Authorised Capital and Securities

AUTHORISED CAPITAL

As at 31 December 2018, the authorised capital of the total number of shares placed (issued) by CPC Company, of the Company amounted to RUB 7,249,343 (seven million and 10,000 ordinary shares of CPC Investments Company two hundred and forty-nine thousand three hundred and forty- (registered in the Cayman Islands’ Company Registrar), which three roubles) and was split into 7,249,343 shares, including: is 100% of the total number of shares placed (issued) by CPC ■■ 5,694,468 ordinary shares at of 1 rouble each Investments Company. Gazprombank, JSC acted as a broker ■■ 1,554,875 preferred shares at par value of 1 rouble each in the agreement for and on behalf of the Issuer.

The Russian Federation represented by the Federal Agency Re-registration of the shares of the above-mentioned foreign for State Property Management owns 100% of Transneft’s companies into the ownership of Transneft was carried out ordinary voting shares. Preferred shares of the Company on 14 March 2018. The additionally were written are non-voting and entitle their owners only to receive fixed off from the issuing account and credited to the current account based on the Company’s performance during of the Federal Agency for State Property Management on 30 the year. March 2018. The placement results report was registered by the Bank of Russia on 26 April 2018, and changes On 27 February 2018, as part of the issue of ordinary shares in the Charter in terms of the size of the authorised capital were in 2017–2018 in the form of a closed subscription in favor registered by the Federal Tax Service of Russia on 22 May 2018. of the Russian Federation, the Company and the Federal Agency for State Property Management entered into As a result of the issue, the Company received the right an agreement to acquire ordinary registered book-entry shares to indirect ownership of CPC-R and CPC-K shares (7%), of the additional issue subject to a payment in kind in the form whose balance sheets include the assets of Caspian Pipeline of 10,000 ordinary shares of CPC Company (registered Consortium (PCP) intended for the transportation of oil through in the Cayman Islands’ Company Registrar), which is 100% the territory of two countries — Russia and Kazakhstan.

Information about the Company’s securities as of 31 December 2018

Par value of all Type of shares Total number shares, RUB State registration number of the issue and date of state registration Ordinary shares3 No. 1-01-00206-A 5,546,847 5,546,847 dated 20 December 2007 No. 1-01-00206-А-002D 21,901 21,901 dated 17 November 20164 No. 1-01-00206-А-003D 125,720 125,720 dated 11 January 20185 Preferred shares No. 2-01-00206-A 1,554,875 1,554,875 dated 20 December 2007

Shareholders of the Company whose in the authorised capital of Transneft is more than 2 %6

Share in the authorised Share for ordinary Share for preferred Name Entity type Location capital shares shares The Russian Federation represented Ultimate beneficiary 9 Nikolsky Per., 78.5515% 100% None by the Federal Agency for State 103685, Moscow Property Management National Settlement Depository Nominee, legal entity 12 Spartakovskaya 20.8415% None 97.1700% (nominee) Ul., 105066, Moscow Legal entities controlled Legal entities, – 0.0215% None 0.1004% by Transneft holders of quasi- (1,561 preferred shares) treasury shares Others – 0.5855% None 2.7296%

147 Annual report 2018

The Company’s authorised capital structure According to Paragraph 4 of Article 20 of the Federal as of 31 December 2018 (%) Law On Securities Market and on the basis 0.0215 of statements by the Issuer, the Bank of Russia retains 0.5855 e uan eeraton individual numbers (codes) of the second and third 20.8415 repreente te eeral additional share issues after three months from Aen or tate ropert the date of state registration of reports on the results anaeent o te uan of the additional issue of equity securities. eeraton atonal ettleent epotor nonee ter are one rannet uare The Russian Federation enjoys no special right to participate 78.5515 in the management of the Company (the ).

As at 31 December 2018, the following were registered in the register: ■■ 2,620 natural persons ■■ 27 legal entities, including 1 nominee

STOCK EXCHANGE INFORMATION ON TRADING THE COMPANY’S SHARES

Preferred shares of the Company are included in the Level One of the Moscow Exchange, they are among the key indexes of the Exchange, and make a component of the MSCI Russia (Morgan Stanley Capital International) index.

General information on the preferred shares Weight of Transneft’s preferred shares of Transneft in the indexes of the Moscow Exchange,

Preferred registered book-entry as at 31 December 2018 Share category share Par value RUB 1 Index name Weight, % Moscow Exchange ticker symbol TRNFP Broad Market Index 0.71 ISIN code RU0009091573 MOEX Index 0.83 Bloomberg Code TRNFP RX Oil & Gas sectoral index 4.77

Trading results for preferred shares of the Company

Indicator 2016 2017 2018 Trading volume (RUB billion) 103.9 131.7 62.5 Minimum price 132,600 156,000 142,500 Maximum price 235,700 222,500 185,000 Year-end price 197,950 179,900 163,450

