Important Disclosures

The information and opinions contained within VTB Capital Research are prepared by JSC VTB Capital or by VTB Capital Inc. As used in this disclosure section, VTB Capital includes JSC VTB Capital, VTB Capital Plc, VTB Capital Inc. and their affiliates as necessary.

Issuer Specific Disclosures

For important disclosures regarding companies that are the subject of reports listed on this website, please see the VTB Capital Research Issuer Specific Disclosures, or contact your research representative.

Analysts’ Certification

The research analysts whose names appear on research reports prepared by VTB Capital Inc. certify that: i) all of the views expressed in the research report accurately reflect their personal views about the subject security or issuer, and ii) no part of the research analysts’ compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analysts in research reports that are prepared by VTB Capital Inc.

The research analysts whose names appears on research reports prepared by VTB Capital Inc. received compensation that is based upon various factors including VTB Capital’s total revenues, a portion of which are generated by VTB Capital’s investment banking activities.

Investment Ratings

VTB Capital uses a three-tiered Investment Rating system for stocks under coverage: Buy, Hold, or Sell.

The three main ratings correspond to the next 12-month Expected Total Return (ETR), defined as the difference between the Target Price and the Last Price divided by the Last Price plus the expected Dividend Yield over the next 12 months. The correspondence is as follows (as of the publishing date):

BUY: ETR exceeds plus 20% or more

HOLD: ETR is between zero and plus 20%

SELL: ETR is less than zero

VTB Capital Research assures the correspondence between the active Investment Ratings and the aforementioned definitions at the time of the Target Price and/or Investment Rating revision. Between such revisions, day-to-day movements in the prices of financial instruments could result in a temporary discrepancy between the Investment Rating and the aforementioned definition. Analysts address such discrepancies based on their scale and duration.

UNDER REVIEW: In the event that significant information about an issuer is due to be announced or is expected to become public in the foreseeable future, or the analyst needs time to evaluate such information, which was announced recently, s/he might choose to place that issuer Under Review. This means that the analyst is suspending the previously published financial forecasts, Target Price and investment rating in order to review them while waiting for the impending information. As such, they are no longer valid and should not be relied upon.

RESTRICTED: In certain circumstances, VTB Capital is not able to communicate issuer ratings due to internal policy and/or law and regulations. In this case, any revision of the financial forecasts, Target Prices and Investment Ratings will be carried out only after the Restricted status is removed.

Notwithstanding the above, VTB Capital may from time to time issue investment recommendations predicated on a different time horizon (such as short-term trading recommendations) to that which is described above. Where VTB Capital issues such an investment recommendation, the use of an alternative time horizon for the purpose of formulating such investment recommendation might result in differences between such investment recommendation and any investment rating published in accordance with the Investment Rating system described above.

The below table details the distribution of VTB Capital’s Investment Ratings on the basis of the three-tier recommendation system described above.

Investment Rating Distribution
Hold 422%
Sell 1 6%
Restricted 0 0%
Not Rated 0 0%
Under Review 1 6%
Investment Rating Distribution for IB clients
Buy4 100%
Hold0 0%
Sell0 0%
Not Rated0 0%
Under Review 0 0%

As of 10 April 2016, the VTB Capital Ratings Distribution table accounts for all the instruments covered, rather than the companies covered. In instances where we provide a recommendation for more than one instrument issued by a company, these are now counted separately. This accounts for the increase in the number of ratings from the count as of 29 February 2016. A list of those companies for which we cover more than one instrument can be found at DoubleRecINC20180228.pdf.

Conflicts Disclosures and Equity Research Historical Ratings

Please search for the company`s disclosure by the instrument name or ticker. Then select the instrument to see its disclosure information.

To view previous short term/sales and trading investment recommendations issued by VTB Capital plc by author, issuer or security please visit https://www.vtbcapital.com/about/information-disclosure/investment-recommendations/

Valuation methods used to determine the price target

VTB Capital Inc. Research employs a Discounted Cash Flow (DCF) model as its principal valuation framework for estimating the fair and target prices of stocks. The central metric is fair current Enterprise Value (EV), which is obtained on the basis of Free Cash Flow to Firm (FCFF) discounted at a constant company-specific Weighted Average Cost of Capital (WACC). VTB Capital Inc. Research also employs a multiple based approach, which uses peer group averages and historical averages.

