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Presented by: VTB Bank, Custody

August 30, 2018 Issue No. 2018/32

Company News

Putin approves injecting capital into United Shipbuilding Corporation On August 24, 2018 it was reported that Russian President approved a government proposal to inject additional capital into United Shipbuilding Corporation (USC) by transferring a 6.0975% plus one share state interest in Zelenodolsk Design Bureau to USC in exchange for new shares. The president also approved transferring a 75% minus one stake in Zelenodolsk Design Bureau and 11.9021% in Zelenodolsk shipbuilding plant named after A.M. Gorky into ownership of the Tatarstan republic.

Government nominates Siluanov to Promsvyazbank supervisory board On August 24, 2018 it was announced that the Russian government nominated First Deputy Prime Minister, Finance Minister and representatives of the Defense Ministry to the supervisory board of Promsvyazbank. The nominees also include the Federal Treasury’s head Roman Artyukhin, First Deputy Finance Minister Leonid Gornin, Deputy Defense Minister Alexei Krivoruchko, Deputy Finance Minister Alexei Moiseyev, and Deputy Defense Minister Tatyana Shvetsova. In January, the Finance Ministry said that the government would create a bank based on Promsvyazbank to handle defense order contracts in the conditions of Western sanctions. In late May, Prime Minister signed a ruling to transfer 100% in Promsvyazbank to the state.

MTS buys back 0.0534% of stock under repurchase program On August 27, 2018 it was stated that major Russian mobile operator MTS bought back 1,067,230 own shares, both common shares and American depositary receipts (ADRs), representing 0.0534% of its capital, through its wholly-owned subsidiary, Bastion LLC. Bastion LLC purchases MTS shares under a repurchase plan launched on July 2 and since then has acquired 11,002,282 shares, or 0.5506% of MTS’ capital. MTS intends to buy back its stock for up to RUB 30 bln starting from July 2 during two years. The operator’s common shares closed at RUB 251.55 on August 24 in and its ADRs at USD 7.58 in New York.

Lukoil’s owners approve cancellation of 11.82% treasury stake On August 27, 2018 shareholders of Russian oil company approved canceling 100.6 mln treasury shares, or an 11.8% stake, in order to reduce capital of the company. The shares will be sold by Lukoil’s 100% affiliate Lukoil Securities Limited for RUB 3,949 per security. After the acquisition by Lukoil, its charter capital will be cut to 750 mln common shares. Bids will be accepted from September 17 until October 16. The payment period is no later than on October 30. Lukoil gave 40 mln treasury shares to an incentive plan for executives.

Moscow Exchange excludes MegaFon shares from indices from August 30, 2018 On August 29, 2018 it was reported that the would exclude shares of mobile operator MegaFon, traded under the MFON ticker, from trading indices from August 30, 2018. The exchange stated that on 30 August 2018, MegaFon shares would leave the MOEX Russia Index, RTS Index, MICEX Broad Market Index, RTS Broad Market Index, MICEX Telecoms Index, RTS Telecoms Index and Equity Subindex of the Pension Indices following the buyback of own shares by the company and the reduction of the company’s free float to 2%. From August 30, the updated values of divisors will be used to calculate the indices mentioned above. MegaFon purchased its common shares and global depositary receipts from July 16 through August 22 to delist from the London Stock Exchange. The operator received applications to purchase 18.6% of its shares from minority holders with the free float of almost 21%.

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Aeroflot board extends powers of CEO Savelyev for 5 years On August 29, 2018 the board of directors of Russian national flagship air carrier extended powers of CEO Vitaly Savelyev for five years. Savelyev has been CEO of Aeroflot since April 2009.

LSR Group board appoints ex-minister Sokolov as CEO On August 29, 2018 the board of directors of Russian real estate developer LSR Group appointed former Transport Minister Maxim Sokolov as the CEO. Former CEO Andrei Molchanov was appointed as the chairman of the board of directors.

Russian Agricultural Bank may further raise capital On August 30, 2018 Kirill Levin, First Deputy CEO of Russian Agricultural Bank, said that the bank had already raised its capital by the required RUB 20 bln and did not rule out a further capital boost. Levin said in May that the bank’s capital would be raised by RUB 5 bln in July, while an increase by additional RUB 10 bln would be agreed on with the government. In April, the bank placed RUB 15 bln perpetual bonds.

