SSEECCUURRIIITTIIIEESS MMAARRKKEETT NNEEWWSSLLEETTTTEERR weekly

Presented by: VTB Bank, Custody

February 6, 2020 Issue No. 2019/04

Company News

Government nominates 9 current members to ’s board On January 30, 2020 it was reported that the Russian government nominated nine current members of gas giant Gazprom’s board of directors to the new board. The nominees include the board’s Chairman Viktor Zubkov, Gazprombank CEO Andrei Akimov, Industry and Trade Minister Denis Manturov, Gazprom CEO Alexei Miller, Energy Minister Alexander Novak, and Agriculture Minister Dmitry Patrushev. The government also proposed to re-elect Timur Kulibayev, chairman of KAZENERGY Association, as well as Viktor Martynov, principal of the Gubkin Russian State University of Oil and Gas, and Vladimir Mau, principal of the Russian Presidential Academy of the National Economy and Public Administration, as Gazprom’s independent directors. Besides the nominees, Gazprom’s current board of directors also comprises deputy CEOs Vitaly Markelov and Mikhail Sereda.

Novatek buys back 670,000 common shares on January 27–31, 2020 On February 3, 2020 it was stated that Russian independent gas producer bought back 670,000 common shares, including in the form of global depositary receipts (GDRs), on the open market on January 27–31. Novatek’s board of directors approved USD 600 mln buyback program in June 2012 and prolonged it several times. In May 2019, the program was extended until June 7, 2020.

Globaltruck unit buys back 0.13% stake in parent company On February 4, 2020 it was announced that Globaltruck Logistic, a subsidiary of Russian cargo carrier Globaltruck, bought back 0.13% in the parent company, or 78,910 common shares, from January 1 through January 31. 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.

En+ to buy out 21.37% of shares from VTB Group for USD 1.58 bln On February 6, 2020 it was reported that Russian aluminum and power producer En+ Group would buy out 21.37% of its shares from VTB Group for USD 1.58 bln. En+ Group will buy out 136,511,122 shares from VTB Group with cash at USD 11.57 apiece, which is a considerable discount to the fundamental price. En+ will attract an up to RUB 110.6 bln loan from Sberbank for the deal. The deal is to be closed on around February 12.

Post Bank to offer RUB 9.9 bln additional shares by July 2020 On February 6, 2020 it was announced that Russia’s Post Bank plans to offer RUB 9.9 bln of additional shares by the end of the second quarter. The shares are expected to be bought in equal parts by the bank’s shareholders VTB and Russian Post.

Dividends/coupons Severstal may pay RUB 26.26 per share in dividends for October–December 2019 On January 30, 2020 the board of directors of Russian steelmaker Severstal recommended paying RUB 26.26 per share, or a total of around RUB 22 bln, in dividends for October–December 2019. The shareholders will consider the recommendation at a meeting on June 5. The register for the meeting will be closed on May 11. The record date for dividends is June 16. Severstal paid RUB 32.08 per share in

1 dividends for October–December 2018. In 2019, the company paid RUB 35.43 per share, or RUB 29.68 bln, in dividends for January–March, RUB 26.72 per share, or around RUB 22.384 bln, in dividends for April– June, and RUB 27.47 per share, or a total of about RUB 23 bln, in dividends for July–September. The core owner of Severstal is tycoon Alexei Mordashov with a stake of 77.03%.

Polymetal to pay USD 94 mln in special dividends for 2019 On January 31, 2020 the board of directors of Russian silver and gold producer Polymetal approved payment of USD 0.2 per share, or a total of about USD 94 mln, in special dividends for 2019. The company will pay dividends on March 5 in the U.S. dollars, but the shareholders may choose British pounds or euros as the currency. The board will decide on recommendation for final 2019 dividends in March, and the shareholders will consider the recommendation at an annual general meeting in April 2020. Polymetal paid USD 0.17 per share in dividends for January–June 2018, USD 0.31 per share in final dividends for 2018, and USD 0.2 in dividends for January–June 2019. ICT Group of tycoon Alexander Nesis owns about 27% in Polymetal, while PPF Group NV of Petr Kellner owns 13%, and tycoon Alexander Mamut and his family owns 10%. More than 50% in Polymetal is free-float.

