Company Presentation Novorossiysk Grain Plant Moscow 17 November - - PowerPoint PPT Presentation

Moscow 17 November 2015

Company Presentation Novorossiysk Grain Plant

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Disclaimer

These materials are being supplied to you solely for your information and for use at a presentation by Public Joint Stoсk Сomрanу “Novorossiysk Grain Plant” (the “Company” or “NGP”). These materials may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, by any medium or for any purpose. These materials do not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, or any offer to underwrite or otherwise acquire any securities of the Company, or any inducement to enter into investment activity in any jurisdiction nor shall they or any part of them nor the fact of their distribution or communication form the basis of, or be relied on in connection with, any contract, commitment or investment decision in relation thereto. These materials includes forward-looking statements that reflect the Company's intentions, beliefs or current expectations. Forward-looking statements involve all matters that are not historical fact. The Company has tried to identify those forward-looking statements by using the words "may", "will", "would", "should", "expect", "intend", "estimate", "anticipate", "project", "believe", "seek", "plan", "predict", "continue" and similar expressions or their negatives. Such statements are made on the basis of assumptions and expectations which, although the Company believes them to be reasonable at this time, may prove to be erroneous. These forward-looking statements are subject to risks, uncertainties and assumptions and other factors that could cause the Company's actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Important factors that could cause those differences include, but are not limited to: changing business or other market conditions, general economic conditions and political and social developments in Russia, the European Union, the United States and elsewhere, and trends in, and the Company's ability to respond to trends in, its industry and in the markets in which it and its subsidiaries operate or plan to operate; the Company’s business and growth strategies; planned acquisitions or development projects, or any

• ther projects in the Company’s investment pipeline; the Company’s expansion into other geographic regions or market segments; the effects
• f legislation, regulation, bureaucracy or taxation on the Company’s business; and the Company’s anticipated future revenues, capital

expenditures and financial resources. Additional factors could cause actual results, performance or achievements to differ materially. The Company, its subsidiaries and each of its and their directors, officers, employees, affiliates and advisors expressly disclaim any obligation or undertaking to release any update of or revisions to any forward-looking statements in these materials and any change in the Company’s expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation. By attending this presentation or by accepting any copy of the materials presented, you are taken to have represented and warranted that you agree to be bound by the foregoing limitations.

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Company’s history – more than 120 years of consistent growth

1882 – 1893  Construction of Novorossiysk silo barn-elevator − the largest in Europe, the second largest in the world with total storage capacity of 49kt  The necessity to build the facilities was explained by the state’s economic needs  Construction of grain conveyor gallery from storage facilities to berth with productivity of 400t per hour 1928 – 1930 1943 – 1958  1943-1950 – recovery of the Terminal after the Great Patriotic War, construction of two mills  1956-1958 – growth of export operations caused the construction of: − new grain elevator №1 with storage capacity

• f 100kt

− grain conveyor gallery to berth with productivity of 1,000t per hour  To satisfy the USSR’s need in grain, necessary infrastructure was build to facilitate import: − grain elevator №2 for loading grain into rail wagons with storage capacity

• f 44kt

− two grain receiving machines Buhler brand were installed 1980 – 1984  Terminal’s modernization(1) : − Installation of two NEUERO ship loaders with total productivity of 1,800t per hour − Conveyor gallery expansion to increase ship loading productivity to 1,600t per hour 2007 – 2010 1994 – 1996  Start of a new era of the Russian grain export, reconstruction of all equipment used for grain import to facilitate export As of 1H 2015, the Company holds the leading position among its competitors – the deep-sea ports in the South Federal District (SFD)(2)

Notes: (1) In 2003, mill equipment was completely replaced by Italian equipment of OCRIM brand with total productivity of 150t per day (2) By grain transshipment volume

30% 26% 19% 15% 11% NGP NGT KSK TCSP TGTC

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NGP – the leading deep-sea grain terminal in Russia

NGP was the leading Russian grain terminal in 1H15 Strategic location Summary overview Unique asset base  Public Joint Stoсk Сomрanу “Novorossiysk Grain Plant” (the “Company” or “NGP”) is the largest deep-sea terminal located on the Black Sea coast in Krasnodar region  NGP’s key business segments include: − grain transshipment − trading (mainly resale of grain) −

• wn production

 Main export destinations include the Middle East (mainly Egypt, Saudi Arabia, Iran, Libya, among others)

Handling terminal Production facilities Infrastructure  2 elevators with total capacity of 140kt  3 grain loaders  Auto and railway grain receiving equipment  Conveyor gallery  Milling plant with daily productivity of 150t  Finished products storage facilities with total capacity of 3,810t  Transportation facility  Power facility  Mechanical facilities  Other infrastructure

