Company NLMKValuation Date 11-Oct-2013Circularity 1Assumption Case 2AR121H13

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Case 2 2010A 2011A 2012A 2013H1 2013E 2014E 2015E 2016E 2017E 2018E 2019E

m USDPPEBeginning Balance 7,316,180 8,382,478 10,569,828 11,753,157 11,753,157 11,677,068 11,881,279 12,294,424 12,873,062 13,637,218 14,341,777 Asset Disposals/(Acquisitions) 28,363 41,751 156,510 - (123,532) - - - - - - Sales of PPE (26,362) (26,980) (28,692) (1,300) (2,600) (6,891) (11,109) (15,641) (20,674) (26,347) (32,890)Capex 1,463,209 2,047,852 1,453,386 374,979 749,958 875,780 1,069,315 1,229,442 1,416,037 1,363,722 1,290,760 Depreciation (279,748) (402,093) (544,227) (349,958) (699,915) (664,679) (645,061) (635,163) (631,207) (632,816) (627,798)Ending Balance 8,382,478 10,569,828 11,753,157 10,981,399 11,677,068 11,881,279 12,294,424 12,873,062 13,637,218 14,341,777 14,971,849

IntangiblesBeginning Balance 203,490 181,136 158,611 141,922 141,922 117,811 96,926 76,041 55,122 - - Investments into intangibles - - - - - - - Amortisation (16,268) (14,850) (25,919) (12,056) (24,111) (20,885) (20,885) (20,919) (55,122) - - Ending balance 181,136 158,611 141,922 129,115 117,811 96,926 76,041 55,122 - - -

Retained EarningsBeginning Balance 9,171,068.0 10,261,214.0 11,098,635.0 11,582,368.0 11,582,368.0 11,770,078.5 12,138,594.1 12,698,818.4 13,461,009.2 14,439,149.2 15,686,174.9 Share issuance/(repurchase) - - - - - - - Net Income 1,331,316.0 1,261,130.0 610,157.0 68,297.0 230,362.7 482,344.7 733,218.0 997,514.8 1,280,109.6 1,631,978.2 2,007,623.4 Dividends (378,687) (375,776) (116,000) - (47,003) (122,939) (186,842) (254,164) (326,147) (415,776) (511,461)NCI share of Net Income 31,065.0 42,192.0 (14,628) 3,149.0 4,350.9 9,110.1 13,848.4 18,840.2 24,177.6 30,823.4 37,918.3 Ending balance 10,261,214.0 11,098,635.0 11,582,368.0 11,538,347.0 11,770,078.5 12,138,594.1 12,698,818.4 13,461,009.2 14,439,149.2 15,686,174.9 17,220,255.6

NCIBeginning balance (108,334) (120,691) (41,863) (32,874) (32,874) (37,225) (46,335) (60,183) (79,024) (103,201) (134,025)Add: NCI share of NI 31,065 42,192 (14,628) 3,149 (4,351) (9,110) (13,848) (18,840) (24,178) (30,823) (37,918)Less: NCI divs - Ending balance (120,691) (41,863) (32,874) 5,776 (37,225) (46,335) (60,183) (79,024) (103,201) (134,025) (171,943)

OWC itemsAccounts Receivable 1,259,596 1,572,641 1,490,951 1,497,143 1,497,143 1,513,933 1,591,221 1,680,357 1,799,571 1,909,288 2,025,665 Inventory 1,580,068 2,828,433 2,826,933 2,530,187 2,530,187 2,526,343 2,620,234 2,728,665 2,879,777 3,008,775 3,141,132 Other current assets 51,994 59,355 30,394 26,581 26,581 46,523 49,082 52,027 55,929 59,564 63,436 Accounts payable 1,107,434 1,622,679 1,462,105 1,608,587 1,601,602 1,575,022 1,608,816 1,650,689 1,716,877 1,768,916 1,821,641 Current Income tax liability 18,803 10,994 23,800 44,219 41,992 65,453 81,980 92,450 97,638 99,849 93,960 Net Balance 1,765,421 2,826,756 2,862,373 2,401,105 2,410,318 2,446,325 2,569,741 2,717,910 2,920,762 3,108,863 3,314,631

Simplified ModelRevenue Growth 36.0% 40.4% 3.6% (6.5%) (6.5%) 1.5% 5.5% 6.0% 7.5% 6.5% 6.5%

Case 1: Revenue Growth -6.5% 2.0% 6.5% 6.5% 8.5% 7.0% 7.0%Case 2: Revenue Growth -6.5% 1.5% 5.5% 6.0% 7.5% 6.5% 6.5%Case 3: Revenue Growth -6.5% 1.0% 5.0% 5.5% 6.5% 6.0% 5.5%Case 4: Revenue Growth -6.5% 0.0% 4.5% 5.0% 6.5% 5.5% 5.5%

Production Cost 59.1% 66.3% 69.9% 73.6% 73.6% 71.8% 70.1% 68.4% 66.6% 64.9% 63.1% Case 1: Production Cost 73.6% 71.5% 69.4% 67.3% 65.3% 63.2% 61.1% Case 2: Production Cost 73.6% 71.8% 70.1% 68.4% 66.6% 64.9% 63.1% Case 3: Production Cost 73.6% 72.5% 71.5% 70.4% 69.3% 68.3% 67.2% Case 4: Production Cost 73.6% 73.6% 73.6% 73.6% 73.6% 73.6% 73.6%

SG&A 3.2% 4.7% 3.7% 4.1% 4.1% 4.0% 3.9% 3.8% 3.7% 3.6% 3.5% Case 1: SG&A 4.1% 3.9% 3.8% 3.7% 3.6% 3.5% 3.3% Case 2: SG&A 4.1% 4.0% 3.9% 3.8% 3.7% 3.6% 3.5% Case 3: SG&A 4.1% 4.0% 4.0% 4.0% 4.0% 3.9% 3.9% Case 4: SG&A 4.1% 4.2% 4.3% 4.4% 4.5% 4.6% 4.7%

Selling expenses 8.5% 8.3% 9.4% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% Case 1: Selling expenses 8.5% 8.5% 8.5% 8.5% 8.4% 8.4% 8.4% Case 2: Selling expenses 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% Case 3: Selling expenses 8.5% 8.5% 8.6% 8.6% 8.6% 8.7% 8.7% Case 4: Selling expenses 8.5% 8.7% 8.8% 9.0% 9.1% 9.3% 9.4%

