 5,000,000 of our ADSs representing ordinary shares that the Selling Shareholder is selling in this offering, and assumes no exercise of the underwriters' option to purchase additional ADSs from the Selling Shareholder. Ordinary shares that a person has the right to acquire within 60 days of June 30, 2020 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all executive officers and board members as a group. Unless otherwise indicated below, the address for

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each beneficial owner listed is c/o HeadHunter Group PLC, 42 Dositheou, Strovolos, 2028, Nicosia, Cyprus.

 
  Shares beneficially
owned before the
offering
  Shares beneficially
owned after the
offering
 
Name of beneficial owner
  Number   Percent   Number   Percent  

5% or Greater Shareholders

                         

Highworld Investments Limited(1)

    18,749,997     37.3 %   18,749,997     37.3 %

ELQ Investors VIII Limited(2)

    12,499,998     24.8 %   7,499,998     14.9 %

Kayne Anderson Rudnick Investment Management LLC(3)

    7,152,455     14.2 %   7,152,455     14.2 %

Executive Officers and Board Members(4)

   
 
   
 
   
 
   
 
 

Mikhail Zhukov

    *     * %   *     * %

Grigorii Moiseev

    *     * %   *     * %

Dmitry Sergienkov

    *     * %   *     * %

Olga Mets

    *     * %   *     * %

Boris Volfson

    *     * %   *     * %

Gleb Lebedev

    *     * %   *     * %

Andrey Panteleev

    *     * %   *     * %

Martin Cocker

        00.0 %       0.0 %

Ion Dagtoglou

        00.0 %       0.0 %

Morten Heuing

        00.0 %       0.0 %

Dmitri Krukov

        00.0 %       0.0 %

Maksim Melnikov

        00.0 %       0.0 %

Thomas Otter

        00.0 %       0.0 %

Terje Seljeseth

        00.0 %       0.0 %

Evgeny Zelensky

        00.0 %       0.0 %

All executive officers and board members as a group (14 persons)

    *     * %   *     * %

Total:

    50,317,860     76.3 %   50,317,860     66.5 %

*
Indicates beneficial ownership of less than 1% of the total outstanding ordinary shares.

(1)
Based on information reported on a Schedule 13G filed on February 10, 2020, Elbrus Capital General Partner II Limited is the general partner of Elbrus Capital Fund II, L.P., which is the majority shareholder of Highworld Investments Limited. As a result, each of Elbrus Capital General Partner II Limited and Elbrus Capital Fund II L.P. may be deemed to share beneficial ownership of the ordinary shares owned by Highworld Investments Limited. The office address for Highworld Investments Limited is Kritis Street, Papachristoforou Building, 1st Floor, 3087 Limassol, Cyprus.

(2)
Based on information reported on a Schedule 13G filed on February 10, 2020, ELQ Investors VIII Limited is a wholly owned, indirect subsidiary of The Goldman Sachs Group Inc., which is a publicly traded company. The address for ELQ Investors VIII Limited is Plumtree Court, 25 Shoe Lane, London EC4A 4AU, United Kingdom.

(3)
Based on information reported on a Schedule 13G filed on March 10, 2020, Kayne Anderson Rudnick Investment Management LLC ("Kayne Anderson") beneficially owns 7,152,455 ADSs. Kayne Anderson shares voting and dispositive power of 5,943,804 of these ADSs with Virtus Investment Advisers, Inc. and shares voting and dispositive power of 5,323,919 of these ADSs with Virtus Opportunities Trust, on behalf of Virtus KAR International Small Cap Fund. The address for Kayne Anderson is 1800 Avenue of the Stars, 2nd Floor, Los Angeles, California 90067, United States of America.

(4)
Other than our Chief Executive Officer and Chief Financial Officer, our executive officers are officers of our key operating subsidiary.

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SHARES AND ADSS ELIGIBLE FOR FUTURE SALE

        Future sales of substantial amounts of our ADSs in the public market could adversely affect market prices prevailing from time to time. Furthermore, because only a limited number of ordinary shares or ADSs will be available for sale shortly after this offering due to existing contractual and legal restrictions on resale as described below, there may be sales of substantial amounts of our ordinary shares or ADSs in the public market after such restrictions lapse. This may adversely affect the prevailing market price of our ADSs and our ability to raise equity capital in the future.