Risks that may impede the achievement of the price target

The downside risks to the target price and investment rating include: adverse economic conditions (including exchange rate risk), a tightening regulatory environment, tightening competition, higher capex requirements, negative changes in management and/or its competency, and a higher cost of capital.

The upside risks to the target price and investment rating include: an improvement in economic conditions (including exchange rate risk), more relaxed regulatory environment, loosening competition, lower investment requirements, positive management changes and/or its competency, and a lower cost of capital.

Conflicts Management Arrangements

The research of VTB Capital Inc. has been published in accordance with our conflict management arrangements.

VTB Capital

This research report is for information purposes only and does not constitute nor is it intended as an offer or solicitation for the purchase or sale of securities or other financial instruments. Neither the information contained in this research report nor any future information made available with the subject matter contained herein will form the basis of any contract. Information and opinions contained herein have been compiled or arrived at by VTB Capital Inc. from publicly available information and sources that VTB Capital Inc. believes to be reliable. Whilst every care has been taken in preparing this research report, no research analyst, director, officer, employee, agent or adviser of any member of the VTB Group gives or makes any representation, warranty or undertaking, whether express or implied, and accepts no responsibility or liability as to the reliability, accuracy or completeness of the information set out in this research report. Any responsibility or liability for any information contained herein is expressly disclaimed. All information contained herein is subject to change at any time without notice. No member of the VTB Group has an obligation to update, modify or amend this research report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. Furthermore, past performance is not indicative of future results.

The investments and strategies discussed herein may not be suitable for all investors or any particular class of investor. Investors should make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives when investing. Investors should consult their independent advisors if they have any doubts as to the applicability to their business or investment objectives of the information and the strategies discussed herein. This research report is being furnished to certain persons as permitted by applicable law, and accordingly may not be reproduced or circulated to any other person without the prior written consent of a member of the VTB Group. This research report may not be relied upon by any retail customers or persons to whom this research report may not be provided by law. Unauthorised use or disclosure of this research report is strictly prohibited. Disclosures of conflicts of interest, if any, are found in the disclosures section of this research report. Investing in the Russian Federation, its markets and in Russian securities and financial instruments involves a high degree of risk, and many persons, physical and legal, may be restricted from dealing in the securities markets of the Russian Federation. Investors should perform their own due diligence before investing. It is particularly important to note that securities and financial instruments denominated in foreign currencies and ADRs and other investments discussed herein are subject to exchange rate fluctuations that may adversely affect the value of the investment. The value of investments may fall as well as rise and investors may not get back the amount invested. Prices and availability of securities, financial instruments or investments are also subject to change without notice. The views and opinions expressed in this research report accurately reflect the personal views of the authors of this research report about the subject investments, securities and financial instruments and issuers and do not necessarily reflect the views of any member of the VTB Group. No part of the compensation of the authors of this research report was, is or will be directly or indirectly related to the specific recommendations or views contained in the research report. By accepting this research report, you agree to be bound by the foregoing limitations. This material is not intended for the use of private investors.

In the United Kingdom this report is approved and/or communicated by VTB Capital plc London, a member of the London Stock Exchange and authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. This report is intended for those persons that would be classified as Eligible Counterparties or Professional Clients under the Financial Conduct Authority’s Conduct of Business rules.”

In connection with distribution of this material in the United States via VTB Capital Inc., this Investment Research is intended for distribution in the United States only to certain US institutional investors. US clients wishing to effect transactions in any Designated Investment discussed should do so through a qualified salesperson of VTB Capital Inc. VTB Capital Inc., is a broker-dealer registered with the SEC and is a FINRA member firm. Nothing herein excludes or restricts any duty or liability to a customer that VTB Capital Inc. has under any applicable law.

This research report is distributed in Singapore by VTB Capital plc to accredited investors, expert investors or institutional investors only (as defined in the applicable Singapore laws and regulations and is not intended to be distributed directly or indirectly to any other class of person). Recipients of this report in Singapore are to contact VTB Capital plc, Singapore branch in respect of any matters arising from, or in connection with, this report. VTB Capital plc, Singapore branch is regulated by the Monetary Authority of Singapore.

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