Read more: Market capitalisation of Transneft’s preferred shares1

Share listings on the Company's website (RUB billion) 301.6 307.8 279.7 254.1

195.9

2014 2015 2016 2017 2018

1 As of the end of each year. As reported by the Moscow Exchange

148 POLICY AND PROFIT DISTRIBUTION

Read more: On 12 December 2016, Transneft’s Board of Directors approved (Minutes No. 25) the Dividend Policy of the Company Dividend Policy and Dividend History (hereinafter referred to as the Dividend Policy). Subject on the Company’s Website to the Dividend Policy, the following principles shall be observed when determining the amount of dividends paid out for shares of all categories (kinds): ■■ Transparency of dividend amount determining procedure ■■ Unconditional accomplishment of the Company’s primary According to Directive of the Federal Agency for State Property objectives stipulated in the Articles of Association Management No. 498-r dated 30 June 2018 and No. 625-r ■■ Focus on enhancing the Company’s investment appeal dated 30 August 2017, the total dividends in the amount ■■ Ensuring financial stability and minimising eventual possible of RUB 82,544,974,829.57 were paid (27,607,496,252.96 negative effects on the Company’s credit ratings for the first half of 2017, and 54,937,478,576.61 for 2017), ■■ Taking the amount of dividends on shares of all categories including: (kinds) into account when calculating tariffs for oil trunk ■■ RUB 3,875.49 per one ordinary share (5,568,748 shares), pipeline transportation services set by the Federal amounting to RUB 21,581,601,039.76 in total Antimonopoly Service’s rates ■■ RUB 7,578.27 per one ordinary share (5,694,468 shares), ■■ Sufficiency of the funds available to the Company amounting to RUB 43,154,216,010.36 in total and obtained from its core business activity to ■■ RUB 3,875.49 per one preferred share (1,554,875 shares), operational, investment and financial activities amounting to RUB 6,025,895,213.20 in total ■■ RUB 7,578.27 per one preferred share (1,554,875 shares), Pursuant to the approved Policy, the base level of dividend amounting to RUB 11,783,262,566.25 in total payments amounts to 25% of the consolidated net profit for the reporting year calculated under IFRS and normalised The dividends resulting from the 2017 performance were paid taking into account the share of profit in subsidiaries in full and within the time limit prescribed by the applicable and jointly controlled companies; income gained from Russian laws. revaluation of financial investments; exchange rate positive balance and other irregular (non-recurring) nonmonetary The amount of dividends for 2017 amounted to 50% components of the net profit. of Transneft's normalised net profits under IFRS.

According to the Articles of Association of Transneft, As of 31 December 2018, Transneft has no dividend debt due the dividend paid on one preferred share can not be less than to the federal budget. the dividend paid on one ordinary share.

Transneft’s dividend history 2017 (interim, based on 1H Name 2017 (for 2016) 2017 results) 2018 (for 2017) Share category (RUB per share) ordinary 4,296.48 3,875.49 7,578.27 preferred, type A 4,296.48 3,875.49 7,578.27 Total number of shares, pcs 7,123,623 7,123,623 7,249,343 Total amount of dividends, RUB 30,606,503,747.04 27,607,496,252.96 54,937,478,576.61 Dividend payout ratio from net profit under RAS 100% 100% 140% Resolution on dividend payment AGMS dated 30 June 2017 EGMS dated 30 August 2017 AGMS dated 30 June 2018

Dividends paid (RUB million)

2016 2017 2018 Dividends paid 12,801.4 58,214 54,937,5

149 Annual report 2018

Information on profit distribution

Name 2016 (for 2015) 2017 (for 2016) 2018 (for 2017) Retained profit (loss) in the reporting period, including: 12 801,4 30 606,5 58 843,6 Dividends paid (RUB million) 12 801,4 30 606,5 58 843,5 Reserve fund replenishment (RUB million) – – 0,02 Kept at Transneft’s disposition (RUB million) – – 0,06

BONDS

Rouble Bonds

Issues of corporate bonds in circulation

Maturity Date / Coupon rate Series Date of placement date of Offer Nominal volume (RUB) (current, % per annum)