Taxes other than income tax 1.48% 1.41% 1.40% 1.21% 1.21% 1.23% 1.24% 1.25% 1.27% 1.28% 1.29% Case 1: Taxes other than income tax 1.21% 1.22% 1.23% 1.23% 1.24% 1.25% 1.25% Case 2: Taxes other than income tax 1.21% 1.23% 1.24% 1.25% 1.27% 1.28% 1.29% Case 3: Taxes other than income tax 1.21% 1.24% 1.27% 1.29% 1.32% 1.35% 1.37% Case 4: Taxes other than income tax 1.21% 1.26% 1.30% 1.34% 1.39% 1.43% 1.48%

Case 2 2010A 2011A 2012A 2013H1 2013E 2014E 2015E 2016E 2017E 2018E 2019E

Irregular itemsLoss on disposal of PP&E (9,657) (29,293) (38,051) (5,623) (2,600) (6,891) (11,109) (15,641) (20,674) (26,347) (32,890)

as % of PPE Sales (36.6%) (108.6%) (132.6%) (432.5%) (100.0%) (100.0%) (100.0%) (100.0%) (100.0%) (100.0%) (100.0%)(Losses)/gain on investments (27,991) 11,922 (2,828) (3,535) (6,006) (5,911) (5,883) (5,856) (5,830) (5,803) (5,776)FX gain/(loss) (59,262) 18,662 3,282 (31,676) (63,352) (26,527) (27,826) (29,058) (30,205) (31,255) (32,193)Other expenses (4,598) (14,337) (140,428) (18,450) (36,900) (51,715) (54,249) (56,650) (58,888) (60,934) (62,762)Impairment losses (58,179) - - - - - - - - - -

Tax MTR 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% ETR 23% 25% 33% 65% 27% 27% 27% 27% 27% 27% 27% Taxes other than income tax 1.5% 1.4% 1.4% 1.2% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4%

DividendPayout ratio 30.2% 27.7% 19.5% - 20.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%

Operating Working Capital ItemsAccounts Receivable 1,259,596 1,572,641 1,490,951 1,497,143 1,497,143 1,513,933 1,591,221 1,680,357 1,799,571 1,909,288 2,025,665

Case 1: Accounts Receivable days 55.1 48.9 44.8 48.1 48.1 47.5 47.0 46.4 45.9 45.3 44.8 Case 2: Accounts Receivable days 55.1 48.9 44.8 48.1 48.1 47.9 47.7 47.5 47.3 47.2 47.0 Case 3: Accounts Receivable days 55.1 48.9 44.8 48.1 48.1 48.3 48.4 48.6 48.8 49.0 49.2 Case 4: Accounts Receivable days 55.1 48.9 44.8 48.1 48.1 48.3 48.6 48.9 49.1 49.4 49.7

Inventory 1,580,068 2,828,433 2,826,933 2,530,187 2,530,187 2,526,343 2,620,234 2,728,665 2,879,777 3,008,775 3,141,132 Case 1: Inventory days 116.9 132.7 121.5 110.4 110.4 110.4 110.4 110.4 110.4 110.4 110.4 Case 2: Inventory days 116.9 132.7 121.5 110.4 110.4 111.2 112.1 112.9 113.7 114.6 115.4 Case 3: Inventory days 116.9 132.7 121.5 110.4 110.4 112.1 113.7 115.4 117.0 118.7 120.4 Case 4: Inventory days 116.9 132.7 121.5 110.4 110.4 112.2 114.0 115.8 117.6 119.4 121.2

Other current assets 51,994 59,355 30,394 26,581 26,581 46,523 49,082 52,027 55,929 59,564 63,436 As % of sales 0.6% 0.5% 0.3% 0.2% 0.2% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%

Accounts Payable 1,107,434 1,622,679 1,462,105 1,608,587 1,601,602 1,575,022 1,608,816 1,650,689 1,716,877 1,768,916 1,821,641

Accrued, Advances & Other 479,627 643,753 514,030 780,371 780,371 743,923 735,540 729,008 730,933 724,088 715,207 Case 1: Accrued, Advances & Other as % of production cost 9.7% 8.3% 6.1% 9.3% 9.3% 9.0% 8.7% 8.4% 8.1% 7.8% 7.5%

Accrued liabilities to employees 149,827 199,300 227,399 252,338 218,119 243,748 268,123 290,243 309,109 323,791 333,505 Advances received 199,407 133,402 111,833 91,310 158,737 156,218 155,476 154,772 154,068 153,364 152,660 Other accounts payable 130,393 311,051 174,798 436,723 205,414 216,506 227,115 237,165 246,533 255,100 262,753

Case 2: Accrued, Advances & Other as % of production cost 9.7% 8.3% 6.1% 9.3% 9.3% 9.0% 8.6% 8.3% 7.9% 7.6% 7.2% Case 3: Accrued, Advances & Other as % of production cost 9.7% 8.3% 6.1% 9.3% 9.3% 9.2% 9.0% 8.8% 8.7% 8.5% 8.3% Case 4: Accrued, Advances & Other as % of production cost 9.7% 8.3% 6.1% 9.3% 9.3% 9.3% 9.2% 9.2% 9.1% 9.1% 9.0%

Trade accounts payable 466,988 818,729 758,044 683,114 683,114 684,608 712,638 744,783 788,788 826,964 866,267 Case 1: Trade accounts payable days 34.6 38.4 32.6 29.8 29.8 29.8 29.8 29.8 29.8 29.8 29.8 Case 2: Trade accounts payable days 34.6 38.4 32.6 29.8 29.8 30.1 30.5 30.8 31.1 31.5 31.8 Case 3: Trade accounts payable days 34.6 38.4 32.6 29.8 29.8 30.5 31.1 31.8 32.5 33.2 33.8 Case 4: Trade accounts payable days 34.6 38.4 32.6 29.8 29.8 30.5 31.2 31.9 32.6 33.3 34.0

Tax payable other than income tax 120,287 143,379 166,841 120,376 120,376 126,106 137,242 149,992 166,162 182,276 199,860 As % of tax payable other than income tax 97.5% 86.9% 98.3% 87.4% 87.4% 89.2% 91.0% 92.8% 94.6% 96.4% 98.3%

Divs payable 2,102 2,061 1,521 7,879 378 990 1,504 2,046 2,625 3,347 4,117 As % of total divs 0.6% 0.5% 1.3% n.a. 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% Cash divs as % of total divs 99.4% 99.5% 98.7% n.a. 99.2% 99.2% 99.2% 99.2% 99.2% 99.2% 99.2%

ST capital lease 38,430 14,757 21,669 16,847 17,363 19,395 21,892 24,861 28,368 32,241 36,190 As % of average PPE 0.49% 0.16% 0.19% 0.15% 0.15% 0.16% 0.18% 0.20% 0.21% 0.23% 0.25%