VTB obtains 19.9% of TNS Energo in direct ownership On August 30, 2018 it was reported that Russia’s second largest lender VTB Bank obtained 19.9% of wholesale power distributor TNS Energo Group in direct ownership. The repo deal on the stake was closed on August 29. In January, VTB said it had transferred the stake from direct shareholding to indirect via wholly-owned Holding VTB Capital.

Dividends/coupons may pay RUB 131.11 per share in dividends for January-June 2018 On August 24, 2018 the board of directors of Russian gold producer Polyus recommended paying RUB 131.11 per share in dividends for January-June. The shareholders are to discuss the recommendation at an extraordinary general meeting on September 28. The record date for the dividends is October 18. The company paid RUB 104.3 per share in interim dividends for January-June 2017, and RUB 147.12 per share in final dividends for 2017. Tycoon Said Kerimov is the major beneficiary owner of Polyus.

Novatek may pay RUB 9.25 per share in dividends for January-June 2018 On August 24, 2018 the board of directors of Russian independent gas producer recommended paying RUB 9.25 per share in dividends for January-June. The record date is October 10. In April, the shareholders of Novatek approved paying RUB 24.29 bln, or RUB 8 per share, in final dividends for 2017. The company also paid RUB 6.95 per share in dividends for January-June 2017, so the total dividend payout for 2017 reached RUB 14.95 per share, or RUB 45.39 bln.

Rosneft board sets October 9 as record date for January-June 2018 dividends On August 24, 2018 the board of directors of Russian oil major set October 9 as the record date for dividends for January-June. On August 28, the board recommended paying RUB 14.58 per share, or a total of RUB 154.5 bln, in dividends for the period. The shareholders will consider the recommendation at an extraordinary general meeting on September 28. The company’s net profit amounted to RUB 309 bln in January-June, and its dividend policy encompasses paying at least 50% of the net profit in dividends no less than twice a year. Rosneft paid RUB 10.48 per share, or RUB 111 bln, in dividends for 2017, including interim dividends.

VSMPO-Avisma board recommends RUB 8.7 bln in January-June 2018 dividends On August 24, 2018 the board of directors of Russian titanium giant VSMPO-Avisma recommended paying RUB 756 per share, or RUB 8.7 bln, in dividends for January-June. The shareholders will consider the recommendation at an extraordinary general meeting on September 28. The register for the meeting will be closed on September 3. VSMPO-Avisma paid RUB 762.68 per share in dividends for January-June 2017. State industrial corporation Rostec holds 25% plus one share in VSMPO-Avisma. Expotrade, controlled by the management of VSMPO-Avisma, has 65.27%.

Globaltrans board recommends RUB 8.2 bln in dividends for January-June 2018 On August 28, 2018 the board of directors of Russian rail cargo operator Globaltrans approved paying RUB 8.2 bln, or RUB 45.9 per share or global depositary receipt (GDR), in dividends for January-June. The sum includes RUB 3.8 bln of interim dividends envisaged by the company’s dividend policy, and RUB 4.4 bln of special interim dividends.

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Nordgold board approves USD 9.6 mln in dividends for April-June 2018 On August 28, 2018 the board of directors of gold mining company Nordgold, controlled by Russian businessman Alexei Mordashov, approved dividends for April-June at USD 9.6 mln, or USD 0.0284 per share. The record date is August 30, the payment date is September 7. The company’s policy envisages paying 30% of its normalized net profit attributable to shareholders in dividends. Nordgold already paid USD 11.2 mln, or USD 0.0331 per share, in dividends for January-March. For 2017, the company paid USD 0.0322 per share, or a total of USD 11 mln, in dividends for January-March, USD 16.5 mln, or USD 0.0482 per share, for April-June, USD 10.8 mln, or USD 0.0318 per share, for July-August, and USD 15.3 mln, or USD 0.045 per share, for October-December.

GV Gold board recommends paying RUB 1 bln in January-June 2018 dividends On August 28, 2018 the board of directors of Russia’s gold producer GV Gold recommended paying RUB 1.02 bln, or RUB 18.551942 per share, in dividends for January-June. The shareholders will consider the recommendation at an extraordinary general meeting on September 29. GV Gold paid RUB 700 mln in interim dividends for January-June 2017 and RUB 2.238 bln, or RUB 40.6973 per share, in dividends for 2017. Board members Sergei Dokuchayev, Valerian Tikhonov, and Natalya Opaleva each hold 20.36% in the company.