03 30 September 2009 18 September 2019/ – 65,000,000,000 12.05

Issues of exchange bonds in circulation

Maturity Date / date Coupon rate Series Date of placement of Offer Nominal volume (RUB) (current, % per annum) Exchange bonds, series BO-05 21 April 2016 9 April 2026 / 17,000,000,000 10.10 15 April 2021 Exchange bonds, series BO-06 6 September 2016 25 August 2026 / 17,000,000,000 9.30 30 August 2022 Exchange bonds, series BO-07 26 April 2017 17 April 2024 17,000,000,000 8.75 Exchange bonds, series BO-001R-01 10 June 2016 2 June 2023 20,000,000,000 9.90 Exchange bonds, series BO-001R-02 8 July 2016 30 June 2023 10,000,000,000 9.65 Exchange bonds, series BO-001R-03 11 August 2016 3 August 2023 15,000,000,000 9.45 Exchange bonds, series BO-001R-04 6 October 2016 29 September 2022 15,000,000,000 9.30 Exchange bonds, series BO-001R-05 3 February 2017 26 January 2024 15,000,000,000 9.25 Exchange bonds, series BO-001R-06 29 March 2017 24 March 2021 20,000,000,000 9.00 Exchange bonds, series BO-001R-07 3 May 2017 28 October 2020 30,000,000,000 8.75 Exchange bonds, series BO-001R-08 19 October 2017 09 October 2025 25,000,000,000 7.90 Exchange bonds, series BO-001R-09 26 February 2018 21 February 2022 15,000,000,000 7.15 Exchange bonds, series BO-001R-10 13 April 2018 8 October 2021 15,000,000,000 7.00

Read more:

Information on the bonds on the corporate website

CREDIT RATINGS

Information on credit ratings In February 2019, Moody’s upgraded Transneft’s rating as of 31 December 2018 to Baa2 with a stable outlook due to the increase in the sovereign rating of the Russian Federation by one Rating agency Rating tier 31 December 2018 level (to Baa3). In foreign currency: ВВB— (stable outlook) Standard & Poor’s In national currency: ВВВ (stable outlook) Moody’s Ваa3 (positive outlook) Expert RA RuAAA (stable outlook)

150 Shareholder and Relations ■■ A corporate broker contract was concluded with The Company seeks most efficient interaction with Gazprombank, JSC to provide corporate communications the , and other stakeholders, ensuring with the investment community, including to ensure regular regular, prompt, accessible, complete and unbiased disclosure meetings with analysts and investors of information, with emphasis on concurrently providing ■■ Work with shareholders from among individuals is material information to various categories of stakeholders. carried out on an ongoing basis in relation to changes in the information of their personal accounts, to transfer The Company mandatorily discloses information on its of dividends, and to registration of inheritance rights (there activities: were 30 applications in 2018) ■■ On its official website https://en.transneft.ru/ ■■ The subscription fee for the Company's registrar services ■■ On the issuer’s webpage http://www.e-disclosure.ru/portal/ was reduced by 25%, the price list for additional services company.aspx?id=636 was changed (free placement of additional shares in favor of the Federal Agency for State Property Management, free In accordance with the Regulations on the Information Policy, transfer of ownership of shares as a result of inheritance the Company implements a number of activities for voluntary with a market value of inherited shares of up to RUB 10 disclosure of information, including: million for shareholders from among individuals). ■■ Publishing (placing) information on the Company’s website ■■ Managing corporate social media accounts ■■ Disclosing information during direct interaction of the Company with shareholders, investors, mass media and other stakeholders ■■ Issuing corporate publications ■■ Providing comments to questions asked by mass media, securities’ market professionals and other stakeholders, verbally or in writing ■■ Preparing and disclosing the Company's Sustainable Development Report compiled in accordance with Transneft’s annual report entered the -list (12 out international GRI standards of 23 companies) of the main category “The best annual report of a company with market capitalisation of more The Company maintains a high level of interaction with than RUB 200 billion” of the 21st Annual Competition investors and shareholders. The following measures were of Annual Reports organised by the Moscow Exchange. implemented in 2018: ■■ The new edition of the Regulations on Provision According to the experts of the Moscow Exchange’s of Information and Documents to Shareholders competition, the annual report of Transneft was of the Company was approved. The Regulations were performed at a high professional level, it meets brought into line with the amendments to the Federal the requirements of the competition and largely Law On Joint-Stock Companies that have come into corresponds to the best practice in disclosing force in terms of the rules governing the information information. At the end of 2018, Transneft retained rights of shareholders. In addition, in order to implement the status of one of the leaders among Russian the recommendations of the CGC, the Regulations companies in terms of the Sustainable Development establish the right of a shareholder owning 25% or more Vector/ Responsibility and Transparency indexes of the Company's voting shares to receive information assigned by the Russian Union of Industrialists and documents of Transneft subsidiaries and Entrepreneurs (RSPP) in 20171. ■■ The Company's website was updated; and the list of voluntarily disclosed information was significantly expanded. The Information for Shareholders section contains frequently asked questions, the dividend history and contact information for communication with investors and shareholders, as well as hotline numbers for all questions related to receiving dividends ■■ Meetings and consultations with representatives In March 2019, the Investor Relations Division was of the analytical and investment community were established, with such key tasks as development held, including with the participation of the Company's of the dialogue with the investment community and management. In October, an open webinar was held orchestration and performance of the work to upgrade with the participation of Gazprombank as a professional Transneft’s investment appeal, as well as to increase its consultant and organiser market capitalisation.

Investor Relations Division Tel +7 (495) 950-84-54 E-mail [email protected] Website: https://en.transneft.ru/investors/contacts/ 1 URL: http://rspp.ru/simplepage/858

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