        As of June 30, 2020, we had 50,317,860 ordinary shares outstanding. Our ADSs are available for sale in the public market with the exception of restrictions related to the lock-up agreements described below or subject to limitations imposed by U.S. securities laws on resale by our "affiliates," as that term is defined in Rule 144 under the Securities Act.

        We expect that all of our ADSs and ordinary shares will be freely transferable without restriction or registration, except for any ADSs or ordinary shares purchased by one of our existing affiliates. ADSs or ordinary shares purchased or held by our affiliates may not be resold except pursuant to an effective registration statement or an exemption from registration, including the safe harbor under Rule 144 of the Securities Act, as described below. In addition, following this offering and the expiration or waiver of the lock-up agreements described below, ordinary shares issuable pursuant to awards granted under certain of our equity plans will eventually be freely tradable in the public market.

        The remaining ordinary shares and ADSs are "restricted shares" as defined in Rule 144. We expect that substantially all of these restricted shares will be subject to the lock-up agreements described below. These ordinary shares or ADSs may be sold in the public market only if the sale is registered or pursuant to an exemption from registration, such as the safe harbor provided by Rule 144.


Rule 144

        In general, a person who has beneficially owned our ordinary shares that are restricted securities for at least six months would be entitled to sell those ordinary shares, provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Persons who have beneficially owned our ordinary shares that are restricted securities for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions that would limit the number of ordinary shares such person would be entitled to sell within any three month period to the greater of either of the following:

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Sales both by affiliates and by non-affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144 to the extent applicable.

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Rule 701

        Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits re-sales of shares in reliance upon Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our employees, executive officers, directors or consultants who purchased shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701.


Regulation S

        Regulation S provides generally that sales made in offshore transactions are not subject to the registration or prospectus delivery requirements of the Securities Act.


Registration Rights

        In connection with the IPO, we, the Selling Shareholder and Highworld Investments Limited entered into a Registration Rights Agreement on May 13, 2019 (the "Registration Rights Agreement"). The Registration Rights Agreement grants the Selling Shareholder and Highworld Investments Limited the right to request registration of their registrable securities under the Securities Act beginning 180 days after the completion of the IPO. Registration of the Selling Shareholder's and Highworld Investments Limited's registrable securities would result in registration of ADSs under the Securities Act and would result in these ADSs becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for ADSs purchased by affiliates.


Lock-up Agreements

        We, the Selling Shareholder, Highworld Investments Limited, our executive officers and our board members have agreed, subject to limited exceptions, not to offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of, directly or indirectly, or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the ADSs or such other securities for a period of 90 days after the date of this prospectus, subject to certain exceptions, without the prior written consent of Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC. See "Underwriting (Conflicts of Interest)."


Equity Incentive Plans

        We filed a Form S-8 registration statement under the Securities Act to register ADSs issued or reserved for issuance under our equity compensation plans and agreements. This registration statement became effective immediately upon filing, and shares covered by this registration statement are eligible for sale in the public markets, subject to vesting restrictions, the lock-up agreements described above and Rule 144 limitations applicable to affiliates.

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MATERIAL TAX CONSIDERATIONS

        The following summary contains a description of the material Cyprus, Russian and U.S. federal income tax consequences of the acquisition, ownership and disposition of ADSs, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase ADSs. The summary is based upon the tax laws of Cyprus and regulations thereunder, the tax laws of the Russian Federation and regulations thereunder and on the tax laws of the United States and regulations thereunder as of the date hereof, which are subject to change.


Material Cyprus Tax Considerations

        The following discussion is a summary of the material Cyprus tax considerations relating to the purchase, ownership and disposition of our ADSs.

Tax Residency

        As a rule, a company is considered to be a resident of Cyprus for tax purposes if its management and control are exercised in Cyprus. The Cyprus Tax Authorities have published documents which indicate, for their purposes, the minimum requirements that need to be satisfied for a company to be considered a tax resident of Cyprus are the following: (i) whether the company is incorporated in Cyprus and is a tax resident only in Cyprus; (ii) whether the company's board of directors has a decision making power that is exercised in Cyprus in respect of key management and commercial decisions necessary for the company's operations and general policies and, specifically, whether the majority of the board of directors' meetings take place in Cyprus and the board of directors' minutes are prepared and kept in Cyprus, and, also, whether the majority of the board of directors are tax residents of Cyprus; (iii) whether the shareholders' meetings take place in Cyprus; (iv) whether the terms and conditions of the issued by the company general powers of attorney do not prevent the company and its board of directors to exercise control and make decisions; (v) whether the corporate seal and all statutory books and records are maintained in Cyprus ; (vi) whether the corporate filings and reporting functions are performed by representatives located in Cyprus; (vii) whether the agreements relating to the company's business or assets are executed or signed in Cyprus.

