2 round_InTeam (ENG)

Proposal is prepared for GettMarch 21, 2016

Group of consultants:

Vitaly PentegovAlexander KulakovVladimir BotoevVladislav Voyakin

| 22 McKinsey Business Diving 2016Source: consultants’ analysis

By 2018 Gett will be able to increase its revenue x3.1 times with the profit margin of 11% due to the following initiatives

1

Initiatives

Regional expansion, focus on FIFA 2018 cities

Потребители

Ресурсы компании

Экспансия в РФ

Revenue in 2018, mln USD Description of initiatives

2

3

4

B2B portfolio increase

Loyalty program development

Carpooling entry 79

+37

+41

+23

245

+65

x 3.1

11%4% +2% +1% +3% +1%Profit margin

1) Expansion in Chelyabinsk, Kazan’, Kaliningrad, Ufa and Krasnodar will allow Gett to increase revenue and profit margin significantly due to effective pricing and mutual discount strategy

2) Corporate services development and increase of B2B in Gett’s portfolio could rise the profitability of the business as well as revenue

3) Loyalty program modernization will allow to rise the company’s market share in Moscow and Russian regions, increase Gett’s brand recognition and rating

4) Implementation of carpooling could be significantly prospective and allow Gett to take the niche in this direction and increase revenue

к 2018 B2C B2BCompletion rate 90% 98%

ATA* 5 min 5 min

FTRS** 10% 20%

* Average time of arrival ** First time ride share

01020304050607080

0%10%20%30%40%50%60%70%80%90%

2013 2014 2015 2016E 2017F 2018F 2019FCzech Republic RussiaPoland TurkeyOthers Number of smarphone users in Russia

| 33 McKinsey Business Diving 2016

Internet and smartphone penetration shows high growth and outpaces many of leading countries

1

2

Source: ICAA, McKinsey, eMarketer, consultants analysis * Moscow, Saint Petersburg

Taxi sector keeps on growing rapidly due to internet penetration, mobile development and displacement of traditional taxi

Russian market of legal taxi indicates rapid growth displacing illegal part

Gett could increase its market share in regions and capitals* due to cutting-age technology servicesInternet penetration and number of smartphones in Russia

56% 52% 39% 31% 27% 24%

44% 48% 61% 69% 73% 76%

2010 2011 2012 2013 2014 2015

Illegal sector Legal sector

0%2%4%6%8%10%12%14%

05

1015202530354045

2015 2016E 2017F 2018F

0%1%2%3%4%5%6%

0

5

10

15

2016E 2017F 2018F

Moscow

RegionsMoscow market structure of rides (% of total rides)

Expected market share of Gett in Russia

16 26

43

71

2011 2015

Moscow Other regions

Market size of legal rides (RUB bln)

+13%p.a.

(mlnpeople)

mln rides

mln rides

% of rides in portfolio

-5000

5000

15000

25000

35000

45000

-15%

-10%

-5%

0%

5%

10%

15%

20%

Jan-

12

Mar

-12

May

-12

Jul-1

2

Sep-

12

Nov

-12

Jan-

13

Mar

-13

May

-13

Jul-1

3

Sep-

13

Nov

-13

Jan-

14

Mar

-14

May

-14

Jul-1

4

Sep-

14

Nov

-14

Jan-

15

Mar

-15

May

-15

Jul-1

5

Sep-

15

Nov

-15

Jan-

16

Nominal wages, RUB (rhs) Real wages, YoY Real disposable income, YoY

$107 $41 $40-50Oil Brent

price


Fall in oil prices caused heavy Ruble devaluation1 2

Source: Thomson Reuters, Rosstat, consultants estimates and analysis

However, decrease in disposable income due to poor macroeconomics condition in Russia affects taxi business negatively

This led to increase of inflation and decrease of disposable incomes, in result – to passenger outflow

20 Mar, 201620 Mar, 2014

68

34 55-65USDRUB

forecast

6.5%

11.4%12.9%

8.6%7.0%

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%

2013 2014 2015 2016F 2017F

Russian CPI

Dynamics of wages and disposable income in Russia


3

Sources: Business atmosphere, analysis of consultants, 2GIS

Current Russian crisis increase the costs of taxi drivers that leads to reduce in revenue and profit of taxi aggregators

Taxi drivers costs spike while aggregators decrease prices, leading to drivers quit due to lack of earnings

There is a risk of revenue and profit margin decrease of taxi business

Costs of Moscow taxi driver per month, RUB

Gasoline

Car wash

Small repairs, oil change, etc.