Current Income tax liability 18,803 10,994 23,800 44,219 41,992 65,453 81,980 92,450 97,638 99,849 93,960 as % of tax expense 4.8% 2.6% 7.8% 34.8% 34.8% 31.1% 27.3% 23.6% 19.9% 16.2% 12.5%

Non-current itemsOther noncurrent assets 26,356 19,274 38,052 30,639 61,278 58,236 57,259 56,264 55,722 54,271 52,397

as % of total sales 0.32% 0.16% 0.31% 0.54% 0.54% 0.50% 0.47% 0.44% 0.40% 0.37% 0.33%

Other LT liabilities 2,849 398,489 422,720 157,437 157,437 173,046 196,540 223,147 255,809 289,398 326,273 as % of total sales 0.03% 3.40% 3.48% 1.38% 1.38% 1.50% 1.61% 1.73% 1.84% 1.96% 2.07%

InvestmentsCapex (1,463,209) (2,047,852) (1,453,386) (374,979) (749,958) (875,780) (1,069,315) (1,229,442) (1,416,037) (1,363,722) (1,290,760)

Case 1: Capex 20.0% 24.4% 13.8% 6.4% 6.4% 8.0% 10.0% 11.0% 12.0% 11.0% 10.0% Case 2: Capex 20.0% 24.4% 13.8% 6.4% 6.4% 7.5% 9.0% 10.0% 11.0% 10.0% 9.0% Case 3: Capex 20.0% 24.4% 13.8% 6.4% 6.4% 7.0% 8.5% 9.0% 10.0% 9.0% 8.5% Case 4: Capex 20.0% 24.4% 13.8% 6.4% 6.4% 6.5% 7.0% 8.0% 9.0% 8.5% 8.0%

Depreciation as % of beginning PP&E 3.8% 4.8% 5.1% 6.0% 6.0% 5.7% 5.4% 5.2% 4.9% 4.6% 4.4% Case 1: Depreciation as % of beginning PP&E 3.8% 4.8% 5.1% 6.0% 6.0% 5.6% 5.2% 4.9% 4.5% 4.2% 3.8% Case 2: Depreciation as % of beginning PP&E 3.8% 4.8% 5.1% 6.0% 6.0% 5.7% 5.4% 5.2% 4.9% 4.6% 4.4%

Case 3: Depreciation as % of beginning PP&E 3.8% 4.8% 5.1% 6.0% 6.0% 5.8% 5.6% 5.4% 5.3% 5.1% 4.9% Case 4: Depreciation as % of beginning PP&E 3.8% 4.8% 5.1% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%

Sales of PPE (26,362) (26,980) (28,692) (1,300) (2,600) (6,891) (11,109) (15,641) (20,674) (26,347) (32,890)As % of beginning PPE 0.36% 0.32% 0.27% 0.01% 0.02% 0.06% 0.10% 0.13% 0.17% 0.20% 0.24%

Investments in Intangibles as % of beginning balance - - - - - - - - - - - Amortisation of intangibles (16,268) (14,850) (25,919) (12,056) (24,111) (20,885) (20,885) (20,919) (55,122) - -

Amortisation of intangibles as % of beginning balance 8.0% 8.2% 16.3% 8.5% 17.0% 17.7% 21.5% 27.5% 100.0% n.a. n.a.

Investment into LT assets n.a. (679,245) 10,873 (2,185) (4,370) 4,344 4,344 4,344 4,344 4,344 4,344 Goodwill 494,654 760,166 786,141 753,381 753,381 753,381 753,381 753,381 753,381 753,381 753,381 Associate Income (107,338) 54,272 276 151 302 302 302 302 302 302 302 Asset Disposals/(Acquisitions) (28,363) (41,751) (156,510) - 123,532 - - - - - -

DebtOperating Cash 800,000 843,200 884,517 923,657 960,141 993,506 1,023,311 Rate on revolver 3.72% 3.79% 3.96% 4.27% 4.60% 4.82% 4.97% Blended rate on cash balance 3.85% 2.88% 2.70% 1.61% 2.76% 2.76% 2.76% 2.76% 2.76% 2.76% 2.76%

Blended debt rate on optional repayments 3.72% 3.79% 3.96% 4.27% 4.60% 4.82% 4.97% 4.34% EUR 2013-2020 902,833 48.8% 4.34% 4.34% 4.34% 4.34% 4.34% 4.34% 4.34% EUR Loans 2016-2019 EURIBOR 6m +1.5% to EURIBOR 3m + 3.5% 677,306 36.6% 3.18% 3.33% 3.67% 4.27% 4.89% 5.30% 5.56% LIBOR+1.625% 2013-2016 108,408 5.9% 1.99% 2.06% 2.61% 3.34% 4.36% 5.17% 5.81% EURIBOR 6m+1.1% 2013-2020 104,990 5.7% 1.44% 1.55% 1.90% 2.51% 3.13% 3.53% 3.78% EURIBOR 6m+3.2% (avg) 2013-2022 12,783 0.7% 3.54% 3.65% 4.00% 4.61% 5.23% 5.63% 5.88% 10% RUB 2013-2017 36,643 2.0% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Other debt 6,971 0.4% 4.24% 4.31% 4.63% 5.11% 5.68% 6.08% 6.37%

Optional sweep as % of cash available for repayments 80.0% 80.0% 80.0% 80.0% 80.0% 80.0% 80.0%

3m USD LIBOR Curve 0.244% 0.400% 0.875% 1.580% 2.610% 3.445% 4.115% 6m USD LIBOR Curve 0.363% 0.438% 0.981% 1.716% 2.732% 3.543% 4.184% 3m EURIBOR Curve 0.227% 0.415% 0.735% 1.325% 1.955% 2.370% 2.635% 6m EURIBOR Curve 0.340% 0.445% 0.798% 1.409% 2.025% 2.430% 2.676%

Equity CapitalShare issuance ($) - - - Share repurchase ($) - - - - - - - - - Share issuance (shares) - - - Share repurchase (shares) - - - - - - - - - Basic NOSH 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 Options Out - - - - - - - - - - Diluted NOSH 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240 5,993,227,240

NCI as % of Net Income 2.3% 3.3% (2.4%) 4.6% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9%

TGR & WACCTGR 2.5% TGR step 0.5% WACC step 0.5%

Market Data & Economic ForecastCurrent share price (RUB) 56.82 Current share price (USD) 1.79 Day count convention 365 Russia Inflation forecast 7.1% 5.4% 4.9% 4.4% 4.0% 3.5% 3.0% Cost inflation forecast 7.1% 5.4% 4.9% 4.4% 4.0% 3.5% 3.0% Russia Salary forecast 13.5% 11.8% 10.0% 8.3% 6.5% 4.8% 3.0% Russia GDP 1.8%