        With respect to the holders of our shares, such holder may be considered to be a resident of Cyprus for tax purposes in a tax year (which is the calendar year) if such holder is physically present in Cyprus (a) for a period or periods exceeding in aggregate more than 183 days in that calendar year or (b) in the aggregate of 60 days, provided the following criteria are met:

        The holding and disposal of the shares by a non-tax resident will not create any tax liability in Cyprus. Non-tax residents are not liable for any tax on the disposal of shares or other securities of a Cyprus company unless the Cyprus company is the owner of immovable property situated in Cyprus.

Taxation of Cyprus Resident Company/Individual

        A company which is considered a resident of Cyprus for tax purposes is subject to corporate income tax in Cyprus, on its worldwide income, subject to certain exemptions. The rate of Corporate

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Income Tax in Cyprus is 12.5%, as of January 1, 2013. By law 187(I)2015 the Income Tax Law No.118 (I) of 2002 was amended introducing a concept of notional interest deduction (the "NID") on equity capital. According to the amended Income Tax Law, with effect from January 1, 2015, (i) companies resident in Cyprus and (ii) companies not resident in Cyprus but which maintain a permanent establishment in Cyprus are entitled to a deduction of notional interest of up to 80% of their taxable income on new equity capital introduced after that date, which is effectively a tax allowable deduction against the taxable profits of the company.

        The Special Contribution for Defense Law No. 117(I) of 2002 (the "SDC Law") previously stated that all Cyprus tax residents are liable to pay a special defense contribution or Cypriot Defense Tax on certain categories of income, these being dividends, interest and rental income.

        By law 119(I) 2015, the SDC Law was amended introducing the concept of a non-domiciled tax resident in Cyprus so that an individual will now be subject to SDC Law if he/she is both (i) a resident for tax purposes of Cyprus and (ii) is also considered to be domiciled in Cyprus. Therefore, a Cyprus tax resident individual who is not domiciled in Cyprus is completely exempted from the special contribution for defense tax on its worldwide income deriving from the categories listed above regardless of whether such income is remitted to a bank account or economically used in Cyprus. Under the SDC Law, a person who does not have his/her domicile of origin in Cyprus, is not considered domiciled in Cyprus unless that person has been a tax resident of Cyprus for at least 17 years out of the last 20 years prior to the tax year and, therefore, will be subject to the SDC Law.

Taxation of Dividends and Distributions

        Under Cyprus legislation there is no withholding tax on dividends paid to non-residents of Cyprus. The dividend will be paid free of any tax to the shareholder who will be taxed according to the laws of such shareholder's country of residence or domicile. Holders of shares must consult their own tax advisors on the consequences of their residence or domicile in relation to the taxes applied to the payment of dividends.

        Individual tax residents of Cyprus are unconditionally exempt from income tax on dividend income, but are subject to Special Contribution to the Defense Fund on dividends at the rate of 17.0% provided that they are also Cyprus domiciled. The tax is withheld by the company prior to payment by the company to the shareholder.

        In June 2019, we completed the change of the place of management of HeadHunter Group PLC from Cyprus to Russia, which resulted in HeadHunter Group PLC becoming a Russian tax resident. Following such change, HeadHunter Group PLC is subject to all taxes and entitled to all tax exemption provided by the Tax Code of Russia, including a holding exemption, according to which a 0% tax rate is applied (subject to various conditions for application of such exemption) to the profits distributed from our Russian operating company to HeadHunter Group PLC. The Russian tax service may challenge the status of HeadHunter Group PLC as a Russian tax resident and may deny HeadHunter Group PLC the tax exemption provided by the Russian Tax Code. See "Risk Factors—Risks relating to Russian taxation—Russian tax residence rules are relatively untested, and our tax residence status may be challenged." In turn, will withhold tax on dividend payments to our investors at the generally applicable 15% tax rate, which may be reduced under an applicable tax treaty between Russia and a country of residence of an investor, if certain conditions defined in the tax treaty are met (in particular, if an investor receiving a dividend is the beneficial owner of the respective dividend). See also "—Material Russian Tax Considerations—Taxation of dividends and other distributions (including distributions in kind)."

