SSEECCUURRIIITTIIIEESS MMAARRKKEETT NNEEWWSSLLEETTTTEERR weekly

Presented by: VTB Bank, Custody

July 04, 2019 Issue No. 2019/24

Company News

Future Financial Group holders approve cutting capital to RUB 6 bln On June 27, 2019 it was disclosed that the shareholders of ’s Future Financial Group have approved reduction of the charter capital to RUB 6 bln from RUB 50.293 bln by decreasing the face value of common shares. Future will not pay any funds to the shareholders during the operation.

Qiwi appoints Poshmorga from Social Discovery Ventures as CFO On June 27, 2019 Russian payment system operator Qiwi stated that it had appointed Vladislav Poshmorga from international Internet holding Social Discovery Ventures as chief financial officer (CFO) from July 1. Poshmorga has over 20 years of experience in finance. Most recently, he served as a chief investment officer at Social Discovery Ventures, an international group of technology and software engineering companies. As CFO, Poshmorga will take over the responsibilities of interim CFO Varvara Kiselyova and report directly to CEO Sergei Solonin. Kiselyova was appointed as deputy CFO for capital markets and Yelena Nikonova, who previously served as head of IFRS reporting at Qiwi, as deputy CFO for financial reporting.

FESCO reelects Leila Mammed Zade as board chairwoman On June 27, 2019 it was stated that Far-Eastern Shipping Company (FESCO) had reelected former head of parent holding Summa Leila Mammed Zade as the chairwoman of the board of directors. Earlier in June, the shareholders of FESCO reelected the board of directors in its current lineup.

TransContainer’s directors prolong CEO Sarayev’s powers for 3 years On June 27, 2019 it was stated that the board of directors of Russian railway container operator TransContainer had prolonged powers of Vyacheslav Sarayev as the CEO of the company for three more years. Sarayev became the CEO of TransContainer on June 29, 2018 replacing Pyotr Baskakov, who had been the company’s CEO for 12 previous years.

Viktor Zubkov re-elected as chairman of board On June 28, 2019 it was disclosed that the shareholders of Russian gas giant Gazprom had re-elected the entire board of directors, including Viktor Zubkov, the chairman. The board of directors also includes Gazprombank CEO Andrei Akimov, Industry and Trade Minister , Gazprom CEO Alexei Miller, Energy Minister , and Agriculture Minister .

Lisin's Fletcher Group sells off 2.6% of NLMK On June 27, 2019 Goldman Sachs said in a statement that Fletcher Group, a company associated with Russian businessman Vladimir Lisin, the core beneficiary of steelmaker (NLMK), was offering around 158 mln shares, or 2.6% of NLMK's capital. Goldman Sachs is the offering's organizer. The bids are collected from non-U.S. investors using a forced book building mechanism. Fletcher Group's stake will fall to 81% after the deal. No new offerings of NLMK shares will take place in the next 90 months.

1

Yandex holders approve board expansion to 10 members On June 28, 2019 it was stated that the shareholders of Russian Internet company had approved three re-appointments and two new appointments to its board of directors, which now counts 10 members. It was mentioned that Rogier Rijnja, Charles Ryan, and Alexander Voloshin were re-appointed as non- executive members of the board of directors for a 3-year term, Mikhail Parakhin was appointed as a non- executive member of the board of directors for a 1-year term, and Tigran Khudaverdyan was appointed as an executive member of the board for a 1-year term. Now the board has 10 members, including Yandex’ co- founder Arkady Volozh and Sberbank CEO German Gref.

Credit Bank of gets 19.65% in Pharmacy Chain 36.6 On June 28, 2019 it was stated that had received 19.65% voting shares in Pharmacy Chain 36.6 during the final restructuring of the company’s debts. The bank’s CEO Vladimir Chubar said that the bank views this investment as a long-term. He added that there are positive changes in the company and he sees a potential for improvement in operational performance.

MTS holders approve exec Felix Yevtushenkov as board chair On June 28, 2019 it was stated that the shareholders of major Russian mobile operator MTS had approved Felix Yevtushenkov, deputy chairman of the board of directors of multi-industry holding Sistema, the operator’s main holder, as chairman of the board of directors. Yevtushenkov will replace at this position Ron Sommer, former president of Deutsche Telekom, who had been chairing MTS’ board of directors since 2009. Felix Yevtushenkov is a son of Vladimir Yevtushenkov, key shareholder and chairman of Sistema’s board of directors.

MegaFon owners replace 2 members on board of directors On July 01, 2019 it was stated that the shareholders of Russian mobile operator MegaFon have replaced two members on the board of directors. The board was joined by Igor Ivanov, executive director advisor at USM Management, and Anton Rybalkin, head of the corporate management direction at USM Management. Frederic Vanoosthuyze, chief technology and IT officer at MegaFon, and Yelena Martynova, director for strategic communications at MegaFon, left the board. The other seven members were re-elected.

Moody’s withdraws ratings of Orient Express Bank On July 02, 2019 International rating agency Moody’s stated that it had withdrawn all ratings of Russia’s Orient Express Bank, including the long-term bank deposit rating of Caa1, long-term counterparty risk rating of B3, long-term counterparty risk assessment of B3(br), and baseline credit assessment of caa1. At the time of withdrawal, all ratings had a Negative outlook. The agency said that it had decided to withdraw the ratings for its own business reasons.

Otkritie FC Bank elects Yudayeva as board chairwoman On July 02, 2019 it was stated that the supervisory board of Otkritie Financial Corporation (FC) Bank had elected First Deputy Chairwoman of the Central Bank Ksenia Yudayeva as the chairwoman of the board. The central bank owns 99.99% in Otkritie FC Bank.

Lukoil buys back RUB 662.3 mln shares and USD 18.67 mln GDRs On July 02, 2019 it was stated that Securities Limited, a unit of Russian oil major Lukoil, paid RUB 662.3 mln rubles to buy 125,323 shares and USD 18.67 mln to buy 221,760 global depositary receipts (GDRs) from the open market on June 17–21. Lukoil bought the securities at the weighted average price of RUB 5,285 per share and of USD 84.19 per GDR. In August 2018, Lukoil announced a USD 3 bln buyback program that will be valid through December 30, 2022.

Surgutneftegas appoints Vladimir Yerokhin as board chairman On July 02, 2019 it was stated that the board of directors of Russia’s Surgutnefetgas had elected Vladimir Yerokhin as the chairman of the board. The board of directors elected Nikolai Matveyev as deputy chairman.

Otkritie FC Bank files RUB 290 bln suit against former owners, executives On July 02, 2019 it was be reporters in the register of arbitration proceedings that Russia’s Otkritie Financial Corporation (FC) Bank had filed a RUB 289.52 bln suit against the company’s former owners and top executives, as well as against Otkritie Holding. The bank submitted its suit to the Moscow Arbitration Court on July 01, and the court is yet to schedule a preliminary hearing. The list of defendants includes the bank’s former CEO Yevgeny Dankevich, former President Ruben Aganbegyan, founder Vadim Belyayev, former members of the executive board Yelena Budnik and Gennady Zhuzhlev, and Otkritie Holding. In 2017, Otkritie FC Bank was the first large Russian bank that was bailed out by the regulator via the Banking Sector Consolidation Fund, which made the central bank the major owner of the troubled bank.

2

Dividends/coupons

T Plus holders approve paying 14.62 kopecks per share in 2018 dividends On June 26, 2019 it was disclosed that the shareholders of Russian power utility had approved paying 14.62 kopecks per common share, including interim dividends, in dividends for 2018. The record date is July 2.

Rosseti owners decide against dividends for 2018, but approve January–March dividends On June 27, 2019 it was revealed that the shareholders of Russian state power grid holding had decided against paying final dividends for 2018, but approved payment of 2.443 kopecks per common share and 7.997 kopecks per preferred share in dividends for January–March 2019. The combined payout for the first quarter will amount to RUB 5.03 bln, more than double the sum of RUB 2.468 bln that the company paid for January–March 2018. Rosseti paid no dividends for 2013–2015 and 2017, but paid a total of RUB 3.785 bln in dividends for 2016, including interim dividends for January–March and final dividends for the year. The Federal State Property Management Agency holds 88.04% in Rosseti.

Executive says MTS could pay RUB 17 bln in dividends for January–June On June 27, 2019 it was reported that according to Vice President for Finance, Investments and M&A of major Russian mobile operator MTS Andrei Kamensky who spoke at an annual general meeting of shareholders, the company could pay RUB 17 bln rubles in dividends for January–June. He said that the total amount of dividends to be paid on 2018 results could amount to some RUB 40 bln. At that the company continues to pay dividends twice a year, and the amount of dividends for the first half of 2019 is seen at RUB 17 bln. It will help MTS to pay more than RUB 57 bln in 2019 on the whole. Kamensky mentioned that MTS’ shareholders could get RUB 28.66 per share on results of 2019. The company’s dividend policy stipulates payment of at least RUB 28 per ordinary share. The operator’s shareholders approved 2018 dividends at RUB 19.98 per share or RUB 39.96 per American depositary receipt (ADR). The payments total RUB 39.927 bln. The register for the dividends will close on July 9. MTS paid RUB 2.6 per ordinary share or RUB 5.2 per ADR for January–June 2018, which amounted to RUB 5.196 bln. In such a way, total dividends for 2018 will amount to RUB 26 per share or about RUB 52 bln. President Alexei Kornya said MTS had demonstrated the best income in 2018 since 2012. According to Kornya the company’s revenue increased 8.4% and reached RUB 480 bln in 2018. In 2019 MTS plans to pass a milestone of RUB 500 bln by revenue. Kornya mentioned that they invested more than RUB 75 bln in Russian infrastructure. For 2019 they plan investment in the development of networks at about 90 billion rubles. MTS’ net debt is fully denominated in rubles. It was specified that in 2019 the company has almost no liabilities to repay allowing it to focus on the company’s operating progress.

Russian Agricultural Bank to pay RUB 1.126 bln in 2018 dividends On June 27, 2019 it was reported that the shareholders of state-owned Russian Agricultural Bank had approved paying RUB 1.126 bln in dividends for 2019. The payment will amount to RUB 2,668 per common share, RUB 2,582 per preferred share and RUB 25,824 per preferred share type A. The bank paid RUB 883.665 mln in dividends for 2017.

Surgutneftegas holders approve paying RUB 81.9 bln in 2018 dividends On June 28, 2019 the shareholders of Russian oil and gas company Surgutneftegas approved paying RUB 81.911 bln, or 65 kopecks per common share and RUB 7.62 per preferred share, in dividends for 2018. The record date is July 18. The company’s net profit soared to RUB 827.641 bln in 2018, as calculated under Russian Accounting Standards. For 2017, Surgutneftegas paid 65 kopecks per common share and RUB 1.38 per preferred share in dividends.

Gazprom’s owners approve record 2018 dividends of RUB 16.61 per share On June 28, 2019 it was stated that the shareholders of Russian gas giant Gazprom had approved payment of record dividends of RUB 16.61 per share, or a total of RUB 393.217 bln in final dividends for 2018. The record date for the dividends is July 18. The payment accounts for 27% of the company’s net profit for the year as calculated under International Financial Reporting Standards (IFRS). Previously, the company paid RUB 8.04 per share in final dividends for 2017. The Federal State Property Management Agency owns 38.373% in Gazprom, while state oil and gas holding Rosneftegaz owns 10.97%, and state company Rosgazifikatsiya holds 0.889%.

3

RusHydro holders approve paying RUB 15.9 bln in 2018 dividends On June 28, 2019 it was disclosed that the shareholders of Russian state-controlled hydropower giant RusHydro had approved paying 3.67 kopecks per share, or a total of RUB 15.919 bln, or 50% of net profit under International Financial Reporting Standards (IFRS), in dividends for 2018. RusHydro paid 2.63 kopecks per share, or a total of RUB 11.226 bln, in dividends for 2017. In April, the board of directors approved a new dividend policy, under which the company’s dividends should amount to 50% of IFRS net profit, but no less than the average level of dividends for the previous three years.

Far East Generating Co holders vote against dividends for 2018 On June 28, 2019 it was stated that the shareholders of Russia's Far East Generating Company had voted against paying dividends for 2019. The company had a loss of RUB 7 bln in the year.

Mechel shareholders approve RUB 18.21 per preferred share in dividends for 2018 On June 28, 2019 it was disclosed that the shareholders of Russian metals and mining group had approved paying RUB 18.21 per preferred share in dividends for 2018, or a total of RUB 2.527 bln rubles, and no dividends on common shares. The record date is scheduled for July 18. For 2017, Mechel paid RUB 16.66 per preferred share, or a total of 2.312 bln rubles, in dividends, and no dividends on common shares.

United Wagon Co shareholders approve zero dividends for 2018 On June 28, 2019 it was disclosed that the shareholders of Russia’s United Wagon Company (UWC) had approved paying zero dividends for 2018 as the company didn’t receive a net profit in the year. UWC paid no dividends for 2015, 2016, and 2017. The company’s net loss widened 32.7% on the year to RUB 6.006 bln in 2018, as calculated under International Financial Reporting Standards (IFRS).

Kamaz holders approve paying no dividends for 2018 On June 28, 2019 Sergei Chemezov, chairman of the board of directors of Russian truck maker Kamaz, told reporters that the shareholders of the company had approved paying no dividends for 2018 and spending the net profit on investment projects. In 2018, the company’s net profit dropped to RUB 27.179 mln from RUB 3 bln in 2017, as calculated under Russian Accounting Standards (RAS). The shareholders also voted for paying no premiums to members of the board of directors. Kamaz paid RUB 749.66 mln, or 24.85% of net profit, in dividends for 2017. State-run industrial corporation Rostec holds 49.9% in Kamaz, Avtoinvest Limited has 23.54%, Daimler AG has 15%, and the remaining 11.56% is held by minority shareholders.

GAZ Group owners approve 2018 dividends of RUB 3.92 per preferred share On June 28, 2019 it was stated that the shareholders of Russian carmaker GAZ Group had approved payment of RUB 3.92 per preferred share and zero rubles per common share in final dividends for 2018. The company paid RUB 4.39 per preferred share in final dividends for 2017, RUB 1.58 per preferred share in dividends for 2016, RUB 1.34 per preferred share in dividends for 2015, and RUB 1.2 per preferred share in dividends for 2014. Tycoon controls GAZ Group through Russian Machines.

Sistema to pay RUB 1.062 bln in final dividends for 2018 On June 29, 2019 it was disclosed that the shareholders of Russian multi-industry holding Sistema had approved a decision to pay RUB 0.11 per common share, or RUB 2.2 per one global depositary receipt – a total of Rub 1.062 bln in final dividends for 2018. The record date for the dividends is July 18. Previously, the company paid the same amount in final dividends for 2017. According to the dividend policy of Sistema, the company should pay total dividends for a year that should amount to the highest of two figures – either 1.19 rubles per share or a 6% dividend yield to a weighted average price of Sistema’s shares for the previous year. But the current payment is lower than envisioned by the policy as the company has to reduce its debt. Vladimir Yevtushenkov owns 59.2% in Sistema, while his son Feliks owns 5.1817%.