USDRUB FX forecast average 30.3663 29.3830 31.0903 31.0394 31.6592 31.9761 31.6592 31.6592 31.6592 31.6592 31.6592 USDRUB FX forecast year-end 30.4769 32.1961 30.3727 32.8395 31.6592 31.9761 31.6592 31.6592 31.6592 31.6592 31.6592 Valuation date FX 32.2930

Case 2 2010A 2011A 2012A 2013H1 2013E 2014E 2015E 2016E 2017E 2018E 2019E

PBT 195,466 351,126 693,076 1,032,983 1,388,650 1,770,150 2,247,850 2,759,262 Current DTA add/(draw) (24,182) 44,072 58,389 (12,592) (24,270) (10,073) (5,220) (3,205) (2,161) (1,520)Noncurrent DTA add/(draw) 215,726 12,452 (60,583) (49,913) (37,796) (39,930) (32,371) (24,385) (17,911) (13,034)DTL add/(draw) (313,065) (78,574) 46,631 158,448 149,122 126,758 96,934 71,582 52,196 37,879 Taxable Income 239,903 447,069 780,131 1,109,737 1,447,993 1,814,142 2,279,973 2,782,587 ETR 27.0% 27.0% 27.0% 27.0% 27.0% 27.0% 27.0%Tax paid (390,972) (421,034) (304,712) (127,169) (120,763) (210,731) (299,765) (391,135) (490,040) (615,872) (751,639)

Current DTABeginning Balance 62,959 50,367 26,098 16,024 10,805 7,600 5,439 (Usage)/Additions (12,592) (24,270) (10,073) (5,220) (3,205) (2,161) (1,520)Ending balance 62,959 121,348 50,367 26,098 16,024 10,805 7,600 5,439 3,919

Noncurrent DTABeginning Balance 249,565 199,652 161,856 121,925 89,554 65,169 47,258 (Usage)/Additions (49,913) (37,796) (39,930) (32,371) (24,385) (17,911) (13,034)Ending balance 249,565 188,982 199,652 161,856 121,925 89,554 65,169 47,258 34,224

DTLBeginning Balance 792,240 633,792 484,670 357,912 260,978 189,395 137,200 (Usage)/Additions (158,448) (149,122) (126,758) (96,934) (71,582) (52,196) (37,879)Ending balance 792,240 745,609 633,792 484,670 357,912 260,978 189,395 137,200 99,321

DTA/DTL Usage AssumptionsCurrent DTA usage as % of available (56.1%) 233.3% 92.7% 20% 20% 20% 20% 20% 20% 20%Noncurrent DTA usage as % of available 1,008.7% 5.3% (24.3%) 20% 20% 20% 20% 20% 20% 20%DTL usage as % of available (78.1%) (11.0%) 5.9% 20% 20% 20% 20% 20% 20% 20%

Case 2 2010A 2011A 2012A 2013H1 2013E 2014E 2015E 2016E 2017E 2018E 2019E

m USDCash balance available for repayment - 1,058,153 1,361,939 895,523 860,489 911,363 1,010,476 1,064,822 1,001,805 Operating cash 800,000 843,200 884,517 923,657 960,141 993,506 1,023,311 Cash flow available for debt repayment 388,292 67,325 (25,928) 1,377 26,944 322,114 671,402

Cash available for debt repayment 78,716 950,231 119,648 (49,957) (10,917) 77,279 393,430 649,896

Scheduled payments & issuance (472,618) (33,205) 184,189 445,012 446,127 (351,934) 50,000

Cash available for revolver & optional repayments 477,614 86,443 134,232 434,095 523,406 41,496 699,896

Beginning revolver balance - - - - - - - Issuance/(repayment) - - - - - - - Ending revolver balance - - - - - - -

Balance available for optional repayments 477,614 86,443 134,232 434,095 523,406 41,496 699,896

Total beginning debt for optional repayment 794,277 1,512,186 1,793,031 2,135,646 2,238,369 2,269,645 2,786,447 Optional repayments (382,091) (69,154) (107,386) (347,276) (418,725) (33,197) (559,917)Ending balance of optional debt 412,186 1,443,031 1,685,646 1,788,369 1,819,645 2,236,447 2,226,531

Beginning debt 4,666,365 3,811,656 3,709,297 3,786,100 3,883,836 3,911,238 3,526,107 Issuance/(Repayment) (854,709) (102,359) 76,803 97,736 27,402 (385,131) (509,917)Ending non-revolver debt 4,666,365 4,785,961 3,811,656 3,709,297 3,786,100 3,883,836 3,911,238 3,526,107 3,016,191

Ending Cash Balance 1,170,622 1,024,448 1,058,153 1,361,939 895,523 860,489 911,363 1,010,476 1,064,822 1,001,805 1,163,290

Interest Income & ExpenseInterest rate 2.70% 1.61% 2.76% 2.76% 2.76% 2.76% 2.76% 2.76% 2.76% Interest income 28,126 21,964 26,977 24,247 24,466 26,537 28,656 28,536 29,896

Interest on scheduled repayments8.95 11/11/2014 Bullet RUB Bond 10,000m (27,833) (27,833) - - - - - 8.75 12/17/2014 Putable RUB Bond 5,000m (13,740) - - - - - - 8.75 12/17/2014 Putable RUB Bond 5,000m (13,740) - - - - - - 7.75 03/05/2013 Bullet RUB Bond 10,000m (24,322) - - - - - - 8.25 07/09/2015 Putable RUB Bond 5,000m (12,950) (12,950) (12,950) - - - - 4.45 19/02/2018 Bullet USD Bond 800m (35,200) (35,200) (35,200) (35,200) (35,200) (35,200) - 4.95 26/09/2019 Bullet USD Bond 500m (24,500) (24,500) (24,500) (24,500) (24,500) (24,500) (24,500)8.50 05/09/2022 Putable RUB Bond 5,000m (13,424) (13,424) (13,424) (13,424) (13,424) (13,424) (13,424)8.40 25/11/2022 Putable RUB Bond 10,000m (26,533) (26,533) (26,533) (26,533) (26,533) (26,533) (26,533)8.00 20/07/2023 Putable RUB Bond 5,000m (12,635) (12,635) (12,635) (12,635) (12,635) (12,635) (12,635)8.00 25/07/2023 Putable RUB Bond 5,000m (12,635) (12,635) (12,635) (12,635) (12,635) (12,635) (12,635)8.50% RUB 2013 Loan (28,025) - - - - - - 3.86% USD 2013 Loan (10,498) - - - - - -

