SSEECCUURRIIITTIIIEESS MMAARRKKEETT NNEEWWSSLLEETTTTEERR weekly Presented by: VTB Bank, Custody August 8, 2019 Issue No. 2019/29 Market News Moscow Exchange starts trading in US dollar/Japanese yen pair On August 5, 2019 it was reported that the Moscow Exchange launched trading in the U.S. dollar to the Japanese yen currency pair. Trades will be settled same day (T+0), next day (T+1) and on T+2 after the trade date. Overnight and tom-next swaps will be also available. Тhe currency pair will also be available for OTC (over-the-counter) trading with tight spreads. The trades will not require full pre-deposit as short selling is prohibited for the T+0 instrument, the Moscow Exchange also said. Yen delivery will occur on the next business day after the trade date, considering the time difference between Moscow and Tokyo. Company News RUSAL owners vote for change of registration to Russia On August 2, 2019 shareholders of Russian aluminum producer RUSAL voted for reregistration of the company to Russia from the Jersey Island at an extraordinary meeting on August 1. After changing the jurisdiction, the company will attain an international status and will be able to carry foreign currency transactions without restrictions. The company will receive tax incentives, in particular, a reduction of the profit tax on the profit attained through dividends and sale of shares. Economic Development Minister Maxim Oreshkin told reporters earlier that RUSAL and En+ could change the jurisdiction to a special economic zone near Kaliningrad until the end of 2019. Europlan board approves issuing RUB 4 bln new bonds On August 5, 2019 the board of directors of Russian car leasing company Europlan approved issuing RUB 4 bln of new bonds of two 10-year bond series. The coupon rates of the BO-05 and BO-06 series are 9.75% and 9.4%, respectively. Europlan will offer RUB 2 bln of the BO-05 series bonds that will mature on February 14, 2029. They will be offered publicly and will carry a call option. The company will also offer RUB 2 bln of the BO-06 series bonds that will mature on May 15, 2029. Aeroflot confirms Deputy CEO Zingman left company On August 5, 2019 it was announced that Russian national flagship carrier Aeroflot’s Deputy CEO Vadim Zingman had left the company. Earlier in the day, a source in the airline stated that Zingman, who had been the deputy CEO since 2009, left the company. Rinsoco sends offer to buy out Uralkali shares at RUB 120 per share On August 6, 2019 it was reported that Rinsoco Trading Company Limited of businessman Dmitry Lobyak had sent a mandatory offer to buy out shares of Russian fertilizer maker Uralkali at RUB 120 apiece. Uralkali received the offer on August 5. The cut-off date is September 20. As of June 30, 56.53358% of the company belonged to its unit Uralkali-Tekhnologiya, fertilizer producer UralChem of Dmitry Mazepin controlled around 20%, and Rinsoco Trading owned 20.19%. Gazprom may sell 3.7% quasi-treasury stake in September–November 2019 On August 7, 2019 it was announced that Russian gas giant Gazprom was considering selling the remaining 3.7% quasi-treasury stake in the company on the open market in September–November. Taking into account Gazprom’s closing price on August 6 on the Moscow Exchange of RUB 226.76, the stake costs RUB 198.6 1 bln. Gazprom CEO announced plans to monetize a 6.64% quasi-treasury stake in June. In July, Gazprom’s subsidiaries Gazprom Gerosgaz Holdings BV and Rosingaz Limited, registered in the Netherlands and Cyprus, respectively, sold 2.93% in the parent company to an undisclosed buyer at RUB 200.5 apiece, or a total of about RUB 139 bln. Sistema closes deal to buy stakes in Sintez, Biocom for RUB 11.8 bln On August 8, 2019 it was reported that Russian multi-industry holding Sistema closed a deal to buy stakes in pharmaceutical companies Sintez and Biocom from Marathon Group for RUB 11.8 bln. Sistema bought a 46.5% stake in Sintez and a 75.1% stake in Biocom through holding company Sinocom Investments Limited. The 46.5% stake in Sintez was acquired by Sinocom for RUB 8.2 bln in a transaction financed jointly by Sistema and a financial partner. Subsequently, in order to combine the businesses, newly acquired Sintez purchased a 75.1% stake in Biocom from Sinocom for RUB 3.6 bln. The purchase of Biocom shares was funded with Sintez’s own capital and funds borrowed by Sintez. Sinocom intends to make a public offer to minority shareholders of Sintez