SSEECCUURRIIITTIIIEESS MMAARRKKEETT NNEEWWSSLLEETTTTEERR weekly Presented by: VTB Bank, Custody April 5, 2018 Issue No. 2018/12 Company News Commercial Port of Vladivostok’s shares rise 0.5% on April 3, 2018 On April 3, 2018 shares of Commercial Port of Vladivostok, a unit of Far Eastern Shipping Company (FESCO) of Russian multi-industry holding Summa Group, rose 0.48% as of 10.12 a.m. Moscow time after a 21.72% slump on April 2. On March 31, the Tverskoi District Court of Moscow sanctioned arrest of brothers Ziyavudin and Magomed Magomedov, co-owners of Summa Group, on charges of RUB 2.5 bln embezzlement. It also arrested Artur Maksidov, CEO of Summa’s construction subsidiary Inteks, on charges of RUB 669 mln embezzlement. On April 2, shares of railway container operator TransContainer, in which FESCO owns 25.07%, fell 0.4%, and shares of Novorossiysk Commercial Sea Port (NCSP), in which Summa and oil pipeline monopoly Transneft own 50.1% on a parity basis, lost 1.61%. Cherkizovo plans common share SPO, to change dividends policy On April 3, 2018 it was reported that meat producer Cherkizovo Group would hold a secondary public offering (SPO) of common shares on the Moscow Exchange to raise USD 150 mln and change the dividend policy to pay 50% of net profit under International Financial Reporting Standards. The shares grew 1.67% to RUB 1,220 as of 10:25 a.m., Moscow time, on the Moscow Exchange. Under the proposal, the current shareholders, including company MB Capital Europe Ltd, whose beneficiaries are members of the Mikhailov- Babayev family (co-founders of the group), will sell shares. The precise number of these shares will be defined during book building. Part of the group, company Mikhailovsky, will sell 2.917 mln shares, or an about 6.63% stake. MB Capital Europe can sell additional shares to fulfill an additional placement option. Cherkizovo will spend the raised funds on corporate goals, including debt repayment and potential acquisitions. The founders plan to retain a majority stake and control over the company. Under the new policy the dividends will be paid if the net debt to adjusted earnings before interest, taxes, depreciation and amortization ratio is below 2.5 in the medium term and if the company is able to finance operating activities and development or strategic purchases. The dividend policy will be submitted for approval by the board of directors at one of the next meetings. Transneft halts talks to buy NCSP stake from Summa Group On April 3, 2018 Igor Dyomin, adviser to president of Russian oil pipeline monopoly Transneft, said that the company suspended talks on buying a stake in Novorossiysk Commercial Sea Port (NCSP) from multi- industry holding Summa Group. Summa Group and Transneft own a 50.1% stake in NCSP on a parity basis, Transneft also has a 10.5% stake in the port independently. Summa was holding talks on selling its stake in the port to Transneft. In February, the Federal Antimonopoly Service said it allowed Transneft’s affiliate Fenti Development Ltd to acquire a 50.1% voting stake in NCSP under a condition that all tariffs are calculated in rubles. The suspension follows arrest of Summa Group’s major owner Ziyavudin Magomedov over embezzlement charges. Shares of NCSP fell 1.77% on the Moscow Exchange on reports about suspension of talks. IT firm IBS to hold IPO on Moscow Exchange On April 4, 2018 it was announced that Russia’s IBS, one of the country’s leading IT services providers, would hold an initial public offering (IPO) on the Moscow Exchange. Free float will reach 30-35% of the company’s increased capital after the IPO. The shares will be added to the sector of the innovation and investment market. The new shares will account for more than 50% of the volume on offer. IBS will invest the raised money in strengthening and expansion of its services via organic growth, as well as mergers and acquisitions. 1 Novaport acquires 48.8% stake in Stavropol airport On April 4, 2018 the regional road and transport ministry said that Russian airport development company Novaport had purchased a 48.8% stake in the Stavropol airport controlled by the Stavropol Region’s government. Along with that, the government of the Stavropol Region remains the owner of 51.2% shares. Deripaska can become Norilsk Nickel board member On April 5, 2018 business daily Kommersant reported that Oleg Deripaska, a shareholder of En+ Group and RUSAL, had been nominated to a new board of directors of metals producer Norilsk Nickel. The new lineup of the board will be considered on April 5, and Deripaska will be the only significant change. A long-standing shareholder conflict between Norilsk Nickel’s shareholders Interros of Vladimir Potanin and RUSAL of Deripaska was