20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:

001-39713

Ozon Holdings PLC

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

Cyprus

(Jurisdiction of incorporation or organization)

Arch. Makariou III,

2-4

Capital Center, 9

floor, 1065, Nicosia, Cyprus

(Address of principal executive offices)

Alexey Arkhipov

+ 357 22 360 000

Arch. Makariou III,

2-4

Capital Center, 9

floor, 1065, Nicosia, Cyprus

(Name, Telephone,

E-mail

and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
American Depositary Shares, each representing one ordinary share with a nominal value of $0.001 per share	OZON	The Nasdaq Global Select Market
Ordinary shares, nominal value of $0.001 per share*	N/A	The Nasdaq Global Select Market*

*	Not registered for trading, but exist only in connection with the registration of the American Depositary Shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2022, 216,413,733 ordinary shares and 2 Class A shares were outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.


Large accelerated filer	☐	Accelerated filer ☐	Non-accelerated filer	☒

			Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

§240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


U.S. GAAP ☐		International Financial Reporting Standards as issued by the International Accounting Standards Board ☒		Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange

Act). Yes ☐ No ☒


Auditor name: JSC “Kept”		Auditor location: Moscow, Russia		Auditor Firm ID: 3055

ABOUT THIS ANNUAL REPORT

Except where the context otherwise requires or where otherwise indicated, the terms “OZON,” the “Company,” “Group,” “we,” “us,” “our,” “our company” and “our business” refer to Ozon Holdings PLC, together with its consolidated subsidiaries as a consolidated entity.

All references in this annual report (“Annual Report”) to “rubles,” “RUB” or “₽” 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.

All references in this Annual Report to the “Commission” or to the “SEC” are to the United States Securities and Exchange Commission, to the “Exchange Act” are to the U.S. Securities Exchange Act of 1934, as amended, and to the “Securities Act” are to the U.S. Securities Act of 1933, as amended.

All references in this Annual Report to “Russia” are to the Russian Federation and to “CBR” are to the Central Bank of Russia.

All references in this Annual Report to “Nasdaq” are to the Nasdaq Global Select Market and to “MOEX” are to Public Joint-Stock Company Moscow Exchange MICEX-RTS, or the Moscow Exchange, where the ADSs are listed under the symbol “OZON.”

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

We report under International Financial Reporting Standards (“IFRS”) as issued 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.

Use of Non-IFRS Financial Measures

Certain parts of this Annual Report refer to Adjusted EBITDA, which is a non-IFRS financial measure which we define as loss before income tax benefit/(expense), total non-operating income/(expense), depreciation and amortization, share-based compensation expense and losses related to the fire incident.

Adjusted EBITDA is used by our management to monitor the underlying performance of the business and its operations. It is a measure which may be used by other companies for a variety of purposes and is often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA as reported by us to the same or similar measures as reported by other companies. For example, Adjusted EBITDA may not be comparable to similarly titled metrics of other companies. It is a measure which is unaudited and has not been prepared in accordance with IFRS or any other generally accepted accounting principles.

Adjusted EBITDA is not a measurement of performance or liquidity under IFRS or any other generally accepted accounting principles, and you should not consider it as an alternative to other financial measures determined in accordance with IFRS or other generally accepted accounting principles. Non-IFRS financial measures have limitations as analytical tools, and you should not consider them in isolation. See Item 5.A “Operating and Financial Review and Prospects—Operating Results—Key Indicators of Financial and Operating Performance” for more detail on these limitations. Accordingly, current and prospective investors should not place undue reliance on references to Adjusted EBITDA contained in this Annual Report.

Key Operating Measures

Certain parts of this Annual Report contain our key operating measures, including, among others, gross merchandise value including revenue from services (“GMV incl. services”), share of our online marketplace (our “Marketplace”) GMV (“Share of Marketplace GMV”), number of orders and number of active buyers. We define:

•

GMV incl. services (gross merchandise value including revenue from services) as the total value of orders processed through our platform, as well as revenue from services to our buyers, sellers and other customers, such as delivery, advertising and other services. GMV incl. services is inclusive of value added taxes, net of discounts, returns and cancellations. GMV incl. services does not represent revenue earned by us. GMV incl. services does not include travel ticketing and hotel booking commissions, other related service revenues or value of the respective orders processed.

•

Share of Marketplace GMV as the total value of orders for sellers’ goods processed through our Marketplace, inclusive of value added taxes, net of discounts, returns and cancellations, divided by GMV incl. services in a given period. Share of Marketplace GMV includes only the value of goods processed through our platform and does not include services revenue.

•

Number of orders as the total number of orders delivered in a given period, net of returns and cancellations.

•

Number of active buyers as the number of unique buyers who placed an order on our platform within the 12-month period preceding the relevant date, net of returns and cancellations.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements that relate to our current expectations and views of future events. These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under Item 3.D. “Key Information—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 in this Annual Report include, but are not limited to, statements about:

•

the impact of geopolitical events and macroeconomic circumstances on our operations, results and ADS holders;

•

our future financial performance, including our revenue, operating expenses and our ability to achieve and maintain profitability;

•

our expectations regarding the development of our industry and the competitive environment in which we operate;

•

the growth of our brand awareness and overall business; and

•

our ability to improve our product offerings and technology platform and to attract and retain buyers and sellers.

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 Item 3.D. “Key Information—Risk Factors” and the following:

•

the current global macroeconomic environment;

•

the geopolitical crisis surrounding Ukraine and related sanctions, trade restrictions, risks and uncertainties, including the risk that we, any member of our Group, our directors or members of our senior management might be targeted by sanctions;

•

any significant fluctuations in our revenue growth and results of operations;

•

our lack of historical profitability and risks in achieving profitability in the future;

•

our ability to effectively promote our business and attract new and retain current buyers and sellers;

•

any failure to retain our market position in a highly competitive e-commerce market;

•

any failure to obtain additional funds to finance our future capital needs;

•

our reliance on counterparties and third-party providers;

•

our reliance on the Russian internet infrastructure;

•

global political and economic stability;

•

further widespread impacts of the COVID-19 pandemic or other health crises restricting the level of business activity, travel, transportation and otherwise affecting our buyers, sellers and third-party providers, as well as any governmental or international response measures;

•

privacy, personal data and data protection concerns; and

•

our ability to successfully remediate the existing material weakness in our internal control over financial reporting and our ability to establish and maintain an effective system of internal control over financial reporting.

As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and Nasdaq corporate governance rules and are permitted to file less information with the SEC than U.S. companies, which may limit the information available to holders of the ADSs.

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 in this Annual Report relate only to events or information as of the date on which the statements are made in this Annual Report. 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 Annual Report and the documents that we have filed as exhibits hereto completely and with the understanding that our actual future results or performance may be materially different from what we expect.

vii

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

You should carefully consider the risks described below before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, prospects, financial condition or results of operations could be materially and adversely affected by any of these risks. The trading price and value of the ADSs could decline due to any of these risks, and you may lose all or part of your investment. This Annual Report also contains forward-looking statements that involve risks and uncertainties. You should carefully review the “Cautionary Statement Regarding Forward-looking Statements” section of this Annual Report. 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 and elsewhere in this Annual Report.

Summary Risk Factors

Our business is subject to numerous risks. We may be unable, for many reasons, including those that are beyond our control, to implement our business strategy. In particular, risks associated with our business include, but are not limited to, the following:

Risks Relating to the Current Geopolitical Environment

•

sanctions imposed by the United States, the European Union, the United Kingdom and other countries in relation to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs;

•

we engage in de minimis activities relating to Crimea, and these activities could potentially impede our ability to raise funding in international capital markets or otherwise materially adversely affect our business and reputation;

Risks Relating to Our Business and Industry

•

we may experience significant fluctuations in our revenue growth and results of operations;

•

we have incurred significant losses in the past and we continue to invest in order to grow and scale our business, and we may not achieve profitability on the timeline that we anticipate;

•

we may need to raise additional funds to finance our future capital needs, which may be challenging in the current environment and may dilute the value of the outstanding ADSs or prevent us from growing our business;

•

if we fail to effectively promote our business and attract new buyers and sellers and retain current buyers and sellers, our business, prospects, financial condition and results of operations may be materially and adversely affected;

•

we operate in a competitive market. If we fail to retain our current market position, our business and results of operations could be materially and adversely affected;

•

our expansion into new products, services, technologies and geographic regions subjects us to additional risks;

•

we may be required to obtain further permits or licenses with respect to our existing and new financial technology (“Fintech”) solutions in the future, our existing Fintech licenses may be revoked and we may be subject to the increased level of scrutiny from Russian regulatory authorities;

•

we rely on many counterparties and third-party providers in our business, and the nonperformance or loss of a significant third-party provider through bankruptcy or otherwise, could adversely affect our operations;

•

privacy and data protection concerns and related claims, including evolving government regulation in the area of consumer data privacy or data protection, could adversely affect our business and results of operations;

•

we may be subject to material litigation;

•

we are exposed to the risk of inadvertently violating anti-corruption laws, anti-money laundering laws and other similar laws and regulations;

•

our business may be adversely affected by the COVID-19 pandemic;

•

if we were treated as a passive foreign investment company, investors in the ADSs subject to U.S. federal income tax could have material adverse tax consequences;

Risks Relating to Russia

•

the adoption, maintenance and expansion of international embargo, economic, trade or other sanctions against Russia may have a material adverse effect on our business, financial condition and results of operations;

•

investing in securities of issuers in emerging markets, such as Russia, generally involves a higher degree of risk than investments in securities of issuers from more developed countries and carries risks that are not typically associated with investing in more mature markets;

•

economic instability in Russia could adversely affect our business;

•

the ongoing development of the Russian legal system and Russian legislation, including the legal framework governing e-commerce and Fintech industries, data protection and related internet services, creates an uncertain environment for investment, business activity and our operations;

Risks Relating to Our Ownership Structure

•

the rights of our shareholders are governed by Cyprus law and our articles of association and differ in some important respects from the typical rights of shareholders under U.S. state laws;

•

changes in Russian tax law could adversely affect our Russian operations;

Risks Relating to Ownership of the ADSs

•

trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq;

•

the trading price of our ADSs may not be indicative of the value at which such securities would trade if they were traded on Nasdaq. Moreover, our listing on MOEX may be adversely impacted if our securities are delisted from Nasdaq;

•

if the depositary for our ADS facility terminates the deposit agreement, this may materially adversely affect the holders of our ADSs;

•

as a foreign private issuer within the meaning of the Nasdaq corporate governance rules, we are permitted to, and we will, 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 the ADSs;

•

we have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired;

•

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 the ADSs and prevent attempts by our shareholders to replace or remove our current management;

•

the price of the ADSs might fluctuate significantly, and investors could lose all or part of their investment; and

•

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

Risks Relating to the Current Geopolitical Environment

Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs.

Sanctions imposed on Russia and Russian persons by a number of countries in connection with the geopolitical crisis surrounding Ukraine and further regulatory counter-measures taken by the Russian Government have had a significant, and in many cases unprecedented, impact on companies operating in Russia. In connection with the geopolitical crisis surrounding Ukraine, the United States, the European Union, the United Kingdom and other countries have imposed severe sanctions targeting Russian financial institutions, including the prohibition on transactions with the CBR, blocking of assets and cutting off certain Russian banks from SWIFT; businessmen and their assets; oil, defense and other state-owned companies, as well as broad export and import restrictions, restrictions on access to financial, investment and other services for Russian entities and individuals, restrictions on Russian airlines and shipping companies and a general ban on new investments in Russia (see Item 3.D “Key Information—Risk Factors—Risks Relating to Russia—The adoption, maintenance and expansion of international embargo, economic, trade or other sanctions against Russia may have a material adverse effect on our business, financial condition and results of operations” for more details).

In response, Russia identified various states, including the United States, all European Union member states and the United Kingdom (including the British Crown Dependencies and British Overseas Territories), as “hostile” and introduced a number of economic measures in connection with their actions, as well as economic measures aimed at ensuring financial stability in Russia. These measures, among others, include:

•

limitations on foreign currency loans to non-Russian residents and certain foreign currency transfers abroad;

•

limitations on Rouble loans to non-Russian residents of “hostile” states;

•

limitations on dividend payments to non-Russian residents of “hostile” states or dividend payments to foreign accounts;

•

an approval regime for certain transactions between persons from “hostile” states and Russian residents with respect to securities or real estate;

•

an approval regime for transactions relating directly or indirectly to the establishment, change, termination or encumbrance of rights of possession, use or disposal of participation interests in Russian limited liability companies and in certain Russian credit institutions, where a person or persons from “hostile” states are party to the relevant transaction;

•

various requirements limiting servicing of debt under facility agreements and other financial instruments, as well as under foreign debt securities such as Eurobonds; and

•

an approval regime for certain types of capital injections by Russian residents to non-Russian residents.

The above measures affected not only Ozon’s relationships with its counterparties, but also its various intra-group transactions, as Ozon Holdings PLC, the holding company of the Group, is registered in the Republic of Cyprus and it and its direct and indirect subsidiaries are considered persons from “hostile” states for the purposes of the Russian counter-sanctions regime.

See Item 4.B “Information on the Company—Business Overview—Regulatory Environment—Capital Control and Protection Measures Related to the Geopolitical Crisis Surrounding Ukraine” for more details.

These actions have had, and are expected to continue to have, a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs, including the following:

•

On February 28, 2022, trading of the ADSs on Nasdaq was suspended by Nasdaq, and such suspension remains in effect as of the date of this Annual Report. Further, on March 15, 2023, the Listing Qualifications Staff of Nasdaq (the “Staff”) notified us that it had determined that our securities would be delisted from The Nasdaq Stock Market as of March 24, 2023, unless Ozon appeals the Staff’s determination. On March 21, 2023, Ozon submitted a request for a hearing to appeal such determination. Under the Nasdaq Listing Rules, a hearing will be held, to the extent practicable, within 45 days of such request, and the delisting of the ADSs will be stayed pending the issuance of a written decision of the hearings panel. Even if such appeal is successful and Ozon’s securities are not formally delisted, there can be no guarantee if or when the trading halt may be lifted and trading might ultimately resume. If such appeal is not successful, Ozon may pursue the further appeals available under the Nasdaq Listing Rules. In the event that Ozon’s securities are ultimately delisted from Nasdaq, the ADSs may be eligible for trading in the over-the-counter market. We can provide no guarantee, however, that one or more brokers will elect to make a market in such securities or will be able to obtain a ticker to facilitate OTC trading. See Item 3.D “Key Information—Risk Factors—Risks Relating to Ownership of our ADSs—Trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq.”

•

The U.S. has imposed a prohibition on U.S. persons making any “new investments” in Russia from April 6, 2022. While we do not believe that the ban would prohibit trading by U.S. persons in ADSs issued prior to April 6, 2022, there has been no guidance issued by OFAC in this regard and we cannot give any assurance that OFAC would not take a different position. There can also be no assurance that brokers, dealers and other financial intermediaries from the U.S., the EU, the UK or other Western countries will be allowed to execute transactions with the ADSs due to potential legal restrictions or limitations set out in their internal policies, which could materially adversely affect the value and trading of the ADSs.

•

Trading of all securities on MOEX was suspended from February 28 to March 23, 2022, and trading of the ADSs on MOEX was resumed on March 29, 2022. However, if Ozon’s appeals described above are unsuccessful, Ozon’s ADSs will be delisted from trading on Nasdaq. This may lead to adverse implications for Ozon’s MOEX listing. On March 15, 2023 MOEX made a public statement that trading in our ADSs would continue on MOEX in the event of our delisting from Nasdaq. In addition, there is currently a general moratorium on delistings from MOEX for foreign companies whose securities are admitted to public trading in Russia where such securities were delisted on foreign exchanges, which is currently effective until October 1, 2023. However, the effectiveness of our continued listing would depend on various matters, including the maintenance of our ADS program and depositary arrangements. See Item 3.D “Key Information—Risk Factors—Risks Relating to Ownership of our ADSs—The trading price of our ADSs may not be indicative of the value at which such securities would trade if they were traded on Nasdaq. Moreover, our listing on MOEX may be adversely impacted if our securities are delisted from Nasdaq”.

Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine and further regulatory counter-measures taken by the Russian Government may prevent us from achieving our financial, operational and strategic objectives, including those described elsewhere in this Annual Report, or otherwise materially adversely affect our business, financial condition and results of operations. Among other things:

•

our ability to raise additional capital, especially from companies and financial institutions established in Western states, is likely to be materially adversely affected or we may only be able to raise additional capital at significantly increased costs, which could potentially reduce the size of our investments into the expansion of our infrastructure and operations, and/or trading of the ADSs may be materially adversely affected;

•

trade restrictions could impact our operations in light of their limitation on our ability to source technology or goods from other countries;

•

we may not be able to launch our business operations in other countries or expand them to the desired scale;

•

as a result of the capital control and protection measures described above, our Russian operating subsidiaries are restricted from transferring cash outside of Russia (without prior approval from the Russian Government or at all), including to our holding company;

•

if additional or all Russian banks are disconnected from SWIFT or become subject to blocking sanctions or asset freezes, we may experience difficulties in making payments to our shareholders and holders of the Bonds outside of Russia;

•

the negative impact on the Russian economy is likely to increase the credit risk for many of our customers, which will result in additional amounts of expected credit losses to be recognized in future. In addition, in March 2022, international rating agencies, including Fitch and Moody’s, withdrew Russian sovereign ratings and stopped covering ratings of entities based in Russia. The withdrawal of ratings increases an uncertainty with respect to the credit risk of our counterparties;

•

our existing or prospective counterparties, advisors and consultants may refuse (and have in the past refused) to transact with us as a Russia-related business; and

•

additional regulatory restrictions and measures that may be introduced from time to time may limit our ability to conduct our day-to-day operations or otherwise have a material adverse effect on our business, financial condition and results of operations and on the value and trading of the ADSs. In particular:

•

on April 7, 2022, amendments to the Russian Criminal Code that would establish criminal liability for complying with foreign sanctions on the territory of Russia were introduced in the State Duma, the lower house of the Russian Parliament. If such amendments are adopted, they could limit our ability to transact with foreign counterparties as they may be unable to work with us. Since April 2022, this initiative has not been progressed, however, as it has not been dismissed completely it is still of potential risk; and

•

on April 27, 2022, amendments to Russian law requiring Russian companies to terminate depositary programs, under which the depositary receipts of such companies are listed on foreign stock exchanges, entered into force. While this law does not apply to us, it cannot be ruled out that this legislation might be further extended to Russian businesses with foreign holding companies or that such foreign holding companies might be required to redomicile in Russia and terminate their depositary programs. The adoption of such legislation could result in the delisting of the ADSs from Nasdaq and materially adversely affect the value and trading of the ADSs and the structure of our share capital more generally.

Press statements by Russian government officials have indicated that it is possible that sanctions imposed on Russia by other countries could be mirrored by counter-measures imposed by Russia; for instance, any freeze of assets of Russian entities could trigger a corresponding freeze of assets owned or controlled by residents of the country which imposed sanctions. Our assets in Russia are held by Russian entities, but the language of any such counter-measures would need to be assessed to determine whether they extend to shares or interests in our Russian subsidiaries held by our holding company or whether there would be any other impact on us. No such counter-measures are currently in place.

Other than the potential restrictions described above in relation to the U.S. prohibition of “new investments”, there are currently no regulatory restrictions on the ability of U.S. persons to acquire and trade in the ADSs or our other securities on Nasdaq if the trading suspension is lifted, and non-U.S. persons are not exposed to any U.S. secondary sanctions risks in connection with such transactions. However, as the geopolitical crisis surrounding Ukraine is ongoing, we cannot assure you that further, more severe sanctions will not be imposed on various sectors of the Russian economy or that other Russian businesses, including ourselves, and individuals, including our directors and members of our senior management, will not be targeted by new sanctions. The existing or further sanctions

imposed on Russia in response to the ongoing geopolitical crisis surrounding Ukraine or any future crises there or elsewhere, or measures taken by Russia in response, may limit our growth, materially adversely affect our business, financial condition and results of operations, and result in a significant decline or fluctuations in the trading price of the ADSs. If we, any other member of our Group or any of our directors, executive officers or other members of senior management were to become a target of sanctions, it may have a material adverse effect on our business, prospects, financial condition and results of operations and on the value and trading of the ADSs.

Heightened tension between Russia and the West increases the likelihood of cybersecurity threats to businesses and external events. Any cybersecurity attack could materially impact and even halt our ability to operate our website. Certain cybersecurity attacks could result in us breaching privacy and other laws, exposing not only investors to significant legal, financial and data loss threat, but also jeopardizing the same for customers, thus potentially resulting in loss of custom due to breach of trust, and regulatory fines. See also Item 3.D “Key Information—Risk Factors—Risks Relating to Our Business and Industry—Computer viruses, undetected software errors and hacking may cause delays or interruptions on our systems and may reduce the use of our services and damage our brand reputation”.

We engage in de minimis activities relating to Crimea, and these activities could potentially impede our ability to raise funding in international capital markets or otherwise materially adversely affect our business and reputation.

In response to certain geopolitical tensions, a number of countries, including the United States, EU countries and Canada, imposed a variety of trade and economic sanctions aimed at Russia, as well as certain individuals and entities within Russia and Ukraine. In December 2014, the U.S. President issued Executive Order No. 13685, which established a region-specific embargo under U.S. law for the Crimea region. Among other things, this embargo generally prohibits U.S. persons and U.S. companies from engaging in investments in the Crimea region and most import or export trade in goods and services with parties in the Crimea region. Pursuant to Executive Order No. 13685, OFAC designates parties operating in the Crimea region on the SDN List. U.S. persons and U.S. companies are generally prohibited from engaging in most transactions or dealings with parties on the SDN List. Non-U.S. persons and companies may be designated on the SDN List if they engage in significant transactions with persons designated on the SDN List under U.S. sanctions programs with respect to Russia. Although we do not operate on the ground in the Crimea region and have no facilities, assets or employees located in the region subject to the embargo, third-party services deliver products ordered on our site to buyers located in the region and third-party independent agents operate a limited number of pick-up points in the region, which distribute packages ordered through our websites and mobile apps along with packages ordered though other providers. In the event sanctions are imposed on the third-party independent agents operating our pick-up points in Crimea or the logistics operators involved in delivering shipments to Crimea, we may be unable to satisfy all or a substantial part of the orders placed by buyers in the embargoed region. Since the imposition of embargo, less than one percent of our revenue has been generated from orders delivered to the Crimea region. However, new sanctions imposed by the United States and certain EU member states or changes in the interpretation of the existing sanctions, including the scope of embargo in place with respect to the Crimea region and the application of secondary sanctions on persons operating in the embargoed region, may adversely affect certain of our operations in the future.

We conduct the customary “know-your-customer” (“KYC”) and onboarding procedures for our sellers and suppliers in accordance with our internal policies. See also Item 3.D “Key Information—Risk Factors—Risks Relating to Our Business and Industry—We are exposed to the risk of inadvertently violating anti-corruption laws, anti-money laundering laws and other similar laws and regulations.” However, we face the risks of receiving incorrect, inaccurate or misleading information in the course of these procedures. If, as a result, we transact with a person or entity in violation of our internal policies or applicable laws and regulations, our business, prospects, financial condition and results of operations may be materially and adversely affected.

To the extent applicable, existing and new or expanded future sanctions may negatively impact our revenue and profitability, and could impede our ability to effectively manage our legal entities and operations both in and outside of Russia or raise funding from international financial institutions or the international capital markets. Our failure to comply with applicable laws and regulations may expose us to negative legal and business consequences, including penalties, government investigations and reputational harm.

Risks Relating to Our Business and Industry

We may experience significant fluctuations in our revenue growth and results of operations.

We have grown our GMV significantly in recent years. Our anticipated future growth will likely place additional demands on our management and operations. Our success in managing our growth will depend, to a large degree, on the ability of our executive officers and other members of senior management to operate effectively and on our ability to further improve and develop our financial and management information systems, controls and procedures. In addition, we expect to have to adapt our existing systems and introduce new systems, train and manage our employees and improve and expand our sales and marketing capabilities.

Our revenue growth may slow down or decline for any number of reasons, including our inability to attract and retain sellers and buyers, decreased buyer spending, increased competition, slowing overall growth of the e-commerce market, the emergence of alternative business models, changes in government policies and general economic and geopolitical conditions. We may also lose buyers and sellers for other reasons, such as a failure to deliver satisfactory customer experience. If we are unable to properly and prudently manage our operations as they continue to grow, or if the quality of our services deteriorates due to mismanagement, our brand name and reputation could be significantly harmed, and our business, prospects, financial condition and results of operations could be materially and adversely affected. In addition, a disproportionate amount of sales on our platform has historically taken place during our fourth quarter, and we expect this seasonal trend to continue. As a result of peak seasonal sales, as of December 31 of each year, our cash and cash equivalents balances typically reach an elevated level (other than as a result of cash flows provided by or used in investing and financing activities). This operating cycle results in a corresponding increase in accounts payable, combined with a decrease in inventories, as of December 31. Our accounts payable balance generally declines during first months of each year, resulting in a corresponding decline in our cash and cash equivalents balances.

Furthermore, our operating results may be adversely impacted by variability of our operating expenses, one off factors and exposure arising from financial instruments (e.g. foreign exchange losses and losses on derivative instruments).

Our results of operations may fluctuate significantly as a result of a variety of factors, including but not limited to those described above. As a result, historical period-to-period comparisons of our results of operations are not necessarily indicative of future period-to-period results. You should not rely on the results of a single fiscal quarter as an indication of our annual results or our future performance.

We have incurred significant losses in the past and we continue to invest in order to grow and scale our business, and we may not achieve profitability on the timeline that we anticipate.

We incurred total losses of ₽58.2 billion, ₽56.8 billion and ₽22.3 billion in the years ended December 31 2022, 2021 and 2020, respectively, and our profitability may be materially affected by various factors, some of which are beyond our control. We believe that we will need to generate and sustain increased revenue levels and decrease the proportionate amount of expenses in future periods to achieve profitability in our markets and, even if we do, we may not be able to achieve or increase profitability in the near term. We continue to invest in our business in order to grow and retain our buyer base, expand our logistics and fulfillment capabilities, as well as continue developing and improving our platform and offering new products and services. These efforts may prove costlier than we anticipate, and many of our initiatives are scaling up (for example, our recent Fintech initiatives, see Item 4.B “Information on the Company—Business Overview—Our Business Operations—Financial Services Offerings”). We may continue to incur losses in the near term as a result of expected increases in our operating expenses as well as one-off events (e.g. force majeure such as fire). As a result, any failure to adequately increase our revenue or contain the costs related to our expansion could prevent us from improving profitability. In addition, our new services, including financial services, that we started to actively develop in recent years, could result in an unexpected increase in costs and negatively impact profitability. Further, as we expand our services to sellers and buyers in various regions, add new categories of products and services, our offerings in these markets may be less profitable than in the markets in which we currently operate, which may not offset the costs required to expand into these markets or verticals and could impact our ability to achieve or sustain profitability. We may also fail to improve the purchasing terms with our suppliers or improve utilization of infrastructure, which could increase our costs and limit our ability to reinvest

into other areas of our business. As a result of these factors, in addition to various other factors that may arise, we may not be able to maintain or increase profitability in the near term. The ongoing geopolitical crisis surrounding Ukraine may also have a significant impact on our profitability and other financial results. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs.”

We may need to raise additional funds to finance our future capital needs, which may be challenging in the current environment and may dilute the value of the outstanding ADSs or prevent us from growing our business.

We may need to raise additional funds to finance our existing and future capital needs, including developing new services and technologies and ongoing operating expenses. In the current geopolitical and macroeconomic environment, this may be challenging; in particular, applicable sanctions restrictions may impose significant limitations in this regard. If we do raise additional funds through the sale of equity securities, these transactions may dilute the ADSs held by our current shareholders. We may also decide to issue securities that have rights, preferences and privileges senior to the ADSs or ordinary shares or convertible into the ADSs or ordinary shares. For example, in February 2021, we completed the issuance of our $750 million Bonds which were in accordance with their terms convertible into the ADSs, however, we note that those holders of the Bonds who subsequently exercised their right to require redemption have forfeited their conversion rights under the Bonds (see Item 5.B “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Borrowings”).