Insurance

Insurance fees

Maintenance (2 times per year minimum)

Taxi patent (for individual entrepreneurs)

Taxes

58265

183%

94%

2014 2015

-49%Profit margin dynamics of Gett

45456 4967858265

2013 2014 2015

30240

9000

6667

5167

2983

2500

1500

208

Costs of Moscow taxi driver per month, RUB

20%

12%

25%

43%

| 66 McKinsey Business Diving 2016Sources: RBC, Vedomosti, TASS, consultants analysis

Intensive competition in Moscow and Saint Petersburg force big players to optimize the business and diversify a portfolio of services

The competition of taxi drivers reached its high level1

Taxi

Market shares of top taxi aggregators in Moscow

50%

38%

12%

USELESS

PROBABLY USEFUL

USEFUL

2

3

Companies aimed to the business diversification in order to save stable growing profit margins

However, penetration of such services in Russia is very low

Rank of the usefulness of additional services in taxi business in Russia, % (survey)

YandexTaxi

Gett

Wheely

Uber

Only taxi services

Taxi, business rides, carrier, delivery of food and flowers

Only taxi services

Taxi, business rides, carrier, delivery of food

Taxi market is potentially more promising than the market of additional services4

9002400600

1800

2015 2018F

Other regionsMoscow

Express delivery market in Russia, $ mln

1600 2800

7400

17200

2015 2018F

Russian taxi market, $ mln

Other regionsMoscow

4,5 times

bigger than delivery market

| 77 McKinsey Business Diving 2016Sources: J'son & Partners, Google, eMarketer

We consider region expansion is more perspective alternative than business diversification of taxi aggregators

62% Russian mobile internet penetration (end of 2015)

58% End of 2014

<50%50-60%>60%

Moscow and its regions, 91%

Saint Petersburg and its regions 85%

37.05

64.81

2016 2017 2018

8.91

10.17

9.44

14.13

6.94

15.21

Chelyabinsk

Kazan'

Omsk

Ufa

Kaliningrad

Krasnodar

| 88 McKinsey Business Diving 2016Source: consultants analysis, vc.ru

Proposed strategy will allow Gett to cover all the big cities of the European part of Russia and increase its revenue by $65 mln by 2018

Market concentration of taxi aggregators in Russian regions is low

The share of taxi aggregators will continue to rise rapidly

4.38% 6% 8% 10%

95.62% 94.00% 92.00% 90.00%

2015 2016 2017 2018

Taxi aggregators Traditional taxi

Expected market share in Russia (% of total rides)

0.88% 0.53% 1.09%

97.50%

GETT UBER YANDEX.TAXI OTHER

Market shares of aggregators in Russia(% of total rides)

Entry to the following cities will give the target level of revenue by 2018:

Expected revenue, mln USD

City of FIFA 2018

City of FIFA 2018

Ufa

| 99 McKinsey Business Diving 2016Source: analysis of consultants

Optimal competitive pricing strategy will allow the company to reach the target level of revenue and acquire significant market share in regions

Proposed portfolio

Krasnodar

Kaliningrad

Chelyabinsk

1 H 2017 2H 2017

Regions expansion pricing strategyNew cities

Economy Comfort BusinessGett Traditional taxi

Kazan’

Omsk

Initial ticket price, RUB

120

140 From 49then12 RUB/min

From 69then11 RUB/min





135

125

140

160 150 150

140

160 150

145

210 240 235230

180

200 190 190

200225 220

215

| 1010 McKinsey Business Diving 2016Sources: consultants estimates

In order to increase the profit margin, Gett could implement the following mutual discount model that will cut costs of the company and counterparties