ALROSA can pay RUB 44 bln in dividends for January-June 2018 On August 28, 2018 the supervisory board of Russian diamond mining giant ALROSA recommended paying RUB 5.93 per share, or a total of RUB 43.674 bln, in dividends for January-June. The shareholder register for the dividends will be closed on October 15. The previous dividend policy of ALROSA encompassed payments of only final dividends amounting to at least 35% of the net profit under International Financial Reporting Standards (IFRS). The company paid RUB 5.24 per share, or a total of RUB 38.59 bln, in dividends for 2017, which accounted for 50% of its net profit under IFRS. The current policy envisages twice a year dividends on basis of the free cash flow. The Federal State Property Management agency owns 33.0256% in ALROSA, the republic of Yakutia has 25.0002%, the districts of the republic hold 8.0003%, and a 33.9739% stake is in free float.

T Plus board recommends paying RUB 0.09 per share in January-June 2018 dividends On August 29, 2018 the board of directors of Russian power producer T Plus recommended paying RUB 0.08996275 per share in dividends for January-June. The record date is October 12. The company paid RUB 0.0656 per share, or a total of RUB 2.9 bln, in dividends for 2017, and paid no dividends for 2015 and 2016. T Plus is part of Viktor Vekselberg’s Renova Group.

TCS Group board of directors approves April-June 2018 dividends at USD 44 mln On August 29, 2018 the board of directors of TCS Group Holding, comprising and Tinkoff Insurance, approved paying USD 0.24 per share or global depositary receipt (GDR), or a total of USD 43.932 mln, in dividends for April-June. The record date is September 13, and the payment date is September 24. In May, the group’s board of directors approved paying USD 0.24 per share or GDR, or a total of USD 43.8 mln, in dividends for January-March. Businessman owns 47.3% in TCS Group.

Russian Railways, Rosseti, may replace dividends with invest On August 29, 2018 it was reported that the government might allow Russian Railways, power grid holding Rosseti and oil pipeline monopoly Transneft to replace dividend payments with investment in infrastructure. The government is inclined to cancel Russian Railways’ dividends on common shares, but retain only dividends on preferred shares to use the non-distributed profit for investment projects until 2025 instead of government financing. On September 5, the Economic Development Ministry, the Finance Ministry, the Transport Ministry, the Energy Ministry and the Federal Antimonopoly Service are to agree on dividend policy of the federal infrastructure monopolies. A federal-level official said that the proposal would be considered for all infrastructure companies including Rosseti and Transneft. No comments are available from the Energy Ministry, the Federal Antimonopoly Service, Russian Railways and Rosseti.

Rosseti may drive dividend payout in 2018 to RUB 5 bln On August 29, 2018 Pavel Grebtsov, director of the tariff policy department at Russian state power grid holding Rosseti, stated that the company might pay dividends for January-September, driving the combined dividend payout in 2018 to about RUB 5 bln. Rosseti paid 1.1965 kopeck per common share and 4.287 kopecks per preferred share, or a total of RUB 2.468 bln, in dividends for January-March. Rosseti did not pay dividends for 2013-2015 and 2017, but paid RUB 1.79 bln for January-March 2016 and a total of RUB 3.785 bln for 2016.

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Eurobonds / DRs to buy back USD 50 mln Eurobonds On August 27, 2018 it was reported that Credit Bank of Moscow would buy back Eurobonds of two issues, for a total of USD 50 mln. The bank will purchase USD 21.328 mln Eurobonds maturing in 2027 and USD 28.672 mln of perpetual bonds. The purchase price is USD 860 per security of USD 1,000 face value. Initially, the bank planned to buy back up to USD 100 mln worth of Eurobonds, then raised the amount to USD 142.8 mln and later reduced to USD 50 mln on high volatility.

Sibur close to making decision on IPO On August 27, 2018 it was announced that Russian petrochemical company Sibur would decide on an initial public offering (IPO) at the end of September. The company is in negotiations to offer a 10-15% stake, most of which belongs to Leonid Mikhelson, to raise USD 2-2.5 bln. It was stated that the company could be valued at USD 20 bln. According to three market sources, JP Morgan, Citi, and Gazprombank can organize the offering. Mikhelson owns a 48.5% stake in the company, including 14.4% in trust management of Gazprombank and 34.08% owned by Mikhelson’s Trust. Gennady Timchenko holds 17% in Sibur, the executives about 14.5%, China’s Sinopec 10% and the Silk Raod Fund 10%.

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, "”, ““ newspapers, and others.

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