Total interest on scheduled payments (256,034) (165,710) (137,876) (124,926) (124,926) (124,926) (89,726)Interest on optional repayments (22,443) (55,933) (68,948) (83,733) (93,267) (108,633) (124,559)Interest on revolver - - - - - - - Total interest expense (278,476) (221,642) (206,824) (208,659) (218,193) (233,559) (214,285)

Bonds out & bond repayment schedule

Debt issuance8.00 20/07/2023 Putable RUB 5,000m - 8.00 25/07/2023 Putable RUB 5,000m - 4.45 19/02/2018 Bullet USD Bond 800m 800,000 Debt issuance for optional repayment - 300,000 350,000 450,000 450,000 450,000 550,000

Case 1: Debt issuance for optional repayment - 300,000 300,000 400,000 450,000 400,000 500,000 Case 2: Debt issuance for optional repayment - 300,000 350,000 450,000 450,000 450,000 550,000 Case 3: Debt issuance for optional repayment - 300,000 400,000 400,000 600,000 600,000 600,000 Case 4: Debt issuance for optional repayment - 300,000 500,000 500,000 700,000 700,000 650,000

Debt Repayment ScheduleLeases (34,929) (20,471) (7,879) (4,988) (3,873) (1,934) - 8.95 11/11/2014 Bullet RUB Bond 10,000m - (312,734)8.75 12/17/2014 Putable RUB Bond 5,000m (157,932)8.75 12/17/2014 Putable RUB Bond 5,000m (157,932)7.75 03/05/2013 Bullet RUB Bond 10,000m (315,864)8.25 07/09/2015 Putable RUB Bond 5,000m - - (157,932)4.45 19/02/2018 Bullet USD Bond 800m (800,000)4.95 26/09/2019 Bullet USD Bond 500m (500,000)8.50 05/09/2022 Putable RUB Bond 5,000m8.40 25/11/2022 Putable RUB Bond 10,000m8.00 20/07/2023 Putable RUB Bond 5,000m8.00 25/07/2023 Putable RUB Bond 5,000m8.50% RUB 2013 Loan (329,702) - - - - - - 3.86% USD 2013 Loan (276,259) - - - - - -

Optional Debt Balance4.34% EUR 2013-2020 902,833 EUR Loans 2016-2019 EURIBOR 6m +1.5% to EURIBOR 3m + 3.5% 677,306 LIBOR+1.625% 2013-2016 108,408 EURIBOR 6m+1.1% 2013-2020 104,990 EURIBOR 6m+3.2% (avg) 2013-2022 12,783 10% RUB 2013-2017 36,643 Other debt 6,971

Case 2 2010A 2011A 2012A 2013H1 2013E 2014E 2015E 2016E 2017E 2018E 2019E

'000 USDRevenue 8,350,748 11,728,556 12,156,592 5,685,024 11,370,048 11,540,599 12,175,332 12,905,852 13,873,790 14,775,587 15,736,000

Growth (%) 36.0% 40.4% 3.6% (6.5%) (6.5%) 1.5% 5.5% 6.0% 7.5% 6.5% 6.5% Production cost (4,933,236) (7,780,243) (8,494,438) (4,182,578) (8,365,156) (8,290,079) (8,534,449) (8,822,236) (9,242,803) (9,586,813) (9,936,493)D&A (296,016) (416,943) (570,146) (362,013) (724,026) (685,564) (665,946) (656,082) (686,329) (632,816) (627,798)Gross Profit 3,121,496 3,531,370 3,092,008 1,140,433 2,280,866 2,564,956 2,974,937 3,427,534 3,944,659 4,555,958 5,171,708

Margin (%) 37.4% 30.1% 25.4% 20.1% 20.1% 22.2% 24.4% 26.6% 28.4% 30.8% 32.9% SG&A (263,146) (556,169) (448,268) (231,441) (462,882) (459,458) (473,790) (490,623) (514,956) (535,154) (555,802)Selling expenses (708,868) (972,685) (1,143,610) (484,356) (968,712) (982,578) (1,035,918) (1,097,330) (1,178,831) (1,254,604) (1,335,247)Taxes other than Income Tax (123,311) (165,073) (169,786) (68,894) (137,788) (141,406) (150,820) (161,604) (175,589) (188,988) (203,388)Impairment losses (58,179) - - - - - - - - - - Operating Profit 1,967,992 1,837,443 1,330,344 355,742 711,484 981,514 1,314,409 1,677,977 2,075,283 2,577,211 3,077,271

Margin (%) 23.6% 15.7% 10.9% 6.3% 6.3% 8.5% 10.8% 13.0% 15.0% 17.4% 19.6%

Loss on disposal of PP&E (9,657) (29,293) (38,051) (5,623) (2,600) (6,891) (11,109) (15,641) (20,674) (26,347) (32,890)(Losses)/gain on investments (27,991) 11,922 (2,828) (3,535) (6,006) (5,911) (5,883) (5,856) (5,830) (5,803) (5,776)Interest Income 45,071 29,531 28,581 21,964 26,977 24,247 24,466 26,537 28,656 28,536 29,896 Interest expense (189,267) (171,764) (266,031) (122,956) (278,476) (221,642) (206,824) (208,659) (218,193) (233,559) (214,285)FX gain/(loss) (59,262) 18,662 3,282 (31,676) (63,352) (26,527) (27,826) (29,058) (30,205) (31,255) (32,193)Other expenses (4,598) (14,337) (140,428) (18,450) (36,900) (51,715) (54,249) (56,650) (58,888) (60,934) (62,762)PBT 1,722,288 1,682,164 914,869 195,466 351,126 693,076 1,032,983 1,388,650 1,770,150 2,247,850 2,759,262

PBT Margin 20.6% 14.3% 7.5% 3.4% 3.1% 6.0% 8.5% 10.8% 12.8% 15.2% 17.5% Net Interest Expense as % of Total Debt 5.1% 3.2% 5.1% 4.2% 6.6% 5.3% 4.8% 4.7% 4.8% 5.8% 6.1% Gross Interest Expense as % of Total Debt 6.7% 3.9% 5.7% 5.1% 7.3% 6.0% 5.5% 5.4% 5.6% 6.6% 7.1%

Core EBIT 1,866,484 1,824,397 1,152,319 296,458 602,626 890,471 1,215,341 1,570,772 1,959,686 2,452,873 2,943,651 Margin (%) 22.4% 15.6% 9.5% 5.2% 5.3% 7.7% 10.0% 12.2% 14.1% 16.6% 18.7%

EBITDA 2,162,500 2,241,340 1,722,465 658,471 1,326,652 1,576,034 1,881,287 2,226,853 2,646,015 3,085,689 3,571,449 Margin (%) 25.9% 19.1% 14.2% 11.6% 11.7% 13.7% 15.5% 17.3% 19.1% 20.9% 22.7%