+7%

Increase of profit margin by 3% due to the following initiatives…

….Offering insurance, auto and services discounts to taxi parks and drivers

Ticket discounts from taxi providers for Gett

Gett negotiates with auto manufacturers, insurance companies and auto services about the discounts

Then Gett offers these discounts to the taxi parks and drivers in exchange of mutual reduce in ticket prices

%

%

Expected reduce in ticket prices due to mutual discount offering

4%

11%

2015 2018

6%

Total profit margin in 2018Profit margin from initiatives

5%

10%

15%

28%

35%


Corporate auto park is quite expensive for most of the companies1 2

Sources: McKinsey, Sberbank CIB report

Moreover, increase and development of corporate sector could lead to increase Gett’s revenue by additional $23 mln and 3% profit margin due to higher profitability of B2B services

Most companies prefer higher taxi classes for their employees

Orders classification and its profit margin

Corporate auto park B2B Gett

≈ $1000 monthly costs per auto

is 40% cheaper

10%

45%

20%

25%

Orders by classes, % Profit margin, %

Auto maintenance

Wages

Logistic system

Gasoline, insurance

Main company costs to corporate auto park

01

02

03

04

3 New corporate clients increase will significantly increase Gett’s profitability

3 3.5 4.56 9

11

2016E 2017F 2018F

Base Case B2B development

Profit margin%

TargetClass

2015

4

1

2

3

4

Business

XL

Comfort

Economy+

0

1,000

2,000

3,000

4,000

5,000

2010 2011 2012 2013 2014

Passenger flow in public transport, mln passenger km

Челябинская область Республика ТатарстанОмская область


Entry of carpooling in Russia will be successful due to the following reasons

2

1

4

Source: RBC, therideshareguy.com, vc.ru, consultants analysis

Carpooling implementation in the 2nd half of 2016 could allow Gett to increase its revenie by $37 mln and profit margin by 2 %

Carpooling is a perspective direction to develop in taxi business, allowing to serve several clients instead of one

Carpooling could add $37 mln of revenue and 2% of profit margin

01

02

Lower prices with the same quality

Russian carpooling market is not domesticated and represented only by one company (BlaBlaCar) not involved in taxi business

03The main competitor of Gett is not involved yet in carpooling in Russia, opportunity to be the first

Both clients and taxi drivers will be interested in carpooling due to lower price to passengers and higher to drivers 150

200

Average cost of ride, RUB

Traditional taxi

Carpooling

Due to reduce and low quality of public transport (especially in regions) carpooling have a good chance to get its market share

3

-3,8%-7,1%

0,4%

To the center

To the center

0.7%

1.4% 2.0%

0.0%0.5%1.0%1.5%2.0%2.5%

0

10

20

30

40

2016 2017 2018Revenue, $ mln Profit margin, %

719

37

Chelyabinsk districtOmsk district

Tatarstan republic

43%

35%

10%

12%Drivers look andbehavior

| 1313 McKinsey Business Diving 2016Source: RBC, Vedomosti, surveys and analyses of consultants

Our analysis of consumer preferences showed the weak points in Gett’s current clients service system

Surveys of clients highlighted the following main factors that affect the choice of the taxi provider1

Yandex.Taxi Uber Gett

Time of taxi arrivalRide costsFlexibility of tariffsAvailability of comfort classesSafetyLoyalty programTotal satisfaction

4

- rating

- rating

- rating

Main clients’complaints

Drivers choose long routesDrivers behave impolite

Analysis of companies, main taxi services and tariffs showed that Gett offers services on the same level of its competitors

2

Cost of ride

Order processing speed

Other

Clients are not always satisfied by Gett’s services3

57%

43%

Yes No

Are you satisfied by Gett’s services Will you use Gett next time?