        In October 2018, we resolved to establish a branch office of our Cyprus company, Headhunter FSU Ltd, in Russia, which is the immediate parent of our Russian operating company, Headhunter LLC, and voluntarily applied for the status of a Russian tax resident in November 2018.

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Headhunter FSU Ltd became a Russian tax resident immediately after the application to the Russian tax service, which was filed on November 8, 2018. As a result, with effect from that date, Headhunter FSU Ltd is subject to all taxes and entitled to all tax exemptions provided by the Russian Tax Code, including a holding exemption, according to which a 0% tax rate will be applied (subject to various conditions for application of such exemption) to the profits distributed from our Russian operating company, Headhunter LLC, to Headhunter FSU Ltd. The Russian tax service may challenge the status of Headhunter FSU Ltd. as a Russian tax resident and may deny Headhunter FSU Ltd. the tax exemptions provided by the Russian Tax Code. See "Risk FactorsRisks relating to Russian taxation—Russian tax residence rules are relatively untested, and our tax residence status may be challenged."

Taxation of Capital Gains

        Cyprus Capital Gains Tax is imposed (when the disposal is not subject to income tax) at the rate of 20.0% on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of ADSs in companies which own immovable property in Cyprus, and such shares are not listed in any recognized stock market. It is unclear whether this exception also applies to disposal of the shares. By law 117(I) 2015 the Capital Gains Tax Law No.119 (I) of 2002 was amended providing that a sale of immovable property consisting of land or land with buildings or buildings between July 16, 2015 and December 31, 2016 is exempted from Capital Gains Tax. The exemption applies if the property was acquired by sale at its market value with a non-related party, and not by way of exchange or gift.

        Gains from sale of shares in companies which indirectly own immovable property in Cyprus by holding directly or indirectly shares in a company, which owns immovable property in Cyprus, will also be subject to capital gains tax. That is applicable only if the value of immovable property is more than 50% of the value of the assets of the company which shares are sold.

Inheritance Tax

        There is no Cyprus inheritance tax.

Deemed Distributions

        A Cypriot company which does not distribute at least 70% of its after tax profits within two years of the end of the year in which the profits arose would be deemed to have distributed this amount as a dividend two years after that year end. The Cypriot Defense Tax, currently at a rate of 17%, would be payable by the company on deemed dividends to the extent that its shareholders are Cyprus tax residents or in the case of individuals, also Cyprus domiciled. Deemed distribution does not apply in respect of profits that are directly or indirectly attributable to shareholders that are non-resident in Cyprus. The Cypriot Defense Tax may also be payable on deemed dividends in case of liquidation or capital reduction of the company. The company will debit such Cypriot Defense Tax paid against the profits attributable to such shareholders. The amount of deemed dividend distribution (subject to the Cypriot Defense Tax) is reduced by any actual dividend paid out of the profits of the relevant year at any time up to the date of the deemed distribution. The profits to be taken into account in determining the deemed dividend do not include fair value adjustments to movable or immovable property (if any). For the purpose of arriving at the profit subject to deemed distribution, any capital expenditure incurred for the acquisition of plant and machinery (excluding private saloon cars), and buildings during the years 2012 to 2014 is deducted from the after tax profits.

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Taxation of Income and Gains

Gains from the Disposal of Securities

        Any gain from disposal by the company of securities (the definition of securities includes shares and bonds of companies and options thereon) shall be exempt from Corporate Income Tax irrespective of the trading nature of the gain, the number of shares held or the holding period and shall not be subject to the Cypriot Defense Tax. Such gains are also outside of the scope of capital gains tax provided that the company whose shares are disposed of does not own any immovable property situated in Cyprus or such shares are listed in any recognized stock exchange.

Gains from Intellectual Property

        Under Cyprus IP box regime, an 80% deduction is allowed from the net profit received from the use or disposal of IP rights. If a loss is resulting from the said activities, in this case only 20% of the resulting loss can be offset against income from other sources or carried forward to be offset against income of subsequent tax years. That provision has a retroactive effect starting from the year 2012. The latest amendments to tax legislation provide that the NID and other deemed deductions can be included in the calculation of the taxable profit/loss.