resolved in 2012 with the intermediation of Roman Abramovich by signing an agreement with a five-year share lockup period, but resumed in mid-February. Interros and RUSAL failed to coordinate parameters of a new shareholder agreement. Potanin agreed to adjust the agreement, including an increase of annual payments to shareholders of Norilsk Nickel from USD 1 bln to USD 1.5 bln, but no more than USD 10 bln over the next five years, while Deripaska wanted dividends raised to USD 2.5 bln a year. Potanin offered Abramovich to buy about 4% in Norilsk Nickel, Abramovich offered Deripaska and Potanin to participate in the deal proportionately to their stakes. RUSAL accepted the offer but asked the High Court of London to prohibit the deal. Interros closed a deal to acquire 2.1% in March. Interros, owning 32.9% and RUSAL, holding 27.8%, are represented in Norilsk Nickel’s board by executives. Millhouse of Abramovich and Alexander Abramov owns 4.2% in Norilsk Nickel. Dividends/coupons Ministry wants state firms to pay 50% of IFRS profit in 2018 dividends On March 30, 2018 Alexei Moiseyev, Deputy Finance Minister, said that the Russian government should extend a rule obliging all state companies to pay 50% of net profit under International Financial Reporting Standards (IFRS) for 2018. No changes are planned in the dividend policy, the Russian Finance Ministry believes it to be acceptable. The 2018 budget encompasses RUB 380 bln of incomes from state companies’ dividends. The Ministry believes the rule on the payment of up to 50% of IFRS net profit in dividends by state companies should be extended for the current year. Globaltrans to receive RUB 2 bln dividends from affiliate NFC for 2017 On March 30, 2018 it was reported that Russian railway operator Globaltrans would receive RUB 2 bln in dividends from 100% affiliate New Forwarding Company (NFC) for 2017. NFC did not pay dividends for 2015 and 2016. Detsky Mir may pay RUB 2.864 bln in final 2017 dividends On April 2, 2018 it was reported that Russia’s largest children goods retailer Detsky Mir might pay RUB 2.864 bln in final dividends for 2017. In 2017, the company’s net profit fell 11.1% to RUB 5.063 bln, as calculated under Russian Accounting Standards (RAS). In March, Detsky Mir said its management would recommend paying the entire 2017 RAS net profit in dividends. The company’s shareholders earlier approved paying RUB 2.195 bln, or RUB 2.97 per share, in dividends for January-September 2017. Multi- industry holding Sistema owns 52.1% in the retailer and the Russia-China Investment Fund (RCIF) holds 14%. Free float accounts for 33.9%. Detsky Mir paid RUB 2.572 bln in dividends for 2016 and RUB 3.119 bln in dividends for January-September 2016. ChelPipe directors recommend paying RUB 11.56 per share in 2017 dividends On April 3, 2018 the board of directors of Russia’s Chelyabinsk Pipe-Rolling Plant (ChelPipe) recommended paying RUB 11.56 per share, or a total of RUB 5.461 bln, in final dividends for 2017. The record date for the dividends is May 10. Previously, the company paid RUB 10.05 per share, or a total of RUB 4.747 bln, in dividends for 2016. ChelPipe paid no dividends for 2011-2015 and used the net profit for the years on development of the company. Andrei Komarov owns 51.9969% in ChelPipe through Cyprus-based Mountrise Limited, and ChelPipe Group’s subsidiary Pervouralsk New Pipe Plant owns 35.8853% in the company. Executive says Sistema to pay 2017 dividends, but below policy On April 4, 2018 Andrei Dubovskov, President of Russian multi-industry holding Sistema, said that the company might pay dividends for 2017 despite mounting debt because of payments to oil company Bashneft, but the size would be lower than envisaged by the company’s dividend policy. The board of directors will discuss the dividend policy and dividend payments in May. Sistema’s financial liabilities grew 2 around 70% in 2017 to RUB 227 bln as of the end of 2017 due to RUB 100 bln worth of liabilities on an amicable agreement with oil major Rosneft over oil company Bashneft case. Sistema paid this sum to Bashneft in March ahead of schedule. The company’s net debt grew around 80% to RUB 213.433 bln as of end of 2017. Sistema’s dividend policy says that interim and final dividends for a year should either equal RUB 1.19 per share or a dividend yield of 6% annually to the weighted average price of Sistema’s shares for the year. Core owner Vladimir Yevtushenkov holds 64.18% in Sistema. Government to submit suggestions on Russian Railways’ dividends next week On April 5, 2018 Deputy Prime Minister Arkady Dvorkovich told reporters that the government would submit its suggestions on dividends of Russian Railways to Prime Minister Dmitry Medvedev next week.