As of December 31, 2022, our short-term and long-term borrowings amounted to ₽55.2 billion and ₽38.9 billion, respectively, as compared to ₽11.5 billion and ₽50.6 billion, respectively, as of December 31, 2021. Any further debt financing would increase our level of indebtedness. Any such indebtedness could negatively affect our liquidity and restrict our operations, including increasing our vulnerability to general economic and industry conditions, limit our ability to plan and react to changes in our business and industry and place us at a disadvantage compared to competitors that have a lower level of indebtedness. Any breach of our financing arrangements, including the covenants, undertakings and other continuing obligations set out in our financing arrangements (see Item 5.B “Operating and Financial Review and Prospectus—Liquidity and Capital Resources—Borrowings”), or the inability to service our debt through internally generated cash flow or other sources of liquidity, would lead to default, which could lead to enforcement of pledges of shares of the Group’s key operating subsidiary or otherwise have a material adverse effect on our business, prospects, financial condition and results of operations.

We may be unable to raise additional funds on terms favorable to us or at all, and if financing is not available or is not available on terms acceptable to us, we may be unable to finance our future capital needs. This may prevent us from increasing our market share, capitalizing on new business opportunities or remaining competitive in our industry, any of which would have a material adverse effect on our business, prospects, financial condition and results of operations.

If we fail to maintain and enhance our brand to effectively promote our business and attract new buyers and sellers and retain current buyers and sellers, our business, prospects, financial condition and results of operations may be materially and adversely affected.

We believe that the effective promotion of our business is of paramount importance to our success. Enhancing our brand recognition in the e-commerce market is critical to increasing the quantity and depth of engagement of sellers and buyers with our platform, which, in turn, enhances the appeal and assortment of products and services to buyers. We have conducted and will continue to conduct various marketing and promotional activities aimed at increasing the visibility of our business and the attractiveness of our platform for our sellers and buyers. We cannot assure you, however, that these activities will be effective in achieving the intended promotional impact on our business. In addition, our buyers and sellers may have conflicting views regarding some of the new initiatives we introduce to improve our platform, which can negatively affect our buyer and seller base. Further, any negative publicity relating to our products or services, regardless of its veracity, could harm our reputation and cause buyers and sellers to leave our platform. If our marketing efforts are not successful in attracting new buyers and retaining current buyers, our business, prospects, financial condition and results of operations could be materially and adversely affected.

We operate in a competitive market. If we fail to retain our current market position, our business and results of operations could be materially and adversely affected.

The markets for our products and services are competitive and rapidly evolving. The successful execution of our strategy depends on our ability to continuously attract and retain sellers and buyers, expand the market for our products and services, continue technological innovation and offer new capabilities to sellers and buyers. We have many competitors, not only among other e-commerce companies but also brick-and-mortar stores and a large and fragmented group of other offline retailers. We compete with these current and potential competitors for both sellers and buyers. From time to time, our buyers may decide not to continue purchasing products on our platform for various reasons, including a preference to shop in brick-and-mortar retail stores. Our sellers may also decide to switch to our competitors’ services. Some of our existing or potential competitors may have greater resources, capabilities and expertise in management, technology, finance, product development, sales, marketing and other areas. Further, the internet facilitates competitive entry and comparison shopping, which enhances the ability of new, smaller or lesser known businesses to compete against us. As a result of these various types of current and potential competitors, we may fail to retain or may lose our current market position, fail to continue to attract new and maintain our existing buyers and sellers, and be required to increase our spending or maintain lower prices for our Direct Sales offerings, which could materially and adversely affect our business, prospects, financial condition and results of operations.

If we fail to improve our customer experience, product offerings and IT platform, we may not be able to attract and retain sellers and buyers, which may have a material adverse effect on our business, prospects, financial condition and results of operations.

Our success depends upon our ability to attract and retain both sellers and buyers. A key factor in attracting and retaining sellers and buyers is our ability to expand the variety of products and services offered by our platform, which, in turn, requires us to attract and retain a large number of sellers. Achieving these objectives requires the maintenance and continual improvement of our products and services, including the customer experience from both the seller and buyer perspective, the accessibility of buyer and seller support services and the reliability of transaction processing services, including reliable and fast delivery options.

To build and maintain our brand reputation and buyer loyalty, we need to continue to improve our products and services, as well as innovate and introduce new products and services to enhance the customer experience of our sellers and buyers. This includes improving our platform to optimize product search results, introducing new ways to pay for products bought on our platform, improving data analytics for sellers and continuing to assess and enhance the buyer experience on our websites and our Shopping App generally. In addition, we need to adapt and improve buyer-facing user interfaces on our platform to keep up with the evolving needs and preferences of our buyers. For example, in light of the growing propensity of buyers to use smartphones to conduct transactions, we will continue to optimize our Shopping App to improve the experience of accessing our platform on mobile devices. It is also difficult to predict the problems that we may encounter in innovating and introducing new products and services and we may need to devote significant resources to the development, support and maintenance of our platform. We cannot provide any assurances that our technological initiatives aimed at improving the experience of our buyers and sellers will be successful, including whether our new products or service offerings and delivery services will be well received by sellers and buyers or improve our operational cost efficiencies. If we are unable to increase and retain the number of sellers and buyers on our platform, or increase the quantity and quality of products and services offered, our business, prospects, financial condition and results of operations could be materially and adversely affected.

If we are not able to respond successfully to technological or industry developments, including changes to the business models deployed in our industry, our business, prospects, financial condition and results of operations may be materially and adversely affected.

The e-commerce market is characterized by rapid technological developments, frequent launches of new products and services, changes in buyer needs and behavior and evolving industry standards. As a result, participants in the e-commerce industry constantly change their product offerings and business models and adopt new technologies to, among other things, increase cost efficiency and adapt to buyer preferences. There can be no assurances that we will be able to keep up with technological improvements or that the technology developed by our competitors will not render our product offerings less competitive or attractive. If we fail to sufficiently equip ourselves or secure the necessary IT equipment, and /or successfully and timely respond to technological or industry developments, it could result in a loss of sellers and buyers, and our brand, business, prospects, financial condition and results of operations could be materially and adversely affected.

Our expansion into additional products, services, technologies and geographic regions subjects us to additional risks.

Our growth strategy depends, in part, on our expansion into additional product or service offerings, such as the financial technology services we offer. Our new initiatives may not be as profitable as expected, and we may be unable to recover our investments in them. In addition, we may be subject to claims if these product or service offerings suffer from service disruptions or failures or other quality issues. We may also have regulatory issues such as fines or withdrawal of licenses permitting to operate the additional businesses. This, in turn, may adversely affect our financial condition or results of operations. Failure to realize the expected returns of any of our investments in new technologies, products or services could also result in our inability to cover the costs we incurred to develop these technologies, which may adversely affect our financial condition or results of operations.

Expansion of the categories of services (such as new fintech services) or products (such as alcoholic beverages) we are offering may result in increased regulatory scrutiny and compliance requirements as a result of the uncertain application of laws, regulations and changing enforcement practices. In addition, some of the new verticals we may expand to may require us to comply with foreign ownership limitations or obtain additional permits or licenses (see Item 3.D “Key Information—Risk Factors—Risks Relating to Our Business and Industry—We may be required to obtain further permits or licenses with respect to our existing and new Fintech solutions in the future, our existing Fintech licenses may be revoked and we may be subject to the increased level of scrutiny from Russian regulatory authorities” and Item 3.D “Key Information—Risk Factors—Risks Relating to Russia—If existing limitations on foreign ownership were to be extended to our business, or if new limitations were to be adopted, it could materially adversely affect our business and prospects” for more details). If we or our sellers fail to comply with laws and regulations applicable to regulated products, our Buyer Website and Shopping App may be blocked or restricted, which may adversely affect our business, financial condition and results of operations.

We may be required to obtain further permits or licenses with respect to our existing and new Fintech solutions in the future, our existing Fintech licenses may be revoked and we may be subject to the increased level of scrutiny from Russian regulatory authorities.

We are actively developing a number of Fintech initiatives, which we believe should be complementary to our primary e-commerce business and are aimed at increasing our average order value, the retention of our buyers and the loyalty of our sellers, as well as at lowering acquisition costs while processing payments. In the recent years, we have already introduced a number of Fintech offerings, such as OZON.Card (our OZON-branded debit card) and OZON.Installment (our buyer-facing lending option). See Item 4.B “Information on the Company—Business Overview—Our Business Operations—Financial Services Offerings.”

The regulation of Fintech solutions in Russia is currently being developed, and we are currently expanding, and may continue to expand, into new Fintech and Fintech-related solutions. For example, in February 2021, we established a microfinancing company, which was included in the register of microfinancing companies maintained by the CBR in May 2021. In May 2021, we acquired Oney Bank LLC (then renamed Ozon Bank), through which we obtained a basic banking license, and in March 2022, we obtained a general banking license for our newly created Ecom Bank from the CBR. In April 2023, Ozon Bank and Ecom Bank completed a reorganization by way of accession of Ozon Bank to Ecom Bank. Ecom Bank, the surviving entity in the reorganization, was renamed Ozon Bank and is a holder of a general banking license. The basic banking license was annulled by the CBR.

The banking license gives us the capability to structure and launch a variety of financial service products, tailored towards the needs of our buyers and sellers, to facilitate and provide greater support for transactions made by them on our platform. Although we do not believe we are required to hold or obtain any other permits or licenses in order to offer our Fintech solutions, since legislation around these offerings is continuing to evolve and we may continue to expand into Fintech and may be subject to different interpretation by the Russian regulatory authorities in the future, there can be no assurance that we will not be required to obtain any such permits or licenses in the future with respect to any of our current or future Fintech solutions. If we fail to obtain such permits or licenses, currently or in the future, or fail to comply with any such permits or licenses we obtain, our business, prospects, financial condition and results of operations could be materially and adversely affected.

In addition, banking and microfinance activities are heavily regulated in Russia by governmental organizations, particularly the CBR. The requirements imposed by relevant laws and regulations from the CBR may limit our Fintech activities and increase our costs of doing business. A breach of the applicable regulations could expose us to potential liability and other sanctions, including the loss of our banking license. If the CBR suspends or to revokes our banking license or excludes our microfinance organization from the register of microfinancing companies, it will substantially limit our ability to offer Fintech products and services, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

Increasing scrutiny and evolving expectations from investors, customers, regulators and others regarding environmental, social or governance (“ESG”) matters may adversely affect our reputation or otherwise adversely affect our business, financial condition or results of operations.

The business environment in which we operate is continually evolving, and ESG-related risks may directly or indirectly impact our business, shareholders and the achievement of our strategy. Regulators have imposed, and we expect regulators to continue to impose, ESG-related rules and guidance, which may burden us with compliance costs or expose us to new or additional risks. Moreover, certain organizations that provide information to investors have developed ratings, which may be based on different metrics from organization to organization, for evaluating companies on their approach to ESG matters. Unfavorable ratings, regardless of their veracity, may lead to negative investor sentiment. If we, our suppliers and other participants in our supply chain are unable to meet the standards imposed by, or expectations of, the regulators or ESG-rating organizations, or our investors, buyers and business partners, or effectively implement our core ESG initiatives we may be exposed to adverse publicity, reputational harm or loss of customer or investor confidence. In addition, the ongoing geopolitical crisis surrounding Ukraine may make it difficult for the companies primarily operating in Russia, including ourselves, to comply with the existing and prospective ESG-related regulations, further introduce ESG initiatives and allocate funds to ESG-related spending, which could adversely affect our business, financial condition or results of operations. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs” for more details.

We rely on many counterparties and third-party providers in our business, and the nonperformance or loss of a significant third-party provider through bankruptcy or otherwise, could adversely affect our operations.

We are party to agreements with third-party companies in various aspects of our business model, including the lessors of our fulfillment centers, various logistics providers and hardware and software suppliers. If we are unable to maintain or renew leases, or lease other suitable premises on acceptable terms, or if our existing leases are terminated for any reason (including in connection with a lessor’s loss of its ownership rights to such premises), or if a lease’s terms (including rental charges) are revised to our detriment, such matters could have a material adverse effect on our business, financial condition and results of operations. If these third parties do not comply with applicable legal or administrative requirements, were to default on their obligations, or if we lose a significant provider through bankruptcy or otherwise, we may be subject to litigation with these third-party providers, fail to renew the respective agreements on commercially acceptable terms and, therefore, face the need of switching to new third-party providers, who may provide services on less favorable terms, and any of the following of which could have a material adverse effect on our business, prospects, financial condition and results of operations. In addition, sanctions imposed on Russia in response to the geopolitical crisis surrounding Ukraine and cautious approach of many international businesses, including hardware and software suppliers, to such sanctions may affect (and have in the past affected) the ability or willingness of such businesses to transact with us as a Russia-based business. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs.”

Our business may be adversely affected if counterparties that we contract with who are registered as individual entrepreneurs or self-employed persons, which includes couriers, are classified as our employees.

A number of counterparties that we contract with are independent individuals registered either as individual entrepreneurs or self-employed persons. We are not obliged to withhold personal income tax and pay social contributions when paying these counterparties for the services that they provide to us. Persons registered as individual entrepreneurs pay personal income tax and social insurance contributions themselves.

Recently, a special tax regime for taxation of professional income was established, which allows individuals to register under a simplified “self-employed” tax regime. This special tax regime, which was developed and promoted by the Russian tax authorities to formalize relationships between legal entities and freelance individuals, provides for taxation of individuals who sell goods, perform work or provide services without having an established labor relationship and who are working as freelancers; for example, couriers, taxi drivers, IT specialists, translators and tutors. A self-employed person’s annual income cannot exceed ₽2.4 million in order for this special tax regime to apply. Individuals who obtain self-employed status are exempt from paying personal income tax and obligatory social insurance contributions and instead pay 4% or 6% tax through a mobile application on the receipt of their income. Provisions regulating this new “self-employed” special tax regime, however, remain largely untested by the Russian tax authorities and there is limited court practice due to insufficient period of implementation.

One of our Russian operating subsidiaries engages such independent individuals who are registered as self-employed and individual entrepreneurs (for example, couriers that deliver customer orders). As such, based on current legislation, we do not consider these individuals to be members of our staff, and we are not obliged to pay or withhold any taxes or contributions when making payments to them. As a result, there is a risk that the courts may, upon the demand of the Russian authorities or the relevant individual entrepreneurs or self-employed individuals, reclassify our relationships with such individuals as labor relationships if such individuals are regularly and predominantly deemed working for the benefit of our Russian subsidiaries in the capacity of employees, which could result in the assessment of additional taxes, penalties and other liabilities on our Russian subsidiaries and could adversely affect our business, prospects, financial condition and results of operations.

Our business may be affected by the developments in the sphere of international taxation.

In January 2019, the Organization for Economic Co-operation and Development (the “OECD”) announced its further work in respect of the Base Erosion and Profit Shifting project and is focusing on two “pillars” to address the tax challenges arising from the digitalization of the economy. On October 8, 2021, more than 130 countries, including Russia, signed the Statement on a Two-Pillar Solution.

Pillar I sets out a framework for the reallocation of a portion of residual profits of large multinational enterprises (“MNEs”) to market jurisdictions where goods or services are used or consumed: MNEs with an annual global turnover above €20 billion and meeting certain profitability conditions will be subject to rules allocating 25% of profits in excess of a 10% profit margin to certain market jurisdictions. We do not expect to fall within the scope of Pillar I.

Pillar II includes two interlocking rules: (i) the Income Inclusion Rule and (ii) the Undertaxed Payment Rule (“UTPR”). Both rules are focused at developing a global minimum tax rate of at least 15% for MNEs (with revenue over €750 million), and together, they form the Global anti-Base Erosion (“GloBE”) rules. Additionally, a treaty-based rule will permit source jurisdictions to impose limited withholding taxes on low-taxed related party payments, which will be creditable against the GloBE rules tax liability. Pillar II is expected to be brought into national legislation of the EU members by the end of 2023, to be effective from 2024. This could give an impetus for other jurisdictions considering this initiative to speed up the process of implementation of Pillar II into national laws. Presently, it is difficult to assess if and to what extent such changes, if implemented, will impact our tax burden. Although we do not expect these changes to have a significant effect on our business, further developments and unexpected implementation mechanics could adversely affect our effective tax rate or result in higher cash tax liabilities.

We operate in Russia, Belarus, Kazakhstan, and Kyrgyzstan which are members of the Eurasian Economic Union (“EEU”). Although VAT rules are regulated by the EEU treaty, there may be cases when domestic legislation of some of the EEU member states may contradict the EEU regulations. The EEU treaty tax provisions are currently being reconsidered; however, until the new EEU tax rules are adopted and tax laws of EEU member states are aligned with the new EEU tax rules, we may be subject to double VAT taxation in respect of some of our operations in those EEU member states. This inconsistency between domestic tax laws and EEU rules could adversely affect our business, prospects, financial condition and results of operations.

In addition, to the extent we expand into new jurisdictions, we will also be subject to the taxation regime of such jurisdictions.

We may have difficulties with sourcing the products we sell through our Direct Sales business.

Besides connecting, and facilitating transactions between, buyers and sellers on our Marketplace, we sell products directly to our buyers through our Direct Sales business. In our Direct Sales business, we purchase and hold inventory of a selection of products in our fulfillment centers to be sold directly to buyers, and therefore are dependent on our suppliers we source the products from. There can be no assurance that we will be able to timely replace any of our suppliers in case their products are no longer available to us or otherwise procure the supply of products to our facilities to be sold through the Direct Sales business, which may adversely affect our business, prospects, financial condition and results of operations. For example, our ability to source products from suppliers outside of Russia may be adversely impacted by customs or other import restrictions. In addition, our Direct Sales business may also be materially and adversely affected by the ongoing geopolitical crisis surrounding Ukraine as some of our suppliers may cease or have already ceased to transact with Russia-based businesses or discontinued their operations in Russia, which is likely to reduce our inventory available for the sale through the Direct Sales business and cause delays in delivery if we experience the respective delays from our suppliers. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs” for more details.

Failed deliveries, excessive returns and other logistics issues may adversely affect our business and prospects.

We offer our buyers a variety of delivery options, including delivery by courier, collection from the offline network of pick-up points and parcel lockers, as well as Russian Post and other third-party delivery service providers. If a delivery fails to reach the buyer, we may continue bearing the inventory costs or be required to engage with the seller for the return of the undelivered product. Even if the product is successfully delivered to the buyer and delivery is verified, we and our sellers are required, in most cases, to allow buyers to return products within a certain period of time after delivery. We also face the risk that third-party logistics providers and couriers might misappropriate inventory or mishandle packages, and we may struggle to verify delivery if the packages are delivered without obtaining buyer signatures or otherwise duly identifying the buyer. When products are delivered without verification, we may be required to deliver a duplicate product or return the money paid for the product. A significant increase in failed deliveries, excessive or mistaken returns or other logistics issues may force us to allocate additional resources to mitigating these issues and may adversely affect our business, prospects, financial condition and results of operations.

A significant disruption in internet access, telecommunications networks or our IT platform may cause slow response times or otherwise impair our customers’ experience, which may in turn reduce traffic to our mobile apps and websites and significantly harm our business, financial condition and results of operations.

Our e-commerce business is critically dependent on the performance and reliability of Russia’s internet infrastructure, accessibility of bandwidth and servers to our service providers’ networks and the continuing performance, reliability and availability of our platform. Telecommunications capacity constraints in Russia may impede the development of our business and may limit internet usage more generally.

As our data centers and all of our backup centers are located in Moscow, we are heavily reliant on Russia’s internet infrastructure to operate our business. Since these centers are located, along with the office of our key operating subsidiary, in Moscow, our operations may also be negatively impacted by disruptions to the power grid, natural disasters or other events affecting the Moscow region. Similarly, if there were any system outages due to any internet delays, disruptions, natural disasters or any other issues with the infrastructure in Russia more generally, this would have a material adverse impact on our business and results of operations depending on the length and severity of the issue.

We have in the past and may continue to experience mobile app and website disruptions, outages and other website performance problems for a variety of reasons, including infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of buyers accessing our websites simultaneously and denial of service or fraud or security attacks. In addition, we may experience slow response times or system failures due to a failure of our information storage, retrieval, processing and management capabilities. Slow response times or system failures may make our platform less attractive to sellers or buyers. If we experience technical problems in delivering our services over the internet, we could experience reduced demand for our services and lower revenue.

Significant disruptions in internet access or in the internet generally mentioned above could significantly harm our business, prospects, financial condition and results of operations.

Computer viruses, undetected software errors and hacking may cause delays or interruptions on our systems and may reduce the use of our services and damage our brand reputation.

Our online systems, including our websites, mobile apps and our other software applications, products and systems, could contain undetected errors, or “bugs,” that could adversely affect their performance. While we regularly update and enhance our websites and IT platform and introduce new versions of our mobile apps, the occurrence of errors in any such updates or enhancements may cause disruptions in the provision of our services and may, as a result, cause us to lose market share, and our reputation and brand, business, prospects, financial condition and results of operations could be materially and adversely affected.

In addition, computer viruses and cybersecurity compromises have in the past, which to date have not been material, and may in the future cause delays or other service interruptions on our systems. However, we may be subject to hacking attempts by malicious actors who seek to gain unauthorized access to our information or systems or to cause intentional malfunctions, loss or corruption of data or leakages of our buyers’ and sellers’ personal data. While we employ various antivirus and computer protection software in our operations, we cannot provide any assurance that such protections will successfully prevent all hacking attempts (whether through the use of “denial of service” attacks or otherwise) or the transmission of any computer viruses which, if not prevented, could significantly damage our software systems and databases, cause disruptions to our business activities (including to our e-mail and other communications systems), result in security breaches and the inadvertent disclosure of confidential and/or sensitive information and hinder access to our platform.

We may incur significant costs to protect our systems and equipment against the threat of, and to repair any damage caused by, computer viruses and hacking. Moreover, if a computer virus or other compromise of our systems becomes highly publicized, our reputation could be materially damaged, resulting in a decrease in the use of our products and services. The inadvertent transmission of computer viruses could also expose us to liability and legal action, which may adversely affect our business, financial condition and results of operations.

Privacy and data protection concerns and related claims, including evolving government regulation in the area of consumer data privacy or data protection, could adversely affect our business and results of operations.

We collect, process, store and transmit large amounts of data, including confidential, proprietary, business and personal information. The effectiveness of our technology, including our artificial intelligence (“AI”) systems, and our ability to offer our products and services to sellers and buyers depends on the collection, storage and use of data concerning customer activity, including personally identifying data. Our collection and use of this data for targeted advertisements, product recommendations, data analytics and outreach communications might raise privacy and data protection concerns that could negatively impact the demand for our products and services. We use third-party technology and systems for encryption, employee email, content delivery to buyers and other functions. Although we have developed systems and processes designed to protect seller and buyer information and prevent and mitigate the impact of data breaches and other fraudulent activities (whether directly through us or indirectly through our sellers or buyers), such measures cannot guarantee the security of such data and may be circumvented or fail to operate as intended.

We may also be subject to claims or regulatory sanctions for actions of third parties that are beyond our control, such as the misrepresentation of information or other inappropriate or unlawful actions with respect to use and processing of data, including buyer and seller data. In our seller agreements and buyer contracts, we have specific clauses where we explicitly exclude any responsibility for actions by third parties or for the accuracy of information they provide to us, and such actions are violations of our terms and conditions to misuse our services. Nevertheless, there can be no assurance that these preventative measures will fully protect us from such actions, which, regardless of merit, may force us to participate in time-consuming and costly litigation or investigations, divert significant management and staff attention, and damage our reputation.

The Russian Parliament and Government enacted consumer data privacy and data protection laws and regulations on, among other things, the solicitation, collection, transfer, processing and use of personal data. Regulation of this nature could reduce demand for our products and services if we fail to design or develop our operations in a way to be compliant with the applicable regulations. The failure to prevent or mitigate data loss, theft, misuse or other security breaches or vulnerabilities affecting our or our sellers’ and buyers’ systems, could expose us or our customers and other counterparties to the risk of loss, disclosure or misuse of such information, could result in liability and expose us to litigation and regulatory action (including under privacy or data protection laws), deter buyers or sellers from using our platform and services, and otherwise harm our business and reputation.

In Russia, as a general rule, in order to process an individual’s personal data, we must obtain the individual’s consent. This consent may be revoked at any time and, if revoked, the relevant personal data must be deleted. We do not collect or perform any operations on our customers’ personal data, except when such collection or processing is in accordance with our terms of services and privacy policies which are available on our websites. Subject to several exemptions, processors of personal data, including ourselves, must register as personal data operators with Roskomnadzor, the Russian regulatory authority for data protection. Roskomnadzor, among its other functions, ensures compliance with the data protection legislation and conducts scheduled and unscheduled audits to ensure such compliance, maintains the registers of personal data operators, infringers of personal data processing requirements and blocked websites, and initiates legal proceedings in case of violations and if required, the imposition of fines or other penalties.

Under Russian law, processors of personal data are obliged to record, systematize, accumulate, store, clarify (update, modify) and retrieve Russian citizens’ personal data using databases located only within Russia (subject to a limited number of exceptions), as well as to provide, upon request, Roskomnadzor with information regarding the location of databases containing the personal data of Russian citizens. A failure to comply with these legal requirements may result in restrictions on our operations, including restricting access to our Buyer Website and including OZON in the special register for infringers of personal data processing requirements, as well as significant fines (up to ₽6 million or ₽18 million for repeat violations). Roskomnadzor also conducts scheduled and unscheduled audits to ensure compliance with the personal data legislation and may initiate legal proceedings in case of violations.

Some of the legal restrictions may be subject to broad interpretation. For example, no standard definition of a “database” exists within the law and, under definitions contained in the Russian Civil Code (the “Civil Code”), a variety of documents and virtual objects (for example, Microsoft Office files) may be referred to as a database. Our information resources, including personal data, may be stored in a virtual environment (as part of our own cloud computing), which, in the absence of clear regulations on cloud computing, may significantly hinder the determination of the exact location of each virtual object and make it more difficult for us to provide the required information on the location within the required period.

Although we believe we comply with these regulations, any change in the regulations or in their interpretation could make it costly, difficult or impossible for us to comply with them and may require us to incur significant efforts and resources. In particular, in March 2021, the Russian Law “On Personal Data,” dated July 27, 2006 (as amended, the “Personal Data Law”), was amended to restrict the usage of publicly available personal data, and all data operators processing publicly available personal data are required to comply with certain terms and restrictions, including obtaining a consent in a specific form. We cannot assure you that our current practices on the processing of data will continue to be unaffected by the new restrictions. In addition, Russia continues to develop its legal framework, including with respect to data privacy and data protection. See Item 3.D “Key Information—Risk Factors—Risks Relating to Russia—The ongoing development of the Russian legal system and Russian legislation, including the legal framework governing Fintech and e-commerce industries, data protection and related internet services, creates an uncertain environment for investment, business activity and our operations.” Any uncertainties in the current Russian legislation on data privacy and data protection may be interpreted adversely to us by the Russian regulatory authorities and courts, and we may face liability for collection, processing, storage and transmission of personal data as a result, which could have a material adverse effect on our business, prospects, results of operations and financial condition. In addition, as our business continues to grow and expand, we may become subject to personal data protection laws of other jurisdictions and will therefore need to comply with the respective legislation, which may require additional expenses.

Due to the legislative changes proposed by the Russian Ministry of Digital Development, Communications and Mass Media and Roskomnadzor, starting from March 2023 all transborder flows of personal data are subject to new rules as provided for in the Personal Data Law. First, there will be no longer need to obtain consent from a data subject or refer to any additional legal ground for processing in order to share personal data with a recipient residing in a country which is not a party to the Convention for the Protection of Individuals with Regard to Automatic Processing of Personal Data or is not otherwise deemed by Roskomnadzor as adequate in terms of data protection measures. Instead, should the need to transfer personal data abroad arise, we will have to either inform Roskomnadzor of such transfer (if the intended recipient country is adequate in terms of data protection measures) or receive its direct permission (if the intended recipient country is not adequate in terms of data protection measures). Additionally, Roskomnadzor is now able to proactively ban transfer of personal data to certain countries if it finds transfer to such countries contrary to constitutional order, public defense and state security or in order to protect economic and financial interests of the Russian Federation, etc. This may adversely affect our ability to attract new sellers from foreign countries to our Marketplace and may therefore reduce our future profits.

If we were found in violation of any privacy or data protection laws or regulations, this could lead to legal liability, and our business may be materially and adversely affected, and we may have to change our business practices or potentially our products and services. In addition, such laws and regulations could impose significant costs on us and could make it more difficult for us to use our current technology. If a data breach were to occur, or if a violation of privacy or data protection laws and regulations were to be alleged, our platform may be perceived as less desirable, and our reputation, business, prospects, financial condition and results of operations could be materially and adversely affected.

Real or perceived inaccuracies of our internally calculated operating metrics or industry and competitive information provided by third parties may harm our reputation.

Most of our operating metrics included in this Annual Report, and which we regularly communicate to the market, are calculated by us internally. We also provide industry, market and competitive information in this Annual Report based on studies and reports of third parties.