Tax Treatment of the Foreign Exchange Differences

        As of January 1, 2015, the Cyprus tax laws provide for all foreign exchange (that includes gains/losses on foreign currency rights or derivatives) to be tax neutral from a Cyprus income tax perspective (i.e. gains are not taxable/losses are not tax deductible) with the exception of foreign exchange gains/losses arising from trading in foreign exchange which remain taxable/deductible. Regarding trading in foreign exchange which remains subject to tax, the tax payers have an option to make an irrevocable election whether to be taxed only upon realization of foreign exchange rather than on an accruals/accounting basis.

Dividends to be Received by the Company

        Dividend income (whether received from Cyprus resident or non-resident companies) is exempt from Income Tax in Cyprus. Dividend income from Cyprus resident companies is exempt from the Cypriot Defense Tax whereas dividend income received from non-Cypriot resident companies is exempt from the Cypriot Defense Tax provided that either (i) not more than 50.0% of the paying company's activities result, directly or indirectly, in investment income, or (ii) the foreign tax suffered is not significantly lower than the tax rate payable in Cyprus (currently interpreted to mean an effective tax burden of at least 6.25%). If the exemption for the Cypriot Defense Tax does not apply, dividends receivable from non-Cypriot resident companies are taxed at a rate of 17.0%. Foreign tax paid or withheld on dividend income received by the resident company can be credited against Cypriot tax payable on the same income provided proof of payment can be furnished.

Interest Income

        The tax treatment of interest income of any company which is a tax resident of Cyprus will depend on whether such interest income is treated as "active" or "passive." Interest income which consists of interest which has been derived by a company which is a tax resident of Cyprus in the ordinary course of its business, including interest which is closely connected with the ordinary course of its business will be subject to Corporate Income Tax at the rate of 12.5%, after the deduction of any allowable business expenses. Any other interest income will be subject to the Cypriot Defense Tax at the rate of 30.0% on the gross amount of interest.

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        Specifically, interest income arising in connection with the provision of loans to related or associated parties should be generally considered as income arising from activities closely connected with the ordinary carrying on of a business and should, as such, be exempt from Cypriot Defense Tax and only be subject to Corporate Income Tax.

Tax Deductibility of Expenses, Including Interest Expense

        The general principle of the Cyprus income tax law is that for an expense to be allowed as a deduction it must have been incurred wholly and exclusively for the production of taxable income.

        The Tax Circular 2008/14 issued by the Cypriot tax authorities provides guidance as to the tax deductibility of expenses incurred in relation to the production of income which is exempt from Corporate Income Tax such as dividend income and profits/ gains on sale of securities. According to that tax circular:

(a)
Any expenditure that can be directly or indirectly attributed to income that is exempt from tax is not deductible for Corporate Income Tax purposes and cannot be set-off against other (taxable) sources of income.

(b)
Any expenditure that is attributable to both taxable and exempt income (such as general overheads) should be apportioned based on a gross revenue ratio or based on an asset ratio. The taxpayer should select the method which is more appropriate and should use this method on a consistent basis.

        Interest incurred in connection with acquisition (directly or indirectly) of shares in a 100% owned subsidiary company as of January 1, 2012 (irrespective of the tax residency status of the subsidiary) shall be deductible for Cypriot tax purposes. This would apply provided that the assets of the subsidiary do not include assets not used in the business. However, in case the subsidiary possesses such assets, the deductibility of interest at the level of the holding company is limited only to the amount relevant to assets, used in the business.

        The latest amendments to tax legislation introduce notional interest deduction under which the Cyprus companies that have issued additional share capital starting from January 1, 2015 and afterwards will have the benefit of a notional interest that will be deducted from their taxable income for each tax year.

Arm's Length Principle

        There are no specific transfer pricing rules or any transfer pricing documentation requirements in the Cyprus tax laws.

        However, the arm's length principle in the Cyprus income tax law requires that all transactions between related parties should be carried out on the at an arm's length basis, being at fair values and on normal commercial terms.

        More specifically, under the arm's length principle, where conditions are made or imposed upon the commercial or financial relations of two businesses which differ from those which would have been made between independent parties, any profits which would have accrued to one of the party had the two businesses been independent, but have not so accrued, may be included in the profits of that business and taxed accordingly. The amendment to the income tax law, effective as of January 1, 2015, extends the arm's length principle by introducing the possibility of, in cases where two related Cyprus tax residents transact and the Cyprus tax authorities make an upward arm's length adjustment to one of them, effecting a corresponding downwards adjustment to the other one.