Tax expense (390,972) (421,034) (304,712) (127,169) (120,763) (210,731) (299,765) (391,135) (490,040) (615,872) (751,639) ETR % 22.7% 25.0% 33.3% 65.1% 34.4% 30.4% 29.0% 28.2% 27.7% 27.4% 27.2%

Net Income 1,331,316 1,261,130 610,157 68,297 230,363 482,345 733,218 997,515 1,280,110 1,631,978 2,007,623 Margin (%) 15.9% 10.8% 5.0% 1.2% 2.0% 4.2% 6.0% 7.7% 9.2% 11.0% 12.8%

Associate Income (107,338) 54,272 276 151 302 302 302 302 302 302 302 (Net Income)/loss for NCI 31,065 42,192 (14,628) 3,149 4,351 9,110 13,848 18,840 24,178 30,823 37,918 NI for NLMK shareholders 1,255,043 1,357,594 595,805 71,597 235,016 491,757 747,368 1,016,657 1,304,589 1,663,104 2,045,844

Declared Dividends 378,687 375,776 116,000 - 47,003 122,939 186,842 254,164 326,147 415,776 511,461 Dividend per share (USD) 0.06 0.02 - 0.01 0.02 0.03 0.04 0.05 0.07 0.09 Dividend per share (RUB) 1.84 0.60 - 0.25 0.66 0.99 1.34 1.72 2.20 2.70

Sales/Capital 1.00 1.11 1.03 1.04 0.97 0.97 0.99 1.00 1.02 1.03 1.05

Case 2 2010A 2011A 2012A 2013H1 2013E 2014E 2015E 2016E 2017E 2018E 2019E

'000 USDNet Income 1,331,316 1,261,130 610,157 68,297 230,363 482,345 733,218 997,515 1,280,110 1,631,978 2,007,623 Depreciation 767,715 362,013 699,915 664,679 645,061 635,163 631,207 632,816 627,798 Amortisation - 24,111 20,885 20,885 20,919 55,122 - - (Inc)/Dec in ST DTA (58,389) 12,592 24,270 10,073 5,220 3,205 2,161 1,520 (Inc)/Dec in LT DTA 60,583 49,913 37,796 39,930 32,371 24,385 17,911 13,034 (Inc)/Dec in Goodwill 32,760 32,760 - - - - - - (Inc)/Dec in Other LT assets 7,413 (23,226) 3,042 977 995 543 1,450 1,874 Inc/(Dec) in DTL (46,631) (158,448) (149,122) (126,758) (96,934) (71,582) (52,196) (37,879)Inc/(Dec) in Other LT liabilities (265,283) (265,283) 15,609 23,494 26,607 32,662 33,589 36,875 OWC items

(Inc)/Dec in Accounts Receivable 166,715 (6,192) (6,192) (16,790) (77,288) (89,136) (119,214) (109,717) (116,377)(Inc)/Dec in Inventory 169,858 296,746 296,746 3,844 (93,891) (108,432) (151,111) (128,998) (132,357)(Inc)/Dec in Other current assets 31,628 3,813 3,813 (19,942) (2,559) (2,945) (3,902) (3,635) (3,872)Inc/(Dec) in Accounts payable (69,932) 146,482 139,497 (26,580) 33,794 41,873 66,188 52,039 52,725 Inc/(Dec) in Current Income tax liability 12,471 20,419 18,192 23,461 16,527 10,470 5,188 2,211 (5,888)

Cash from Operations 1,688,612 622,031 1,054,752 1,063,497 1,223,463 1,473,686 1,752,799 2,079,609 2,445,077

Cash from Operations ex-DTA/DTL 1,688,612 666,468 1,150,695 1,150,553 1,300,218 1,533,029 1,796,791 2,111,733 2,468,402

LT Investments (9,609) 4,370 (4,344) (4,344) (4,344) (4,344) (4,344) (4,344)Capex (1,453,386) (374,979) (749,958) (875,780) (1,069,315) (1,229,442) (1,416,037) (1,363,722) (1,290,760)Proceeds from sales of PP&E 1,300 2,600 6,891 11,109 15,641 20,674 26,347 32,890 Cash from Asset Disposals/(Acquisitions) (28,363) (41,751) (156,510) - 123,532 - - - - - - Investment in intangibles - - - - - - - Cash from Investing (1,609,896) (383,288) (619,456) (873,233) (1,062,550) (1,218,145) (1,399,707) (1,341,719) (1,262,214)

Issuance/(Repayment) of debt 149,135 (854,709) (102,359) 76,803 97,736 27,402 (385,131) (509,917)Issuance/(Repayment) of revolver - - - - - - - Dividends (164,501) (516,335) (116,529) (47,003) (122,939) (186,842) (254,164) (326,147) (415,776) (511,461)Proceeds from share issuance - - - - - - - Share repurchases - - - - - - - Cash from Financing (116,529) 149,135 (901,712) (225,298) (110,039) (156,428) (298,745) (800,907) (1,021,377)

Net Cash Flow (37,813) 387,878 (466,416) (35,034) 50,875 99,112 54,347 (63,017) 161,485

Existing cash balance 1,058,153 1,361,939 895,523 860,489 911,363 1,010,476 1,064,822 1,001,805

Ending cash balance 1,446,031 895,523 860,489 911,363 1,010,476 1,064,822 1,001,805 1,163,290

Case 2 2010A 2011A 2012A 2013H1 2013E 2014E 2015E 2016E 2017E 2018E 2019E

'000 USDCurrent assetsCash, equivalents & STI 1,170,622 1,024,448 1,058,153 1,361,939 895,523 860,489 911,363 1,010,476 1,064,822 1,001,805 1,163,290 Accounts Receivable 1,259,596 1,572,641 1,490,951 1,497,143 1,497,143 1,513,933 1,591,221 1,680,357 1,799,571 1,909,288 2,025,665 Inventory 1,580,068 2,828,433 2,826,933 2,530,187 2,530,187 2,526,343 2,620,234 2,728,665 2,879,777 3,008,775 3,141,132 Other current assets 51,994 59,355 30,394 26,581 26,581 46,523 49,082 52,027 55,929 59,564 63,436 Deferred income tax assets 43,069 18,887 62,959 121,348 50,367 26,098 16,024 10,805 7,600 5,439 3,919 Total Current Assets 4,105,349 5,503,764 5,469,390 5,537,198 4,999,801 4,973,386 5,187,924 5,482,329 5,807,699 5,984,871 6,397,441