There may be inherent challenges in calculating some of these measures, for example, GMV incl. services, the number of active buyers, and the number of orders. In addition, our measures of calculating operating metrics may differ from estimates published by third parties or from similarly titled metrics used by our competitors or other parties due to differences in methodology. For instance, we calculate GMV incl. services in Annual Report as the total value of orders processed through our platform, as well as revenue from services to our buyers, sellers and other customers, such as delivery, advertising and other services. GMV incl. services is inclusive of value added taxes, net of discounts, returns and cancellations. We have historically calculated and presented to market participants GMV incl. services both inclusive and net of value added tax. We believe our calculation of GMV incl. services in this Annual Report provides investors with a useful tool to understand the value of orders processed through our platform and services rendered to our buyers and sellers. However, if buyers, sellers or investors do not perceive our operating metrics or information on our competitive position in the market to be accurate, or if we discover material inaccuracies in our operating metrics, our reputation could be materially and adversely affected.

We may use open source code in a manner that could be harmful to our business.

We use open source code, which is subject to licensing, in connection with our technology and services. Original developers of open source code do not provide warranties for the use of their source code. The use of such open source code may ultimately require us to replace certain code used in our platform, pay a royalty to use certain open source code or discontinue certain aspects of our platform. As a result, the use of open source code could have a material adverse effect on our business, prospects, financial condition and results of operations.

We may be subject to product liability claims when people or property are harmed or damaged by the products that are sold on our platform.

We are exposed to product liability or food safety claims relating to personal injury or illness, death or environmental or property damage caused by the products that are sold by us or through our Marketplace, and we do not maintain any insurance with respect to such product liability. As the products offered by us or through our Marketplace are manufactured by third parties, we have only limited control over the quality of these products. In addition, we cannot always effectively prevent our sellers from selling harmful or defective products on our Marketplace, which could cause death, disease or injury to our buyers or damage their property. We may be seen as having facilitated the sale of such products and may be forced to recall such products. Under our Direct Sales model, where we act directly as seller, we may also have to recall harmful products.

Although we require that our sellers only offer products that comply with the existing product safety rules and monitor such compliance, we may not be able to detect, enforce or collect sufficient damages for breaches of such agreements. In addition, any negative publicity resulting from product recalls or the assertion that we sold defective products could damage our brand and reputation. Any material product liability, food safety or other claim could have an adverse effect on our business, prospects, results of operations and financial condition.

We may be subject to material litigation.

We have been involved in litigation relating to contract disputes, third-party intellectual property infringement claims, employment and tax-related cases and other matters in the ordinary course of our business. As our business expands, we may face an increasing number of such claims, including those involving high amounts of damages. As a public company, we may face additional exposure to claims and lawsuits inside and outside Russia.

The outcome of any claims, investigations and proceedings is inherently uncertain, and regardless of the outcome, defending against these claims could be both costly and time consuming, and could significantly divert the efforts and resources of our management and other personnel. An adverse determination in any such litigation or proceedings could result in damages as well as legal and other costs, limit our ability to conduct business or require us to change the manner in which we operate, which would have a material adverse effect on our business, prospects, financial condition and results of operations.

We are subject to payments-related risks.

We accept payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), installment payments under OZON.Installment, gift cards, direct debit from a buyer’s bank account, consumer invoicing and card and cash payment upon delivery. We are currently subject to, and may become subject to additional, regulations and compliance requirements (including obligations to implement enhanced authentication processes that could result in significant costs and reduce the ease of use of our payments products). For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs. In addition, as we make payments to a number of third parties, including our sellers, any disruptions with such outbound payments (including, without limitation, as a result of the geopolitical crisis surrounding Ukraine) can adversely affect our business and reputation and subject us to payment default risks.

We rely on third parties to provide certain payment methods and payment processing services, including the processing of credit cards, debit cards and promotional financing. In each case, it could disrupt our business if these processing services become unwilling or unable to provide these services to us, or if the services are offered on less favorable terms in the future.

We have experienced in the past fraudulent payment activities on our platform, which to date have not been material to us, and may continue to experience these fraudulent activities in the future. Although we have implemented various measures to detect and reduce the occurrence of fraudulent payment activities on our platform, there can be no assurance that such measures will be effective in combating fraudulent transactions or improving overall satisfaction among our buyers and sellers.

We are also subject to payment card association operating rules, such as the Payment Card Industry Data Security Standard (“PCI DSS”), including data security rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it costly, difficult or impossible for us to comply. Failure to comply with these rules or requirements, as well as any breach, compromise or failure to otherwise detect or prevent fraudulent activity involving our data security systems, could result in our being liable for card issuing banks’ costs, subject to fines and higher transaction fees and the loss of the ability to accept credit and debit card payments from our buyers, process electronic funds transfers or facilitate other types of online payments, and our business and results of operations could be adversely affected.

We may be impacted by fraudulent or unlawful activities of sellers, which could have a material adverse effect on our reputation and business and may result in civil or criminal liability.

The law relating to the liability of online service providers is still evolving in Russia, and governmental agencies have in the past and could in the future require changes in the way online businesses are conducted. Our standard agreement with the sellers on our Marketplace provides for bi-monthly or daily payments to sellers for the products sold rather than immediate payment after the sale of a product, although a seller may request payment for products sold earlier than a scheduled bi-monthly payment date. Our standard form agreement with our sellers provides that we will deduct the return charges from our regular payments to sellers if a buyer makes a return. These provisions are designed to prevent sellers from collecting payments, fraudulently or otherwise, in the event that a buyer does not receive the products they ordered or when the products received are materially different from the seller’s descriptions, and to prevent sellers on our Marketplace from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others or otherwise violating our product requirements. If our sellers circumvent or otherwise fail to comply with these provisions, it could harm our business or damage our reputation, and we could face civil or criminal liability for unlawful activities by our sellers.

If we fail to adequately protect our intellectual property rights, our business, prospects, financial condition and results of operations could be adversely affected.

We rely on registered trademarks and confidentiality agreements to protect our intellectual property rights. However, we may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or diminish the value of our trademarks and other proprietary rights.

We are not always able to discover or determine the extent of any unauthorized use of our proprietary rights. Actions taken by third parties that license our proprietary rights may materially diminish the value of our proprietary rights or reputation. The protection of our intellectual property may require the expenditure of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property do not always adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or other intellectual property rights.

The Russian legal system and courts do not have a reputation for protecting intellectual property rights as vigorously as jurisdictions such as the United States. Companies operating in Russia thus face a higher risk of intellectual property infringement compared to companies operating in certain other jurisdictions. Furthermore, the validity, application, enforceability and scope of protection of intellectual property rights for many internet-related activities, such as internet commercial methods patents, are uncertain and still evolving, which may make it more difficult for us to protect our intellectual property, and our business, prospects, financial condition and results of operations could be adversely affected.

We may be subject to intellectual property infringement claims brought against us by others, which are costly to defend and could result in significant damage awards.

We rely, to some extent, on third-party intellectual property, such as licenses to use software to operate our business and certain other copyrighted works. Due to the nature of our business operations, we may from time to time be subject to material intellectual property claims connected with violations of the exclusive rights of third parties. We also expect to be exposed to a greater risk of being subject to such claims in light of growing competition in the market and an increasingly litigious business environment in Russia. A number of internet, technology, media and

patent-holding companies own or are actively developing patents covering e-commerce and other internet-related technologies, as well as a variety of online business models and methods. We believe that these parties will continue to take steps to protect these technologies, including, but not limited to, seeking patent protection in certain jurisdictions. As a result, disputes regarding the ownership of technologies and rights associated with e-commerce and other online activities are likely to arise in the future. In addition, we use certain open source code, and the use of open source code is often subject to compliance with certain license terms, which we may inadvertently breach. See Item 3.D “Key Information—Risk Factors—Risks Relating to Our Business and Industry—We may use open source code in a manner that could be harmful to our business.”

Although our employees are instructed to avoid acts that would infringe the intellectual property of others, we cannot be certain that our products, services and brand identifiers do not or will not infringe on valid patents, trademarks, copyrights or other intellectual property rights held by third parties. We may incur substantial expenses in responding to and defending against infringement claims, regardless of their veracity. Such diversion of management time and expenses, and the potential liability associated with any lawsuit, may cause significant harm to our business, prospects, financial condition and operations. A successful infringement claim against us could result in significant monetary liability, such as being liable for license fees, royalty payments, lost profits or other damages, or material disruption of our business. Similarly, the owner of the intellectual property may obtain injunctive relief to prevent us from making further use of certain technology, software or brand identifiers. If the amount of such payments is significant or if we are prevented from incorporating certain technology or software into our products or services or using our brand identifiers without hindrance, our business, prospects, financial condition and results of operations could be materially and adversely affected.

Due to sanctions imposed by the United States, the European Union and the United Kingdom followed by withdrawal of a significant amount of international brands from the Russian market, the Russian Government partly legalized parallel import to mitigate the damage associated with a potential shortage of goods in Russia. We seek through every means to fully comply with applicable laws and regulations, however there can be no assurance that goods on our Marketplace, imported to the territory of Russia in order of the parallel import, will not cause violation of third parties’ intellectual property rights. Therefore, we may from time to time be subject to material intellectual property claims connected with violations of exclusive rights.

We are exposed to the risk of inadvertently violating anti-corruption laws, anti-money laundering laws and other similar laws and regulations.

We operate and conduct business across the entirety of Russia and other EEU countries, where instances of fraud, money laundering, bribery and corruption have been reported to have taken place. We have policies and procedures designed to assist with compliance with applicable laws and regulations, and upon becoming a public company in the United States, we will be subject to the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”). The FCPA prohibits providing, offering, promising or authorizing, directly or indirectly, anything of value to government officials, political parties or political candidates for the purposes of obtaining or retaining business or securing any improper business advantage.

We maintain internal compliance policies and procedures, but we cannot provide any assurance that these policies and procedures will be strictly followed at all times and that they will effectively detect and prevent all violations of the applicable laws and every instance of fraud, money laundering, bribery and corruption. We also cannot provide any assurance that potential violations of our internal compliance procedures will be uncovered through our procedures or that violations of the applicable anti-bribery or money laundering laws, including the FCPA, will not occur. We have internal audit, compliance, security and other procedures in place, which are designed to prevent instances of fraud, money laundering, bribery and corruption. However, despite these controls and procedures, there can be no assurance that through these and other procedures we use we will timely and effectively catch any violations of our internal compliance procedures or any violations of laws, including those related to fraud, money laundering, bribery and corruption. We are thus exposed to potential civil or criminal penalties or associated investigations under the relevant applicable laws which may, if not successfully avoided or defended, have an adverse impact on our business, prospects, financial condition or results of operations. Similarly, actual findings or mere allegations of such violations could negatively impact our reputation and limit our future business opportunities, which may cause our reputation, financial condition and results of operations to be materially and adversely affected.

We depend on talented employees, including our senior management and IT specialists, to grow, operate and improve our business, and if we are unable to retain and motivate our personnel and attract new talent, we may not be able to grow effectively.

Our success depends on our continued ability to identify, hire, develop, motivate and retain talented employees. Our ability to execute and manage our operations efficiently is dependent upon contributions from all of our employees. Competition for senior management and key IT personnel is intense, and the pool of qualified candidates is relatively limited. From time to time, some of our key personnel may choose to leave our company for various reasons, including personal career development plans, alternative compensation packages, geopolitical situation or other reasons. An inability to retain the services of our key personnel or properly manage the working relationship among our management and employees may expose us to legal or administrative action or adverse publicity, which could adversely affect our reputation, business, prospects, financial condition and results of operations. The current geopolitical circumstances have created additional challenges for our team, both in Russia and internationally. We have taken steps to retain and motivate our team, but there is a risk of increased personnel turnover which could have an adverse effect on our operations.

Training new employees with no prior relevant experience could be time consuming and requires a significant amount of resources. We may also need to increase the compensation we pay to our employees from time to time in order to retain them. If competition in our industry intensifies, it may be increasingly difficult for us to hire, motivate and retain highly skilled personnel due to significant market demand. If we fail to attract additional highly skilled personnel or retain or motivate our existing personnel, we may be unable to pursue growth, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

In addition, equity awards have historically formed a significant portion of the regular compensation of our management team. The decrease in the value of the ADSs and current suspension of trading on Nasdaq has largely eliminated our ability to rely on equity awards for retention and motivation purposes. As a result, the cash component of our employee compensation may increase in the medium term, which may lead to an increase in our operating expenses.

Employee misconduct is difficult to determine and detect and could harm our reputation and business.

We face a risk that may arise out of our employees’ lack of knowledge or willful, negligent or involuntary violations of laws, rules and regulations or other misconduct. Misconduct by employees could involve, among other things, the improper use or disclosure of confidential information (including trade secrets), embezzlement or fraud, any of which could result in regulatory sanctions or fines imposed on us, as well as cause us serious reputational or financial harm. We have experienced fraudulent misconduct by employees in the past, which to date has not caused any material harm to our business. However, any such further misconduct in the future may result in unknown and unmanaged risks and losses. We have internal audit, compliance, security and other procedures in place that are designed to monitor our employees’ conduct. However, despite these controls and procedures there can be no assurance that we will discover employee misconduct in a timely and effective manner, if at all. It is not always possible to guard against employee misconduct and ensure full compliance with our risk management and information policies. The direct and indirect costs of employee misconduct can be substantial, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

We do not have and may be unable to obtain sufficient insurance to protect ourselves from business risks.

The insurance industry in Russia relative to that in other jurisdictions is not as mature, and access to many forms of insurance coverage common in other jurisdictions is limited. In 2022, supply in insurance market has shrunk after many foreign insurance companies left Russian market, and the process of getting insurance became more complicated due to increased risks. We currently maintain insurance coverage for our fulfillment centers and sorting centers (and our merchandise and sellers’ goods located at these facilities), Ozon fresh’s equipment and assets, and third-party liability in respect of damage caused by our property. However, we do not have full coverage of business interruption risks, product liability or third-party liability in respect of environmental damage arising from accidents on our property or relating to our operations. Unless we obtain complete insurance coverage, there is a risk of irrecoverable loss or destruction of certain assets, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Our business may be adversely affected by the COVID-19 pandemic.

In December 2019, a novel strain of coronavirus was reported in Wuhan, China, which spread throughout the world and was classified as a global pandemic. The COVID-19 pandemic has had a significant impact on the economies of most countries, including Russia, and has led to the closure of borders, restrictions on movement, the suspension of manufacturing and production and the cancellation of mass events. During the spring of 2020, the Russian Government introduced a number of recommendations and restrictions, including declaring a “period of non-working days,” which limited business activity, as well as other restrictions on the movement of citizens and a limitation on most commercial activities. These restrictions differed in scope across the Russian regions and were subject to change. Some of these restrictions were re-introduced, or other similar restrictions were introduced, during subsequent surges in COVID-19 infections in the fall of 2020 and the summer of 2021, however, the majority of these restrictions were lifted in 2022.

We believe that the COVID-19 pandemic and the various measures implemented by the Russian Government and regional authorities, which included social distancing, stay-at-home orders and limited quarantine measures, had a catalyzing effect on the e-commerce industry in Russia and contributed to the increased demand for our products and services. However, it is uncertain what effect the pandemic will have on our business in future periods if there are further COVID-19 surges. 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 be adversely impacted going forward.

An increase in the share of international e-commerce companies in the Russian market or changes in measures aimed at restricting international e-commerce may adversely affect our business and results of operations.

We face competition from companies engaged in international e-commerce. If such companies were to substantially increase their market share in Russia, our business and results of operations could be adversely affected.

In addition, in recent years, Russia has imposed a number of measures aimed at supporting the development of domestic e-commerce businesses. For example, in 2019 and 2020, the cost of products being sent to Russia from abroad that may be imported free of customs duty was reduced from €1,000 to €200 per mailing pack. In March 2022, the threshold price was temporarily increased to €1,000 until October 1, 2022. See Item 4.B “Information on the Company—Business Overview—Regulatory Environment—Customs Regulation.” This and any other changes aimed at incentivizing buyers to shop on Russian e-commerce platforms appear beneficial for our growing business. However, if such regulations are abolished or the threshold for the cost of goods that may be imported free of customs duty is changed to earlier or higher levels, we may face an increased level of competition from a large number of foreign competitors. We may, in response to any increased competition from foreign competitors, be compelled to increase our expenditure on implementing strategies to make ourselves more competitive and boost our brand recognition so as to remain an attractive platform to our buyers and sellers. If we are unsuccessful in implementing our strategies in response to increased competition from foreign competitors, our business, prospects, financial condition and results of operations could be materially and adversely affected.

If we were treated as a passive foreign investment company, investors in the ADSs subject to U.S. federal income tax could have material adverse tax consequences.

Special U.S. federal income tax rules apply to U.S. investors owning shares of a passive foreign investment company (“PFIC”). If we were treated as a PFIC for any taxable year during which a U.S. Holder (as defined in Item 10.E “Additional Information—Taxation—U.S. Federal Income Tax Considerations for U.S. Holders”) holds the ADSs, the U.S. Holder could be subject to certain material adverse tax consequences upon a sale, exchange, or other disposition of the ADSs, or upon certain distributions by us. While we believe that we were not a PFIC for U.S. federal income tax purposes in 2021, because this determination is made annually at the end of each taxable year and is dependent upon a number of factors, some of which are beyond our control and may be impacted by external events, including the geopolitical crisis surrounding Ukraine (see Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs”) or the halting of trading of the ADSs on Nasdaq (see Item 3.D “Key Information—Risk Factors—Risks Relating to the Ownership of the ADSs—Trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq”), we are unable to make a determination as to whether we will be a PFIC in 2022 or any other taxable year. U.S. Holders should consult their own tax advisors about the potential application of the PFIC rules to their investment in the ADSs. For a more detailed discussion of PFIC tax consequences, see Item 10.E “Additional Information—Taxation—U.S. Federal Income Tax Considerations for U.S. Holders—Passive Foreign Investment Company Considerations.”

Risks Relating to Russia

The adoption, maintenance and expansion of international embargo, economic, trade or other sanctions against Russia may have a material adverse effect on our business, financial condition and results of operations.

The United States, the European Union, the United Kingdom and other countries have imposed economic sanctions on Russian individuals and entities, including “blocking” sanctions and asset freezes that block the property of certain Russian Government officials and entities, private individuals and Russian companies; sanctions limiting access to capital markets, for example, limitations on provision of debt or equity financing for named participants operating in the Russian energy, financial, defense, communication and transportation sectors, including named Russian financial state-owned institutions, or all Russian persons in general in case of the UK; sanctions prohibiting use of foreign correspondent accounts and the use of SWIFT services for certain financial institutions; comprehensive territorial sanctions that prohibit a number of commercial activities of U.S., EU and UK persons, including virtually all dealings within the jurisdiction of the U.S. with, in or involving sanctioned countries or territories, including Crimea, Sevastopol and the self-proclaimed People’s Republics of Donetsk and Luhansk; and broad export and import restrictions on Russia. See also Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—We engage in de minimis activities relating to Crimea, and these activities could potentially impede our ability to raise funding in international capital markets or otherwise materially adversely affect our business and reputation.”

These sanctions have been prolonged, extended and expanded in recent years. In addition, the United States also maintains so-called “secondary” sanctions threatening the imposition of a range of sanctions against non-U.S. parties engaging in, among other things, targeted activities involving Russia, certain sectors of the Russian economy or sanctioned persons outside of the U.S. jurisdiction. While the actual imposition of U.S. secondary sanctions requires affirmative action by the U.S. administration and is thus in practice discretionary, the impact of potential sanctions can be as severe as designations for blocking sanctions.

In January 2018, pursuant to the Countering America’s Adversaries through Sanctions Act of 2017, the U.S. administration presented the U.S. Congress with a report on senior Russian political figures, “oligarchs” and “parastatal” entities (the “Section 241 Report”). The list included 96 of the wealthiest Russian businessmen, including Mr. Vladimir Evtushenkov, who beneficially owned 49.2% in Sistema PJSFC (“Sistema”), one of our principal shareholders, as of the date of this Annual Report. On April 13, 2022, Mr. Vladimir Evtushenkov was included in the UK asset freeze sanctions list prohibiting dealings with funds or economic resources belonging to, owned, held or controlled by him and making funds or economic resources available to him. As set forth in Schedule 13D/A filed by Sistema with the SEC on April 28, 2022, Mr. Vladimir Evtushenkov ceased to be a controlling shareholder and member of the board of directors and any other management body of Sistema.

On April 11, 2023, Mr. Felix Evtushenkov, who beneficially owns 15.2% in Sistema, was included in the UK asset freeze sanctions list. Mr. Felix Evtushenkov was a member of the board of directors of the Company from March 9, 2022 until April 11, 2023. His position with our board of directors was automatically terminated as soon as the sanctions were imposed on him personally by the UK.

See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs” for more details related to the sanctions arising out of the geopolitical crisis surrounding Ukraine. Given the ongoing geopolitical crisis surrounding Ukraine, it is possible that the U.S., the EU, the UK and other countries could expand or tighten the current sanctions on Russia further. However, it is difficult to predict with any level of certainty the extent to which any such expansion or tightening of the current sanctions would occur. Any change in U.S., EU, UK and other countries’ sanctions policies toward Russia, including if we, or any subsidiary, director or member of our senior management, become targeted by sanctions, may have a material adverse effect on our business, financial condition and results of operations and on the value and trading of the ADSs.

In response to Russia’s recognition of the self-proclaimed People’s Republics of Donetsk and Luhansk and the geopolitical crisis surrounding Ukraine, the U.S., the EU, the UK and other countries imposed sanctions against Russia and Russian entities and individuals.

In particular, since February 21, 2022, the U.S. imposed multiple sanctions on Russia, including:

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additional prohibitions on Russian sovereign debt and transactions involving the CBR, the Russian National Wealth Fund and the Russian Ministry of Finance;

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blocking sanctions on leading Russian financial institutions, including Sberbank, VTB Bank, Alfa-Bank, VEB.RF (Vnesheconombank) and Promsvyazbank, Russian Direct Investment Fund and its management company, numerous defense-related entities, as well as blocking sanctions on Russian Government officials, entities, businessmen and managers with close ties to the Russian Government;

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additional prohibitions related to new debt and equity of major Russian state-owned enterprises and large privately-owned financial institutions;

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restrictions on Russia’s access to controlled U.S. goods, software and technologies, particularly items that Russia relies on for its defense, aerospace and maritime industries, including semiconductors, computers, telecommunications, information security equipment, lasers and sensors, as well as restrictions on the export, re-export and transfer (in-country) to and within Russia of a variety of items necessary for refining oil;

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prohibitions on the export, re-export, sale or supply from the U.S. or by a U.S. person to any person in Russia of luxury goods, dollar denominated banknotes and other items or any category of services as may be determined;

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prohibitions on the import to the U.S. of Russian crude oil, petroleum, liquefied natural gas, coal and other energy products, seafood and preparation thereof, alcoholic beverages and non-industrial diamonds, as well as any other products of Russian origin as may be determined; and

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prohibitions on new investments in the Russian energy sector and any other sector of the Russian economy as may be determined and a general prohibition on new investments in Russia by U.S. persons.

On March 11, 2022, OFAC also issued new guidance affirming that Russia-related sanctions apply to all prohibited transactions, regardless of whether a transaction is denominated in traditional fiat currency or virtual currency.

Since February 23, 2022, the EU has introduced multiple tranches of sanctions on Russia, including:

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expanded capital market restrictions, restrictions preventing Russian persons from accessing certain financial services within the EU such as deposit restrictions (including crypto-asset wallets) exceeding a certain threshold, the exclusion of certain banks from SWIFT, and a prohibition on physically bringing euros and other EU member state currencies into Russia;

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asset freezes and travel bans targeting prominent Russian businessmen, Russian politicians, Russian banks, Russian state-owned institutions and others;

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trade restrictions prohibiting export to Russia or for use in Russia of: aircraft, oil refinery, gas liquefaction- and energy sector-related products; advanced technology products; luxury goods; goods that contribute to enhancement of Russian industrial capacities; and comprehensive restrictions on dual-use goods;

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further trade restrictions, prohibiting the import into the EU of iron and steel products, coal and certain other fossil fuels as well as goods that “generate significant revenues for Russia” (for instance, wood, cement, fertilizers and aluminum) that originate in Russia or have been exported from Russia;

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prohibitions of all transactions with certain state-owned entities unless they are strictly necessary for the purchase, import or transportation of natural gas and oil, including refined petroleum products;

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investment restrictions, including restrictions on public financing for trade or investment in Russia; a restriction on investing in, participating or contributing to projects that are co-financed by the Russian Direct Investment Fund; a restriction on investing in entities operating in the energy sector in Russia; a prohibition on awarding or continuing the execution of public procurement contracts to or with a Russian person or entity owned by it or acting at the direction of such Russian person or its subsidiary; and a prohibition on providing any state support to Russian entities that are over 50% publicly owned or controlled;

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prohibitions on the provision of credit ratings and access to any subscription services related to credit rating activities to Russian nationals, residents and entities;

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media restrictions prohibiting the broadcast or contribution to the broadcast of a number of key Russian stations;

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transport restrictions resulting in Russian air carriers being banned from operating within the EU, a prohibition to enter EU ports of the EU for any vessel registered under the Russian flag and a prohibition on road transport undertakings established in Russia to transport goods by road within the EU with certain exceptions; and

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general trust services restrictions that prohibit providing particular services to trusts or similar arrangements with settlors or beneficiaries being a Russian person, an entity owned by a Russian person or controlled by a Russian person or its subsidiary or acting at their direction.

The UK has also introduced a number of Russian sanctions that are to some extent similar to the EU restrictions but so far are narrower in terms of trade and financial services restrictions. These sanctions include:

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capital market restrictions in relation to shares and transferable securities issued by, and the provision of new loans to, Russian companies or companies owned by individuals who are resident or located in Russia on or after March 1, 2022, correspondent banking restrictions and restrictions on dealing with Russian sovereign debt and the CBR;

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expansion of the existing asset freeze list to include a number of Russian businessmen, including Mr. Vladimir Evtushenkov, Russian politicians and Russian banks, including Sberbank, VTB Bank, Alfa Bank, Gazprombank and Rosselkhozbank;

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trade restrictions for aircrafts, technology products, dual-use and military goods and technology, oil refining, quantum computing and advanced materials goods and technology and luxury goods; and

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aviation restrictions and restrictions on Russian vessels entering UK ports; and

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prohibition on the import and acquisition of iron and steel products which are consigned from Russia or originate from Russia.

A further expansion of sanctions on Russia and Russian entities and individuals may have an adverse effect on our ability to expand and grow our business and raise financing to fund the development of our business.

Our Russian subsidiaries have entered into financing and other transactions with Russian state-owned financial institutions and their affiliates that have subsequently been designated under U.S., EU and UK sanctions, including Sberbank and VTB Bank that have recently been subject to blocking sanctions. Blocking sanctions on Sberbank and VTB may hinder the ability of such subsidiaries to raise financing and transact with them. While such transactions with financial institution under non-blocking sanctions are not currently prohibited, if the scope of sanctions is further expanded and all Russian banks become subject to blocking sanctions, our ability to raise financing and transact with such parties may be hindered. Such sanctions may materially adversely affect our ability to raise financing and our business.

In addition, since March 2019, several Russian book publishers, including Litres Holding Limited (“Litres”), in which we hold a 42.27% interest, and our former controlling shareholder, have been subject to sanctions imposed by Ukraine, which have blocked Ukrainian users from accessing our services and websites and those of Litres.

Investing in securities of issuers in emerging markets, such as Russia, generally involves a higher degree of risk than investments in securities of issuers from more developed countries and carries risks that are not typically associated with investing in more mature markets.

Emerging markets, such as Russia, are subject to greater risks than more developed markets, including significant legal, economic, tax and political risks. Investors into businesses operating in the emerging markets should be aware that these markets are subject to greater risk and should note that emerging economies, such as the economy of Russia, are subject to potential instability and any information set out in this Annual Report may become outdated relatively quickly.

Financial or economic crises, whether global or limited to a single large emerging market country, tend to adversely affect prices in the capital markets of most or all emerging market countries, as investors move their money to more stable, developed markets. Over the past few years, the Russian capital markets have been highly volatile, including due to the impact of global economic slowdowns, sharp declines in oil prices, deteriorating conditions in the Russian economy itself, the COVID-19 pandemic, geopolitical disputes or international sanctions. As has happened in the past, various adverse factors, such as significant ruble depreciation; capital outflows; worsening of various economic indicators; geopolitical disputes, such as the geopolitical crisis surrounding Ukraine and imposition of additional trade and economic sanctions against Russia in connection therewith; or an increase in overall perceived risks associated with investing in emerging economies, could hinder foreign investment in Russia and adversely affect the Russian economy. In addition, during times of economic crises and market volatility, businesses that operate in emerging markets can face severe liquidity constraints, as available funding may often be reduced or withdrawn. Generally, investments in emerging markets are only suitable for sophisticated investors who fully appreciate the significance of the risks involved, and investors are urged to consult with their own legal and financial advisers before making an investment in the ADSs. See also Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs” and Item 3.D “Key Information—Risk Factors—Risks Relating to Ownership of our ADSs—Trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq.”

Economic instability in Russia could adversely affect our business.

Our primary operation market is Russia. As a result, our business and results of operations are dependent on the economic conditions in Russia. Over the last two decades, the Russian economy has experienced or continues to experience at various times:

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significant volatility in its GDP;

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the impact of international sanctions and the increased geopolitical tensions between Russia and the Western countries over the geopolitical crisis surrounding Ukraine;

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increased tensions with other regions and countries;

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high levels of inflation;

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increases in, or high, interest rates;

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sudden price declines in oil and other natural resources;

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instability in the local currency market;

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budget deficits;

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the continued operation of loss-making enterprises due to the lack of effective bankruptcy proceedings;

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capital flight; and

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significant increases in poverty rates, unemployment and underemployment.

The Russian economy has been subject to abrupt downturns in the past. Furthermore, following the imposition of economic sanctions by the United States and the EU and the decline of oil prices, in 2015, Russia’s GDP declined by 2.0% in real terms, according to the Russian Federal Statistics Service (“Rosstat”). In 2019, Russia’s GDP grew by 2.2% in real terms, according to Rosstat. In 2020, Russia’s GDP declined by 2.7% in real terms, according to Rosstat, followed by a GDP increase by 5.6% in real terms in 2021. In 2022, Russia’s GDP decreased by 2.1% in real terms, according to Rosstat. However, any expected growth of Russia’s GDP in the future may not be achieved due to generally unfavorable economic conditions or geopolitical factors, in particular, the current global macroeconomic environment and the ongoing geopolitical crisis surrounding Ukraine, which is likely to have a significant adverse impact on the Russian economy (see Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs”), and this consequently may materially adversely affect our business, prospects, financial condition and results of operations.

The Russian economy has often been impacted by actions taken by governments outside of Russia and by political risk within Russia, including the economic sanctions imposed by the United States, European Union, United Kingdom and other countries, as well as by tensions between Russia and other countries and regions. Ethnic, religious, historical and other divisions have, on occasion, given rise to tensions and, in certain cases, acts of terrorism and military conflicts, both within Russia or with neighboring countries. If existing conflicts, tensions or terrorist activities, or threats thereof, remain unresolved, or new disturbances or hostilities arise, this could have significant political and economic consequences, and we may be unable to access capital, or access capital on terms reasonably acceptable to us, and the use of and access to our products and services in particular areas may be impacted, which may have a material adverse effect on our business, prospects, financial condition and results of operations.

In 2015, the CBR initiated a period of dovish monetary policy with gradual reductions in the key interest rate. However, in March 2021, the CBR began to reverse its monetary policy, and the key interest rate in Russia increased from 4.25% to 8.50% over 2021. As of the date of this Annual Report, the key interest rate was at 7.5% (see Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs”). Fluctuations in the key interest rate may affect our ability and the ability of our sellers and other counterparties to enter into loan arrangements on favorable terms and adversely affect the general spending power of our buyers.

The ongoing development of the Russian legal system and Russian legislation, including the legal framework governing e-commerce and Fintech industries, data protection and related internet services, creates an uncertain environment for investment, business activity and our operations.

Currently, the Russian domestic legislation system includes the Constitution of the Russian Federation of 1993, the Civil Code and other federal laws, decrees, orders and regulations issued by the President, the Russian Government and federal ministries, which can be complemented by regional and local rules and regulations, adopted in certain spheres of regulation. Several fundamental Russian laws have only recently become effective and many are still evolving. Consequently, certain areas of judicial practice are not yet fully settled and are therefore sometimes difficult to predict.

The current regulatory environment of Russia may result in inconsistent interpretations, applications and enforcement of the law. Among the possible risks of the current Russian legal system are:

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inconsistencies among federal laws, decrees, orders and regulations and regional and local laws, rules and regulations;

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limited judicial and administrative guidance on interpreting Russian legislation;

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the absence of established court practice, including in interpreting new principles of Russian legislation, particularly business and corporate law;

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substantial gaps in the regulatory structure due to the delay or absence of implementing legislation; and

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a high degree of unchecked discretion on the part of governmental and regulatory authorities.

There are also legal uncertainties relating to property rights in Russia. During Russia’s transformation to a market economy, the Russian State Duma has enacted legislation to protect property against expropriation and nationalization, and, if property is expropriated or nationalized, the legislation provides for fair compensation. There is, however, no assurance that such protections would be enforced.

Notwithstanding recent reforms of the Russian court system, the continued evolution of the Russian legal system could affect our ability to enforce our contractual rights or to defend ourselves against legal action, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

In addition, as e-commerce and the internet continue to develop on a global scale and, in particular, in Russia, new laws and regulations relating to the use of the internet in general and the e-commerce sector in particular may be adopted. These laws and regulations may further govern the collection, use and protection of data, buyer protection, online payments, pricing, anti-bribery, tax, website contents and other aspects relevant to our business. The adoption or modification of laws or regulations relating to our operations could adversely affect our business by increasing compliance costs, including as a result of confidentiality or security breaches in case of non-compliance and administrative burdens. We must comply with applicable regulations in Russia, and any non-compliance could lead to fines and other sanctions imposed by the Russian Government authorities.

Over the recent years, a number of legislative initiatives related to the internet were submitted to the Russian State Duma, the lower house of the Russian Parliament, and a few of them were further signed into laws. For example, in December 2018, a draft law aimed at ensuring the safe and sustainable functioning of the internet in Russia was submitted for consideration to the Russian State Duma and, in April 2019, the draft law was adopted. The law requires Russian telecommunications operators to install new equipment to ensure that the Russian internet functions autonomously in case the global internet is not operating in Russia, and introduces the notion of the Russian national domain zone. In addition, in July 2021, the Russian authorities adopted several laws introducing new requirements and regulations for the companies operating in the technology and internet sectors. In particular, new laws establish a general legal framework for the calculation of the internet audience of various websites and services and provide for the creation of a unified system for accounting of online advertising in 2022. See Item 3.D “Key Information—Risk Factors—Risks Relating to Russia—We may be subject to existing or new advertising legislation that could restrict the types of advertisements we serve, which could result in a loss of advertising revenue.” It is currently unclear how these laws might affect our operations, and there can be no assurances that these initiatives may not negatively affect our business or operations. Furthermore, we may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure our websites are accessible within an acceptable load time, which may adversely affect our business.

In addition, a number of legislative initiatives, including a draft law regulating big data, are reportedly under consideration. If any such initiatives applicable to the use of the internet and the e-commerce sector are adopted, we may be required to comply with the new requirements, and such compliance may require us to introduce further security protection measures or make further costly investments in our IT infrastructure, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Inflation in Russia may increase our costs and exert downward pressure on our operating margins.

The Russian economy has experienced periods of high inflation since the early 1990s. The consumer price index, which is a key measure representing inflation in Russia, grew year-on-year by 8.4% in 2021 and by 4.9% in 2020, according to Rosstat. In 2022, the level of inflation increased even more than in 2021 and amounted to 12.0%, according to Rosstat and there can be no assurance that it will not further increase in the future, including as a result of sanctions and restrictions imposed by foreign countries on Russia in response to the ongoing geopolitical crisis surrounding Ukraine. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs.” We tend to experience inflation-driven increases in some of the costs of our operations, such as salaries that are linked to, or impacted by, the general price level in Russia. In the event that we experience cost increases resulting from inflation, our operating margins may decrease if we are unable to pass these increases on to our buyers. In such circumstances, our business, prospects, financial condition and results of operations could be materially adversely affected.

Crime and corruption could disrupt our ability to conduct our business and, thus, materially adversely affect our operations.

The stability, effectiveness, fairness, transparency and strength of government institutions, rule of law and business practices in Russia have been varied and have changed along with political and economic changes over the years. The local and international press has from time to time reported on cases of corruption in Russia, including the bribery of officials for initiating investigations by state agencies, obtaining licenses or other permissions or obtaining the right to supply products or services to state agencies. Press reports have also described instances in which government officials engaged in selective investigations and prosecution to further the commercial interests of certain government officials or certain companies or individuals. Additionally, published reports indicate that various Russian media published slanted articles in return for payment. The proliferation of organized or other crime, corruption and other illegal activities that disrupt our ability to effectively conduct our business or any claims that we have been involved in corruption, or illegal activities, even if false, that generate negative publicity could have a material adverse effect on our business, prospects, financial condition and results of operations.

Findings of failure to comply with existing laws or regulations, unlawful, arbitrary or selective government action or increased governmental regulation could have a material adverse effect on our business, prospects, financial condition and results of operations.

Our operations are subject to regulation by various government entities and agencies at both the federal and regional levels. Our subsidiaries also maintain a number of licenses, including a general banking license maintained by our Ozon Bank (ex-Ecom Bank). Russian regulatory authorities often exercise considerable discretion in matters of enforcement and interpretation of applicable laws, regulations and standards, the issuance and renewal of licenses and permits and in monitoring licensees’ compliance with license terms, which may lead to inconsistencies in enforcement.

Russian authorities have the right to, and frequently do, conduct periodic inspections of operations and properties of Russian companies throughout the year. Any such future inspections may conclude that we have violated applicable laws, decrees or regulations. In addition, we are subject to the Russian consumer protection legislation (see Item 4.B “Information on the Company—Business Overview—Regulatory Environment—Consumer Protection and Commerce Regulation”) and may face potential claims of our buyers under these rules. Findings that we failed to comply with existing laws, regulations or directions resulting from government inspections may result in the imposition of fines, penalties or more severe sanctions, including the suspension, amendment or termination of our licenses or permits or in requirements that we suspend or cease certain business activities, or in criminal and administrative penalties being imposed on our officers, any of which would have a material adverse effect on our reputation, business, prospects, financial condition and results of operations.

In addition, the Russian tax authorities have been reported to have aggressively brought tax evasion claims relating to Russian companies’ use of tax optimization schemes, and press reports have speculated that these enforcement actions have been selective. Also, in the past, Russian authorities have prosecuted some Russian companies, their executive officers and their shareholders on tax evasion, fraud and related charges. In some cases, the result of these prosecutions has been the prolonged prison detention or imposition of prison sentences for individuals and significant fines or claims for unpaid taxes. If selective or arbitrary government action is directed at us, any of our executive officers, directors or shareholders, our business, prospects, financial condition and results of operations could be materially and adversely affected. Any such actions, even if addressed to others, may materially and adversely affect the investment environment and overall consumer and entrepreneurial confidence in Russia.

New legislation on “foreign agents” may impose additional restrictions and obligations on our business.

The new unified legislation on “foreign agents” became effective in December 2022. In accordance with this new legislation, virtually any company that has a website and foreign counterparties (such as clients or suppliers) may fall within the definition of a “foreign agent” and thus be required to comply with the requirements of this new law. Among the requirements are self-registration in the “foreign agents” register, provision of information on “foreign agent” status to shareholders and employees, marking all of materials (including on the Internet) with special marking and keeping separate accounting records for funds from foreign sources. Among the legal consequences of violation of the new legal regime are court liquidation and limitation of access to information resources of a “foreign agent”.

If existing limitations on foreign ownership were to be extended to our business, or if new limitations were to be adopted, it could materially adversely affect our business and prospects.

Russian law restricts foreign (non-Russian) ownership or control of companies involved in certain important activities in Russia.

For instance, from March 1, 2023 only Russian individuals or Russian companies (being companies by more than 50% controlled by the Russian Federation or its constituent bodies or municipalities and/or Russian individuals and persons controlled by them) can act as owners of classifieds businesses in Russia. This limitation could affect our plans to develop our services for online advertisement and therefore our Group profit.

Currently, e-commerce technology, the internet and online advertising are not industries that are otherwise specifically covered by this legislation, but proposals have from time to time been considered by the Russian Government and the Russian Parliament, which, if adopted, would impose foreign ownership or control restrictions on certain large technology or internet companies.

For instance, in early 2023 Russia has proposed a draft agreement on electronic commerce in the EEU. The authors suggest imposing restrictions on the operations of marketplaces with a share of foreign ownership above 49% or with more than 1/3 foreigners in the board of directors. Depending on the implementation of this agreement into national laws of Russia and other countries-members of the EEU, these restrictions may significantly affect business of the Group in Russia and such other countries.

As another example, a draft law which was proposed in mid-2019 was aimed at restricting foreign ownership of “significant” internet companies. A number of parties, including representatives of the Russian Government, identified concerns with the draft law, and the proposal was withdrawn in November 2019. Another draft law, which was proposed in December 2020, is aimed at restricting foreign ownership of audio and video services, including online cinemas.

If any similar legislation imposing limitations on e-commerce businesses were to be adopted and were applicable to us, it could have a material adverse effect on our business and prospects.

Participant liability under Russian corporate law could cause us to become liable for the obligations of our subsidiaries.

Our principal operating subsidiary, Internet Solutions LLC, is a limited liability company organized in Russia. Russian law generally provides that participants in a limited liability company are not liable for that company’s obligations and risk only the loss of their investment. This rule does not apply, however, when one legal entity is capable of determining decisions made by another entity. The legal entity capable of determining such decisions is called the effective parent entity (osnovnoye obshchestvo), and the legal entity whose decisions are capable of being so determined is called the effective subsidiary entity (docherneye obshchestvo). The effective parent bears joint and several liability for transactions concluded by the effective subsidiary in carrying out business decisions if:

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the effective parent gives binding directions to the effective subsidiary or provides consent to the relevant transactions entered into by the subsidiary; and

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the right of the effective parent to give binding instructions is based on its share in the subsidiary’s capital, or is set out in a contract between such entities or stems from other circumstances.

In addition, under Russian law, an effective parent is secondarily liable for an effective subsidiary’s debts if an effective subsidiary becomes insolvent or bankrupt as a result of the action of an effective parent. In these instances, the other participants of the effective subsidiary may claim compensation for the effective subsidiary’s losses from the effective parent that causes the effective subsidiary to take action or fail to take action knowing that such action or failure to take action would result in losses. We could be found to be the effective parent of our subsidiaries, in which case we would become liable for their debts, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

The Russian banking system remains underdeveloped, the number of creditworthy banks in Russia is limited and another banking crisis could place severe liquidity constraints on our business.

Instability in the Russian banking sector may adversely affect the Russian economy, which may in turn negatively impact our business. Increases in the level of underperforming loans in recent years have generally weakened the level of capital for banks, which, in turn, may lead them to shrink their loan portfolios, and as a result, debt funding may become less available for individuals and businesses. Recessionary trends in the Russian economy and stricter enforcement by the CBR affected a number of notable Russian banks, which were acquired, liquidated or taken over for financial rehabilitation by other Russian banks, the Deposit Insurance Agency or the CBR in recent years.

Serious deficiencies, instability or crises in the Russian banking sector, or other problems experienced by Russian banks, including deterioration in their credit portfolios, difficulties in accessing liquidity, meaningful financial losses or reduction of profitability, falling capital ratios, suspension or revocation of their licenses or takeovers for subsequent liquidation or rehabilitation, resulted in the past, and may result in the future, in significant adverse consequences for our business. For example, if we were to seek debt financing from Russian banks in the future and a banking crisis were to re-occur in Russia, our ability to access such financing may be limited in such circumstances. In addition, the instability of the Russian banking sector may also impede the development of our product offerings and Fintech initiatives. Any such factors could have a material adverse effect on our business, prospects, financial condition and results of operations.

The trading price of our ADSs may not be indicative of the value at which such securities would trade if they were traded on Nasdaq. Moreover, our listing on MOEX may be adversely impacted if our securities are delisted from Nasdaq.

On November 19, 2020, we obtained the approval of MOEX in relation to the listing and admission of the ADSs to trading on MOEX under the symbol “OZON,” but no assurance can be given that we will be able to continue to maintain such listing. Trading of securities on MOEX was generally suspended from February 28 to March 23, 2022, and trading of the ADSs on MOEX was resumed on March 29, 2022. However, sales of securities by international investors on MOEX are currently significantly limited. The trading value of the ADS on MOEX may therefore be different from the value at which they would trade if all of the ADSs were available for trading on both Nasdaq and MOEX.

If the Nasdaq appeals process described above is unsuccessful, Ozon’s ADSs will be delisted from trading on Nasdaq. This may lead to adverse implications for Ozon’s MOEX listing. On March 15, 2023 MOEX made a public statement that trading in our ADSs would continue on MOEX in the event of our delisting from Nasdaq. In addition, there is currently a general moratorium on delistings from MOEX for foreign companies whose securities were admitted to public trading in Russia where such securities were delisted on foreign exchanges which is currently effective until October 1, 2023. However, the effectiveness of our continued listing would depend on various matters, including the maintenance of our ADS program and depositary arrangements.

See Item 3.D “Key Information—Risk Factors—Risks Relating to Ownership of our ADSs—Trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq” and Item 3.D “Key Information—Risk Factors—Risks Relating to Russia—If the depositary for our ADS facility terminates the deposit agreement, this may materially adversely affect the holders of our ADSs.”

If the depositary for our ADS facility terminates the deposit agreement, this may materially adversely affect the holders of our ADSs.

The depositary for our ADS facility, The Bank of New York Mellon, has the right to terminate the deposit agreement at any time on 90 days’ notice, provided that the depositary has given us a resignation notice and a successor depositary has not been appointed within 60 days. In addition, in the event that our ADSs are ultimately delisted from Nasdaq and are not listed on another stock exchange, nor is there a symbol available for over-the-counter trading of ADSs in the U.S., the depositary will have the right to terminate the deposit agreement on 90 days’ notice, whether or not a resignation notice has been previously given by the depositary.

In light of the current geopolitical circumstances, we can provide no guarantee that the depositary will not resign or will not exercise its right to terminate the deposit agreement if we are delisted from Nasdaq and other relevant conditions are met. If the depositary resigns, it may be difficult or impossible to identify a successor depositary that is able to manage our ADS program at the same level as the current depositary, or at all.

If the current depositary seeks to terminate the ADS facility, the holders of ADSs will be entitled to convert them into our ordinary shares. The mechanics and timing relating to how the ADSs will be converted into the underlying shares remain uncertain for investors who hold their ADSs through the Russian National Settlement Depository. Any ADSs that have not been converted into ordinary shares before termination of the deposit agreement will be cancelled upon such termination, and the depositary will be entitled to sell the underlying ordinary shares. Any such sales may take a substantial amount of time and be at prices materially below the intrinsic value of our ordinary shares. The mechanics and timing relating to how proceeds from such sale will be distributed to the former holders of the ADSs remain unclear.

Regulatory authorities in Russia could determine that we hold a dominant position in our markets, which would result in limitations on our operational flexibility and may adversely affect our business, financial condition and results of operations.

The Russian Law on Protection of Competition, dated July 26, 2006 (as amended, the “Competition Law”), generally prohibits any concerted action or agreement between competitors or coordination of business activities of competitors that results or may result in the fixing or maintenance of prices and various other types of anticompetitive behaviors. In a number of court cases, Russian courts have found concerted actions where competitors acted in a similar way within the same period of time, although, arguably, there have been legitimate economic reasons for such behavior and the behavior was not aimed at restriction of competition. Therefore, there is a risk that we may be found in violation of the Competition Law if our market behavior vis-à-vis our sellers or buyers is viewed as being similar to behavior of our competitors and perceived by the Federal Antimonopoly Service (the “FAS”) as a purported restriction of competition. See Item 4.B “Information on the Company—Business Overview—Regulatory Environment—Antimonopoly Regulation.”

The Competition Law also prohibits any form of unfair competition, including, among other things, through defamation or otherwise. Such broad interpretations of the Competition Law may result in the imposition of behavioral limitations on our activities by the FAS, may limit our operational flexibility and may result in civil liability, administrative liability for us and our management and even criminal liability for our management.

Although to date we have only received what we consider to be routine inquiries from the FAS, we have not engaged with the FAS to define our market position. At some point in the future, the FAS may conclude that we hold a dominant position in one or more of our markets in Russia. If the FAS were to do so, this could result in heightened scrutiny for review and possible limitations on our future acquisitions and the FAS may demand that we obtain clearance from them prior to contractually agreeing to make any substantial changes to our standard agreements with sellers and agents. Further, under certain circumstances, we may be deemed to be abusing a dominant market position simply by refusing to conclude a contract with certain third parties. Any abuse of a dominant market position could lead to administrative penalties and the imposition of fines calculated by reference to our revenue. In addition, some legislative initiatives under discussion may be applicable to us as an e-commerce business. See Item 4.B “Information on the Company—Business Overview—Regulatory Environment—Antimonopoly Regulation.”

We believe that our operations comply with Russian antimonopoly regulations. However, investigations that may be conducted by the FAS in the future, into our operations or transactions, and the imposition of related penalties, sanctions or conditions on us, could have a material adverse effect on our business, prospects, financial condition and results of operations.

We may be subject to existing or new advertising legislation that could restrict the types of advertisements we serve, which could result in a loss of advertising revenue.

Russian law prohibits advertising of certain products, such as uncertified products or tobacco products, and heavily regulates advertising of certain other products and services, such as alcohol, pharmaceuticals and children food. Advertisements for certain products and services, such as financial services, as well as advertisements aimed at minors and some others, must comply with specific rules and must in certain cases contain particular disclaimers.

Further amendments to advertising regulations may impact our ability to provide some of our services or limit the type of advertising services we may offer. However, the application of these laws to parties that merely facilitate or distribute advertisements (as opposed to marketing or selling the relevant product or service) can be unclear. Pursuant to our terms of service, we require that our advertisers have all required licenses or authorizations. If parties engaging our advertising services do not comply with these requirements, and these laws were to be interpreted to apply to us, or if our advertising serving system failed to include the necessary disclaimers, we may be exposed to administrative fines or other sanctions and may have to limit the types of advertisers we serve.

In 2021, amendments that require major internet and e-commerce companies, including ourselves, to allocate 5% of website advertising capacities to social advertisements were adopted. It is expected that further amendments to advertising regulations will be adopted in the nearest future which will expand requirements to the share of website commercial capacities (not only advertising) allocated to social advertisements. This could adversely affect advertising services that we offer and could lead to a decrease in advertising revenue and total revenue of the Group.

The regulatory framework in Russia governing the use of behavioral targeting in online advertising is unclear. If new legislation were to be adopted or the current legislation were to be interpreted to restrict the use of behavioral targeting in online advertising, our ability to enhance the targeting of our advertising could be significantly limited, which could impact the relevance of the advertisements distributed by us, reduce the number of parties engaging our services and ultimately decrease our advertising revenue, which would have a material adverse effect on our business, prospects, financial condition and results of operations.

Since September 2022, advertisers, advertising distributors and advertising system operators, including ourselves, are required to submit information about advertisements to the Unified Online Advertising Register, maintained by Roskomnadzor. The information is transmitted to the supervisory authority through an advertising data operator – an owner of a computer program authorised by Roskomnadzor to establish that advertisements have been disseminated on the Internet. Currently no special liability provisions have been introduced in the Code on Administrative Offences in connection with these new requirements, however we expect that further amendments will be adopted soon.

Due to the fact that several main Russian TV channels owned by National Advertising Alliance (NRA), a company controlling television advertising distribution in Russia, were designated SDN under the US sanctions regime, market demand on TV advertising could be significantly limited, which could lead to a decrease in our advertising revenue. Also, in light of the geopolitical crisis surrounding Ukraine a significant number of international brands were restricted to invest in advertising in Russia. These restrictions may also negatively affect our advertising revenue.

One or more of our subsidiaries may be forced into liquidation due to formal non-compliance with certain requirements of Russian law, which could have a material adverse effect on our business, financial condition and results of operations.

Certain provisions of Russian law may allow a court to order liquidation of a Russian legal entity on the basis of its formal non-compliance with certain requirements in connection with its formation or reorganization or during its operation. There have been cases in the past in which formal deficiencies in the establishment process of a Russian legal entity or non-compliance with provisions of Russian law have been used by Russian courts as a basis for liquidation of a legal entity. For example, in Russian corporate law, negative net assets calculated on the basis of the Russian Accounting Standards as of the end of the financial year following the second or any subsequent financial year of a company’s operation can serve as a basis for a court to order the liquidation of the company, upon a claim by governmental authorities (if no decision is taken to liquidate the company). Many Russian companies have negative net assets due to very low historical asset values reflected on their Russian balance sheets. However, their solvency (i.e., their ability to pay debts as they come due) is not otherwise adversely affected by such negative net assets. In addition, according to Russian court practice, formal non-compliance with certain requirements that may be remediated by a non-compliant legal entity should not itself serve as a basis for liquidation of such legal entity.

Ozon Technologies LLC, our subsidiary, had negative net assets as of December 31, 2021 and Ozon Invest LLC had negative net assets as of December 31, 2022. Under the relevant Russian legislative requirement, a company may be forced into liquidation after having negative net assets for two consecutive years, and we therefore believe that our subsidiaries in Russia are currently fully compliant with these corporate legal requirements. Also, we note that there was introduced a temporary alleviation of the rules described above, namely, Russian limited liability companies and joint-stock companies are not obliged to liquidate or decrease their charter capital if their net assets are below amount of their charter capital as of the end of 2022 and 2023 years. Nonetheless, weaknesses in the Russian legal system create an uncertain legal environment, which makes the decisions of Russian courts or governmental authorities difficult, if not impossible, to predict. If involuntary liquidation were to occur, then we may be forced to reorganize the operations we currently conduct through the affected subsidiaries. Any such liquidation could lead to additional costs, which could materially adversely affect our business, financial condition and results of operations.

Risks Relating to Our Organizational Structure

The rights of our shareholders are governed by Cyprus law and our articles of association and differ in some important respects from the typical rights of shareholders under U.S. state laws.

Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in Cyprus. The rights of our shareholders and the responsibilities of members of our board of directors under Cyprus law and our articles of association are different than under the laws of some U.S. state laws. For example, existing holders of shares in Cypriot public companies are entitled as a matter of law to pre-emptive rights on the issue of new shares in that company (if shares are issued for cash consideration). The pre-emptive rights, however, may be disapplied by our shareholders at a general meeting for a specified period, and our shareholders have disapplied the pre-emptive rights with respect to certain issuances of shares from the date of completion of our initial public offering, which was completed in November 2020, for a period of five years.

In addition, our articles of association include other provisions, which differ from provisions typically included in the governing documents of most companies organized in the U.S., including that our shareholders are able to convene an extraordinary general meeting as provided in section 126 of the Cyprus Companies Law Cap. 113 and vote upon the matters which by law are reserved to the shareholders or are provided in the articles of association. As a result of the differences described above, our shareholders may have rights different to those generally available to shareholders of companies organized under U.S. state laws, and our board of directors may find it more difficult to approve certain actions.

Under Cyprus law, generally the company, rather than its shareholders, is the proper claimant in an action in respect of wrongdoing done to the company or where there is an irregularity in the company’s internal management.

Notwithstanding this general position, Cyprus law provides that a court may, in a limited set of circumstances, allow a shareholder to bring a derivative claim (an action in respect of and on behalf of the company) against the wrongdoers. The aggrieved may proceed to the institution of a derivative action, provided that the alleged wrongdoing cannot be remedied by a simple majority vote of the shareholders of the company and that the alleged wrongdoers are in control of the company, so that the company which is essentially the proper claimant cannot claim itself.

Grounds which warrant the institution of a derivative claim may include:

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a complaint that the company’s affairs are being conducted in an oppressive manner to some of the company’s shareholders (including the aggrieved);

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the ultra vires and illegal use of control in decision-making by the board of directors or a shareholder majority;

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violation of the voting procedures of the company that require a special majority;

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violation of personal rights of a shareholder, referring to personal rights provided for by the company’s constitution or the applicable law; and

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fraud on the minority by the controlling majority. Fraud has been interpreted to include behaviors of gross negligence against the minority, especially where the wrongdoers are found to have personally gained benefits from their negligent behavior.

Remedies commonly sought by a derivative action include, among other things:

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the cancellation of the illegal or ultra vires acts or decisions taken by the company;

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damages for breach of duties by the directors owed to the company or negligence by the company’s officers or breaches of the company’s constitutional documents or applicable law (damages in this respect are paid to the company not to the aggrieved); and

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tracing and recovery of property misappropriated by the persons in control of the company’s management or third parties.

In certain circumstances, such as when fraud on the minority is alleged, the derivative action will be based on the principles of equity; therefore, the court will need to be satisfied that the claimant has come to court with “clean hands” (without fault and without withholding any crucial information), and that the action has been bona fide filed and serves the company’s interests, that there is no alternative means to remedy the wrongdoing. As such, the above would need to be met in order for the court to allow the action to proceed and determine which remedy, if any, is more appropriate to be granted, depending on the individual circumstances of each case.

In addition to a derivative action, where there is a complaint that the company’s affairs are being conducted in an oppressive manner to some of the company’s shareholders, the aggrieved may file a petition to the Cypriot court pursuant to section 202 of the Cyprus Companies Law, Cap. 113. Commonly sought orders in such a case include an order to regulate how the company’s affairs are run in the future, an order for the purchase of the shares of any members by other members or by the company (and in the latter case, out of a reduction of the company’s capital), and an order for the winding-up of the company on the ground that it is just and equitable.

Holders of the ADSs may not be able to exercise pre-emptive rights in relation to future issuances of ordinary shares.

To raise funding in the future, we may issue additional ordinary shares, including ordinary shares represented by ADSs. Generally, existing holders of shares in Cypriot public companies are entitled by law to pre-emptive rights on the issue of new shares in that company (provided that such shares are paid in cash and the pre-emption rights have not been disapplied by our shareholders at a general meeting for a specific period). Holders may not be able to exercise pre-emptive rights for ordinary shares where there is an issue of shares for non-cash consideration or where pre-emptive rights are disapplied. Holders may also not be able to exercise pre-emption rights directly (but possibly only by instructing the depositary as the registered holder of shares) as only holders of shares and not of ADSs have such rights in Cyprus. In the United States, we may be required to file a registration statement under the Securities Act to implement pre-emptive rights. We can give no assurances that an exemption from the registration requirements of the Securities Act would be available to enable U.S. holders of ordinary shares to exercise such

pre-emptive rights and, if such exemption is available, we may not take the steps necessary to enable U.S. holders of ordinary shares to rely on it. Accordingly, holders may not be able to exercise pre-emptive rights on future issuances of ordinary shares, and, as a result, their respective percentage ownership interest(s) in us would be diluted. As our shareholders authorized the disapplication of pre-emptive rights for a period of five years from the date of completion of our initial public offering in November 2020, with respect to certain issuances of shares, after the five-year period will be subject to pre-emptive rights unless those rights are additionally disapplied. Furthermore, rights offerings are difficult to implement effectively under the current U.S. securities laws, and our ability to raise capital in the future may be compromised if we need to do so through a rights offering in the United States.

Because of their significant voting power and special rights granted to Class A shares, our principal shareholders are able to exert control over us and our significant corporate decisions.

The shares beneficially owned by our principal shareholders, Sistema and the Baring Vostok Private Equity Funds, amount to 31.76% and 27.75%, respectively, of our issued and outstanding ordinary shares as of March 20, 2023.

Each of our principal shareholders holds one Class A share, which confers the right to appoint and remove:

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two directors so long as such Class A shareholder together with its Affiliates and/or its permitted Transferees (as these terms are defined in our articles of association exhibited to this Annual Report) holds at least 15% of voting power of the ordinary shares; or

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one director so long as such Class A shareholder, together with its Affiliates and/or its Permitted Transferees (as these terms are defined in our articles of association exhibited to this Annual Report) holds less than 15% but at least 7.5% of voting power of the ordinary shares.

Each Class A share is convertible into one ordinary share at any time by its holder, while ordinary shares are not convertible into Class A shares other than as provided in our articles of association. Upon any transfer of a Class A share by a holder to any person that is not an affiliate or otherwise under control of such holder, such Class A share shall be automatically converted into an equal number of ordinary shares.

As a result, our principal shareholders may have the ability to determine the outcome of all matters submitted to our shareholders for approval, including the election and removal of directors, subject to and in accordance with the manner prescribed in our articles of association, and any merger, consolidation or sale of all or substantially all of our assets. The interests of our principal shareholders might not coincide with the interests of the other holders of the ADSs or our ordinary shares. This concentration of ownership may harm the value of the ADSs by, among other things:

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delaying, deferring or preventing a change in control of us;

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impeding a merger, consolidation, takeover or other business combination involving us; or

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causing us to enter into transactions or agreements that are not in the best interests of all shareholders.

Furthermore, from time to time the press and non-traditional media may speculate about a wide variety of matters relating to us, including our principal shareholders. For example, in February 2019, Russian investigative authorities initiated a case against a number of senior employees of Baring Vostok Capital Partners Group Limited, relating to the performance of their respective roles as directors for another portfolio company of private equity funds advised by Baring Vostok Capital Partners Group Limited. The senior employees were found guilty and received suspended sentences in August 2021. The accusations have been strongly denied, and the sentences are currently being appealed. None of these individuals has been engaged in our day-to-day operations by participating in the operational decision-making process or otherwise, and their ongoing detention has not affected and is not expected to affect our business and operations, but these events, as well as any future actions or claims involving either of our principal shareholders or their investments, which are extensive and varied, may generate adverse press coverage with respect to our business. Any reports in the media and other public statements regarding the activities of our principal shareholders, irrespective of whether such statements have any basis in fact, may adversely affect our reputation and business.

We may be subject to defense tax in Cyprus.

Cypriot tax resident companies must pay a Special Contribution for the Defense Fund of the Republic of Cyprus, or the defense tax, at a rate of 17% on deemed dividend distributions to the extent that their ultimate direct or indirect shareholders are individuals who are both Cyprus tax residents and Cyprus domiciled. A Cypriot company that does not distribute at least 70% of its after tax profits within two years from the end of the year in which the profits arose, is deemed to have distributed this amount as a dividend two years after that year end. The amount of this deemed dividend distribution, subject to the 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 and the resulting balance of profits will be subject to the defense tax to the extent of the appropriation of shares held in the company at that time by individuals who are both Cyprus tax residents and Cyprus domiciled. The profits to be taken into account in determining the deemed dividend do not include fair value adjustments to any movable or immovable property.

The defense tax payable as a result of a deemed dividend distribution is paid in the first instance by us, which may recover such payment from its Cypriot shareholders by deducting the amount from an actual dividend paid to such shareholders from the relevant profits. To the extent that we are unable to recover this amount due to a change in shareholders or no actual dividend is ever paid out of the relevant profits, we will suffer the cost of this defense tax. Imposition of this tax could have a material adverse effect on our business, prospects, financial condition and results of operations if we are unable to recover the tax from shareholders as described above.

In September 2011, the Commissioner of the Inland Revenue Department of Cyprus issued Circular 2011/10, which exempted from the defense tax any profits of a company that is tax resident in Cyprus imputed directly to shareholders that are themselves tax residents in Cyprus to the extent that these profits are indirectly apportioned to shareholders who are ultimately not Cyprus tax residents.

Risks Relating to Russian Taxation

Changes in Russian tax law could adversely affect our Russian operations.

Generally, Russian taxes that we are subject to include, among others, corporate income tax, value added tax, property tax and employment-related social security contributions and other taxes. We are also subject to duties and liabilities of a tax agent in terms of withholding taxes with respect to some of our counterparties. Although the Russian tax climate and the quality of tax legislation have generally improved with the introduction of the Russian Tax Code, a possibility exists that Russia may impose arbitrary or onerous taxes and penalties in the future. Russia’s tax collection system increases the likelihood of such events, and this could adversely affect our business.

Russian tax laws are subject to frequent change and some of the sections of the Russian Tax Code are comparatively new and continue to be redrafted.

The interpretation and application of the Russian Tax Code generally and, in particular, the new rules, have often been unclear or unstable. Differing interpretations may exist both among and within government bodies at the federal, regional and local levels; in some instances, the Russian tax authorities take positions contrary to those set out in clarification letters issued by the Ministry of Finance in response to specific taxpayers’ queries and apply new interpretations of tax laws retroactively. In some instances, the Russian tax authorities issued tax claims for periods for which the statute of limitations had expired and reviewed the same tax period several times. This increases the number of existing uncertainties and leads to inconsistent enforcement of the tax laws in practice.

Furthermore, over recent years, the Russian tax authorities have shown a tendency to take more assertive positions in their interpretation of tax legislation, which has led to an increased number of material tax assessments issued by them as a result of tax audits of taxpayers. Taxpayers often have to resort to court proceedings to defend their position against the Russian tax authorities. In the absence of binding precedent or consistent court practice, rulings on tax matters by different courts regarding the same or similar circumstances may be inconsistent or contradictory. In practice, courts may deviate from the interpretations issued by the Russian tax authorities or the Russian Ministry of Finance in a way that is unfavorable for the taxpayer.

The Russian tax system is, therefore, impeded by the fact that, at times, it continues to be characterized by inconsistent judgment of the local tax authorities and the failure of the Russian tax authorities to address many of the existing problems. It is, therefore, possible that our transactions and activities that have not been challenged in the past may be challenged in the future, which may have a material adverse effect on our business, prospects, financial condition, results of operations and the trading price of the ADSs. Since 2014, several important new rules have been introduced into the Russian Tax Code as a part of the Russian Government’s policy focused on curtailing Russian businesses from using foreign companies mostly or only for tax reasons. These rules impose significant limitations on tax planning and are aiming at allowing the Russian tax authorities to tax foreign income attributable to Russian businesses (known as “de-offshorization measures”). These rules include, in particular:

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rules governing the taxation of “controlled foreign companies” (without limitation of jurisdictions to which this definition applies and which residents may fall under the regime);

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rules determining the tax residence status of non-Russian legal entities based on place of effective management (corporate tax residence rules), with certain tax incentives not available for non-Russian legal entities mandatorily recognized as Russian tax residents by the tax authority (such as 0% tax rate on dividends received available under certain conditions);

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rules defining the “beneficial ownership” (actual recipient of income) concept for application of double tax treaties;

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adopting country-by-country reporting (“CbCR”) requirements which assume automatic exchange of county-by-country reports aimed at providing more transparency of international transaction;

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taxation of capital gains received by non-Russian legal entities derived from the sale of shares in “real estate rich” companies (with the value of assets deriving, directly or indirectly, from real estate located in Russia by more than 50%); and

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codified general anti-abuse rules (these are based on the judicial concept of “unjustified tax benefit,” and provide a few tests to support tax reduction or tax base deduction, including the “main purpose test”). In practice, the Russian tax authorities tend to apply anti-abuse rules in broad sense which creates uncertainties as to how particular transactions or structures could be assessed by the tax authorities and may lead to disallowance of tax benefits resulting from a transaction or the re-characterization of a transaction for tax purposes. Therefore, it is possible that despite the best efforts of our group to comply with Russian tax laws and regulations, certain transactions and activities of our group that have not been challenged in the past may be challenged in the future, resulting in a greater than expected tax burden, exposure to significant fines and penalties and potentially severe enforcement measures for us.

These changing conditions create tax risks in Russia that are more significant than those typically found in jurisdictions with more developed tax systems; they have significant effect on us, complicate our tax planning and related business decisions and may expose us to additional tax and administrative risks, as well as extra costs that are necessary to secure compliance with these new rules. In addition, there can be no assurance that the current tax rates will not be increased and that new taxes will not be introduced.

It is expected that Russian tax legislation will progressively become more sophisticated. The introduction of new taxes or amendments to current taxation rules may affect our overall tax efficiency and may result in significant additional tax liabilities. We cannot provide holders of the ADSs with any assurance that additional Russian tax exposures will not arise. Such additional tax exposures could have a material adverse effect on our business, results of operations, financial condition or prospects, and the trading price of the ADSs.

Changes to Russia-Cyprus double tax treaty could increase our tax burden.

In 2020, the Russian President announced significant changes to Russian tax laws, and the Russian Government was directed to revise Russian double tax treaties with a number of countries, including Cyprus, Netherlands, Malta, Luxembourg and Switzerland 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.

The Russian Ministry of Finance initiated negotiations with the competent authorities of Cyprus and Russia and signed a protocol of the amendments to the Russia-Cyprus double tax treaty in September 2020.

In accordance with the protocol to the Russia-Cyprus double tax treaty, the increased 15% tax rates are applied to both dividend and interest income beginning in January 1, 2021 (though it provides for a number of exceptions where the lower rates of 5% or 0% are envisaged). The preferential tax rate of 5% is envisaged for dividend and interest income received by Cypriot tax resident public companies whose shares are listed on a registered stock exchange and which have no less than 15% of shares in free float, provided that this public company owns at least 15% of the shares in a Russian company paying the income for a period of at least 365 consecutive days.

However, currently there are different interpretations of the above requirements to apply the 5% preferential tax rate and the practice is still developing. These amendments to the Russia-Cyprus double tax treaty and uncertainty of their interpretation may potentially adversely affect the taxation of future dividend distributions from our Russian subsidiaries. Moreover, having regard to current unstable political and economic environment resulting in recent unfavorable developments in double tax treaty relations between Russia and other countries (see section “Risks Relating to Russian Taxation—Changes in Russian tax law could adversely affect our Russian operations”), we cannot exclude that double tax treaty between Russia and Cyprus may be either further revised or denounced in the future which may result in increased tax costs and have an adverse effect on our business and financial condition.

In 2019 the Russian Federation ratified the MLI effective from 2021 in respect of withholding taxes covered by tax treaties concluded by the Russian Federation with 34 countries and with an effect from 2022 with respect to tax treaties with additional 7 countries. Application of the MLI could potentially limit tax benefits granted by double tax treaties with the respective countries.

In 2022 a number of countries announced that they suspend international exchange of tax information with Russia (such as Isle of Man, Guernsey, Jersey, Germany, USA, Latvia, Ukraine, Austria, Switzerland). In February 2023 it was announced that the Russian Federation was included into the EU list of jurisdictions non-cooperative in tax sphere (“the EU black list”).

In turn, the Russian Federation included Canada and Cayman Islands in the Russian “black list” of non-cooperative jurisdictions for tax purposes. Certain tax benefits and exemptions envisaged by the Russian Tax Code could be not achievable if companies from such black-listed jurisdictions are involved, such as exemptions related to international holding companies, CFCs, etc.

In March 2023 it was announced that the Ministry of Finance and Ministry of Foreign Affairs of the Russian Federation initiated the proposal to the President of the Russian Federation to issue a decree suspending the application of double tax treaties with the jurisdictions regarded as “unfriendly” until “the unilateral economic and other measures in relation to the Russian Federation violating its rights are removed”. Currently, it is not known how this new initiative will develop. We cannot exclude that double tax treaties the Russian Federation concluded with certain jurisdictions may be either denounced or suspended. It may result in disallowance of tax benefits with respect to income paid to such jurisdictions from Russian sources and lead to the increased tax costs and have an adverse effect on our business and financial condition.

Our Cypriot entities may be exposed to taxation in Russia if they are treated as having a Russian permanent establishment or as being Russian tax residents.

The Russian Tax Code provides for extended taxation and related tax obligations for foreign legal entities that carry on commercial activities in Russia in such a manner that they create either a permanent establishment or result in migration of a tax residence due to place of effective management being in Russia (in the first case, the foreign legal entity is subject to Russian corporate income tax with regard to income derived from activities conducted through the permanent establishment; in the second case, the Russian corporate income tax applies to the worldwide income of the foreign legal entity tax residence of which is migrated to Russia; in addition, in both cases, other taxes may apply depending on the circumstances).

Although tax residence rules for legal entities as defined in the Russian Tax Code are broadly similar to the respective concepts known in the international context, including those developed by the OECD for tax treaty purposes, they have not yet been sufficiently tested in the Russian administrative and court practice since they have been in effect only from 2015.

The permanent establishment concept has been in effect for a while, but several key elements of this concept, for example, the allocation of income and expenses to a permanent establishment, still lack sufficient application guidelines.

While we do not believe that our holding company or other Cypriot entities may be treated as having a tax residence or a permanent establishment in Russia or any other jurisdiction, we cannot assure that Russian or other relevant tax authorities will not attempt to claim them as having permanent establishment or tax residence in such jurisdiction. If any of these occurs, additional taxes, as well as related penalties, may be imposed on us and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Our entities are subject to tax audits by the relevant tax authorities, which may result in additional tax liabilities.

Generally, tax returns, together with related documentation, are subject to audit by the tax authorities, which are authorized by applicable laws to impose severe fines and penalties. As a rule, the tax authorities may audit tax periods within three-five years (depending on the jurisdiction) immediately preceding the year when the tax audit is initiated. Tax audits may be repeated in a few specifically defined circumstances, for example, the taxpayer’s reorganization or liquidation, or upon the re-filing of a tax return (amended to decrease the tax payable), or if a tax audit is conducted by a higher-level tax authority as a measure of control over the activities of a lower-level tax authority. Therefore, previous tax audits may not preclude subsequent tax claims relating to the audited period.

In addition, the Russian Tax Code provides for the possibility of an extension of the three-year statute of limitations for tax offences if the taxpayer obstructed the performance of the tax review and this has become an insurmountable obstacle for the tax audit. Because the terms “obstructed”, “hindered” and “insurmountable obstacles” are not specifically defined in Russian law, the Russian tax authorities may attempt to interpret these terms broadly, effectively linking any difficulty experienced by them in the course of their tax audit with obstruction by the taxpayer and use that as a basis to seek additional tax adjustments and penalties beyond the three-year limitation term. Therefore, the statute of limitations is not entirely effective.

Tax audits may result in additional costs if the tax authorities conclude that we did not satisfy our tax obligations in any given tax period. Such audits may also impose additional burdens on us by diverting the attention of management resources. The outcome of these audits could have a material adverse effect on our business, prospects, financial condition, results of operations or the trading price of the ADSs.

Our Russian entities may be exposed to additional value added tax and corporate income tax obligations if the tax authorities consider some of our suppliers as “bad faith” suppliers.

The vast majority of Russian taxpayers regularly encounter claims regarding transactions with “bad-faith” suppliers by Russian tax authorities arguing that such suppliers could not fulfill their contractual obligations, leading to challenges of VAT recovery and corporate income tax deduction.

If the tax authorities prove that our Russian subsidiaries did not act with prudence when selecting suppliers and substantiate the legitimacy of their claims regarding purchases from these suppliers, additional taxes may be levied to our Russian subsidiaries and an outflow of cash may be required to settle such liabilities. Due to a diversity in approaches used to assess tax violations, it is impracticable to determine the financial consequences of potential tax liabilities which may arise as the result of transacting with such suppliers. While we have established internal procedures to monitor and control this risk, our Russian subsidiaries may still be affected by this risk due to ambiguity of criteria used by the tax authorities and subjective nature of the risk. It is therefore possible that transactions of our Russian subsidiaries with suppliers may be challenged by the Russian tax authorities, which may have a material adverse effect on our business, prospects, financial condition, results of operations and the trading price of the ADSs.

The Russian tax authorities may challenge the application of a reduced social security contributions and corporate profits tax rates by one of our companies which qualifies as an IT company.

Our Russian subsidiary as a qualifying IT company applies tax benefits: 0% corporate income tax rate and reduced social security contributions rate of 7.6% in relation to payments to employees. The above 0% corporate income tax rate is set for the period from 2022 to 2024. The tax rate after 2024 is not currently established and there is uncertainty on whether 0% or any other beneficial corporate income tax rate could be applied after 2024.

The Russian Tax Code establishes the respective reduced rate for companies who carry out IT activities, develop and sell own-developed computer programs and databases or render services involving development, adaptation, modification and support of computer programs and databases (“preferential IT activity”). In order to apply the reduced rates, a taxpayer should be officially accredited to perform activity in IT sphere, the share of its income related to these activities should comprise 70% of total income.

We believe our subsidiary meets all of the above requirements and effectively operates as a shared service center rendering services to our subsidiaries with respect to development and adaptation of IT products that are being used primarily within our Group. Such practice is widely used by many Russian group of companies.

There is some uncertainty as to the classification of some types of activities as preferential IT activities for the purposes of application of the reduced tax rates. The Russian Tax Code provision regarding application of the reduced rates of profits tax and social security contributions is relatively untested. Given the absence of substantial administrative and court practice, the tax authorities may challenge the application of the reduced rates. Moreover, there is no assurance that the above tax benefits, including reduced corporate income tax rate of 0%, would not be cancelled or amended going forward. This may have an adverse effect on our business, financial condition and results of operations.

Russian thin capitalization rules and general interest deductibility rules allow different interpretations, which may affect our business.

The Russian Tax Code provides for three main restrictions that limit the deductibility of expense for interest accruing on indebtedness. First, a loan must be obtained (indebtedness is incurred) with a proper economic reasoning (for a business purpose or justification). Second, the interest rate on transactions regarded as controlled for Russian transfer pricing purposes must be within established interest rate (safe-harbor) range. Third, the thin capitalization rules apply to “foreign controlled debt,” i.e., loans and other debt received by a Russian organization:

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from a foreign person (legal entity or individual) acknowledged as a related party for Russian transfer pricing purposes, if this foreign person directly or indirectly holds more than 25% of shares in the Russian organization’s charter capital (or if such person indirectly holds shares in the Russian organization’s charter capital and the share of direct participation of each person of the chain in each subsequent organization is more than 50%);

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from another person that is a related party of the aforementioned foreign person; or

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which are guaranteed or otherwise secured by any of the persons mentioned above.

The ability to deduct interest is restricted to the extent that foreign controlled debt exceeds net assets by more than three times (12.5 times for banks and leasing companies).

Interest on excess debt is non-deductible and treated as a dividend subject to withholding tax. In the event a taxpayer has negative net assets, the whole amount of interest accrued on the controlled debt is non-deductible and treated as a dividend. The statutorily defined scope of the foreign controlled debt was amended recently such that loans obtained from banks or Russian affiliates are excluded under certain conditions; at the same time, loans obtained from foreign affiliates are explicitly included.

Our Russian operations may be affected by requalification of interest into dividend (including by our inability to deduct interest) based on Russian thin capitalization rules if at any time the respective indebtedness qualifies as foreign controlled debt, or by the inability to deduct interest based on other reasons.

In addition, starting from 2022, the changes in calculation of safe harbor interest rates on loans for Russian transfer pricing purposes will come into effect. Due to cancellation of publication of LIBOR rates, the new interbank risk free rates will be used in setting safe harbor rates for transfer pricing controlled transactions.

See Item 10.E “Additional Information—Taxation—Material Russian Tax Considerations” for further discussion of important Russian tax considerations.

Risks Relating to the Ownership of the ADSs

Trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq.

On February 28, 2022, trading of the ADSs on Nasdaq was suspended by Nasdaq and remains suspended as of the date of this Annual Report. Further, on March 15, 2023, Nasdaq notified us that Ozon’s ADSs would be delisted from Nasdaq on March 24, 2023 unless Ozon appeals such determination. On March 21, 2023, Ozon submitted a request for a hearing to appeal such determination. If the appeal is unsuccessful, Ozon’s ADSs will be formally delisted from Nasdaq. In such case, the ADSs may be eligible for trading in the over-the-counter market; we can provide no guarantee, however, that one or more brokers will elect to make a market in such securities or will be able to obtain a ticker to facilitate OTC trading. Even if such appeal is successful and Ozon’s securities are not formally delisted, there can be no guarantee if or when the trading halt may be lifted and trading might ultimately resume. If such appeal is not successful, Ozon may pursue the further appeals available under the Nasdaq Listing Rules.

Even if trading of the ADSs were to resume, trading would likely be volatile, and the trading price of the ADSs might decline significantly.

The U.S. has imposed a prohibition on U.S. persons making any “new investments” in Russia starting from April 6, 2022. While we do not believe that the ban would prohibit trading by U.S. persons in the ADSs issued prior to April 6, 2022, there has been no guidance issued by OFAC in that regard and we cannot give any assurance that OFAC would not take a different position. There can also be no assurance that brokers, dealers and other financial intermediaries from the U.S., the EU, the UK or other Western countries will be allowed to execute transactions with the ADSs due to potential legal restrictions or limitations set out in their internal policies, which will materially adversely affect the value and trading of the ADSs. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs.”

As a foreign private issuer within the meaning of the Nasdaq corporate governance rules, we are permitted to, and we will, 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 the ADSs.

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 permitted to, and we will, follow home country practice in lieu of the above requirements. As long as we rely on the foreign private issuer exemption to certain of the Nasdaq corporate governance standards, a majority of the directors on our board of directors are not required to be independent directors, our compensation committee is not required to be comprised entirely of independent directors and we will not be required to have a nominating committee. Therefore, 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, our management oversight may be more limited than if we were subject to all of the Nasdaq corporate governance standards.

Accordingly, our shareholders and holders of ADSs will 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.

See Item 16G “Corporate Governance” for the list of home country practices we rely on instead of those of Nasdaq. We may in the future elect to follow home country practices in Cyprus with regard to other matters.

We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022. Based upon that evaluation, our principal executive and principal financial officer concluded that, as a result of the material weakness in our internal control over financial reporting described below, the design and operation of our disclosure controls and procedures were not effective as of December 31, 2022.

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 the annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, in the course of preparing the financial statements that are included in this Annual Report, management identified a material weakness in control activities as we did not perform a sufficient risk assessment to identify and assess the risk of material misstatement in certain disclosures to the consolidated financial statements and, consequently, did not maintain effective controls, including controls with respect to the relevant input data, to mitigate those risks. The material weakness resulted in material misstatements in certain financial risk management disclosures in notes to the consolidated financial statements that were corrected in our consolidated financial statements as of and for the year ended December 31, 2022 prior to our issuance of those financial statements.

Notwithstanding this material weakness, our management, based on the substantial work performed, concluded that our consolidated financial statements for the periods covered by and included in this Annual Report are fairly stated in all material respects in accordance with IFRS. Our independent registered public accounting firm, JSC “Kept”, who audited the consolidated financial statements included in this Annual Report, has issued an adverse attestation report on our internal control over financial reporting. JSC “Kept”s report is included elsewhere in this Annual Report.

We are working on a plan to remediate the identified deficiency in our internal control over financial reporting relating to the risk assessment process, design and implementation of controls with respect to certain disclosures in notes to the consolidated financial statements that resulted in a material weakness discussed above. Specifically, we are planning to:

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revise our risk assessment with respect to the risk of material misstatement within the financial reporting process to re-consider risks of misstatements as applied to the disclosures in notes to the consolidated financial statements;

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improve the design of controls over disclosures in notes to the consolidated financial statements, including controls with respect to the input data and precisions of review controls;

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develop checklists to be used by our accounting team to ensure that the disclosures are compiled in accordance with the relevant accounting framework; and

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improve documentation to support our review and approval of the disclosures in notes to the consolidated financial statements and strengthening supervisory reviews by accounting experts and management.

While we believe that these remedial efforts will improve our internal control over financial reporting, the implementation of these measures is ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. Due to this ongoing testing, we cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. In addition, as we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above. Management will test and evaluate the implementation of these new and revised procedures and control activities to ascertain whether they are designed and operating effectively to provide reasonable assurance that they will prevent or detect a material error in our financial statements. See Item 15 “Controls and Procedures” for more details.

If we fail to remediate our current or future material weaknesses or significant deficiencies 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, our consolidated financial statements may be restated, investors may lose confidence in the accuracy and completeness of our financial reports the market price of the ADSs could be materially and adversely affected, the ADSs may be delisted from Nasdaq, and our reputation, results of operations and financial condition may be adversely affected. Failure to comply with Section 404 of the Sarbanes-Oxley Act could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.

If we fail to establish and maintain proper internal controls, 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 second annual report following our initial public offering, which was completed in November 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. Our Section 404(a) assessment is presented in Item 15 “Controls and Procedures”.

As discussed above in Item 3.D “Key Information—Risk Factors—Risks Relating to the Ownership of the ADSs—We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired,” our management concluded that, as of December 31, 2022, our internal control over financial reporting was not effective due to the presence of a material weakness. The continued presence of this or other material weaknesses 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, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of the 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 improve the overall effectiveness of our disclosure controls and procedures and internal control over financial reporting, and maintain satisfactory controls once achieved, 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 of 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. As our internal control over financial reporting was not effective as of December 31, 2021, investors may lose confidence in our results of operations, the price of the 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 require significant resources and management attention.

As a public company in the United States, we incur legal, accounting and other expenses that we would not incur as a private company. We are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act, the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations have increased our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase the demand on our systems and resources. 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 need to establish 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 increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, these rules and regulations may 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 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 intend 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.

Failure to comply with Section 404 of the Sarbanes-Oxley Act 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 the ADSs.

We do not expect to pay any dividends in the foreseeable future.

We have never declared or paid cash dividends on our ordinary shares. We intend to retain all available liquidity sources and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate declaring or paying any cash dividends in the foreseeable future.

Any future final determination regarding the declaration and payment of dividends, if any, will be at the discretion of our shareholders at a general meeting and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our shareholders at a general meeting may deem relevant.

In addition, the terms of certain of our outstanding borrowings restrict our ability to pay dividends or make distributions on our ordinary shares without consent of a lender, and we may enter into credit agreements or other borrowing arrangements in the future that may further restrict our ability to declare or pay cash dividends or make distributions on our ordinary shares. As a result of the sanctions imposed by foreign countries on Russia and reactive

capital control and protection measures introduced by the Russian Government in connection with the ongoing geopolitical crisis surrounding Ukraine, our Russian operating subsidiaries are also restricted from transferring cash outside of Russia, which would affect dividend payments, if any, to our holding company. In addition, international depositaries may impose restrictions on such payments. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs” and Item 4.B “Information on the Company—Business Overview—Regulatory Environment—Capital Control and Protection Measures Related to the Geopolitical Crisis Surrounding Ukraine.”

Consequently, we may not pay dividends in the foreseeable future, or at all, and any return on investment in the ADSs is solely dependent upon the appreciation of the price of the ADSs on the open market, which may not occur. See Item 8.A “Financial Information—Consolidated Statements and Other Financial Information—Dividend Policy.”

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 the ADSs and prevent attempts by our shareholders to replace or remove our current management.

As we are incorporated in Cyprus, we are subject to Cyprus law. Our articles of association contain provisions that may discourage unsolicited takeover proposals that our shareholders may consider to be in their best interests or limit the ability of our shareholders to remove management, including the following:

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our articles of association require that any person who is not affiliated with our principal shareholders and is an acquiror of 30% or more of the voting power of our issued shares, including the issued ordinary shares, must make a mandatory tender offer that is subject to recommendation of at least two-thirds of directors, including an affirmative vote of a majority of the independent directors, an acceptance by at least 75% of the shareholders (as specified in the articles of association) to whom the offer is made and certain other terms and conditions set out in the articles of association that are more restrictive than those that would apply under statutory provisions of the Cypriot laws to a Cypriot company with a listing on an EU regulated market, and in the event of breach of these provisions, the voting rights of such acquiror and the persons acting in concert, in excess of 30% of the votes conferred by ordinary shares will be suspended;

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our articles of association require that if a principal shareholder holding a Class A share or its affiliates acquire 43% or more of the voting power of our issued shares, including the issued ordinary shares, it must make a mandatory tender offer that is subject to recommendation by at least two-thirds of our board of directors, including an affirmative vote of a majority of the independent directors, an acceptance by at least 75% of the shareholders to whom the offer is made and certain other terms and conditions that are more restrictive than those that would apply under statutory provisions of Cyprus law to a Cypriot company with a listing on an EU regulated market, and in the event of breach of these provisions, the voting rights in respect of the shareholders holding Class A shares and their affiliates in excess of, 43% of the votes conferred by ordinary shares will be suspended;

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any merger, consolidation or amalgamation of the Company would require the approval of our shareholders and board of directors;

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each of our principal shareholders holds one Class A share, which confers the right to appoint and remove (i) two directors so long as such Class A shareholder holds, together with its affiliates and permitted transferees, at least 15% of the votes including the votes conferred by the ordinary shares or (ii) one director so long as such Class A shareholder holds, together with its affiliates and permitted transferees, less than 15% but at least 7.5% of the votes including the votes conferred by the ordinary shares. We are not authorized to issue additional Class A shares unless such issue is approved by holders of all issued Class A shares and a special resolution of the general meeting of our shareholders;

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subject to the special rights provided in our articles of association to the holders of Class A shares on the appointment and removal of directors, our board of directors may be appointed and removed by the holders of the majority of the voting power of the ordinary shares; and

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preference shares may, with the sanction of a special resolution, be issued on the terms and conditions and under circumstances that could have an effect of discouraging a takeover or other transaction.

Together these provisions may make the removal of management more difficult and may discourage or prevent a change of control, which could depress the price of the ADSs

Neither Cyprus nor the broader EU takeover laws apply to us and our minority shareholders do not benefit from the same protections that the minority shareholders of a Cypriot company that is listed on an EU regulated market would have at their disposal.

As of the date of this Annual Report, Cyprus law does not contain any requirement for a mandatory offer to be made by a person acquiring control in a Cypriot company if such company’s shares are not listed on an EU regulated market. Neither our shares nor the ADSs are listed on an EU regulated market. Our articles of association contain a mandatory tender offer provision that requires any third-party acquiror that acquires, together with parties acting in concert, 30% or more of the voting rights in our issued shares, including the issued ordinary shares, to make a mandatory tender offer to all of our other shareholders at the price not lower than the higher of the highest price per ordinary share or per ordinary share represented by depositary receipts paid by acquiror and parties acting in concert and the highest market price per ordinary share, including ordinary share represented by depositary receipts, quoted on a stock exchange, in each case in the preceding 12 months. For each of our principal shareholders who hold a Class A share the requirement to make a mandatory tender offer is triggered by a principal shareholder and its affiliates only if they acquire, together with concert parties, 43% or more of the voting rights in our shares. Each of our principal shareholders holding Class A shares holds and is expected to hold less than 43% of the voting rights in our shares. Our articles of association do not prohibit the holders of our Class A shares to combine their holdings to trigger the mandatory tender offer. Although our articles of association provide for the obligation by an acquiror to make a mandatory tender offer in certain cases, in the absence of applicable statutory provisions our shareholders may not get the same opportunity to sell their shares in the event an acquiror obtains a significant stake or even control in the company as would shareholders in a Cypriot company that is listed on an EU regulated market.

The price of the ADSs might fluctuate significantly, and investors could lose all or part of their investment.

On February 28, 2022, trading of the ADSs on Nasdaq was suspended by Nasdaq and remains suspended as of the date of this Annual Report. Further, on March 15, 2023, the Listing Qualifications Staff of Nasdaq (the “Staff”) notified us that it had determined that our securities would be delisted from The Nasdaq Stock Market as of March 24, 2023, unless Ozon appeals the Staff’s determination. On March 21, 2023, Ozon submitted a request for a hearing to appeal such determination. Under the Nasdaq Listing Rules, a hearing will be held, to the extent practicable, within 45 days of such request, and the delisting of the ADRs will be stayed pending the issuance of a written decision of the hearings panel. Even if such appeal is successful and Ozon’s securities are not formally delisted, there can be no guarantee if or when the trading halt may be lifted and trading might ultimately resume. If such appeal is not successful, Ozon may pursue the further appeals available under the Nasdaq Listing Rules. See Item 3.D “Key Information—Risk Factors—Risks Relating to Ownership of our ADSs—Trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq.”

If trading of the ADSs were to resume, trading would likely be volatile, and the trading price of the ADSs may decline significantly. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs” and Item 3.D “Key Information—Risk Factors—Risks Relating to Ownership of our ADSs—Trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq.” Volatility in the market price of the ADSs may prevent investors from being able to sell their ADSs at or above the price they paid for such ADSs. The trading price of the ADSs may be volatile and subject to wide price fluctuations in response to various factors, including:

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the current global macroeconomic environment;

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the geopolitical crisis surrounding Ukraine (see Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis surrounding Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs”);

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the overall performance of the equity markets;

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fluctuations in our actual or projected results of operations;

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changes in our projected earnings or failure to meet securities’ analysts’ earnings expectations;

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the absence of analyst coverage;

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changes in trading volumes of the ADSs;

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issuance of new or changed securities analysts’ reports or recommendations;

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additions or departures of key personnel;

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general economic conditions;

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the activities of our competitors, suppliers and sellers;

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changes in the market valuations of comparable companies;

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changes in investor and analyst perception with respect to our business and the e-commerce industry in general;

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changes in interest rates;

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availability of capital; and

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changes in the statutory framework applicable to our business.

These and other factors might cause the market price of the ADSs to fluctuate substantially, which might limit or prevent investors from readily selling their ADSs and may otherwise negatively affect the liquidity of the 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. Furthermore, investors in the secondary market may view our business more critically than investors in our initial public offering, which could adversely affect the market price of the ADSs in the secondary market. Prices for e-commerce or technology companies have traditionally been more volatile compared to share prices for companies from other industries.

Accordingly, the price of the ADSs could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price. Securities class action litigation has often been instituted against companies in periods of volatility in the overall market and in the market price of a company’s securities. Such 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 the ADSs, or the perception in the public markets that these sales may occur, may depress the market price of the ADSs.

Sales of substantial amounts of the ADSs in the public market, or the perception that these sales could occur, could adversely affect the price of the ADSs and could impair our ability to raise capital through the sale of additional shares. As of March 20, 2023, we had 216,413,733 ordinary shares outstanding. Outstanding shares may be deposited for delivery of ADSs, and all of the ordinary shares outstanding as of the date of this Annual Report may be sold in the public market by existing shareholders, subject to applicable limitations imposed under federal securities laws and restrictions resulting from sanctions imposed by foreign countries on Russia and Russia-based securities, as well as related reactive capital control measures adopted by Russia.

The ADSs are freely tradable without restriction under the Securities Act, except for any of the ADSs that may be held or acquired by our directors, executive officers, major shareholders and other affiliates, as that term is defined in the Securities Act, which are subject to restrictions on resale under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available.

In the future, we may also issue additional ordinary shares, ADSs or debt securities with conversion rights if we need to raise capital in connection with a capital raise or acquisition. The amount of ordinary shares issued in connection with a capital raise or acquisition could constitute a material portion of the then-outstanding ordinary shares. An issuance of additional ordinary shares, ADSs or debt securities with conversion rights could potentially reduce the market price of the ADSs. In addition, if we raise additional funds through the sale of equity securities, these transactions may dilute the value of the outstanding ADSs. See Item 3.D “Key Information—Risk Factors—Risks Relating to Our Business and Industry—We may need to raise additional funds to finance our future capital needs, which may be challenging in the current environment and may dilute the value of the outstanding ADSs or prevent us from growing our business.”

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 the ADSs will depend 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 us, the trading price for the 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 the 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 the ADSs could decrease, which could cause the price of the ADSs or trading volume to decline.

Holders of ADSs may not be able to exercise their right to vote the ordinary shares underlying their 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 a request from us, the depositary shall distribute to the holders as of the record date:

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the notice of the meeting or solicitation of consent or proxy sent by us; and

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a statement as to the manner in which instructions may be given by the holders.

Holders of ADSs may instruct the depositary to vote the ordinary shares underlying the ADSs. Otherwise, holders will not be able to exercise their right to vote unless they surrender the ADSs for cancellation and withdraw our ordinary shares. However, holders may not know about the meeting far enough in advance to withdraw those ordinary shares. Under our articles of association, the minimum notice required for convening a shareholders’ meeting is 30 calendar days. The depositary and its agents may not be able to send voting instructions to holders of ADSs or carry out a holder’s voting instructions in a timely manner. The depositary, upon timely request from us, will notify you of the upcoming vote and arrange to deliver voting materials to holders. We cannot guarantee that holders of ADSs will receive the voting materials in time to ensure that holders can instruct the depositary to vote the ordinary shares underlying their 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 holders of ADSs may not be able to exercise their right to vote and may lack recourse if the ordinary shares underlying their ADSs are not voted as requested.

Holders of ADSs may be subject to limitations on the transfer of their ADSs.

The ADSs 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 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 Annual Report outside the United States, or to assert U.S. securities law claims outside of the United States.

We are incorporated in the Republic of Cyprus and conduct substantially all of our operations in Russia through subsidiaries. The majority of our current directors and senior officers reside outside the United States, principally in Russia. Substantially all of our assets and the assets of our current directors and executive officers are located outside the United States, principally in Russia. 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.

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.

In particular, investors should be aware that there is uncertainty as to whether the Russian courts would recognize and enforce judgments of the U.S. courts obtained against us or our directors or management 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 the Russian courts against us or our directors or officers 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 Republic of Cyprus, or between the United States and Russia, 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. In addition, there are doubts as to whether a Cypriot court would impose civil liability on us, our directors and officers in an original action predicated solely upon the U.S. federal securities laws brought in a court of competent jurisdiction in Cyprus against us or such directors and officers, respectively. The current geopolitical environment surrounding Russia will likely heighten these challenges.

Holders of ADSs may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.

The deposit agreement governing the ADSs representing our ordinary shares provides that, to the fullest extent permitted by applicable law, holders and beneficial owners of ADSs irrevocably waive the right to a jury trial of any claim that they may have against us or the depositary arising from or relating to our ordinary shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws.

However, holders of ADSs will not be deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. In fact, holders of ADSs cannot waive our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. If we or the depositary opposed a demand for jury trial relying on jury trial waiver mentioned above, it is up to the court to determine whether such waiver was enforceable considering the facts and circumstances of that case in accordance with the applicable state and federal law.

If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. To our knowledge, the enforceability of a jury trial waiver under the federal securities laws has not been finally adjudicated by a federal court or by the United States Supreme Court. Nonetheless, we believe that a jury trial waiver provision is generally enforceable under the laws of the State of New York, which govern the deposit agreement, by a federal or state court in the City of New York. In determining whether to enforce a jury trial waiver provision, New York courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has knowingly waived any right to trial by jury. We believe that this is the case with respect to the deposit agreement and the ADSs. In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable set-off or counterclaim sounding in fraud or one which is based upon a creditor’s negligence in failing to liquidate collateral upon a guarantor’s demand, or in the case of an intentional tort claim, none of which we believe are applicable in the case of the deposit agreement or the ADSs. If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary relating to the matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not have the right to a jury trial regarding such claims, which may limit and discourage lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary according to the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may have different outcomes compared to that of a jury trial, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if the jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of U.S. federal securities laws and the rules and regulations promulgated thereunder.

Item 4. Information on the Company

A. History and Development of the Company

Corporate Information

We were incorporated in Cyprus on August 26, 1999 under the Cyprus Companies Law, Cap. 113 as Jolistone Enterprises Limited (registration number HE 104496) and changed our name to Ozon Holdings Limited on November 8, 2007. On October 22, 2020, Ozon Holdings Limited was converted from a private limited liability company incorporated in Cyprus into a public limited company incorporated in Cyprus, and our name changed pursuant to a special resolution at a general meeting of our shareholders to Ozon Holdings PLC. Our registered office is located at Arch. Makariou III, 2-4, Capital Center, 9^th floor, 1065, Nicosia, Cyprus. The principal executive office of our key operating subsidiary, Internet Solutions LLC, is located at 10 Presnenskaya Embankment, “Naberezhnaya Tower,” Tower C, 123112, Moscow, Russia. The telephone number at this address is +7 495 232 1000.

The ADSs, each representing one ordinary share, have been listed on Nasdaq and MOEX since November 24, 2020 under the symbol “OZON.” Trading of the Ozon’s ADSs on the NASDAQ was suspended by the NASDAQ on February 28, 2022, and remains suspended. NASDAQ’s suspension can only be removed at NASDAQ’s discretion. Further, on March 15, 2023, the Listing Qualifications Staff of Nasdaq (the “Staff”) notified us that it had determined that our securities would be delisted from The Nasdaq Stock Market as of March 24, 2023, unless Ozon

appeals the Staff’s determination. On March 21, 2023, Ozon submitted a request for a hearing to appeal such determination. Under the Nasdaq Listing Rules, a hearing will be held, to the extent practicable, within 45 days of such request, and the delisting of the ADRs will be stayed pending the issuance of a written decision of the hearings panel. Even if such appeal is successful and Ozon’s securities are not formally delisted, there can be no guarantee if or when the trading halt may be lifted and trading might ultimately resume. If such appeal is not successful, Ozon may pursue the further appeals available under the Nasdaq Listing Rules. See Item 3.D “Key Information—Risk Factors—Risks Relating to Ownership of our ADSs—Trading of the ADSs on Nasdaq has been, and remains, suspended and Ozon has received a delisting notice from Nasdaq.”

The SEC maintains an internet site that contains reports and information regarding issuers, such as ourselves, that we file electronically, with the SEC at www.sec.gov. Our website addresses are www.ozon.ru and ir.ozon.com. The information contained on, or that can be accessed through, our websites is not a part of, and shall not be incorporated by reference into, this Annual Report. We have included our website addresses as inactive textual references only.

Our agent for service of process in the United States is Puglisi & Associates, and its address is 850 Library Avenue, Suite 204, Newark, Delaware 19711.

For a description of our principal expenditures and divestitures for the three years ended December 31, 2022 and for those currently in progress, see Item 5. “Operating and Financial Review and Prospects.”

Capital Expenditures

Please refer to Item 5.B. “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Expenditures” for description of our capital expenditures.

B. Business Overview

We are a leading e-commerce platform in the large, fragmented, underpenetrated and growing Russian e-commerce market, according to INFOLine, as well as the most recognized e-commerce brand in Russia, according to BrandScience. In the year ended December 31, 2022, our platform served approximately 35.2 million active buyers and approximately 232 thousand active sellers. Our mission is to transform the Russian consumer economy by offering the widest selection of products, exceptional value and maximum online shopping convenience among Russian e-commerce companies, while empowering partners to achieve greater commercial success. We attribute our success to our focus on enhancing the buyer and seller experience, our nationwide logistics infrastructure and our cutting-edge technology and strong culture of innovation.

We connect and facilitate transactions between buyers and sellers on our Marketplace, which represented 76% of our GMV incl. services and 38% of our revenue in the year ended December 31, 2022. We also sell products directly to our buyers through our Direct Sales business, which represented 19% of our GMV incl. services and 49% of our revenue in the year ended December 31, 2022.

As of December 31, 2022, our platform served 35.2 million active buyers, compared to 25.6 million active buyers as of December 31, 2021.

We have achieved faster growth, in terms of GMV incl. services, than the growth of the Russian e-commerce market, which grew by 37% in the year ended December 31, 2022, according to INFOLine, as compared to the same period in 2021. We achieved GMV incl. services growth of 86% in the year ended December 31, 2022.

Due to significant investments in our growth, we reported a loss of ₽58.2 billion in the year ended December 31, 2022, compared to a loss of ₽56.8 billion and a loss of ₽22.3 billion in the years ended December 31, 2021 and 2020, respectively.

LOGO

Our nationwide logistics infrastructure facilitates the fulfillment and delivery of parcels purchased on our Marketplace and our Direct Sales businesses in an efficient and reliable way. In the year ended December 31, 2022, we significantly expanded our warehouse infrastructure, consisting of fulfillment and sorting centers and our dark store network. In the year ended December 31, 2022, our operations utilized approximately 1.4 million square meters of warehouse capacity, compared to our warehouse capacity of 1 million square meters in the year ended December 31, 2021.

We are a technology-driven company with a strong culture of innovation. Our secure and scalable technology infrastructure, developed by our in-house research and development team, provides the foundation for seamless buyer and seller experiences on our platform, as well as for our supply chain operations, business intelligence, traffic and search optimization, customer relationship management operations and payments.

We believe that developing complementary products and services will help us to grow our core business and our market share. We have developed and successfully launched adjacent verticals, such as our Fintech services (see Item 4.B “Information on the Company—Business Overview—Our Business Operations—Financial Services Offerings”) and Ozon fresh, our expedited parcel delivery service for select products offered on our platform (see Item 4.B “Information on the Company—Business Overview—Our Business Operations—Ozon fresh”), as well as advertising and logistics services for sellers.

Our Business Operations

Marketplace

The OZON Marketplace is our core business, which enables thousands of sellers to offer a wide assortment of products to our buyers. We launched our Marketplace in September 2018, and it has since grown to account for 76% of our total GMV incl. services in the year ended December 31, 2022, while our Direct Sales business accounted for 19% of our total GMV incl. services in the year ended December 31, 2022. We offer sellers three logistics models, the fulfillment-by-Ozon (“FBO”) model, the fulfillment-by-seller (“FBS”) model and the Storefront model, to use individually or together, when selling their products on our Marketplace. Through these three models, our sellers are able to leverage our nationwide fulfillment and delivery infrastructure according to their business needs. Our FBO model is an attractive option for sellers who do not have their own storage facilities or are unable to fulfill orders by themselves. Our FBS model, in contrast, is suitable for sellers who do not want to supply, or would not benefit from supplying, inventory to our fulfillment centers, such as sellers who sell their products on several marketplaces simultaneously and do not want to commit their inventory to a single marketplace or sellers who sell heavy and bulky products, such as furniture. Our Storefront model allows sellers to use their own fulfillment and delivery capacities to deliver goods directly to customers, bypassing our fulfillment and delivery infrastructure altogether. Under all three models, we collect payments for each order made by our buyers and make aggregate payments, net of our marketplace commissions, to our sellers on a twice-monthly basis. Our Marketplace commission consists of a referral fee, which is a percentage of the total sales price of the product and, where applicable, other fees, such as delivery or storage fees collected from sellers. Our marketplace commissions increased to ₽106.4 billion in the year ended December 31, 2022 from ₽44.3 billion and ₽16.5 billion in the years ended December 31, 2021 and 2020, respectively.

The key advantages of the Marketplace model, particularly in the context of products sold under the FBS and Storefront logistics models, are that it allows for the continual expansion of our platform’s product catalog without being subject to capacity limitations at our fulfillment centers or, in the case of all our logistics models, the need to invest in working capital or maintain appropriate levels of inventory for each product listed on our platform. Our sellers remain the owners of the products that they list on our platform and are responsible for pricing and managing their inventory and sales, marketing and other activities.

Direct Sales

In our Direct Sales business, we purchase and hold inventory for a selection of products in our fulfillment centers to be sold directly to buyers. Through our Direct Sales business, we sell goods from select categories of products, including “bestsellers” or products with high buyer demand and predictable purchase trends. Similar to all products sold through our FBO model, products sold through our Direct Sales business are fulfilled at our fulfillment centers and channeled to the relevant sorting hubs. We have dedicated sales teams that identify and track the demand for products in each product category on our platform. As our platform presents a competitive market for products, the same products may be sold by us on a Direct Sales basis and by our sellers on the Marketplace at the same time.

Assortment and Pricing Strategy

We currently offer a wide assortment of products on our platform and intend to continue expanding our catalog to strengthen our position as a one-stop shop for all of our buyers’ shopping needs. As of December 31, 2022, we offered approximately 170 million SKUs on our platform. While we do not control the price of the products offered by our sellers through our Marketplace, this pricing data is shared with our sellers to enable them to price their products competitively. Our provision of “price indices” to our sellers, together with the high volume and large variety of products offered on our platform, naturally fosters a competitive environment that ensures that our buyers are able to purchase goods at competitive prices on our platform.

Delivery

We offer our buyers a comprehensive selection of delivery options, including delivery by courier, collection from our offline network of pick-up points and parcel lockers and delivery by Russian Post and other third-party delivery service providers. While maintaining a broad range of delivery options and increasing the proportion of buyers served by same-day and next-day deliveries, we have developed an expedited delivery service which delivers orders to buyers within one hour (see Item 4.B “Information on the Company—Business Overview—Ozon fresh”). In the year ended December 31, 2022, we delivered approximately 465.4 million orders, an increase from approximately 223.3 million orders in the year ended December 31, 2021, and an increase from approximately 73.9 million orders in the year ended December 31, 2020. Generally, the delivery fee charged to a buyer depends on the delivery method and the shipping destination. We offer our buyers a variety of free delivery options to our OZON-branded pick-up points or parcel lockers. In the year ended December 31, 2022, our revenue from our delivery services increased to ₽6.3 billion from ₽2.8 billion in the same period in 2021, an increase of 129%.

Ozon fresh

As of December 31, 2022, Ozon fresh offered a select assortment of SKUs, with delivery to our buyers within one hour of their orders being placed. We are also offering a range of FMCG products, such as coffee, snacks and other foods under our own private label, along with our ready-to-eat meals. Products offered through Ozon fresh are stored and fulfilled in our dark stores and exclusively delivered by couriers. We also leverage our dark store network to offer expedited delivery of a selection of our most frequently purchased products across a variety of product categories offered on our platform.

We launched the first pilot of Ozon fresh in Moscow in 2020 which was met with strong buyer demand. Following our successful launch in Moscow, we launched Ozon fresh in Saint Petersburg, Tver, Krasnodar, Rostov-on-Don, Kazan, Sochi, Volgograd and Naberezhnye Chelny with the goal of making our under-one-hour delivery services available to millions of consumers in these regions.

Financial Services Offerings

We have developed a variety of financial services to provide alternative models of engagement with our sellers and buyers and further enhance our monetization opportunities as the Russian e-commerce market evolves. We have Fintech offerings for our users through “business to customer” (“B2C”) and “business to business” (“B2B”) models, which we believe are not widely offered in the Russian e-commerce market.

Buyers may also benefit from our Fintech offerings, such as OZON.Card (our OZON-branded debit card) and OZON.Installment (our buyer-facing lending option). OZON.Card users enjoy discount prices for a wide range of product mix on our Marketplace. OZON.Installment is our service that allows buyers to purchase products on a deferred basis and pay for them in installments. We believe these offerings will increase buyer loyalty and order frequency. Our B2C Fintech offerings also allow us to reduce our payment processing costs. If a product purchased on our platform is paid for with a debit or credit card, we will have to pay the relevant bank a processing fee to process the payment. This fee is significantly lower or does not arise if the buyer pays for the products through one of our B2C Fintech offerings.

Our B2B offering includes our “Flexible Payment Plan” solution that enables our sellers to make payments according to a payment schedule that suits their individual business needs. We believe that our “Flexible Payment Plan” helps our sellers manage their working capital and increase their sales on our Marketplace. In 2022 we introduced our new “Money Before Sales” offering for sellers working under the FBO model, which allows our sellers to access money even before the merchandise is sold on our platform. The offering covers a select assortment of goods where we see predictable buyer purchasing trend based on our internally developed AI-enabled systems.

A pre-approved list of sellers may opt to be scored by us or our financial partners based on metrics such as their revenue and inventory stored in our fulfillment centers, who may offer loans to these sellers directly on bespoke terms. We believe our B2B Fintech offering is designed to enhance seller retention by providing capital financing opportunities to support the growth of their businesses on our platform. In the year ended December 31, 2022, our financial services revenue was ₽1.1 billion.

Advertising

In March 2019, we launched an advertising platform for sellers to promote their products on promotional shelves and advertising banners on our platform. In the year ended December 31, 2022, our advertising revenue increased to ₽26.3 billion from ₽9.3 billion in the year ended December 31, 2021 and from ₽4.0 billion in the year ended December 31, 2020. We aim to grow our advertising revenue and expand our advertising services as this does not require us to incur any incremental variable costs or capital expenditure. We also receive advertising revenue from suppliers of products we sell under our Direct Sales model. Under bespoke arrangements with these suppliers, the relevant suppliers pay the fees for marketing activities, such as television marketing campaigns and promotional offers of their products on our platform.

Buyer Experience

Shopping App and Buyer Website

We developed our Shopping App and Buyer Website, both of which are accessible through desktop PCs, digital tablets and mobile phones, with a focus on delivering a rewarding and seamless buyer experience. We have teams of IT engineers, designers, data analysts and product managers who are dedicated to enhancing the OZON buyer experience. Our data science and machine learning teams analyze the data we collect to identify trends in our buyers’ shopping activities and use these data-powered insights to generate relevant product recommendations to our customers, and thereby improving the shopping experience on our platform.

Once our buyers have selected all the products they intend to purchase and drop them into the buyer’s digital “shopping cart,” they will proceed to select the delivery method at the checkout page. Buyers can pay for their purchases by debit or credit card, mobile payment and digital wallet services. Buyers may also benefit from our Fintech offerings, such as OZON.Card (our OZON-branded debit card) and OZON.Installment (our buyer-facing lending option).

Enhancing buyer loyalty

In April 2019, we launched OZON.Card issued by partner bank, our OZON-branded debit card that offers cardholders a suite of benefits. In July 2022, we relaunched OZON.Card based on MIR payment system issued by our own Bank. Purchases on Ozon marketplace with the OZON.Card provide special discounts on a wide products mix for all cardholders. Transactions outside of marketplace give the cardholder cashback of 1% for all purchases and up to 10% for specific product categories of the value amount.

We believe that these reward programs incentivize holders of OZON.Card to increase the frequency of their purchases for both on-platform and off-platform purchases. In the three months ended December 31, 2022, OZON.Card was the most popular payment method on the Ozon platform.

Seller Experience

As one of the leading multi-category e-commerce companies in Russia, with a large and growing buyer base of approximately 35.2 million active buyers as of December 31, 2022, we believe that our platform presents an opportunity for businesses of all sizes and maturities across Russia to achieve greater online commercial success. Both businesses and entrepreneurs can become sellers on our platform, provided that they meet our onboarding criteria. Becoming a seller on our platform is designed to be as straightforward as possible, without compromise on the thoroughness of our security and KYC checks. Once a prospective seller has cleared our KYC checks, the prospective seller’s account will be activated and it may start listing its products on our platform. Our engagement with our sellers, subject to our standard terms and conditions of the engagement, is for an indefinite period of time. We may unilaterally suspend a seller’s account under certain circumstances, including where the seller’s service quality has fallen to a level that we determine warrants such suspension, the seller is in default of its payment obligations to us, the seller’s product listings are misleading or inaccurate, the seller infringed the intellectual property rights of a third party or sells counterfeit products.

Sellers across Russia can sell their goods on our platform for as long as they are able to procure the delivery of their products to one of our fulfillment centers (under the FBO model), fulfill and deliver parcels to our sorting hubs while OZON handles last-mile deliveries (under our FBS model) or fulfill and deliver parcels to customers directly (under our Storefront model).

Our OZON.Seller interface with our constantly evolving Seller App has been designed to be user friendly and gives sellers access to a broad set of advanced tools for inventory management, assortment management, product pricing and marketing, including downloadable analytical and financial performance reports on their sales and expenses, such as storage, returns or fulfillment costs. We also offer our sellers a suite of promotional and profit management tools, including the ability to tailor discount packages or marketing campaigns towards specific group of buyers, access to marketing impact analytics and the ability to participate in promotional activities.

Fulfillment and Logistics Infrastructure

Ozon logistics infrastructure serves two core functions, fulfillment and delivery for both our Marketplace business and our Direct sales business. The fulfillment process involves the acceptance, storage, consolidation and packaging of ordered products into parcels at our fulfillment centers. We mostly lease fulfillment centers from third-party contractors, who build fulfillment centers to our specifications to suit our business operations and bear the construction costs. We also own several fulfillment centers. Our fulfillment centers are equipped with our proprietary warehouse management system. Our warehouse management system enables the automation of the processes at our fulfillment centers, such as the acceptance, placement, selection, consolidation, sorting and packaging of products, and the tracking of each product during each stage of the fulfillment process. For further information on our fulfillment and logistics infrastructure, please refer to Item 4.D “Information on the Company—Property, Plants and Equipment.”

Once the fulfillment process of a product is completed, the parcel is transferred to one of our many sorting hubs located across Russia, which then directs it to the appropriate “last-mile” delivery channel, including our own fleet of delivery vehicles, our network of OZON-branded pick-up points and parcel lockers and delivery by third-party delivery service providers, where appropriate. We believe that our last-mile nationwide and multichannel delivery infrastructure is one of our key competitive advantages and makes shopping on our platform more convenient. We aim to further develop our network of pick-up points through a franchise model that will allow us to expand our delivery infrastructure without the need to purchase or lease real estate for the purpose of housing pick-up points.

Marketing and Sales

We have a dedicated marketing team that covers our nationwide advertising and marketing needs across all product categories and channels. Our marketing strategy has four core objectives:

•

increase our buyer base and brand awareness;

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maximize user traffic on our platform and organically improve conversion;

•

optimize our traffic acquisition costs; and

•

increase order frequency and buyer loyalty.

We aim to achieve these objectives through a variety of strategies, including by maximizing our offline visibility by branding the assets and equipment used in our nationwide delivery infrastructure, expanding our product catalog, targeted advertisements to buyers and promoting our OZON Premium membership.

Technology

Our IT department is essential to our ability to implement our strategy, improve our operational performance, maintain the scalability, security and flexibility of our platform and strengthen our competitive position in the Russian e-commerce market.

Our IT product development teams are organized by verticals, such as buyer experience, seller experience, fulfillment, logistics and CRM, and are supported by our horizontally organized IT teams that are grouped into specializations, such as development operations and database administration, release engineering, security and incident management. We believe the organization of our IT product development teams optimally facilitates the scaling and maintenance of our core technology platform.

All of our core software, which includes all software necessary for our business to operate in the ordinary course of business and excludes proprietary software such as office software and enterprise resource planning systems or other general purpose software (such as issue-tracking and monitoring, code libraries), are developed in-house by our team of IT engineers.

Cybersecurity

We have developed a multi-level cybersecurity framework and a set of cybersecurity policies to protect our IT systems, databases and transactions conducted on our platform. The analytical processes and protection tools implemented to protect data and our IT systems include perimeter protection tools, perimeter scanning, user rights restrictions on workstations, Secure Sockets Layer (SSL) encryption technology, antivirus protection, software update controls, code review and stress and load tests. Our staff undergo our internally developed training program on workplace protection and password policy, rules of safe communication and use of software, incident management and personal data protection. We also regularly screen our IT systems to detect data leakages and security breaches.

We meet industry standards and international best practices in the field of information security and data protection, including compliance with applicable Russian laws, PCI DSS, CBR standards concerning financial transactions of our banking subsidiaries, as well as the standards of third-party technology solutions that we use.

See Item 4.B “Information on the Company—Business Overview—Regulatory Environment—Privacy and Data Protection Regulation” for more information.

International Operations

Ozon Global

Since 2019 our cross border business Ozon Global has enabled international sellers to offer goods to our customers. As of December 31, 2022 approximately 16 thousand international sellers from 45 countries, including China, Turkey, India, South Korea, Israel, Thailand, operated on our platform. In 2022 we continued to expand our global operations and launched Ozon Partner Delivery for goods from Turkey and China, and our Marketplace introduced direct sales of popular clothing and footwear brands by merchants through the Ozon Global platform. In October 2022, we established a sales office in Turkey to attract further local sellers, further expand our product assortment and improve delivery time.

Operations in EEU countries

We believe that our buyer and seller value propositions will be attractive to consumers and merchants in other EEU countries. Our international expansion allows us to further expand the total addressable market beyond Russia and capture the opportunity in additional underpenetrated e-commerce markets. We launched our operations in Belarus and Kazakhstan in 2021. Our customers in Belarus and Kazakhstan can order products on our platform and collect their parcels from one of numerous “Belpochta” offices (post offices) across Belarus and “Kazpochta” offices (post offices) across Kazakhstan. We also aim to onboard Belarussian and Kazakh merchants to our platform, which will provide Russian consumers an even greater assortment of products while providing Belarussian and Kazakh businesses, from SMEs and large brands, greater access to the Russian consumer market.

Intellectual Property

We rely primarily on a combination of trademark, software and domain names regulation in Russia, as well as contract provisions to protect our intellectual property.

“Ozon.ru” is a registered trademark in Russia where it is considered to be a “well-known” trademark with respect to our key services. Ozon.ru is also a registered trademark in the U.S., Israel, Germany, Latvia, Lithuania, Estonia and some former Commonwealth of Independent States (“CIS”) countries that are designated contracting parties under the Madrid Agreement Concerning the International Registration of Marks dated April 14, 1891 (the “Madrid Agreement”) and the Protocol to the Madrid Agreement dated June 27, 1989 (the “Protocol to the Madrid Agreement”). We have other registered trademarks in Russia, which include “Ozon” and “Ozon Travel.”

Our employee contracts contain terms that provide us with rights to all software developed by our employees in the course of their employment with us. We occasionally engage third parties to develop software that is not material to our operations, and, in each case, we seek to engage such third parties under copyright assignment agreements or license agreements, as applicable.

Our domain name “Ozon” is duly registered and has legal protection in Russia.

Litres

We hold a 42.27% interest in Litres, the leader in the licensed digital books market in Russia and the CIS countries. We believe that Litres has demonstrated a high level of growth and profitability. In the year ended December 31, 2022, Litres had revenue of ₽7.3 billion, an 8% increase from ₽6.7 billion in the year ended December 31, 2021 and 43% from ₽5.1 billion in the year ended December 31, 2020. Litres had a net income margin (which we define as

Litres’ total comprehensive income as a percentage of Litres’ revenue) of 10% in the year ended December 31, 2022, compared to 8% in the year ended December 31, 2021 and 5% in the year ended December 31, 2020. Litres has a diversified offering of digital books products. Litres sells digital books and audiobooks through “pay-per-download” sales on the Litres website and mobile apps (that are compatible with both iOS and Android) or through paid subscriptions on its Mybook and “Zvuki slov” websites and mobile apps (that are compatible with both iOS and Android). Litres also serves as a self-publishing platform for authors through its Litres.Selfpub service.

OZON.Travel

OZON.Travel is one of the leading online travel agencies in Russia that offers a one-stop platform for flight and railway ticket bookings and hotel reservations for both B2C and B2B clients. OZON.Travel also offers B2B services to small and medium-sized enterprises by providing them a high-quality mobile app, flexible payment options and seamless electronic document reconciliation, reports and transactions. As of December 31, 2022, OZON.Travel was fully integrated with Ozon.ru, the main e-commerce platform business, which enables us to promote OZON.Travel to our large buyer base. In the year ended December 31, 2022, OZON.Travel had revenue of ₽0.7 billion, a 70% increase from ₽0.4 billion in the year ended December 31, 2021.

Seasonality

Our business is affected by seasonality, which historically has resulted in higher sales volume during the second half of the year compared to the first half. Higher sales during the second half of the year are mainly attributable to the increased demand for products during the peak New Year season in December, as well as Black Friday sales in November. We believe that our business will continue to demonstrate seasonal patterns in the future. For further information on our quarterly data, please refer to “Quarterly Data” and “Other Factors” in Item 5. “Operating and Financial Review and Prospects.”

Licenses

Please refer to Item 5.C. “Operating and Financial Review and Prospects—Research and Development, Patents and Licenses, etc.” for description of the licenses currently held by our group companies.

Regulatory Environment

Intellectual Property Regulation

Our intellectual property rights to trademarks and other types of intellectual property enjoy protection under Russian law and international conventions. The Civil Code (Part IV) is the basic law in Russia that governs intellectual property rights, including their protection and enforcement. The software and technologies that we develop internally generally do not require registration and enjoy legal protection simply by virtue of being created and either publicly disclosed or existent in a certain physical form. In addition, we obtain exclusive rights to materials that are subject to copyright protection and that are created for us on the basis of agreements with the authors of such materials. Also, subject to the provisions of the Civil Code, we are deemed to have acquired exclusive rights to copyright objects created by our employees during the course of their employment with us and within the scope of their job functions.

Under Russian law, the registration of copyright is not required. Software may be registered by a copyright holder, at its discretion, with the Russian Federal Service for Intellectual Property (“Rospatent”).

Trademarks, inventions, utility models and industrial designs require mandatory registration with Rospatent to have legal protection in Russia. Trademarks registered abroad under the Madrid Agreement Concerning the International Registration of Marks dated April 14, 1891 (the “Madrid Agreement”) and/or the Protocol to the Madrid Agreement dated June 27, 1989 (the “Protocol”), have equal legal protection in Russia as trademarks registered locally. Our main brands are registered as trademarks in Russia. We have several Ozon-related brands registered in the U.S., Israel, Germany, Latvia, Lithuania, Estonia and some former CIS countries under the Madrid Agreement and the Protocol to the Madrid Agreement.

The Civil Code generally provides for the legal protection of trademarks registered with Rospatent. In addition, Russia protects trademarks registered under the Madrid Agreement and the Protocol, if international registration of such trademarks extends to Russia.

Registration of a trademark in Russia by Rospatent is valid for 10 years after the filing (extendable for additional 10 year rolling terms). The same term applies to international registration under the Madrid Agreement. Registration only protects the classes of goods or services subject of the registration. In the absence of registration, the trademark is not protected against unauthorized use by a third party.

The Civil Code recognizes a concept of a well-known trademark, i.e., a mark which, as a result of its widespread use, has become well known in association with certain goods among Russian consumers. Well-known trademarks enjoy more legal benefits than ordinary trademarks, including broader coverage (i.e. an exclusive right of the trademark owner to use it with classes of goods for which the trademark was not registered, provided the use of an identical or confusingly similar trademark by a third party would cause consumers to associate the third party’s trademark with the owner of the well-known trademark and would affect its legitimate interests) and an unlimited registration period. One of our trademarks is registered as a well-known trademark in Russia.

We note, however, that the Russian legal system is still evolving and courts do not have a reputation for protecting intellectual property rights as vigorously as jurisdictions such as the United States. As a result, we may face a higher risk of intellectual property infringement compared to companies operating in certain other jurisdictions. See Item 3.D. “Key Information—Risk Factors—Risks Relating to Our Business and Industry—If we fail to adequately protect our intellectual property rights, our business, prospects, financial condition and results of operations could be adversely affected.”

Advertising Regulation

We advertise our product offerings to our buyers and also offer advertising services to our sellers and third parties. Advertising is a highly regulated activity in Russia, principally by the Law on Advertising dated March 13, 2006 (as amended, the “Advertising Law”).

The Advertising Law prohibits various types of advertisements (including, among others, those which may induce criminal, violent or cruel behavior, those which use pornographic or indecent materials and those which are misleading), as well as advertisements for certain regulated products and services without appropriate certification, licensing or approval. Advertisements for products such as alcohol, pharmaceuticals, baby food, financial instruments or securities and financial services, as well as incentive sweepstakes and advertisements aimed at minors, must comply with specific rules and must in certain cases contain specified disclosure.

Russian advertising laws define and prohibit, among other things, “unfair,” “untrue” and “hidden” advertising (i.e., advertising that influences consumers without their knowledge). Advertising based on improper comparisons of the advertised products with products sold by other sellers is deemed unfair. It is also prohibited to advertise goods which may not be produced and distributed under Russian law.

The Advertising Law, as well as the Competition Law, restrict unfair competition in terms of information flow such as the dissemination of false, inaccurate, or distorted information, misrepresentation with respect to the nature, method, and place of manufacture, consumer characteristics, quality and quantity of a product or incorrect comparison of one product with those sold or manufactured by others.

Pursuant to the Advertising Law, any email advertising is subject to preliminary consent of a recipient. The Advertising Law does not specifically regulate display advertising, such as pop-up ads appearing on third-party websites, which may potentially be qualified as “telecom” advertising, being subject to a recipient’s consent pursuant to the Advertising Law.

Violation of the Advertising Law can lead to civil actions or administrative penalties imposed by the FAS.

The application of the Advertising Law and related legislation to parties that merely facilitate or distribute advertisements (as opposed to marketing or selling the relevant product or service) can be unclear. Pursuant to our terms of service, we require that our advertisers have all required licenses or authorizations. If they do not comply with these requirements, and the Advertising Law is interpreted to apply to us in these circumstances, or if our advertising serving system fail to include the necessary disclaimers, we may be exposed to administrative fines or other sanctions.

In 2021, amendments that require major internet and e-commerce companies, including ourselves, to allocate 5% of website advertising capacities to social advertisements were adopted. Further amendments are expected regarding the share of website commercial capacities (not only advertising) allocated to social advertisements.

Since September 2022, advertisers, advertising distributors and advertising system operators, including ourselves, are required to submit information about advertisements to the Unified Online Advertising Register, maintained by Roskomnadzor. Currently no special liability provisions have been introduced in the Code on Administrative Offences in connection with these new requirements, however we expect that further amendments will be adopted soon. See Item 3.D. “Key Information—Risk Factors—Risks Relating to Russia—We may be subject to existing or new advertising legislation that could restrict the types of advertisements we serve, which could result in a loss of advertising revenue.”

Privacy and Data Protection Regulation

As we collect, store and otherwise handle personal data of our buyers, sellers and employees, we are subject to laws and regulations regarding privacy and protection of the user data, including the Personal Data Law. The Personal Data Law, among other things, requires that any processing of personal data of an individual (including collection, recording, systematization, accumulation, storage, use, transfer, blocking, deleting and destroying) is generally subject to such individual’s preliminary consent (which must, from an evidential perspective, sufficiently attest to the fact that it has been obtained but, in most cases, not necessarily be in writing). However, in a number of cases the consent must be in writing (and signed by holographic or electronic signature), including for special sensitive categories of personal data and biometric personal data and the reporting or transferring of an employee’s personal data to a third party.

The Personal Data Law also provides for the right to withdraw consent, in which case the person processing personal data has the obligation to destroy the data relating to the relevant individual. Failure to comply with legislation on personal data protection may lead to civil, disciplinary, administrative and criminal liability, and an obligation to terminate or procure the termination of any wrongful processing of personal data.

The Personal Data Law requires personal data operators to conduct certain types of personal data processing (“restricted processing actions”, including recording, systematization, accumulation, storage, clarification (updating, modification), extraction or downloading) with respect to Russian citizens exclusively with the use of Russian databases. According to Roskomnadzor guidance, the parallel input of gathered personal data into a Russian information system and a foreign-based system is prohibited. These data may be transferred to a foreign-based system by way of cross-border transfer from a Russian-based system only. Failure to comply with data processing requirements, including the localization requirement, may result in a court decision blocking our website and our inclusion in a special register for infringers of personal data processing requirements, as well as imposition of an administrative fine.

We are required to comply with Russian legislation on information security and data protection, including the Law on Information, Information Technologies and Information Protection dated July 27, 2006 (as amended), the Law on Trade Secrets dated July 29, 2004 (as amended), and applicable CBR regulations concerning financial transactions of our banking subsidiaries.

The Russian legal framework governing data protection continues to develop, and therefore, there may be uncertainties as to the application or interpretation of these laws. See Item 3.D. “Key Information—Risk Factors—Risks Relating to Russia—The ongoing development of the Russian legal system and Russian legislation, including the legal framework governing e-commerce, data protection and related internet services, creates an uncertain environment for investment, business activity and our operations.”

Antimonopoly Regulation

Our Russian subsidiaries are subject to Russian antimonopoly regulation. Also, the Competition Law has extraterritorial application to transactions and actions which are performed outside of Russia but lead, or may lead, to the restriction of competition in Russia. The Competition Law vests the FAS as the antimonopoly regulator with wide powers and authorities to ensure competition in the market, including prior approval of mergers and acquisitions, monitoring activities of market players that occupy dominant positions, prosecution of any wrongful abuse of a dominant position, prevention of cartels and other anti-competitive agreements or practices and counteracting unfair competition. The regulator may impose significant administrative fines on market players that abuse their dominant position or otherwise restrict competition, and is entitled to challenge contracts, agreements or transactions that violate or may violate competition. Furthermore, for systematic violations, a court may order, pursuant to a suit filed by the FAS, a compulsory split-up or spin-off of the violating company, and the new entities established as result of such a mandatory reorganization cannot form a group of companies.

We currently consider that we do not occupy a dominant position in any of the commodity markets. At the same time, we cannot rule out that the FAS could view the product boundaries of a commodity market differently.

In February 2022, the FAS and leading Russian IT, internet and e-commerce companies, including ourselves, signed guidance introduced by the FAS on the basic principles of interaction between participants of digital markets, which provides for, among other things, reasonable transparency of digital platforms, neutrality towards other market participants, including competitors, and safeguards for the platform users’ rights.

Consumer Protection and Commerce Regulation

As the majority of our buyers are individuals, we are subject to Russian laws and regulations regarding consumer protection and trade regulation, including:

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Law on Essentials of State Regulation of Commerce in the Russian Federation dated December 28, 2009 (as amended) which establishes the general legal framework for regulation of wholesale and retail activities carried out in Russia. Among other matters, it contains antimonopoly provisions and regulation of supply contracts with respect to food products, introduces a system of trade registers and requires the application of identification marks (the so-called “Fair Mark”) to certain product categories for the purposes of product monitoring and counterfeit combat.

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Law on Technical Regulation dated December 27, 2002 (as amended) which establishes a general legal framework for the application of product requirements and the assessment of product conformity. There are also particular technical regulations that provide for detailed requirements in respect of product categories.

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Sanitary and Epidemiological Rules and Regulations approved by the Russian Chief Sanitary Officer which establish requirements regarding supporting documents, raw materials and components to be used in baby food products, as well as package and chemical compound requirements.

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Law on Quality and Safety of Food Products dated January 2, 2000 (as amended) which establishes a general framework for ensuring the quality and safety of food products, including requirements regarding their packaging, storage, transportation, sale and disposal.

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Law on Protection of Consumer Rights dated February 7, 1992 (as amended) which establishes a general legal framework for regulation of the relationship between sellers, manufacturers and service providers, on the one hand, and buyers, on the other hand, in the course of the sale of goods, performance of works or rendering of services. It prohibits contractual terms limiting consumer rights and contains certain minimum standards as well as information rights for consumers.

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Regulation of the Russian Government dated December 31, 2020, approving, among others, rules of the distant retail sale of products, which establishes a general framework between sellers and buyers in respect of distant sale of products. Among other matters, this provides for conditions of entering into contract of distant sale, specific rights of buyers, such as rejection and return of certain products, as well as certain minimum standards.

If we expand the categories of products we are offering (for example, alcoholic beverages), we will need to follow the effective rules of the sale of such products.

On May 16, 2020, the Russian Government adopted the procedure for the issuance of permits on distant sale of pharmaceuticals. In order to be eligible for such a permit from Roszdravnadzor, a company must have had a pharmaceutical license for at least one year; places for the storage of orders meeting certain requirements; a website or mobile app; its own or third-party courier service with cold chain capabilities; and an electronic or mobile payment system to pay for goods at the place of service.

We hold a license for pharmaceutical activities for medical use, permit for online sale of medicines and license for pharmaceutical activities for veterinary use.

Regulation of the Sale and Lease of Real Estate

The majority of the premises we use are leased (for example, the office of our key operating subsidiary, Internet Solutions LLC, and most of our fulfillment centers). From time to time, we may also manage real estate in accordance with our asset-light strategy. Under the Civil Code, agreements relating to sale or lease of real estate must expressly set out the details of the real estate and the purchase price or lease rate. Registration is required for real estate transfer agreements and lease agreements (other than short-term leases for less than one year). Subject to certain requirements, unregistered lease agreements are binding on the parties, but not against third parties. As a general rule, the tenant has a pre-emptive right to renew a lease upon its expiry on the terms and conditions to be agreed by the parties. Lease agreements may only be unilaterally terminated in limited prescribed situations (through a court procedure) or pursuant to the lease terms.

Employment Regulation

We have employees working in our fulfillment centers, delivery infrastructure operations and research labs and corporate offices. Employment matters in Russia are governed mainly by the Labor Code and numerous implementing enactments, which are enforced by the Russian courts and the Federal Service on Labor and Employment. The Labor Code sets out minimum rights of employees and requires a written employment agreement to be in place that must, as a general rule, be for an indefinite term. Unilateral early termination of employment agreements by an employer is possible only for certain grounds and subject to specified remedies for the employee, except in the case of termination for cause.

In 2018, the law on the special tax regime for the “self-employed” was adopted in several constituent entities of Russia (and extended to all of Russia from July 1, 2020). For the purposes of this law, a self-employed person is an individual conducting income-generating activities while not having an employer, not engaging employees and not benefiting from property income. The income tax rate for the self-employed varies from 4% to 6%, as opposed to the standard 13% applicable income tax rate.

One of our key Russian operating subsidiaries contracts with some individuals who are registered as self-employed and individual entrepreneurs (for example, couriers that help with our fulfillment and logistics). As such, based on current legislation, we do not consider these individuals to be members of our staff, and we are not obliged to pay or withhold any taxes or social contributions when making payments to them. See Item 3.D. “Key Information—Risk Factors—Risks Relating to Our Business or Industry—Our business may be adversely affected if counterparties that we contract with who are registered as individual entrepreneurs or self-employed persons, which includes couriers, are classified as our employees.”

Customs Regulation

The Eurasian Economic Commission has the authority to establish customs duties. Personal use products sent to Russia through international mail or delivered by carriers are free from these duties if their price does not exceed a specified threshold. Since 2019, this threshold has fluctuated from €200 to €1,000 per mailing pack. Since 1 April 2023, the current threshold has been €200 per mailing pack weighting below 31 kg. See Item 3.D. “Key Information—Risk Factors—Risks Relating to Our Business and Industry—An increase in the share of international e-commerce companies in the Russian market or changes in measures aimed at restricting international e-commerce may adversely affect our business and results of operations.”

Banking Regulation

Ozon Bank (ex-Ecom Bank), our subsidiary, operates as credit organization in Russia and is therefore subject to various banking laws and regulations. The Russian Law “On Banks and Banking Activities” dated December 2, 1990 (as amended, the “Banking Law”) is the principal law regulating the Russian banking sector. Among other things, it establishes the framework for the registration and licensing of credit organizations and the regulation of banking activity by the CBR.

From 2017, the Banking Law divides Russian banks into two groups: banks with a general license and banks with a basic license. A bank with a basic license may not perform certain kinds of banking operations with foreign persons, such as placement of funds deposited with it by individuals and legal entities on its behalf and for its own account, depositing and placement of precious metals, issuance of bank guarantees or acting as a surety, leasing operations, acquisition of claims against foreign persons, as well as opening of a correspondent account with a foreign bank, save for the purposes of participating in foreign payment systems.

In April 2023, Ozon Bank and Ecom Bank completed a reorganization by way of accession of Ozon Bank to Ecom Bank. Ozon Bank was a holder of a basic banking license. Ecom Bank, the surviving entity in the reorganization, was renamed Ozon Bank and is a holder of a general banking license. The basic banking license was annulled by the CBR.

Licensing

A license must be obtained from the CBR to engage in banking activities as defined in the Banking Law. Applicants must be incorporated within Russia and registered with the CBR as a credit organization, and submit, among other things, a feasibility report and detailed information on the suitability of the applicant’s management team.

The CBR must revoke a bank’s license if, among other things:

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its capital adequacy ratio falls below 2%;

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its regulatory capital is less than its minimal charter capital as set by the CBR;

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the bank fails to adjust its charter capital to its regulatory capital according to CBR requirements within 45 days of CBR notification;

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the bank fails to satisfy the claims of its creditors or make mandatory payments (for example, taxes and duties) amounting to an aggregate minimum of ₽100 thousand within 14 days of such amounts falling due; or

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the amount of the bank’s regulatory capital is less than a certain statutory threshold during a certain defined period of time.

The CBR may also revoke a bank’s license on other grounds, including for failure to provide accurate information or engaging in activities which do not comply with Russian banking, insider trading or anti-money laundering regulations.

Charter Capital Requirements

Under the Banking Law:

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the minimum charter capital for newly-established banks in Russia holding general license is ₽1 billion; and

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the minimum regulatory capital for banks holding general license is ₽1 billion.

Ozon Bank (ex-Ecom Bank) is compliant with the above capital requirements.

Reporting Requirements

Russian banks must regularly submit balance sheets to the CBR, together with financial statements showing their actual respective financial positions. They must also inform the CBR in respect of providing large loans, guarantees and sureties (exceeding 5% of a bank’s capital in respect of a single client). The CBR may at any time carry out full or selective checks of a bank’s submissions and may inspect all books and records of the bank. In addition, annual audits must be carried out by an audit company that is a member of a self-regulatory organization of auditors. All credit organizations in Russia are required to prepare financial statements according to Russian Accounting Standards, while credit institutions holding a general license are also required to prepare financial statements according to IFRS. Banks must also regularly file reports on their activities with the CBR in the prescribed form.

Mandatory Reserve Deposit Requirements

To cover loan losses and currency, interest and financial risks, the CBR requires banks to form mandatory reserve deposits and keep them in designated non-interest-bearing accounts with the CBR or to maintain an average amount of mandatory reserves on the banks’ correspondent accounts with the CBR.

From April 1, 2023, mandatory reserves applicable to credit organizations holding general banking license are:

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4% in respect of each of the following categories of obligations in rubles: (i) obligations to foreign legal entities, (ii) obligations to individuals and (iii) other types of obligations;

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7.5% in respect of each of the following categories of obligations in foreign currency of “hostile” states (including USD): (i) obligations to foreign legal entities, (ii) obligations to individuals and (iii) other types of obligations; and

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5.5% in respect of each of the following categories of obligations in foreign currency of “non-hostile” states: (i) obligations to foreign legal entities, (ii) obligations to individuals and (iii) other types of obligations.

The CBR and its regional units have the right to conduct unscheduled audits of credit organizations to monitor their compliance with the reserve rules, with fines and direct debits applicable for contraventions.

Capital Control and Protection Measures Related to the Geopolitical Crisis Surrounding Ukraine

In response to the sanctions imposed on Russia and Russian persons by a number of countries in connection with the geopolitical crisis surrounding Ukraine, Russia identified various states, including the United States, all European Union member states and the United Kingdom (including the British Crown Dependencies and British Overseas Territories), as “hostile” and introduced a number of economic measures in connection with their actions, as well as economic measures aimed at ensuring financial stability in Russia.

In response, various decrees have been introduced in Russia, including, among others:

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Decree No. 79 of the Russian President dated February 28, 2022 which introduced a mandatory sale of foreign currency proceeds by Russian residents participating in foreign economic activity within the amounts determined by the Russian Government Commission for the Control of Foreign Investments (the “Government Commission”) (currently set at 0%) and within the time periods determined by the CBR. This decree also banned foreign currency loans to non-Russian residents and certain foreign currency transfers abroad without a permit.

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Decree No. 81 of the Russian President dated March 1, 2022 which established the Government Commission’s approval regime for transactions between persons from “hostile” states and Russian residents (and Russian entities controlled by persons from “hostile” states, for example Ozon) with respect to securities and real estate.

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Decree No. 95 of the Russian President dated March 5, 2022 which established a special procedure for the servicing and repayment of debt exceeding ₽10 million per month to foreign creditors from “hostile” states (including a requirement to use a special ruble type “C” account materially restricting operations from such account), unless a permit from the CBR or the Russian Ministry of Finance is granted.

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Decree No. 126 of the Russian President dated March 18, 2022 which requires Russian residents to obtain a permit from the CBR for certain types of capital injections to non-Russian residents, subject to certain exceptions, including for capital contributions in rubles or currencies of “non-hostile” states or in the amounts not exceeding ₽15 million in currencies of “hostile” states. This decree also established limitations on the amount of prepayments and advance payments made by Russian residents to non-Russian residents under certain types of contracts as set out by the CBR (currently set at 0%).

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Decree No. 254 of the Russian President dated May 4, 2022 which imposed restrictions on distribution of profits by Russian limited liability companies to persons from “hostile” states.

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Decree No. 520 of the Russian President dated August 5, 2022 which set out further prohibitions and restrictions on transactions which directly or indirectly affect control over credit institutions included on the list (both Ozon Bank and Ecom Bank are included on this list).

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Decree No. 618 of the Russian President dated September 8, 2022 which introduced restrictions on investors’ ability to restructure holdings in or exit Russian limited liability companies.

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Decree No. 737 of the Russian President dated October 15, 2022 which introduced additional restrictions on transactions with share capital of Russian credit institutions with persons from “hostile” states.

Operations in other jurisdictions

In addition to Russia, we have operations in other jurisdictions (including Kazakhstan and Belarus) which we do not consider material in the context of our Group and business. These operations are subject to the laws and regulations applicable in such jurisdictions. To the extent we expand into new jurisdictions, we will also be subject to the laws and regulations applicable in those new jurisdictions.

C. Organizational Structure

We are an entity incorporated in Cyprus and are acting as a holding company for all of our operating subsidiaries. On October 22, 2020, Ozon Holdings Limited was converted from a private limited liability company incorporated in Cyprus into a public limited company incorporated in Cyprus, and our name changed pursuant to a special resolution at a general meeting of our shareholders to Ozon Holdings PLC. Our key operating subsidiary is Internet Solutions LLC, registered in Russia and wholly-owned by the Group.

D. Property, Plants and Equipment

We lease and operate a network of fulfillment centers with a total building footprint of approximately 712,000 square meters. Our fulfillment centers are located in Moscow, Tver, Saint Petersburg, Kaliningrad, Kazan, Yekaterinburg, Rostov-on-Don, Novosibirsk, Voronezh, Novorossiysk, Nizhniy Novgorod, Chapayevsk and Khabarovsk. We also have fulfillment centers in Kazakhstan and Belarus.

We own the warehouse equipment used in our leased fulfillment centers, such as mezzanines, sorting machines and conveyor lines. We also own the computer equipment and hardware that we use in our warehouses, used to automate fulfillment and sorting processes, as well as the computer equipment and hardware in our call centers and offices.

All our offices, including our principal executive office of our key operating subsidiary, Internet Solutions LLC, located at 10 Presnenskaya Embankment, “Naberezhnaya Tower” Tower C, 123112, Moscow, Russia, are leased.

Item 4A. Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled Item 3.A. “Key Information—Selected Financial Data,” and our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements and is affected by numerous risks and uncertainties, including those described in Item 3.D. “Key Information—Risk Factors” of this Annual Report. Actual results could differ materially from those contained in any forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” for more information.

A. Operating Results

Overview

We are a leading e-commerce platform in the large, fragmented, underpenetrated and growing Russian e-commerce market, according to INFOLine. We connect and facilitate transactions between buyers and sellers on our Marketplace, where the respective GMV represented 76% of our GMV incl. services and the respective commissions represented 38% of our total revenue in the year ended December 31, 2022. We also sell products directly to our buyers through our Direct Sales business, which represented 19% of our GMV incl. services and 49% of our total revenue in the year ended December 31, 2022. We have approximately 170 million SKUs, as of December 31, 2022, spanning multiple categories, including electronics, home and decor, children’s goods, FMCG, fresh food and car parts, at competitive prices and with a wide range of delivery options.

In the year ended December 31, 2022, our platform served approximately 35.2 million active buyers who placed an average of 13.2 orders per buyer during that year, an increase from approximately 25.6 million active buyers who placed an average of 8.7 orders per buyer in the year ended December 31, 2021. For the year ended December 31, 2022, our GMV incl. services increased by 86% to ₽832.2 billion from ₽448.3 billion in the year ended December 31, 2021, and for the year ended December 31, 2021, our GMV incl. services increased by approximately 127% to ₽448.3 billion from ₽197.4 billion in the year ended December 31, 2020.

Due to the significant expenses required to finance our growth as well as, for the year ended December 31, 2022, one-off expenses related to the convertible bonds and a fire incident, we incurred a loss of ₽58.2 billion, ₽56.8 billion and ₽22.3 billion in the years ended December 31, 2022, 2021 and 2020, respectively. See Item 5.A “Operating and Financial Review and Prospectus—Operating Results—Comparison of the Results of Operations for the Years Ended December 31, 2022, December 31, 2021 and December 31, 2020—Loss on convertible bonds and Operations – Loss related to the fire incident”.

Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis relating to Ukraine, as well as further regulatory measures taken by the Russian Government in response, have had a significant, and in many cases, unprecedented, impact on companies operating in Russia. These actions have impacted our business and may continue to do so going forward. For more details, see Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis relating to Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs.”

Factors Affecting Our Financial Condition and Results of Operations

Our financial condition and results of operations are driven by our success in attracting and retaining buyers to our platform and increasing the frequency of the purchases they make, onboarding sellers to enlarge assortment, as well as our ability to enhance the efficiency of our operations as we continue to grow. In 2020 and 2021, our results of operations were affected by the COVID-19 pandemic and related response measures, while in 2022 our operations were affected by the ongoing geopolitical crisis relating to Ukraine. For more details, see Item 3.D “Key Information—Risk Factors—Risks Relating to Our Business and Industry— Our business may be materially adversely affected by the COVID-19 pandemic” and “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis relating to Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value and trading of our ADSs.”

Number of our buyers and sellers and the product assortment offered on our platform

The combination of our wide selection of products, competitive prices and convenient buyer shopping experience, coupled with our strong brand awareness and seller support tools and services, enable us to attract more buyers to our platform, which, in turn, draws more sellers to our Marketplace, resulting in an expansion of our product catalog and increased buyer retention. We have seen significant increases in the number of active buyers on our platform in recent periods. As of December 31, 2022, we had 35.2 million active buyers, compared to 25.6 million and 13.8 million active buyers as of December 31, 2021 and 2020, respectively. We have grown significantly faster than the Russian e-commerce market, with our GMV incl. services increasing by 86% to ₽832.2 billion for the year ended December 31, 2022, from ₽448.3 billion for the year ended December 31, 2021.

We actively focus on increasing the range of features we offer to sellers to enhance the attractiveness of our Marketplace to our current and potential sellers. We have developed a number of initiatives, including the OZON.Seller platform and our Seller App, which give our sellers access to a broad set of advanced tools for stock management, assortment management, product pricing and marketing, including analytical and financial performance reports on their sales and expenses such as storage, returns or fulfillment expenses, as well as a suite of promotional and profit management tools.

In addition to our Marketplace, we also operate our Direct Sales business, where we purchase products to be sold directly to our buyers. The successful operation of our Direct Sales business depends on a number of factors, including our ability to increase the range of products sold by us directly, achieve competitive prices for such products and ensure the necessary amount of stock in our fulfillment centers for the timely delivery of products to our buyers. See Item 3.D “Key Information—Risk Factors—Risks Relating to Our Business and Industry—We may have difficulties with sourcing the products we sell through our Direct Sales business.”

In any particular period, changes in the volume and share of products sold through our Marketplace or our Direct Sales business will impact our revenue and cost of sales as sales through our Marketplace generate higher gross margins.

Loyalty and engagement of our buyers

Our financial results have benefited from greater retention and higher order frequency in recent years. Annual frequency of orders in 2022 reached 13.2, marking significant step up from 8.7 and 5.4 in 2021 and 2020 respectively. We attribute this increase to continuous enhancements in shopping experience, convenient and fast delivery, wide assortment of goods at attractive prices. We plan to continue developing our core business and adjacent verticals to improve buyer loyalty and engagement, including our Fintech solutions, Ozon fresh and OZON Premium offerings.

Efficiency of our fulfillment and delivery operations

We have built a comprehensive logistics and e-commerce fulfillment and delivery infrastructure, which we believe is one of the leading infrastructures in Russia. Our logistics and fulfillment infrastructure is structured to maximize the efficiency we achieve in fulfillment and delivery activities. We generate revenue from our fulfillment activities mainly through Marketplace commissions collected from our sellers as well as delivery charges to our buyers. We incur fulfillment expenses primarily from our network of fulfillment centers, where we store products sold by us directly and provide storage services to our sellers using the FBO model. Delivery expenses are incurred for our delivery platform which integrates our sorting centers and third party delivery channels (couriers, pick-up points and parcel lockers) into a delivery network.

Our fulfillment and delivery expenses are highly dependent on a number of factors, such as volume of orders and level of utilization for fulfillment and sorting centers, as well as for the delivery network, density of orders, delivery distance and method. Our business already started gaining efficiency and improvement in fulfillment and delivery expenses as a percentage of GMV incl. services in fulfillment infrastructure in 2022, compared to 2021 and 2020 levels as a result of normalization of operating costs at our newly launched fulfillment centers as they reach normalized levels of utilization. We also expect to see improvement in the efficiency of the delivery network following the establishment of our new fulfillment centers in a number of Russian regions to decrease the delivery distance, future growth in density of courier orders and growth in utilization pick-up points and parcel lockers over the long term.

Our ability to leverage our growing scale

We have continued to scale our business, which has positively impacted our margins. While we expect our operating expenses to increase as we continue to expand our business, we expect such expenses to decrease as a percentage of GMV incl. services and revenue over time as we benefit from economies of scale and operating leverage.

Other Factors

Our business is affected by seasonality, which historically has resulted in higher sales volume during the second half of the year compared to the first half. Higher sales during the second half of the year are mainly attributable to the increased demand for products during the peak New Year season in December, as well as Singles Day and Black Friday sales in November. We recognized 56%, 60% and 58% of our annual revenue during the second half of 2022, 2021 and 2020, respectively. We believe that our business will continue to demonstrate seasonal patterns in the future. For further information on our quarterly data, please refer to Item 5. “Operating and Financial Review and Prospects—Quarterly Data.”

Our business is also affected by macroeconomic conditions and the political environment in Russia, where our buyers and sellers are primarily located. For example, during 2020 and 2021, our results of operations were affected by the COVID-19 pandemic and related response measures. See Item 3.D “Key Information—Risk Factors—Risks Relating to Our Business and Industry—Our business may be adversely affected by the COVID-19 pandemic”. Currently, the purchase capabilities of our buyers may be significantly influenced by political and economic developments in Russia and the effects of these factors on demand for products and services. The imposed sanctions in response to the ongoing geopolitical crisis relating to Ukraine and their impact on the Russian economy, alongside the associated inflationary pressures, may also have a significant impact on our ability to achieve profitability or our other financial objectives in the timeline we anticipate. See Item 3.D “Key Information—Risk Factors—Risks Relating to the Current Geopolitical Environment—Sanctions imposed by the United States, the European Union, the United Kingdom and other countries in response to the geopolitical crisis relating to Ukraine are likely to have a material adverse effect on our business, financial condition and results of operations and on the value of, and trading market for, our ADSs.”

Segments

For management purposes, our business is organized into business units, including Ozon.ru (our core e-commerce business, which is comprised of sales of multi-category consumer products through our Buyer Website and Shopping App) and other initiatives and verticals. These business units are managed separately and the results of their operations are reviewed by the chief operating decision maker on a regular basis, including for the purpose of allocating resources between the business units.

Ozon.ru represented over 99% of our revenue for each of the years ended December 31, 2022, 2021 and 2020. As Ozon.ru reflects the consolidated view of all operating segments, we present Ozon.ru as our only reportable segment.

Key Indicators of Financial and Operating Performance

We regularly review a number of metrics, including the following key financial and operating metrics, to evaluate our business, measure our performance and liquidity, identify trends in our business, prepare financial projections and make strategic decisions. We believe these IFRS and non-IFRS financial measures and operating measures are useful in evaluating our performance. We have not provided a discussion in this Annual Report of certain non-IFRS financial measures that we have disclosed in the past, including contribution margin and free cash flow, because we believe that the most directly comparable IFRS financial measures are sufficiently useful for evaluating our results of operations and liquidity.


	For the year ended December 31,
(₽ in millions, except as indicated)	2022			2021			2020
GMV incl. services⁽¹⁾		832,240			448,260			197,414
Share of Marketplace GMV, %⁽²⁾		76.2			64.8			47.8
Total revenue		277,115			178,215			104,350
Net cash (used in)/ generated from operating activities		(18,753	)		(13,626	)		6,570
Loss for the year		(58,187	)		(56,779	)		(22,264	)
Loss for the year as a percentage of GMV incl. services, %		(7.0	)		(12.7	)		(11.3	)
Adjusted EBITDA⁽⁴⁾		(3,215	)		(41,156	)		(11,716	)
Adjusted EBITDA as a percentage of GMV incl. services, %		(0.4	)		(9.2	)		(5.9	)
Number of orders, million⁽⁵⁾		465.4			223.3			73.9
Number of active buyers, million⁽⁶⁾		35.2			25.6			13.8

⁽¹⁾

GMV incl. services (gross merchandise value including revenue from services) comprises the total value of orders processed through our platform, as well as revenue from services to our buyers, sellers and other customers, such as delivery, advertising and other services. GMV incl. services is inclusive of value added taxes, net of discounts, returns and cancellations. GMV incl. services does not represent revenue earned by us. GMV incl. services does not include travel ticketing and hotel booking commissions, other related service revenues or value of the respective orders processed.

⁽²⁾

Share of Marketplace GMV represents the total value of orders processed through our Marketplace, inclusive of value added taxes, net of discounts, returns and cancellations, divided by GMV incl. services in a given period. Share of Marketplace GMV includes only the value of goods processed through our platform and does not include services revenue.

⁽³⁾

Adjusted EBITDA is a non-IFRS financial measure that we calculate as loss for the period before income tax benefit/(expense), total non-operating income/(expense), depreciation and amortization, share-based compensation expense and losses related to the fire incident. Adjusted EBITDA is disclosed here and elsewhere in this Annual Report to provide investors with additional information regarding our results of operations.

Adjusted EBITDA is a supplemental non-IFRS financial measure that is not required by, or presented in accordance with, IFRS. We have included Adjusted EBITDA in this Annual Report because it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses, non-operating income/(expense), and material non-recurring items. Accordingly, we believe that Adjusted EBITDA provides useful information to investors in understanding and evaluating our operating results in the same manner as our management and board of directors.

We believe it is useful to exclude non-cash charges, such as depreciation and amortization and share-based compensation expense, from our Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax benefit/(expense) and total non-operating income/(expense) as these items are not components of our core business operations. We believe it is useful to exclude losses related to the fire incident as these losses relate to a material non-recurring event, which is not indicative of our performance in future. Adjusted EBITDA has limitations as a financial measure, and you should not consider it in isolation or as a substitute for loss for the period as a profit measure or other analysis of our results as reported under IFRS. Some of these limitations are:

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;

•

adjusted EBITDA does not reflect share-based compensation, which has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy;

•

although share-based compensation expenses are non-cash charges, we cannot assure that we will not perform a buy-back or other similar transaction which leads to a cash outflow;

•

although losses related to the fire incident are resulted from a material non-recurring event, there is no assurance that such or similar losses will not recur in the future; and

•

other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, operating loss, loss for the period and our other IFRS results.

The following table presents a reconciliation of loss for the period to Adjusted EBITDA for each of the periods indicated:


(₽ in millions)	For the year ended December 31,
(₽ in millions)	2022			2021			2020
Loss for the year		(58,187	)		(56,779	)		(22,264	)
Income tax expense		1,025			2			230
Total non-operating expense/(income)		13,013			(2,079	)		4,711
Depreciation and amortization		19,770			9,880			4,963
Share-based compensation expense		10,999			7,820			644
Losses related to the fire incident		10,165			—			—

Adjusted EBITDA		(3,215	)		(41,156	)		(11,716	)

⁽⁴⁾	Number of orders is the total number of orders delivered in a given period, net of returns and cancellations.

⁽⁵⁾	Number of active buyers is the number of unique buyers who placed an order on our platform within the 12-month period preceding the relevant date, net of returns and cancellations.

Components of Our Results of Operations

GMV incl. services

GMV incl. services (gross merchandise value including revenue from services) is the key driver of our revenue, as the majority of our revenue is a function of our GMV incl. services. Our primary sources of revenue are sales of goods under our Direct Sales model and Marketplace commissions from the sale of goods by sellers on our Marketplace. From time to time, the mix of products sold through our Direct Sales and Marketplace businesses may

change. These changes may impact our revenue, as we recognize gross sales of goods net of returns and cancellations as revenue for our Direct Sales business and Marketplace commissions as revenue for Marketplace sales. Accordingly, we do not measure the volume of our operations on the basis of revenue but rather on the basis of our GMV incl. services, which also includes revenues from services rendered to our sellers and buyers, such as advertising and delivery services processed through our platform. Revenues from these services correlate with the volume of goods sold on our platform.

Revenue

Sales of goods relate to transactions where we act directly as the seller of goods we purchase from our suppliers (namely, through our Direct Sales business model). We recognize revenue from sales of goods on a gross basis, net of return and cancellation allowances, when the goods are delivered to our buyers.

Service revenue includes Marketplace commissions, charges for delivery services and advertising services, financial services revenue, and travel commissions.

Marketplace commissions represent net commission fees charged to third-party sellers for selling their products through our Marketplace. Upon a sale, we charge the third-party sellers a commission fee, which consists of a base fee and variable fee component. The base fee component of the commission fee is charged based on the product category for the relevant product. The variable fee component of the commission fee is paid by the sellers based on the additional services rendered to the sellers, such as storage fees for products stored at our fulfillment centers and delivery fees. Marketplace commissions are recognized at the point of delivery of products to the buyers.

Delivery services represent charges for the delivery of products to our buyers who place their orders through our mobile apps and website, as well as other customers who benefit from our delivery services.

Advertising services allow our sellers and other customers to place advertisements or display their products in particular areas of our websites and mobile apps at fixed or variable fees. Advertising revenue is recognized evenly over the period in which the advertisement is displayed or based on the number of views or clicks.

Financial services revenue primarily relates to interest income on financial assets of our banking and microcredit entities as well as banking commissions. Interest income is recognized on an accrual basis using the effective interest rate method. Banking commission revenue is recognized as the related transaction occurs.

Travel commissions consist of commission fees and ticketing fees charged from the travel supplier and/or traveler for the sale of airline and railway tickets and hotel bookings, as applicable. Travel commission fees are recognized upon completion of the respective booking.

Operating Expenses

Our primary categories of operating expenses are cost of sales and fulfillment and delivery expenses, as well as sales and marketing, technology and content and general and administrative expenses. As our business continues to grow, we expect our operating expenses to increase in absolute terms but decrease over time as a percentage of GMV incl. services as we continue to benefit from our operating leverage.

Cost of sales consists of the purchase price of consumer products, supplier rebates and subsidies, write-downs and losses of inventories, cost of travel ticketing, the costs of obtaining and supporting contracts with sellers on our Marketplace, and cost of financial service revenues, which primarily consist of interest payable on external financing attracted to finance the loan portfolios.

Fulfillment and delivery expenses consist of outbound shipping costs, packaging material costs, costs incurred in operating our fulfillment centers, sorting centers, customer service centers, pick-up points, expenses related to payment processing, costs associated with the use by these functions of facilities and equipment, such as depreciation expenses, as well as write-offs and losses of sellers’ inventory and other related costs. Fulfillment and delivery expenses also include amounts paid to employees and third parties that assist us in fulfillment, sorting, delivery and customer service operations. Fulfillment and delivery costs are expensed as incurred.

Comparison of the Results of Operations for the Years Ended December 31, 2022, December 31, 2021 and December 31, 2020

The following table presents our results of operations for the years ended December 31, 2022, 2021 and 2020:


	For the year ended December 31,
(₽ in millions)	2022			2021			2020
Revenue:
Sales of goods		135,278			120,792			81,414
Service revenue		141,837			57,423			22,936

Total revenue		277,115			178,215			104,350

Operating expenses:
Cost of sales		(121,475	)		(112,548	)		(72,859	)
Fulfillment and delivery		(122,518	)		(76,240	)		(30,676	)
Sales and marketing		(24,508	)		(23,535	)⁽¹⁾		(10,015	)
Technology and content		(22,851	)		(12,862	)⁽¹⁾		(4,394	)
General and administrative		(19,747	)		(11,886	)⁽¹⁾		(3,729	)
Losses related to the fire incident		(10,165	)		—			—

Total operating expenses		(321,264	)		(237,071	)		(121,673	)

Operating loss		(44,149	)		(58,856	)		(17,323	)

Loss on convertible bonds		(8,567	)		—			—
Expected credit losses on financial assets		(348	)		—			—
Loss on disposal of non-current assets		(824	)		(33	)		(35	)
Interest expense		(11,860	)		(5,802	)		(2,115	)
Interest income		2,869			1,484			311
Net gain on revaluation of financial instruments at fair value through profit or loss		726			6,341			—
Share of profit of an associate		289			197			112
Impairment of non-financial assets		(255	)		—			—
Foreign currency exchange gain/(loss), net		4,963			(108	)		(1,984	)
Other non-operating expenses		(6	)		—			(1,000	)

Total non-operating (expense)/income		(13,013	)		2,079			(4,711	)

Loss before income tax		(57,162	)		(56,777	)		(22,034	)
Income tax expense		(1,025	)		(2	)		(230	)

Loss for the year		(58,187	)		(56,779	)		(22,264	)

Other comprehensive income – items that are or may be reclassified to profit or loss (net of tax):
Exchange differences on translation of foreign operations		(67	)		(3	)		—

Other comprehensive income, net of tax		(67	)		(3	)		—

Total comprehensive income for the year		(58,254	)		(56,782	)		(22,264	)

⁽¹⁾

During 2022, we revised our presentation of expenses related to maintenance of content of our marketplace platform, which resulted in a corresponding reclassification of ₽1.2 billion from sales and marketing expenses to technology and content expenses, and ₽0.3 billion from general and administrative expenses to technology and content expenses as compared to the presentation for 2021.

GMV including services

In the year ended December 31, 2022, GMV incl. services increased to ₽832.2 billion, an increase of 86% year-on-year, compared to ₽448.3 billion in the year ended December 31, 2021. GMV incl. services in the year ended December 31, 2021, increased by 127% compared to ₽197.4 billion in the year ended December 31, 2020. The increases in GMV incl. services in the years ended December 31, 2022 and 2021 were primarily attributable to the strong growth in the number of orders, the expansion of our customer base and further growth in the order frequency of our buyers.

Revenue

The following table presents our revenue, broken down by type, for the years ended December 31, 2022, 2021 and 2020 and as a percentage of total revenue:


	For the year ended December 31,
	2022		2022		2021		2021		2020		2020
	(₽ in millions)		(% of revenue)		(₽ in millions)		(% of revenue)		(₽ in millions)		(% of revenue)
Revenue
Sales of goods		135,278		49		120,792		68		81,414		78

Service revenue		141,837		51		57,423		32		22,936		22

Marketplace commissions		106,428		38		44,345		25		16,503		16
Advertising revenue		26,268		9		9,322		5		3,965		4
Delivery services		6,287		2		2,750		2		1,761		2
Financial services		1,088		—		—		—		—		—
Travel commissions		730		—		429		—		445		—
Other revenue		1,036		—		577		—		262		—

Total revenue		277,115		100		178,215		100		104,350		100

In the year ended December 31, 2022, our total revenue was ₽277.1 billion, a 55% increase compared to ₽178.2 billion in the year ended December 31, 2021. In the year ended December 31, 2021, our revenue increased by 71% to ₽178.2 billion compared to ₽104.4 billion in the year ended December 31, 2020. In the years ended December 31, 2022 and 2021, the increases in total revenue were driven by increases in both revenue from sales of goods and service revenue. The increases in service revenues were driven primarily by increases in Marketplace commissions.

Sales of goods. Our revenue from sales of goods in the year ended December 31, 2022 was ₽135.3 billion, a 12% increase compared to ₽120.8 billion in the year ended December 31, 2021. Our sales of goods in the year ended December 31, 2021, increased by 48% to ₽120.8 billion compared to ₽81.4 billion in the year ended December 31, 2020. The increase in our revenue from sales of goods in the year ended December 31, 2022 was primarily attributable to an increase in the number of active buyers to 35.2 million as of December 31, 2022, from 25.6 million as of December 31, 2021, as well as an increase in buyer purchasing frequency to 13.2 average orders per buyer in the year ended December 31, 2022, compared to 8.7 average orders per buyer in the year ended December 31, 2021. The increase in our revenue from sales of goods in the year ended December 31, 2021 was primarily attributable to an increase in the number of active buyers to 25.6 million as of December 31, 2021, from 13.8 million as of December 31, 2020, as well as an increase in buyer purchasing frequency to 8.7 average orders per buyer in the year ended December 31, 2021, compared to 5.4 average orders per buyer in the year ended December 31, 2020.

Service revenue. In the year ended December 31, 2022, our service revenue increased by 147% to ₽141.8 billion from ₽57.4 billion in the year ended December 31, 2021, which increase was primarily attributable to a 140% increase in Marketplace commissions driven by significant growth in GMV incl. services by 86% combined with an increase in the Share of Marketplace GMV from 65% in the year ended December 31, 2021 to 76% in the year ended December 31, 2022. Also contributing to the increase in service revenue was a 182% increase in our advertising revenue, primarily due to the growth in our seller base to approximately 232 thousand active sellers in the year ended December 31, 2022 from more than 90,000 sellers in the year ended December 31, 2022 (an increase of 2.5 times year-on-year). In the year ended December 31, 2021, our service revenue increased by 150% to ₽57.4 billion compared to ₽22.9 billion in the year ended December 31, 2020, primarily attributable to the 169% increase in Marketplace commissions driven by significant growth in GMV incl. services by 127% combined with an increase in the Share of Marketplace GMV, which increased to 65% in the year ended December 31, 2021 from 48% in the year ended December 31, 2020, and a 135% increase in our advertising revenue, primarily due to the growth in our seller base to more than 90,000 active sellers in the year ended December 31, 2021 (an increase by more than 3.5 times year-on-year).


A. Offer and Listing Details			98
B. Plan of Distribution			98
C. Markets			98
D. Selling Shareholders			98
E. Dilution			98
F. Expenses of the Issue			98
Item 10. Additional Information			98
A. Share Capital			98
B. Memorandum and Articles of Association			98
C. Material Contracts			99
D. Exchange Controls			99
E. Taxation			99
F. Dividends and Paying Agents			114
G. Statement by Experts			114
H. Documents on Display			115
I. Subsidiary Information			115
J. Annual Report to Security Holders			115
Item 11. Quantitative and Qualitative Disclosures about Market Risk			115
Item 12. Description of Securities Other than Equity Securities			115
A. Debt Securities			115
B. Warrants and Rights			115
C. Other Securities			115
D. American Depositary Shares			115
PART II			118
Item 13. Defaults, Dividend Arrearages and Delinquencies			118
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds			118
Item 15. Controls and Procedures			118
Item 16. [Reserved]			122
Item 16A. Audit Committee Financial Expert			122
Item 16B. Code of Ethics			122
Item 16C. Principal Accountant Fees and Services			122
Item 16D. Exemptions from the Listing Standards for Audit Committees			122
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers			122
Item 16F. Change in Registrant’s Certifying Accountant			122
Item 16G. Corporate Governance			123
Item 16H. Mine Safety Disclosure			124
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			124
PART III			125
Item 17. Financial Statements			125


Item 18. Financial Statements			125
Item 19. Exhibits			125
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1
SIGNATURES			127