ChelPipe approves new dividend policy based on debt/EBITDA ratio On February 4, 2019 the board of directors of Russia’s Chelyabinsk Pipe Plant, or ChelPipe, approved a new dividend policy, which envisages payments at least twice a year, tied to the net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio as a balancing mechanism for financial sustainability. The company will pay in dividends of no less than 100% of the net profit, calculated under International Financial Reporting Standards (IFRS), if its net debt to EBITDA ratio is below 1.5x, and at least 70% of the IFRS net profit, or at least 100% of net cash flow, if the ratio is within the range of 1.5–2.5x. The ratio of 2.5–3.5x will result in dividends of at least 50% of the IFRS net profit, or 75% of net cash flow, and the board will make additional decision if the rate is above 3.5x. The new policy will be effective for 2019 dividends and beyond. For 2017 and 2018, ChelPipe paid in dividends RUB 4.7 bln and RUB 5.5 bln, respectively, once a year. For 2019, it paid the dividends twice, and the total sum amounted to RUB 7.7 bln. ChelPipe is considering various options of entering the stock market. It may list its shares on the Exchange. The board of directors also approved a development strategy until 2024, under which it plans to reduce non-resource costs by at least 2.5% annually and decrease the debt burden to the net debt ratio to below 1.5x. The board proposed two new independent directors.

MMK board recommends paying RUB 1.507 per share in October–December 2019 dividends On February 5, 2020 the board of directors of Russia’s Magnitogorsk Iron and Steel Works (MMK) recommended paying RUB 1.507 per share, or almost RUB 16.84 bln, in dividends for October–December 2019. In 2019, the company already paid RUB 1.488 per share, or RUB 16.627 bln, or 100% of free cash flow, in dividends for January–March, RUB 0.69 per share, or RUB 7.71 bln, or 200% of free cash flow, in dividends for April–June, and RUB 1.65 per share, or RUB 18.438 bln, or 100% of free cash flow, in dividends for July–September. For October–December 2018, MMK paid RUB 1.398 per share, or over RUB 15.62 bln, in dividends. Viktor Rashnikov, chairman of the board of directors, holds 84.26% in MMK, while free float accounts for 15.7%.

EN+ confirms plans to resume dividend payments in 2020 On February 6, 2020 it was announced that Russian aluminum and power producer En+ Group plans to resume dividend payments in 2020. The plans to resume the payments were first announced in August 2019.

Eurobonds / DRs Foreign investors buy 55% of Sovcombank’s USD 300 mln Eurobonds On January 31, 2020 Dmitry Gladkov, an executive at Renaissance Capital, one of the placement’s organizers, said that foreign investors bought 55% of USD 300 mln perpetual subordinated Eurobonds of Russia’s Sovcombank. Investors from Continental Europe bought 22% of the issue, investors from Asia and the MENA region – 12%, investors from the U.K. – 12%, and the U.S. investors – 9%, while Russian investors acquired 45%. On January 30, Sovcombank closed a bidding book for USD 300 mln Eurobonds with a yield of 7.75%. The bidding book reached almost USD 2 bln. J.P. Morgan, Alfa-Bank, Emirates NBD Capital, Gazprombank, Sberbank CIB, and VTB Capital also acted as organizers.

TMK to place USD 500 mln Eurobonds at 4.3% On February 5, 2020 a financial source stated that Russian oil and gas pipe producer TMK would place USD 500 mln of 7-year dollar-denominated Eurobonds at a yield of 4.3%. Demand for the Eurobonds exceeds USD 1.6 bln. The initial yield guidance stood at 4.75% and was lowered to 4.3–4.35% earlier in the day

2 during bookbuilding. On January 31–February 4, the company held meetings with investors devoted to a possible placement of Eurobonds in Moscow, London, Frankfurt, Zurich and Geneva. J.P. Morgan, Renaissance Capital, Alfa-Bank, BofA Securities, Gazprombank, Sova Capital, UBS and VTB Capital act as organizers.

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 Enfiandzhiants 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.

3