Otkritie FC Bank holders approve paying RUB 2 bln in 2018 dividends On July 01, 2019 it was stated that the shareholders of Russia’s Otkritie Financial Corporation (FC) Bank had approved paying RUB 2 bln in dividends for 2018. The shareholders also approved sending RUB 295.17 mln to a reserve fund and spending RUB 3.6 bln to redeem losses of previous years. The record date is July 9. The central bank holds almost 100% in Otkritie FC Bank.

Transneft to pay RUB 77.6 bln in final dividends for 2018 On July 01, 2019 it was stated that the shareholders of Russian oil pipeline monopoly had approved a decision to pay RUB 77.611 bln, or RUB 10,706 per common and preferred share, in final dividends for 2018. The company will use 1RUB 0.111 bln of the net profit for 2018 and RUB 67.5 bln of undisbursed profits from previous years to pay the dividends. Previously, the company paid RUB 82.5 bln in total dividends for 2017, which accounted to 50% of the adjusted net profit for the year calculated under

4

International Financial Reporting Standards (IFRS). The Russian government owns 100% of Transneft’s common shares, or 78.55% of the company’s shareholder equity.

Globaltrans confirms January–June target dividend level at RUB 8.3 bln On July 01, 2019 it was stated that Russian railway operator Globaltrans had confirmed the target for January–June dividends at RUB 8.3 bln. The company’s operating results fall in line with expectations of the management. High demand for services of Globaltrans allowed the company to raise prices as planned and to utilize the rolling stock it had bought fully, the company said. In April, the Globaltrans shareholders confirmed payment of RUB 8.3 bln, or RUB 46.5 per share, in final and special final dividends for 2018, driving the total payout for the year to RUB 16.5 bln, up 3% on the year. Globaltrans’s free float stands at 56.9%. The companies of Nikita Mishin and Andrei Filatov own 11.5% stakes in the railway operator each, Konstantin Nikolayev has 10.8%, Member of Globaltrans’ Board of Directors Alexander Yeliseyev controls 5.1%, and the company’s Director for Strategy Sergei Maltsev owns 4%.

Federal Freight to pay RUB 15 bln in dividends for 2018 On June 29, 2019 it was stated that Railway cargo operator Federal Freight, part of , would pay RUB 14.93 bln in dividends for 2018, which accounts for 70.2% of the company’s net profit for the year under Russian Accounting Standards (RAS). The amount includes interim dividends for January–September 2018 paid in December, RUB 4.99 bln.

Sovcomflot to pay RUB 1.435 bln in dividends for 2018 On July 01, 2019 it was disclosed that Russian state-owned shipping company Sovcomflot will pay RUB 1.435 bln, or 50% of the Russian Accounting Standards (RAS) net profit, in dividends for 2018, and will keep another RUB 1.435 bln undistributed. Sovcomflot paid RUB 1.69 bln in dividends for 2017.

Owners of M.Video-Eldorado decide against dividends for 2018 On July 01, 2019 it was stated that the shareholders of Russia’s electronics and household appliances seller M.Video-Eldorado Group had approved paying no final dividends for 2018. Earlier in May, Chairman of the Board of Directors of M.Video Said Gutseriyev said that the united M.Video-Eldorado Group can return to payment of dividends from 2020. Safmar Group of Mikhail Gutseriyev owns 38.2% in M.Video-Eldorado Group, while Germany’s MediaMarktSaturn has a 15% stake.

TGC-2 shareholders approve no dividends for 2018 On July 02, 2019 it was revealed that the shareholders of Russian power producer Territorial Generating Company-2 (TGC-2) had approved paying no dividends for 2018. The company paid no dividends for 2009- 2017. The net profit of TGC-2 amounted to RUB 3 bln in 2018 under Russian Accounting Standards (RAS), after a net loss of RUB 15 mln in 2017.