to acquire their common shares in the company. Sistema and its financial partner have concluded an agreement under which Sistema will acquire its financial partner’s stake in Sinocom within three years of the transaction closing. VTB transfers remaining stake in Evrofinance Mosnarbank in April–June 2019 On August 8, 2019 it was stated that Russia’s VTB has given away the last indirect stake in Evrofinance Mosnarbank in April–June. The minority stake owned by VTB, amounting to 7.99%, was transferred in the first quarter of 2019. The remaining part of the stake was requalified as assets for sale in the first quarter of 2019 and was transferred in the second quarter of 2019. In March, the U.S. added Evrofinance Mosnarbank to the sanctions list for its connection with Venezuelan state oil and gas company PDVSA. Venezuela’s national Development Fund, Fonden holds 49.99% in the bank. VTB reduced its direct stake in the asset to zero from 7.99% on March 29, giving it to Russia’s Federal State Property Management Agency free of charge. The bank owned a 17.02% interest in Evrofinance Mosnarbank via ITC Consultants (Cyprus) Limited and VTB Bank (Europe). VTB estimated the fair price of the 25% stake at RUB 2.9 bln. Russia’s Gazprombank holds 20% in the bank directly and 5% through Novfintekh. Dividends/coupons MMK board recommends RUB 0.69 per share in January–June 2019 dividends On August 1, 2019 the board of directors of Russia’s Magnitogorsk Iron and Steel Works (MMK) 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 200% of its free cash flow in April–June. The recommendation will be considered by shareholders at an extraordinary general meeting on September 27. The register will be closed on September 2. The record date for the dividends is October 15. Director for Economy Andrei Yeryomin said in a conference call that MMK plans to disburse at least 100% of its free cash flow for dividends for July–September. MMK paid RUB 1.488 per share, or RUB 16.627 bln, in dividends for January–March. For 2018, the company paid RUB 0.801 per share for January–March, RUB 1.589 per share for April–June, RUB 2.114 per share for July–September and RUB 1.398 per share for October–December. Etalon to pay USD 0.19 per share in dividends for 2018 On August 2, 2019 shareholders of Russian real estate developer Etalon approved paying USD 0.19 per share in dividends for 2018. The record day is August 30. The payment date is September 17. In 2018, Etalon’s net profit fell drastically to RUB 37 mln, as calculated under International Financial Reporting Standards (IFRS). Its free cash flow hit a record high of RUB 14.6 mln. Cash reserves amounted to over RUB 23 mln, the company said earlier. Tatneft board recommends paying RUB 40.11 per share in January–June 2019 dividends On August 6, 2019 the board of directors of Russian oil company Tatneft recommended paying RUB 40.11 per share in dividends for January–June. The shareholders will consider the recommendation at an extraordinary general meeting on September 13. The record date is September 27. Polyus board to recommend paying USD 328 mln in January–June 2019 dividends On August 6, 2019 the board of directors of Russian gold producer Polyus recommended paying USD 328 mln in dividends for January–June. Based on the current number of shares (excluding the treasury stock) the expected size of dividends amounts to USD 2.46 per share or USD 1.23 per global depositary receipt. In ruble terms, the dividends will be announced on August 22. For 2018, Polyus paid RUB 143.62 per share in final dividends. The current dividend policy encompasses dividend payments in the amount of no less than 30% of the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for the period. Said Kerimov holds 82.44% in Polyus. 2 Sibur may pay RUB 16.77 bln in dividends for January–June 2019 On August 6, 2019 the board of directors of Russian petrochemical holding Sibur recommended paying RUB 7.7 per share, or a total of RUB 16.77 bln, in dividends for January–June. The company paid RUB 11.023 bln, or RUB 5.06 per common share, in dividends for January–June 2018; and RUB 10.46 per share, or a total of RUB 22.8 bln, in final dividends for 2018. Evraz board approves paying USD 508.17 mln in interim dividends On August 8, 2019 the board of directors of U.K.-based mining giant Evraz, which operates mainly in Russia, approved paying USD 0.35 per share, or a total of USD 508.17 mln, in interim dividends.