Noncurrent assetsLong-term Investments 687,665 8,420 19,293 17,108 14,923 19,267 23,611 27,955 32,299 36,643 40,987 PP&E 8,382,478 10,569,828 11,753,157 10,981,399 11,677,068 11,881,279 12,294,424 12,873,062 13,637,218 14,341,777 14,971,849 Intangibles 181,136 158,611 141,922 129,115 117,811 96,926 76,041 55,122 - - - Goodwill 494,654 760,166 786,141 753,381 753,381 753,381 753,381 753,381 753,381 753,381 753,381 Deferred income tax assets 21,387 237,113 249,565 188,982 199,652 161,856 121,925 89,554 65,169 47,258 34,224 Other non-current assets 26,356 19,274 38,052 30,639 61,278 58,236 57,259 56,264 55,722 54,271 52,397 Total Noncurrent Assets 9,793,676 11,753,412 12,988,130 12,100,624 12,824,113 12,970,944 13,326,641 13,855,338 14,543,789 15,233,331 15,852,839

Total Assets 13,899,025 17,257,176 18,457,520 17,637,822 17,823,914 17,944,330 18,514,565 19,337,668 20,351,488 21,218,202 22,250,280

Current LiabilitiesAccounts payable 1,107,434 1,622,679 1,462,105 1,608,587 1,601,602 1,575,022 1,608,816 1,650,689 1,716,877 1,768,916 1,821,641 Revolver debt - - - - - - - - - - - ST Loans and Borrowings 525,559 1,306,263 1,816,169 993,972 1,483,513 1,443,674 1,473,566 1,511,606 1,522,271 1,372,376 1,173,914 Current Income tax liability 18,803 10,994 23,800 44,219 41,992 65,453 81,980 92,450 97,638 99,849 93,960 Total Current Liabilities 1,651,796 2,939,936 3,302,074 2,646,778 3,127,106 3,084,149 3,164,362 3,254,744 3,336,785 3,241,140 3,089,516

Noncurrent liabilitiesDeferred Income tax liability 400,601 713,666 792,240 745,609 633,792 484,670 357,912 260,978 189,395 137,200 99,321 Long-term borrowings 2,289,965 3,099,924 2,850,196 3,791,989 2,328,144 2,265,623 2,312,534 2,372,231 2,388,968 2,153,731 1,842,277 Other long-term liabilities 2,849 398,489 422,720 157,437 157,437 173,046 196,540 223,147 255,809 289,398 326,273 Total noncurrent liabilities 2,693,415 4,212,079 4,065,156 4,695,035 3,119,373 2,923,340 2,866,986 2,856,356 2,834,173 2,580,330 2,267,870

- Shareholders' EquityIssued shares 221,173 221,173 221,173 221,173 221,173 221,173 221,173 221,173 221,173 221,173 221,173 Statutory reserve 10,267 10,267 10,267 10,267 10,267 10,267 10,267 10,267 10,267 10,267 10,267 APIC 98,752 306,391 306,391 256,922 306,391 306,391 306,391 306,391 306,391 306,391 306,391 Accumulated other comprehensive loss (916,901) (1,489,442) (997,035) (1,736,476) (997,035) (997,035) (997,035) (997,035) (997,035) (997,035) (997,035)Retained earnings 10,261,214 11,098,635 11,582,368 11,538,347 11,770,078 12,138,594 12,698,818 13,461,009 14,439,149 15,686,175 17,220,256 NCI (120,691) (41,863) (32,874) 5,776 (37,225) (46,335) (60,183) (79,024) (103,201) (134,025) (171,943)Total Shareholders' Equity 9,553,814 10,105,161 11,090,290 10,296,009 11,273,650 11,633,055 12,179,431 12,922,782 13,876,744 15,092,946 16,589,109

Total Liabilities & Equity 13,899,025 17,257,176 18,457,520 17,637,822 17,520,128 17,640,544 18,210,779 19,033,882 20,047,702 20,914,416 21,946,494

Balance Check - - - - 303,786.0 303,786.0 303,786.0 303,786.0 303,786.0 303,786.0 303,786.0

Debt MetricsTotal debt 2,815,524 4,406,187 4,666,365 4,785,961 3,811,656 3,709,297 3,786,100 3,883,836 3,911,238 3,526,107 3,016,191 Total debt/EBITDA 1.3x 2.0x 2.7x 3.6x 2.9x 2.4x 2.0x 1.7x 1.5x 1.1x 0.8x Interest Coverage Ratio 12.9x 12.8x 4.9x 2.9x 2.4x 4.5x 6.7x 8.6x 10.3x 12.0x 16.0x

Case 2 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E 2019E

m USDEBIT 602,626 890,471 1,215,341 1,570,772 1,959,686 2,452,873 2,943,651

Margin % 5.3% 7.7% 10.0% 12.2% 14.1% 16.6% 18.7% Growth % (47.7%) 47.8% 36.5% 29.2% 24.8% 25.2% 20.0%

Depreciation 699,915 664,679 645,061 635,163 631,207 632,816 627,798 Amortisation 24,111 20,885 20,885 20,919 55,122 - - (Tax expense) (120,763) (210,731) (299,765) (391,135) (490,040) (615,872) (751,639)(Capex) (749,958) (875,780) (1,069,315) (1,229,442) (1,416,037) (1,363,722) (1,290,760)Other investing flows 2,600 6,891 11,109 15,641 20,674 26,347 32,890 (Inc)/Dec in OWC items (1,096,952) 425,651 452,055 (36,007) (123,416) (148,169) (202,852) (188,101) (205,768)(Inc)/Dec in Other Operating Items (255,749) 18,652 24,470 27,602 33,205 35,039 38,749

Unlevered FCF 654,837 479,059 424,371 501,350 590,965 979,381 1,394,921

Valuation Date 11-Oct-2013Stub 22.5% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Year count 0.1 0.7 1.7 2.7 3.7 4.7 5.7

WACC (USD) Discount Factor 8.16% 99.1% 94.5% 87.4% 80.8% 74.7% 69.0% 63.8%8.66% 99.1% 94.2% 86.7% 79.8% 73.4% 67.6% 62.2%9.16% 99.0% 93.9% 86.0% 78.8% 72.2% 66.1% 60.6%9.66% 99.0% 93.6% 85.3% 77.8% 70.9% 64.7% 59.0%10.16% 98.9% 93.3% 84.7% 76.8% 69.8% 63.3% 57.5%10.66% 98.9% 93.0% 84.0% 75.9% 68.6% 62.0% 56.0%11.16% 98.8% 92.6% 83.4% 75.0% 67.4% 60.7% 54.6%