TMK holders approve paying RUB 2.6 bln in January–March dividends On July 02, 2019 it was stated that the shareholders of Russian oil and gas pipe maker TMK had approved paying RUB 2.55 per share, or a total of RUB 2.634 bln, in dividends for January–March. The record date is July 18. TMK paid RUB 2.28 per common share, or a total of RUB 2.356 bln, in dividends for 2017 and did not pay dividends for 2018. Dmitry Pumpyansky, chairman of the board of directors, is the main beneficiary owner of the company.

Federal Passenger Company to pay zero dividends for 2018 On July 02, 2019 it was stated that Federal Passenger Company, a unit of Russian Railways, would pay no final dividends for 2018. The company will send RUB 304.221 mln of RUB 6.084 bln Russian Accounting Standards (RAS) net profit for the year to the reserve fund, and keep 95%, or RUB 5.780 bln, undistributed.

Zarubezhneft to pay RUB 6 bln in final dividends for 2018 On July 02, 2019 it was reported that Russian state-owned oil company Zarubezhneft would pay about RUB 6 bln in final dividends for 2018, a 33% increase on the year. It its annual report the company showed high revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) as compared with 2017. The report reads that this allows the company to maintain one of the leading payment positions compared with the financial results, and to undertake an obligation to pay about RUB 6 bln in dividends to the state in 2019. Zarubezhneft’s net profit rose 30% on the year to RUB 11.59 bln in 2018 as calculated under International Financial Reporting Standards (IFRS). The Federal State Property Management Agency owns 100% in Zarubezhneft.

5

Uralvagonzavod not to pay final dividends for 2018 On July 03, 2019 it was stated at an annual general meeting of shareholders of Russian railway equipment and tank producer Uralvagonzavod that the company would not pay final dividends for 2018, and would spend the net profit on investment and to cover losses of previous years. Uralvagonzavod’s net profit stood at RUB 7.212 bln in 2018 as calculated under Russian Accounting Standards. The shareholders decided to spend RUB 3.276 bln of the profit to finance the company’s investment program, RUB 3.276 bln to cover losses of previous years, and RUB 360.610 mln to form a reserve fund. The company will also spend RUB 4.99 mln to pay rewards to the board of directors members, RUB 256.26 mln to finance social programs, and RUB 37.5 mln to finance charity programs. State industrial corporation Rostec owns 97.48% in Uralvagonzavod.

Eurobonds / DRs Russian ministry closes placement of USD 2.5 bln Eurobonds On June 27, 2019 the Finance Ministry completed the placement of USD 2.5 bln of Russia’s Eurobonds. It was stated that the ministry sold USD 1.5 bln of 2029 Eurobonds at a yield of 3.95% and USD 1 bln of 2035 Eurobonds at a yield of 4.3%. 59% of the two issues were bought by U.K. investors, 26% U.S. ones, 13% European ones and Asian investors. Managing companies accounted for 65% of all investors, funds for 17%, insurers for 13% and banks for 5%. VTB Capital and Gazprombank were the organizers.

TCS Group places 16.7 mln GDRs at USD 18 apiece / Oleg Tinkov buys USD 10 mln GDRs On June 27, 2019 it was stated that TCS Group, which includes and Tinkoff Insurance of Russian businessman Oleg Tinkov, had placed around 16.7 mln global depositary receipts (GDRs) at USD 18 apiece on the . Later it was stated that businessman Oleg Tinkov purchased 555,560 global depositary receipts (GDR) of TCS Group, which includes Tinkoff Bank and Tinkoff Insurance, for USD 10 mln during a secondary public offering (SPO). Tinkoff Bank CEO Oliver Hughes bought 12,400 GDRs for USD 223,700, CFO Ilya Pisemsky 11,000 for USD 198,000. The technical placement was scheduled for July 2. Tinkov's stake will decrease to 40.4% from 43.8% following the offering. TCS Group offered 18.3 mln GDRs. Morgan Stanley, Renaissance, Sberbank CIB and UBS Europe were the organizers. The funds will be used to raise the capital adequacy, the company said in a statement.

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 Dombrovska ya 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.

6