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Presented by: VTB Bank, Custody

August 1, 2019 Issue No. 2019/28

Company News

Subsidiaries set price for share offering at RUB 200.5 per share On July 26, 2019 it was reported that two subsidiaries of Russian gas giant Gazprom set the price for the sale of shares in the parent company at RUB 200.5 per share. Gazprom Gerosgaz Holdings BV and Rosingaz Limited, registered in the Netherlands and Cyprus, respectively, were collecting bids for 693.6 mln shares of the parent company, accounting for 2.9% of capital, on the on July 25. Investors submitted 494 bids totaling RUB 198.9 bln. Gazprom’s shares closed at RUB 219 apiece on the Moscow Exchange.

Polymetal issues new shares for staff incentive program On July 29, 2019 it was announced that Russian precious metals producer again issued new shares for a long-term employee incentive program. In accordance with the terms of the company’s deferred share awards (DSA) and performance share plan (PSP), 22,280 ordinary shares with no par value were issued to certain individuals, none of which are either directors or persons discharging managerial responsibilities (PDMRs). The shares are to be admitted to trading on the London Stock Exchange on July 30.

Bank St Petersburg to buy back 12 mln common shares at RUB 53.5 On July 31, 2019 it was reported that ’s Bank Saint Petersburg plans to buy back 12 mln common shares at RUB 53.5 apiece. Bids may be submitted from September 6 through October 7.

Alfa-Bank expands 3-year bond offering to RUB 8 bln On July 31, 2019 a banking source said that Russia’s Alfa-Bank expanded the offering amount of 3-year exchange bonds to RUB 8 bln from RUB 5 bln. The final coupon rate guidance for the bond was set at 7.9% annually, which corresponds to an 8.06% annual yield to maturity. The initial guidance was 7.9–8.1% annually. The issue carries semiannual coupons. The technical placement was preliminary scheduled for August 9. Alfa-Bank organizes the placement.

Transport Minister Ditrikh chairs board of directors of On August 1, 2019 the board of directors of Russian national flagship carrier Aeroflot has reelected Transport Minister Yevgeny Ditrikh as its chairman. Board Member Mikhail Poluboyarinov was elected as the deputy chairman.

Lisin transfers Freight One shares to Fletcher Group, IPO possible On August 1, 2019 it was reported that Russian tycoon Vladimir Lisin has transferred the shares he owns in railway cargo operator Freight One to Fletcher Group, through which he controls all his assets, to facilitate a possible initial public offering (IPO) of Freight One. Lisin’s Universal Cargo Logistics (UCL) holding earlier transferred shares of Freight One from its railway division UCL Rail, and Freight One said on August 1 that UCL was no more the owner of 100% in the company, while Fletcher Group Holdings Limited acquired 100% in it. The deal is a continuation of the announced ownership restructuring of the group’s transportation assets. Consolidation of Freight One in Fletcher Group Holdings will improve manageability of the business, and will potentially make a possible entry to the capital markets easier, if the markets are favorable for share placements. In April, Freight One CEO Sergei Karatayev told reporters that the company does not rule out a possibility of carrying out an IPO if the market conditions are good.

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Antitrust clears Kuzbassenergo to buy Reftinskaya from Enel Russia On August 1, 2019 Vitaly Korolyov, Deputy Director at the Federal Antimonopoly Service, said that the service cleared power producer Kuzbassenergo to buy the Reftinskaya GRES power plant from Enel Russia and issued an order regarding pricing for the next five years. Siberian Generating Company, the owner of Kuzbassenergo, has a significant share of the market in Siberia, but it is not present in the Urals and European part of Russia. Crossflows between pricing regions demand additional measures of antimonopoly control in order to avoid risks of price manipulation in the future, so the service issued the order. Each power generation asset of Kuzbassenergo is not allowed to make actions during price bidding that may lead to a significant increase in prices on the wholesale power and capacity market, according to the order. The company also should minimize the cost of fuel used in power production and burn the cheapest fuel possible. In July, the shareholders of Enel Russia approved the sale of the plant to Kuzbassenergo for no less than RUB 21 bln. The price can be adjusted by up to 5% and additional payments of up to RUB 3 bln can be made within five years from the closure of the deal, if certain conditions are met. The deal can be closed in 2019.