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        We cannot exclude that the respective tax authorities may challenge the arm's length principle applied to transactions with our related parties and therefore an additional tax liabilities may accrue. If additional taxes are assessed with this respect, they may be material.

Stamp Duty

        Cyprus levies stamp duty on an instrument if:

        There are documents which are subject to stamp duty in Cyprus at a fixed fee (ranging from €0.05 to €35) and documents which are subject to stamp duty based on the value of the document. The above obligation arises irrespective of whether the instrument is executed in Cyprus or abroad.

        A liability to stamp duty may arise on acquisition of shares and such stamp duty would be payable where the shares acquisition documents are executed in Cyprus or later brought into Cyprus as the company's shares that underlie the shares may be considered to be Cypriot property.

        The stamp duty rates are as follows:

        Any documents that do not specify values incur a stamp duty of €35. In cases where the stamp duty Commissioner can estimate the value of a document, he or she has the authority to impose stamp duty as per the above rates. Any transactions involving ADSs between parties not resident in Cyprus will not be subject to stamp duty. There are no applicable stamp duties with respect to the purchase and sale of ADSs.

Withholding Taxes on Interest

        No withholding taxes shall apply in Cyprus with respect to payments of interest by the company to non-Cyprus tax resident lenders (both corporations and individuals).

        There should be no withholding tax in Cyprus on interest paid by the company to Cyprus tax resident lenders when the interest is considered as interest accruing from their ordinary course of business or interest closely connected with the ordinary course of their business.

        Any payment of interest which is not considered as interest accruing from the ordinary course of business or interest income closely connected with the ordinary course of business by the company to Cypriot tax resident (both corporations and individuals), lenders shall be subject to Cypriot Defense Tax at the rate of 30.0%, whereby the company is required to withhold such tax from the interest.

Capital Duty

        Capital duty is payable to the Registrar of Companies as follows:

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Material Russian Tax Considerations

        The following discussion is a summary of the material Russian tax considerations relating to the purchase, ownership and disposition of our ADSs.

        Prospective holders of the ADSs should consult their tax advisers as to which countries' tax laws could be relevant to acquiring, holding and disposing of ADSs and receiving payments of dividends and the consequences of such actions under the tax laws of those countries. This summary is based upon the law as in effect as at the date hereof. The information and analysis contained in this section are limited to issues relating to taxation, and prospective holders should not apply any information or analysis set out below to other issues, including (but not limited to) the legality of transactions involving the ADSs.

General

        The following is a summary of certain Russian tax considerations relevant to the purchase, ownership and disposal of ADSs, as well as the receipt of dividend income, by Russian resident and non-resident investors based on the laws of the Russian Federation in effect at the date hereof, which are subject to change (possibly with retroactive effect).

        The summary does not seek to address the applicability of taxes levied at the level of regional, municipal, or other non-federal authorities of the Russian Federation or procedures related to them. Likewise, this overview does not address the availability of double tax treaty relief in respect of ADSs, and it should be noted that practical difficulties, including satisfying certain documentation requirements, may arise from claiming relief under a double tax treaty. Prospective holders should consult their own professional advisors regarding the tax consequences of investing in ADSs. No representations with respect to the Russian tax consequences for any particular holder are made hereby.

        The provisions of the Russian Tax Code applicable to holders of and transactions involving ADSs are ambiguous and lack interpretive guidance. Both the substantive provisions of the Russian Tax Code applicable to financial instruments and the interpretation and application of those provisions by the Russian tax authorities may be subject to rapid and unpredictable change and inconsistency compared to jurisdictions with more developed capital markets or taxation systems. In practice, the interpretation and application of these provisions rests largely with local Russian tax inspectorates.

        The interpretation of different tax inspectorates in the Russian Federation may be inconsistent or contradictory, and tax inspectorates may impose conditions, requirements or restrictions not stipulated by the existing legislation. Similarly, in the absence of binding precedents, court rulings on tax or related matters by different Russian courts relating to the same or similar circumstances may also be inconsistent or contradictory.

        For the purposes of this summary, a "Russian Resident Holder" is a holder of ADSs who is: