SSEECCUURRIIITTIIIEESS MMAARRKKEETT NNEEWWSSLLEETTTTEERR weekly

Presented by: VTB Bank, Custody

July 2, 2020 Issue No. 2020/25

Market News

MOEX Index rises 0.60%, RTS increases 0.72% at opening On July 2, 2020 Russia’s MOEX Russia Index rose 0.60% to 2,759.72 at 10:00 a.m. time. The RTS increased 0.72% to 1,221.34.

Ruble falls 7.85 kopecks to RUB 70.52 per USD On July 2, 2020 the weighted average rate of the Russian ruble with tomorrow settlement fell 7.85 kopecks against the U.S. dollar to RUB 70.5198. On July 1, the weighted average rate stood at RUB 70.4413 against the dollar.

Company News

Rostelecom holder contests EGM decision on deal part On June 25, 2020 it was reported that state-controlled telecom operator ’s shareholder Alexander Taroyev filed a lawsuit to the Arbitration Court of St. Petersburg and the Leningrad Region seeking to void the company’s decision regarding the voting rights. A.A. Taroyev demands that a decision of an extraordinary general meeting (EGM) of the shareholders be found invalid. According to A.A. Taroyev, dividends on preferred shares of Rostelecom upon the results of January–September 2018 and for the complete 2018 year were not paid fully, and the owners of preferred shares should have received the right to vote on the agenda of the EGM. The law says that owners of preferred shares do not have the voting rights as long as they are paid dividends. Taroyev referred to the EGM when Rostelecom’s shareholders approved an additional issuance of shares at a price of RUB 93.21 to consolidate mobile operator T2 RTK Holding, working under brand Tele2.

Zubkov reelected as board of directors’ chairman On June 26, 2020 the board of directors of Russian gas giant Gazprom reelected Viktor Zubkov as its chairman. Zubkov has chaired the board of directors since 2008. CEO Alexei Miller was reelected as a deputy chairman of the board.

Promsvyazbank says can invest in 's new share placement On June 26, 2020 a spokesperson of Promsvyazbank stated that the bank was interested in investing in a possible additional share placement of Aeroflot. Transport Minister Yevgeny Ditrikh said that the additional share placement by Aeroflot was being considered, and the shares can be bought by banks and the government.

Rosneft buys back 596,700 securities for USD 3.2 mln on June 22–26, 2020 On June 29, 2020 it was reported that Russian oil major bought back 596,686 shares and global depositary receipts (GDRs) for USD 3.2 mln on June 22–26. The company bought 123,770 common shares and 472,916 GDRs. The weighted average price stood at USD 5.31 apiece. Since the launch of the USD 2 bln buyback program on March 23, the company bought back 37.317 mln securities for USD 159.3 mln.

1

Air transport agency head Neradko nominated to UAC board On June 29, 2020 it was announced that Russia’s First Deputy Transport Minister Alexander Neradko, head of the Federal Air Transport Agency, had been nominated to the board of directors of United Aircraft Corporation (UAC).

Uralkali says merges with unit owning quasi-treasury stake On June 30, 2020 it was reported that Russian fertilizer producer Uralkali merged with affiliate Uralkali- Tekhnologiya that owns a 56.22% quasi-treasury stake in the parent holding. Uralkali’s capital is to decrease by the face value of the quasi-treasury shares on the date of termination of activities of the affiliate, which is the merger date.

Yandex says raises USD 1.06 bln in public, private share placement On June 30, 2020 it was announced that Russian tech giant had closed public and private offerings of 21,522,840 Class A shares and raised USD 1.06 bln before underwriting discounts, commissions, and other fees. Yandex publicly sold 8,121,827 Class A shares. Goldman Sachs & Co., sole underwriter, exercised in full its option to purchase an additional 1,218,274 Class A shares, and accordingly Yandex issued an aggregate of 9,340,101 Class A shares at an offering price of USD 49.25 per share in the public offering, for gross proceeds of some USD 460 mln. Yandex privately sold 4,060,913 Class A shares to each of three private investors, or an aggregate of 12,182,739 Class A shares. The investors were VTB Capital, investment business arm of VTB Group, a Russian bank and global provider of financial services; Ervington Investments Ltd., a company whose ultimate beneficiary is Roman Abramovich; and Treliscope Ltd., a company whose ultimate beneficiaries are Alexander Abramov and Alexander Frolov. Goldman Sachs International served as the sole placement agent for the concurrent private placement.

Russia says to raise Rosagroleasing capital by RUB 6 bln On June 30, 2020 it was stated that the Russian government would allocate RUB 6 bln to increase charter capital of state-run agricultural leasing company Rosagroleasing to help farmers get 1,500 agricultural vehicles additionally under leasing agreements at beneficial terms.

Russian Aquaculture doubles buyback volume to RUB 600 mln On June 30, 2020 it was reported that fish producer Russian Aquaculture increased its buyback program to RUB 600 mln from RUB 300 mln. The program will be implemented until June 30, 2021, or until the limit is reached. The buyback will be performed by Russian Sea – Aquaculture unit using the company’s own funds. The shares will be used for incentive programs and other corporate purposes, but can also be cancelled.

Acron sells 10.1% in Verkhnekamsk Potash Company to Otkritie On June 30, 2020 it was announced that Russian fertilizer producer Acron sold 10.1% in Verkhnekamsk Potash Company, the operator of Talitsky Potash Project, to Otkritie Financial Corporation (FC) Bank. As a result of the deal, Acron’s stake in the project was reduced to 50% plus one share. Sberbank Investment, part of top lender Sberbank, is another shareholder with stakes of 20% and 19.9%.

Lenta says owners to mull change of registration to Kaliningrad On July 2, 2020 it was reported that shareholders of Russian retailer Lenta would consider changing registration of the company from Cyprus to a special administrative unit in the Kaliningrad Region at an extraordinary general meeting on July 22. The change of jurisdiction, if implemented, will turn Lenta into an international company in accordance with Russian legislation that will be registered in a special administrative district on the Oktyabrsky Island in Kaliningrad. The board of directors recommended that the shareholders approve the decision. The new jurisdiction would ensure a simpler tax structure and help Lenta avoid future risks of measures against tax evasion in Russia.

PPF Group sells 2.66% in Polymetal for GBP 15.75 per share On July 2, 2020 it was reported that PPF Group sold 12.5 mln shares in gold producer Polymetal, or a 2.66% stake for GBP 15.75 per security. Morgan Stanley is the placement organizer. Polymetal closed at GBP 16.15 per share on the on June 30.

VSMPO-Avisma says directors elect former Evraz executive as CEO On July 2, 2020 the board of directors of Russian titanium producer VSMPO-Avisma has elected Sergei Stepanov, former vice president of and metals company Evraz, as the CEO. Stepanov was vice president of Evraz in charge of the coal division from November 2012 through June 2020. Prior to that, he was executive director of gold producer Nordgold in charge of operating activity of the company’s gold assets. Stepanov also occupied executive positions in -Resurs, SUAL holding, and ’s

2

DTEK. Kuzyuk was appointed the company’s acting CEO in May 2020, when the previous CEO Mikhail Voyevodin decided to leave the company.

Dividends/coupons ALROSA says owners approve RUB 2.63 per share in 2019 final dividends On June 25, 2020 shareholders of Russian giant ALROSA approved paying RUB 2.63 per share in final dividends for 2019. The shareholder register will be closed on July 13. Thus the dividends for the entire 2019 will amount to RUB 6.47 per share, or 100% of free cash flow. The Russian government owns a 33.03% stake in ALROSA, the Yakutia republic 25% plus one share, districts of the republic 8%, the free float is about 34%.

MTS says owners approve RUB 41.1 bln in 2019 dividends, RUB 20.57 per share On June 25, 2020 shareholders of major Russian mobile operator MTS approved a final 2019 annual dividend at RUB 20.57 per ordinary share, or RUB 41.14 per American depositary receipt (ADR), totaling RUB 41.1 bln. The record date is July 9. The payout is to be completed on or before August 13. The shareholders also elected the board of directors chaired by Felix Yevtushenkov, a member of the board of directors of , MTS’ core owner.

TGC-1 holders approve RUB 0.001 per share in dividends for 2019 On June 26, 2020 shareholders of Russian power producer Territorial Generating Company-1 (TGC-1) approved paying 0.1 kopecks per share, or a total of RUB 3.995 bln, in dividends for 2019. The payment accounts for 50% of the company’s net profit in 2019, as calculated under International Financial Reporting Standards (IFRS). For 2018, TGC-1 paid 0.064 kopecks, or RUB 2.485 bln, which accounted for 35% of the IFRS net profit, in dividends.

Gazprom says owners approve paying RUB 15.24 per share in 2019 dividends On June 26, 2020 shareholders of Russian gas giant Gazprom approved paying RUB 15.24 per share, or a total of RUB 360.784 bln, in dividends for 2019. The payment accounts for 30% of the profit attributable to shareholders for 2019, as calculated under International Financial Reporting Standards (IFRS). For 2018, Gazprom paid RUB 16.61 per share, or 27% of its IFRS net profit, in dividends.

Sistema says owners approve RUB 1.254 bln in dividends for 2019 On June 29, 2020 shareholders of Russian multi-industry holding Sistema approved payment of RUB 0.13 per ordinary share or RUB 2.6 per global depository receipt, or a total of RUB 1.254 bln, in dividends for 2019. The record date for the dividends is July 16. According to the dividend policy of Sistema, the company should pay total dividends for a year that should amount to the highest of the two figures – either RUB 1.19 per share or a 6% dividend yield to a weighted average price of Sistema’s shares for the previous year. But the current payment is lower than provided by the policy as the company has to reduce debt. Sistema paid RUB 0.11 per share, or RUB 2.2 per GDR – a total of RUB 1.062 bln in final dividends for 2018. Vladimir Yevtushenkov owns 59.2% in Sistema, while his son Feliks owns 5.1817%.

MOEK says owners approve no dividends for 2019 On June 29, 2020 shareholders of United Moscow Energy Company (MOEK) approved paying no dividends for 2019. The shareholders decided to allocate RUB 34 mln of RUB 11.6 bln net profit for 2019 to the reserve fund, RUB 4.3 bln to investment, and leaving RUB 7.27 bln profit received under contracts for technological connection to the power grids available. MOEK has not paid any dividends since 2013, when it became part of Gazprom Energoholding.

Central Telegraph board wants higher dividends, stocks add over 30% On June 29, 2020 the board of directors of Russia’s Central Telegraph, a unit of state-controlled telecom operator Rostelecom, recommended the shareholders to approve dividends on ordinary and preferred shares of RUB 11.83 per share, or RUB 2.5 bln in total, and the stock jumped by more than 30%. Central Telegraph paid RUB 7.41 in dividends on both types of shares. The news pushed the company’s ordinary shares up by 32.65% to RUB 29.05 and preferred shares by 33.01% to RUB 24.98 as of 10.35 a.m. Moscow time.

Atomenergoprom to pay RUB 2.6 bln in 2019 dividends On June 29, 2020 shareholders of Atomenergoprom, which consolidates the civil assets of Russian state nuclear corporation Rosatom, approved paying RUB 2.608 bln in dividends for 2019. Rosatom will receive RUB 2.46 bln and the government represented by the Finance Ministry RUB 144.7 mln. The total dividends

3 for 2019 including the interim ones for six months will amount to RUB 10.253 bln. The net profit of the company was RUB 10.8 bln in 2019, as calculated under Russian Accounting Standards (RAS).

WGC-2 shareholders approve RUB 0.054 per share in dividends for 2019 On June 29, 2020 shareholders of Russian power producer Wholesale Generating Company-2 (WGC-2) approved paying RUB 0.0544 per share, or a total of RUB 6.013 bln, in dividends for 2019. The record date is July 10. For 2018, WGC-2 paid RUB 0.0368 per share, or a total of RUB 3.902 bln, in dividends. WGC-2 is controlled by Gazprom Energoholding.

Mosenergo holders approve RUB 0.12 per share in dividends for 2019 On June 29, 2020 shareholders of Russian power utility Mosenergo approved paying RUB 0.12075 per share, or a total of RUB 4.8 bln, in final dividends for 2019. The record date is set at July 8. The company paid RUB 0.21 per share in final dividends for 2018.

UAC board recommends paying no dividends for 2019 On June 29, 2020 the board of directors of Russia’s United Aircraft Corporation (UAC) recommended paying no dividends for 2019 due to a net loss. The shareholders will consider the recommendation at an annual general meeting on July 31 in absentia. UAC had a net loss of RUB 60.5 bln in 2019 as calculated under International Financial Reporting Standards (IFRS) and of RUB 70.8 bln under Russian Accounting Standards (RAS).

Power Machines shareholder approves no dividends for 2019 On June 30, 2020 Severgroup of tycoon Alexei Mordashov, the only shareholder of Russian power engineering company Power Machines, approved a decision for Power Machines not to pay dividends for 2019. Power Machines also paid no dividends for 2018.

Vanino Port says shareholders decide against dividends for 2019 On June 30, 2020 shareholders of Russian stevedore company Vanino Commercial Sea Port decided against paying dividends for 2019. The company’s net profit jumped by 46% on the year to RUB 2.868 bln in 2019, as calculated under Russian Accounting Standards (RAS). The company has not paid dividends since 2014.

Surgutneftegas owners approve paying RUB 30.7 bln in 2019 dividends On June 30, 2020 shareholders of Russian oil and gas company approved paying RUB 0.65 per common share and RUB 0.97 per preferred share, or a total of around RUB 30.69 bln, in dividends for 2019. The record date for dividends is July 20. For 2018, Surgutneftegas paid RUB 0.65 per common share and RUB 7.62 per preferred share in dividends.

Alfa-Bank shareholders decide against dividends for 2019 On June 30, 2020 shareholders of Russia's Alfa-Bank decided against dividend payments for 2019. The bank will spend its RUB 51.9 bln net profit under Russian Accounting Standards (RAS) for 2019 on the increase of capital.

GV Gold holders approve RUB 27.28 per share in dividends for 2019 On June 30, 2020 shareholders of Russian gold producer GV Gold approved paying RUB 7.28 per share, or a total of almost RUB 1.5 bln, in final dividends for 2019. The record date is July 16. GV Gold paid RUB 14.93 per share, or a total of RUB 820.7 mln, in dividends for January–June 2019. The combined amount of dividends for 2018 was about RUB 3 bln with final dividends standing at RUB 159.4 mln.

UWC board recommends paying no dividends for 2019 On June 30, 2020 the board of directors of Russian rail car producer United Wagon Company (UWC) recommended paying no dividends for 2019. The decision is subject to approval by an annual general meeting of shareholders. The record date for the meeting is July 31. UWC paid no dividends for 2015–2018 either.

NLMK holders approve paying RUB 3.21 per share in January–March 2020 dividends On June 30, 2020 shareholders of Russian steelmaker (NLMK) approved paying RUB 3.21 per share, or a total of around RUB 19.328 bln, in dividends for January–March. The dividend payment will account for 75% of the company’s free cash flow. The record date for dividends is July 13. NLMK paid RUB 7.34 per share in dividends for January–March 2019. Businessman Vladimir Lisin holds around 81% in NLMK through Fletcher Group.

4

Detsky Mir owners approve paying RUB 2.2 bln in 2019 dividends On July 2, 2020 shareholders of Russia’s largest children goods retailer have approved paying RUB 3 per share, or a total of RUB 2.217 bln, in dividends for 2019. The dividend payment will account for 90% of the company’s net profit under International Financial Reporting Standards (IFRS) or 55% of the net profit under Russian Accounting Standards (RAS) for October–December 2019. The company paid RUB 3.289 bln, or RUB 4.45 per share, in dividends for 2018 and RUB 3.739 bln, or RUB 5.06 per share, in January–September dividends. Multi-industry holding Sistema owns 33.4% in the retailer, the Russia-China Investment Fund (RCIF) 9%.

Globaltruck unit buys back 129,591 shares in parent firm in June 2020 On July 2, 2020 it was stated that Globaltruck Logistic, a subsidiary of Russian cargo carrier Globaltruck, bought back 129,591 shares in the parent company in June, which amounts to 0.22% of the parent company’s shareholder equity. The RUB 386 mln buyback program has been in force since November 11, 2019 and will last until May 31, 2021 or until the limit is reached in price or the amount of shares. Under the program, the company buys its shares at no more than RUB 132 per security. The unit bought back a 0.33% stake in the parent company in November 2019, a 0.34% stake in December 2019, a 0.13% stake in January 2020, a 0.47% stake in February, a 0.24% stake in March, and 10,000 shares in May.

UVZ holders approve private offering of RUB 35 bln new shares On July 2, 2020 shareholders of Russian railway equipment and tank maker Uralvagonzavod (UVZ) have approved raising the charter capital through a private offering of RUB 35 bln of additional shares. The offering price equals a face value of RUB 1,000. State industrial corporation Rostec owns 97.48% in the facility.

Eurobonds / DRs Sibur to place USD 500 mln Eurobonds at 2.95% On June 30, 2020 a banking source said that Russian petrochemical holding Sibur would place USD 500 mln 5-year Eurobonds at a yield of 2.95%. The initial yield guidance amounted to 3.125–3.25% and was lowered to the final guidance of around 3% earlier in the day. The company held a roadshow of the Eurobonds on June 29. Citi, Gazprombank, Goldman Sachs, J.P. Morgan, and VTB Capital act as the organizers of the placement.

Mail.ru Group says trading in GDRs on starts On July 2, 2020 tech giant Mail.ru Group’s global depositary receipts (GDRs) has started trading on the Moscow Exchange under ticker MAIL. Local listing is one of the key requirements for future indexation, bound to increase Mail.ru Group’s visibility among the funds looking at the Russian equity market. Mail.ru Group’s GDRs traded at RUB 1,694.40 on the Moscow Exchange as of 10.39 a.m. local time. The securities closed at USD 22.50 on July 1 on the London Stock Exchange.

Please be advised that the information presented in this newsletter is based on the following sources: National Settlement Depository (NSD); Clearstream Banking; Euroclear Bank; PRIME-TASS information agency; “Kommersant”, "Rossiyskaya Gazeta”, “Izvestiya, "Vedomosti”, “The Moscow Times“ newspapers, and others.

For more information kindly contact: Anna Enfiandzhi ants Evgenia Makarova Julia Dombrovskaya T +7 (495) 783 13 91 T +7 (495) 783 13 64 T +7 (495) 783 13 15 F +7 (495) 783 13 89 F +7 (495) 783 13 89 F +7 (495) 783 13 20 E [email protected] E [email protected] E [email protected] This document has been prepared exclusively for internal use of VTB Bank (PJSC) customers. The information should not be further distributed or duplicated in whole or in part by any means without the prior written consent of VTB Bank (PJSC). The information contained herein has been prepared on the basis of information which is either publicly available or obtained from a source which VTB Bank (PJSC) believes to be reliable at the time of publication. Information provided herein may be a summary or translation. The content of the material contained herein is subject to change without notice, and such changes could affect its validity. VTB Bank (PJSC) is not obligated to update the material in light of future events. Furthermore, VTB Bank (PJSC) does not warrant, expressly or implicitly, its veracity, accuracy or completeness. VTB Bank (PJSC) and its affiliates accept no liability whatsoever for any use of this communication or any action taken based on or arising from the material contained herein. Additional information may be available upon request. The material in this communication is for information purposes only. Therefore, this communication should not be interpreted as investment, tax or legal advice by VTB Bank (PJSC) or any of its officers, directors, employees or agents and customers should consult with appropriate professional advisers for these specific matters. Nothing expressed or implied herein is intended to create any obligation of VTB Bank (PJSC) and/or impose any liability on VTB Bank (PJSC) and/or create legal relations between VTB Bank (PJSC) and VTB Bank (PJSC) customers.

5