Cash Flow Valuation

WACC (USD) PV of Cash Flows PV of TV Enterprise Value2.0% 2.5% 3.0% 2.0% 2.5% 3.0%

8.16% 3,382,290 14,756,939 16,140,391 17,792,204 18,139,228 19,522,681 21,174,494 8.66% 3,327,421 13,292,611 14,442,848 15,796,479 16,620,032 17,770,270 19,123,901 9.16% 3,273,936 12,043,015 13,011,265 14,136,820 15,316,951 16,285,200 17,410,756 9.66% 3,221,790 10,965,747 11,789,533 12,737,100 14,187,536 15,011,323 15,958,890 10.16% 3,170,942 10,028,814 10,736,217 11,542,486 13,199,756 13,907,159 14,713,427 10.66% 3,121,352 9,207,628 9,820,054 10,512,482 12,328,979 12,941,406 13,633,833 11.16% 3,072,981 8,482,980 9,017,015 9,616,535 11,555,961 12,089,997 12,689,516

IMM ValuationWACC (USD) PV of Cash Flows TV EBITDA multiple Enterprise Value

2.0% 2.5% 3.0% 2.0% 2.5% 3.0%8.16% 3,382,290 4.3x 5.0x 5.9x 14.2x 15.3x 16.6x 8.66% 3,327,421 3.9x 4.2x 4.6x 13.1x 14.0x 15.0x 9.16% 3,273,936 3.5x 3.8x 4.1x 12.1x 12.8x 13.7x 9.66% 3,221,790 3.2x 3.5x 3.7x 11.2x 11.8x 12.6x 10.16% 3,170,942 2.9x 3.2x 3.4x 10.4x 11.0x 11.6x 10.66% 3,121,352 2.7x 2.9x 3.1x 9.8x 10.3x 10.8x 11.16% 3,072,981 2.5x 2.7x 2.8x 9.2x 9.6x 10.1x

Exit Multiple

WACC (USD) PV of Cash Flows TV based on multiple Enterprise Value 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x

8.16% 3,382,290 13,154,123 15,346,476 17,538,830 16,536,412 18,728,766 20,921,120 8.66% 3,327,421 12,781,835 14,912,141 17,042,447 16,109,257 18,239,562 20,369,868 9.16% 3,273,936 12,421,721 14,492,008 16,562,295 15,695,657 17,765,944 19,836,231 9.66% 3,221,790 12,073,330 14,085,552 16,097,773 15,295,120 17,307,341 19,319,563 10.16% 3,170,942 11,736,229 13,692,267 15,648,305 14,907,170 16,863,208 18,819,247 10.66% 3,121,352 11,410,003 13,311,670 15,213,337 14,531,355 16,433,022 18,334,689 11.16% 3,072,981 11,094,255 12,943,298 14,792,340 14,167,237 16,016,279 17,865,322

Net DebtRevolver debt - ST Loans and Borrowings 1,483,513 PV of leases 74,074 Long-term borrowings 2,328,144 Cash 895,523 Net Debt 2,990,208

Implied Share price

DCF Exit MultipleUSD per share USD per share

2.0% 2.5% 3.0% 6.0x 7.0x 8.0x 8.16% 2.53 2.76 3.03 8.16% 2.26 2.63 2.99 8.66% 2.27 2.47 2.69 8.66% 2.19 2.54 2.90 9.16% 2.06 2.22 2.41 9.16% 2.12 2.47 2.81 9.66% 1.87 2.01 2.16 9.66% 2.05 2.39 2.72

10.16% 1.70 1.82 1.96 10.16% 1.99 2.31 2.64 10.66% 1.56 1.66 1.78 10.66% 1.93 2.24 2.56 11.16% 1.43 1.52 1.62 11.16% 1.86 2.17 2.48

RUB per share RUB per share 2.0% 2.5% 3.0% 6.0x 7.0x 8.0x

8.16% 61.22 66.81 73.49 8.16% 54.74 63.60 72.46 8.66% 55.08 59.73 65.20 8.66% 53.02 61.63 70.23 9.16% 49.81 53.73 58.28 9.16% 51.35 59.71 68.08 9.66% 45.25 48.58 52.41 9.66% 49.73 57.86 65.99

10.16% 41.26 44.12 47.38 10.16% 48.16 56.06 63.97 10.66% 37.74 40.21 43.01 10.66% 46.64 54.32 62.01 11.16% 34.62 36.77 39.20 11.16% 45.17 52.64 60.11

Forward Valuation EBITDA multiple 8.2x 8.2x 8.2x 8.2x 8.2x 8.2x 8.2x 8.2x EV 14,153,382 10,901,011 12,950,171 15,458,409 18,297,907 21,742,132 25,354,902 29,346,363 Add cash 1,058,153 895,523 860,489 911,363 1,010,476 1,064,822 1,001,805 1,163,290 less Debt (4,666,365) (3,811,656) (3,709,297) (3,786,100) (3,883,836) (3,911,238) (3,526,107) (3,016,191) less NCI - - - - - - - - Market Cap 10,545,170 7,984,878 10,101,362 12,583,672 15,424,546 18,895,716 22,830,600 27,493,463

Share px 54.70 42.18 53.89 66.47 81.48 99.82 120.60 145.23 Divs 0.25 0.66 0.99 1.34 1.72 2.20 2.70 IRR (68.2%) 0.1% 10.6% 14.5% 16.6% 17.6% 18.2%

Case 2 USD RUBRisk-free rate 2.63% 7.44% Levered raw beta 1.23 1.23 Market Risk premium 6.70% 6.70% Country risk premium 1.70% 1.70% Ke 12.95% 17.76%

Pre-tax Kd estimate 5.25% 7.99%ETR 27.01% 27.01%Kd 3.83% 5.83%

% of debt in target capital 36.15% 36.85%% of equity in target capital 63.85% 63.15%

WACC 9.66% 13.37%

Case 2 2010A 2011A 2012A 2013H1 2013E 2014E 2015E 2016E 2017E 2018E 2019E

Non-controlling interest valuationBook Value (120,691) (41,863) (32,874) (37,225) (46,335) (60,183) (79,024) (103,201) (134,025) (171,943)% Share of NCI in NI -0.4% -0.4% 0.1% -1.9% -1.9% -1.9% -1.9% -1.9% -1.9% -1.9%Current share px 56.8 Current mkt cap 10,545,169,906 Group '13 PE ratio 17.3x 17.3x 17.3x 17.3x 17.3x 17.3x 17.3x NI share of NCI '13 (4,351) (9,110) (13,848) (18,840) (24,178) (30,823) (37,918)MV of NCI at Group PE - - - - - - - -

Summary of discount factors

Russia discount 20.00%Low free float 5.00%Total discount 25.00%