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Presented by: VTB Bank, Custody

August 23, 2018 Issue No. 2018/31

Company News

FGC UES board approves selling 0.54% in Rosseti On August 17, 2018 the board of directors of Russia’s Federal Grid Company of Unified Energy Systems (FGC UES) approved selling 0.538% of its parent company power grid operator Rosseti at no lower than RUB 0.83 per share, or a total of RUB 900 mln. Rosseti’s board of directors earlier ordered its representatives in FGC UES’s board to support the decision. As a result, the stake of FGC UES in Rosseti fell to 0.151% from 0.689%. The remaining shareholding consists of preferred shares only.

RUSAL starts process to move to Russian jurisdiction On August 17, 2018 it was reported that Jersey-registered Russian aluminum giant UC , hit by the U.S. sanctions, was considering changing its jurisdiction and becoming a resident of one of the country’s special administrative regions. The board of directors decided that such a change of registration will on the whole serve the best interests of the company and its shareholders and approved a start of its preparatory process. A government source said in June that RUSAL could become a resident of one of the special administrative regions that will be created the Russky Island near Vladivostok and in the Oktyabrsky Island near Kaliningrad. On August 16, the board of directors of En+ Group of tycoon approved a transfer of En+ Holding Limited, a subsidiary in charge of the group’s power industry assets, from jurisdiction of Cyprus to one of Russia’s special administrative regions.

MGTS replaces 2 members on board of directors, including MTS CEO On August 20, 2018 it was announced that the shareholders of City Telephone Company (MGTS), a fixed line unit of mobile operator MTS, changed two members on the board of directors at an extraordinary general meeting. The board was left by MTS President Alexei Kornya and his advisor Andrei Yershov, who earlier headed MGTS. The newcomers are MGTS General Director Pavel Kuznetsov and MTS Vice President Maria Golyandrina. MTS owns 94.7% of MGTS’ capital.

MTS buys back 0.0549% of stock under repurchase program On August 20, 2018 it was reported that major Russian mobile operator MTS has bought back 1,096,590 own shares, both common shares and American depositary receipts (ADRs), representing 0.0549% 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 9,935,052 shares, or 0.4972% 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 248.65 on August 17 in Moscow and its ADRs at USD 7.50 in New York.

Magnit board to mull share buyback under incentive plan on August 21, 2018 On August 20, 2018 it was stated that the board of directors of Russian retailer Magnit plans to meet on August 21 to discuss a share buyback under a long-term incentive plan. The board approved the main conditions of the long-term and short-term incentive programs in late July. No more than 50 key top managers of Magnit will partake in the program, whose goal is to ensure growth of the price of Magnit’s shares in the next five years. Payments under the program will depend on several factors, including financial results of the Magnit.

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Russian government decides to transfer UAC into Rostec On August 20, 2018 it was announced that the government had made a final decision to transfer United Aircraft Corporation (UAC) into Russian state industrial corporation Rostec.

Central bank sends share buyout offer to B&N Bank minority holders On August 20, 2018 it was reported that Russia’s central bank had made a buyout offer to minority shareholders of its subsidiary B&N Bank. The central bank wants to buy out common shares, preferred shares with fixed dividends and preferred shares of the fourth, fifth and sixth types. B&N Bank and Otkritie Financial Corporation (FC) Bank have been undergoing a bailout by the central bank since 2018; the authority plans to merge the banks by the beginning of 2019. In March, the central bank injected RUB 56.9 bln in B&N Bank and became the holder of a 99.999999998% stake in it after buying new shares. Minority holders control around 0,000000002%.

VTB bank to raise stake in Novorossiysk Grain Plant to 33.18% On August 21, 2018 the Federal Antimonopoly Service preliminary approved a bid of Russia’s second largest bank VTB to raise its stake in Novorossiysk Grain Plant by 10.93% to 33.18%. On August 9, the bank said in a report that it acquired a 22.25% stake in Novorossiysk Grain Plant earlier in August during debt settlement. In July, the plant raised RUB 2.8 bln loan from VTB Bank for upgrade and development.