14%56%

19%11%

No, indeed Probably no

Probably yes Yes, indeed

There is a need to improve client services and loyalty program

Valuation of clients preferences in choice of the taxi aggregator

1 2 3 4 5 6 7

1

2

3

4

5

6

7

Rating

Factor number

Gett’s client services are rated lower than of main competitors

10% more km available



Accumulation of“km” points


21

Sources: Gett, surveys of consultants, Levada

Implementation of the new loyalty program will allow Gett to attract new clients and improve the loyalty level of existed clients

Implementation of the new loyalty program will give the company more new clients and increase its brand recognition

Clients are not interested in Gett loyalty program

Client is able to pay its ride distance by virtual kmaccumulated. The rate is 1 real km = 10 virtual km

Discounts from partner companies

Decrease in loyalty levels from 20 to 4

0 км

100 км

500 км

1000 км

Every level has its own set of useful bonuses44

12

73

What Gett bonuses are interesting for you? (% of total correspondents)

Does Gettneed it?

Review of the best practices showed the bonuses interesting for clients

89

83

95

Promo-codes for the first ride

Reaching the new loyalty level

There are no attractive bonuses for me

Discounts from partner companies

Accumulation of “km” points to pay for further rides

Increase in comfort class level

01

02

03

Ability to pay the rides by accumulated points

Class level increase

Order of exotic cars

Accumulating of the ride “km”(analog for mile airlines programs)


Our analysis showed that investment funds are the most preferable sources of funds for Gett2

Sources: Vedomosti, Finam, Forbes, RBC, bankir.ru, Gett, analysis of consultants

The company is ready to implement the initiatives due to ability to get enough funds from different financial institutions

Gett could get the financing from the following funds:

Implementation of the strategy requires the following costs

3

Expansion in Regions

Total Costs, $ mln

B2B Sector Development

R&D of the New Loyalty Program

Carpooling

149

36

32

20

59Criterions of choice Invest.

Funds Banks Private Investors

Accessibility

Affordability

Speed of fund raising

Safety

Payment Period

≈ $200 mlnExpected sources of investments

≈ $87 mlnNew funds available to invest

1

| 1616 McKinsey Business Diving 2016Source: analysis of consultants

Step-by-step implementation of the following initiatives will allow the company to expand its business in Russia successfully, entering new region cities and increasing B2B share

Business plan constructionOptimization analysisComposition of tariffs for regionsConducting partnership agreementsSetting up of Wi-Fi modules in taxi carsStart of the new loyalty programConsumer sector analysisCompetitive analysis

Implementation of marketing and advertisement strategies

Attracting new corporate clientsExpansion in new region cities(priority is based on the FIFA 2018 cities)IT infrastructure optimization

Carpooling testingCorporate auto sales Creating of the analytical center for consumer behavior analysis

Road map

H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018

Initi

al s

teps

Deve

lopm

ent

Mar

ket s

hare

hol

d

Initiative


By 2018 Gett will be able to increase its revenue x3.1 times with the profit margin of 11% due to the following initiatives

Expected Results

к 2018 B2C B2BCompletion rate 90% 98%

ATA* 5м 5м

FTRS** 10% 20%

0.9%1.2%

1.6%2.0%

2015 2016E 2017F 2018F

Expected market share of Gett in Russia

Expected operational results of Gett

0%2%4%6%8%10%12%

050

100150200250300

2015 2016E 2017F 2018FRevenue CostsProfit margin, %

Source: consultants’ analysis

1

Initiatives

Regional expansion, focus on FIFA 2018 cities

Потребители

Ресурсы компании

Экспансия в РФ

Revenue in 2018, mln USD

2

3

4

B2B portfolio increase

Loyalty program development

Carpooling entry 79

+37

+41

+23

245

+65

x 3.1

11%4% +2% +1% +3% +1%Profit margin

* Average time of arrival ** First time ride share

| 18

DISCLAIMER

This presentation (further: Presentation) is a business case solution to the annual case competition McKinsey Business Diving organized by McKinsey & Company. The company data is taken from the case description and not pretended to be real in any case. Therefore, the results of Presentation should not be considered to be real and implemented in linked business as a template. All calculations in this presentation are made on the base of consultants’ estimations and analyses and should not be viewed as a recommendation or advice. Gett is not somehow linked with the results of this Presentation and did not contribute to the appearance of the information in Presentation.

© InTeam 2016.

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