Dividends/coupons NLMK board recommends RUB 3.68 per share in dividends for April–June 2019 On July 26, 2019 the board of directors of Russian steelmaker Novolipetsk Steel (NLMK) recommended paying RUB 3.68 per share in dividends for April–June. The recommendation is subject to approval by shareholders at an annual general meeting (AGM) on September 27. The register for the meeting will be closed on September 2. The record date is recommended for October 10. The company paid RUB 5.24 per share in dividends for April–June 2018 and RUB 7.34 per share in dividends for January–March 2019.

MTS board wants RUB 8.68 per share paid in dividends for January–June 2019 On July 30, 2019 the board of directors of major Russian mobile operator MTS recommended shareholders to approve January–June dividends at RUB 8.68 per share, or RUB 17.36 per American depositary receipt (ADR), totaling RUB 17.346 bln. For January–June 2018, MTS paid RUB 2.6 per common share, or RUB 5.2 per ADR, which totaled RUB 5.196 bln. For 2018, MTS paid RUB 19.98 per share, or RUB 39.96 per American depositary receipt (ADR), totaling RUB 39.927 bln.

Sberbank to pay 50% of IFRS net profit in dividends for 2019 On July 31, 2019 Alexander Morozov, Deputy CEO of Russian top bank Sberbank, said that the bank still plans to pay 50% of its International Financial Reporting Standards (IFRS) net profit in dividends for 2019. Sberbank keeps the plans to continue similar dividend payments after its net profit reaches RUB 1 tln in 2020 in line with the development strategy. Deputy CEO Lev Khasis said that the bank does not plan any large acquisitions in the nearest future, but may buy some small companies. A top manager of the bank also said that the transaction to buy a stake in internet company Rambler may be closed by the end of August.

VEON board recommends USD 0.13 per share interim dividends On August 1, 2019 the supervisory board of Amsterdam-based VEON, the sole owner of Russian mobile operator VimpelCom, has recommended paying USD 0.13 per share in interim dividends. The shareholder register for the dividends will be closed on August 14. The final 2018 dividends of the company amounted to USD 0.17 per share. As a result, the total 2018 dividends were USD 0.29 per share.

MMK board recommends RUB 0.69 per share in dividends for January–June 2019 On August 1, 2019 the board of directors of Russia’s Magnitogorsk Iron and Steel Works (MMK) has recommended paying RUB 0.69 per share in dividends for January–June. MMK will pay a total of around RUB 7.71 bln in dividends, which accounts for 100% of its free cash flow in April–June. The record date for the dividends is October 15. MMK paid RUB 16.627 bln in dividends for January–March 2019. The company paid RUB 0.801 per share in dividends for January–March 2018, RUB 1.589 per share for April–June, RUB 2.114 per share for July–September and RUB 1.398 per share in dividends for October–December 2018.

Globaltrans to get RUB 7 bln in 2018 dividends from New Forwarding Company On August 1, 2019 it was announced that New Forwarding Company, a wholly-owned subsidiary of Globaltrans, would pay RUB 7 bln, or RUB 6,783 per share, in dividends for 2018. The total undistributed profit stood at RUB 20.04 bln in 2018. The company paid RUB 6 bln, or RUB 5,814 per share, in dividends from the undistributed profit for previous years in April 2019.

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Eurobonds / DRs Finance Ministry says plans no Eurobond buybacks On July 25, 2019 Konstantin Vyshkovsky, head of the ministry’s department of state debt and state financial assets, stated that Russia’s Finance Ministry had no plans to buy back Eurobonds as there were no signs that any Eurobond holder was ready to sell them at good conditions for the budget. Nevertheless, Russia’s budget encompasses the possibility of buying back up to USD 4 bln Eurobonds.

Gazprom studies Eurobonds issuance in Russia, UK in 2019 On July 30, 2019 it was stated that Russian gas giant Gazprom was considering issuing Eurobonds in Russia or the U.K. in 2019 to test market interest. The company may use a newly established U.K.-based unit as its Luxembourg’s subsidiaries Gaz Capital and GazAsia are at risk due to a court dispute with Ukraine’s state energy holding Naftogaz Ukrainy. In 2018, the Stockholm arbitration court ruled that Gazprom must pay Naftogaz Ukrainy USD 2.56 bln for non-shipment of gas.

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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