US wants full discharge of Deripaska from RUSAL, En+ On August 21, 2018 Marshall Billingslea, representative of the U.S. Department of the Treasury, stated that the authority does not plan to lift sanctions from Russian aluminum giant UC RUSAL, it wants tycoon Oleg Deripaska to cease control over RUSAL and En+ Group fully. The official added that the department is far from reducing pressure on Russia, but is increasing it. Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said that Deripaska lost around 50% of his fortune as a result of the U.S. sanctions introduced against 38 Russian tycoons, officials and companies in April. According to the treasury’s report, banking accounts of Deripaska and Russian businessman , the owner of , were frozen in Cyprus on the back of the sanctions.

MegaFon unit to purchase 18.6% of issued stock under buyback On August 23, 2018 it was reported that MegaFon Investments (Cyprus) Ltd. (MICL), the wholly-owned subsidiary of Russian mobile operator MegaFon, has received applications to purchase 57,031,834 ordinary shares and 58,293,820 global depositary receipts (GDRs) of the parent company or an 18.6% stake in total under the buyback. MICL accepted for purchase all validly tendered GDRs and ordinary shares subject to applicable settlement procedures set out in the tender offer memorandum and related documents. Payments for ordinary shares will be made in Russian rubles at the central bank’s exchange rate in effect on August 23, the date of announcement of the results of the tender offer, of RUB 67.6163 per USD 1, for a purchase price of RUB 659.26 per share. Payment for the GDRs will be made in accordance with the procedures set forth in the tender offer memorandum. MegaFon bought back shares and GDRs from July 16 through August 22 in order to delist from the London Stock Exchange. The deals were made through MICL at USD 9.75 apiece. The operator said it was ready to buy back up to 20.8% of its shares and receipts from minority holders.

Rosseti board of directors reelects Novak as chairman On August 23, 2018 the board of directors of Russian power grid holding Rosseti has reelected Energy Minister Alexander Novak as its chairman.

Dividends/coupons Neft to raise interim dividends for January-September 2018 On August 16, 2018 Alexei Yankevich, Deputy CEO for Economy and Finance at Russian oil company , stated that the company plans to raise interim dividends for January-September as compared with RUB 10 per share the company paid for January-September 2017. Gazprom Neft also paid RUB 15 per share, or a total of RUB 71.1 bln, in dividends for 2017. Gas giant Gazprom directly and indirectly owns 95.68% in Gazprom Neft, and minority holders own the remaining 4.32%.

Sibur may pay RUB 5.06 per share in dividends for January-June 2018 On August 16, 2018 the board of directors of Russian petrochemical holding Sibur recommended paying RUB 5.06 per share, or a total of RUB 11.023 bln in dividends for January-June. The record date for the dividends is set at the 11th date from the day when the shareholders approve the payment. The shareholders will discuss the recommendation at a meeting scheduled for September 17. In 2016, the

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Polymetal may pay USD 0.17 per share in dividends for January-June 2018 On August 21, 2018 the board of directors of Russian gold producer Polymetal International recommended paying USD 0.17 per share in dividends for January-June, up from USD 0.14 paid in dividends for the same period of 2017. The payment accounts for 50% of the company’s net profit for the period. This will bring the total dividend declared in 2018 to USD 0.47 per ordinary share, or USD 213 mln and the dividend yield to 4.7% since the beginning of the year calculated based on an average share price in 2018. The dividends will be paid on September 28. 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.

Cherkizovo Group may pay RUB 20.48 per share in dividends for January-June 2018 On August 22, 2018 the board of directors of Russian meat producer Cherkizovo Group recommended paying RUB 20.48 per share in dividends for January-June. In May, the board approved a new dividend policy, under which the company is to pay at least 50% of the net profit under International Financial Reporting Standards (IFRS) in dividends. The company paid RUB 75.17 per share, or RUB 3.3 bln, in 2017 dividends. In September 2017, the shareholders approved distribution of undistributed profit for 2014, 2015, 2016 and January-June 2017 and payment of RUB 59.82 per share, or a total of RUB 2.63 bln, in dividends. Cherkizovo Group is controlled by the family of its founder Igor Babayev, an 8% stake is owned by Spain’s Grupo Fuertes.

PhosAgro board recommends paying RUB 5.8 bln in dividends On August 22, 2018 the board of directors of Russian fertilizer maker PhosAgro recommended paying RUB 45 per share, or a total of RUB 5.83 bln, from undistributed net profit in dividends. The shareholders will consider the board’s recommendation at an extraordinary general meeting on October 1.

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.

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