• bjects

Source: IKAR Port Novorossiysk (74%) Port Taman Port Tuapse Turkey Ukraine Black Sea Russia Georgia Romania Bulgaria Novorossiysk Terminal(1) Shareholder NGP NCSP Delo Group UCL Holding Glencore, Kernel Source: Company data Notes: (1) NGT – “Novorossiysk Grain Terminal”, KSK – “Kombinat “Stroykomplekt”, TCSP – “Tuapse Commercial Sea Port”, TGTC – “Taman Grain Terminal Complex”; (2) JSC “OZK” is controlled by the Russian Federation (50% + 1 share) and Summa Group (50% - 1 share); (3) Controlled by Ziyavudin Magomedov

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Section 1 NGP – unique investment opportunity

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Key investment highlights

Significant market growth potential and demand increase on NGP’s services



The leading deep-sea grain terminal in Russia



Diversified business model resilient to market fluctuations



Dynamically growing business with high performance results



Experienced and highly professional management team



Clear business development strategy



26.7 29.4 32.3 35.4 38.9 42.2 2015F 2017F 2019F 2021F 2023F 2025F mt 102 104 107 110 113 115 2015F 2016F 2017F 2018F 2019F 2020F mt 1,976 2,670 2014/15А 2030F mt 7.0 9.2 2015A 2050F bn ppl

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Significant market growth potential and demand increase on NGP’s services

…to facilitate accelerated growth in grain export due to limited reserves in the rest of the world… …inevitably stimulate growth in grain harvest in Russia… World population growth and global grain consumption… …which increases demand for NGP’s services, inter alia as a result

• f unique expertise

World population Grain consumption(1) Located in the deep-sea port with the possibility to serve vessels with carrying capacity of over 70kt



Notes: (1) Including wheat and feed grain

Ability to work with a wide range of crops



Growth: 58%

Increased throughput from railway, ensuring acceptance of the whole grain volume in one terminal



Provision of trade loans to exporting companies



Source: International Grains Council, Company’s annual report 2014 Source: Rosstat, Ministry of Agriculture, Ministry of Economic Development Source: International Grains Council

Growth: 13 mt

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Potential of increase in NGP’s freight base

Growth potential of freight Increase in grain export Growth drivers Comments Expansion of handled cargo

 Russian grain exports by 2023 are expected to reach up to 40mt – resulting in an increase of +10mt when compared to current reported levels  Based on NGP’s share of transshipment capacity in Russia, potential increase in export volume attributable to NGP will amount up to 1.5mt  From June 2013 to June 2014 corn export volume increased by 1.5mt  Until recently, corn was transshipped mainly in shallow-water ports during the harvest season, while in deep-sea ports corn was transshipped during off-season and in small amounts (due to the lack of adequate storage capacity during the harvest season)  Potential increase in corn transshipment volume is estimated at up to 1.5mt

1.5mt 1.5mt

Attracting volumes from deep-sea terminals

 Due to a lack of storage facilities, exporters have to load one ship at multiple terminals in Novorossiysk  Up to 35% of NGP’s transshipment is carried out by exporters with subsequent loading in

• ther terminals in Novorossiysk

 Potential to increase cargo base through reallocation from other deep-sea terminals is estimated at up to 0.5mt

0.5mt

 Due to the lack of deep-sea terminals’ capacity, significant grain volume is exported through shallow-water ports with subsequent transshipment at anchorage  Current volume of transshipment at anchorage equates to c.5mt. Taking into account NGP’s share in deep-sea grain transshipment, potential growth of cargo base is estimated at up to 0.5mt

Volume shifting from shallow-water ports

0.5mt

Potential to increase NGP’s cargo base is sufficient to utilise new capacities and is estimated at c.4mt by 2018

1.4 1.2 0.9 0.7 0.5 NGP NGT KSK TCSP TGTC mt 30% 26% 19% 15% 11%

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The leading deep-sea grain terminal in Russia

…and having unique competitive advantages …with a growing market share by transshipment capacity in deep-sea ports of the Azov-Black Sea basin… The leading deep-sea grain terminal in Russia…

Source: (1) Without taking into account deep-sea ports in Kerch and Sevastopol, transshipped in total 32kt of grain in 1H 2015; (2) NGT – “Novorossiysk Grain Terminal”, KSK – “Kombinat “Stroykomplekt”, TCSP – “Tuapse Commercial Sea Port”, TGTC – “Taman Grain Terminal Complex”; (3) By the range of handled crops as well as by business segments

1H 2015A 2018F

21% 21% 21% 25% 12% 29% 24% 16% 22% 9%

Advantage NGP NGT KSK TGTC TCSP Business scale expansion

    

Diversified business model(3)

    

Competitive technical and infrastructural features of the Terminal

    

Access to debt financing

    

Source: IKAR Source: IKAR Source: Company analysis

(2)

Grain transshipment volume Market share NGP NGT KSK TGTC TCSP

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Diversified business model

Revenue structure by segment (2014) …allows the Company to diversify its operations in a dynamic market environment NGP’s business model… Grain transshipment Trading Own production Exporters / Traders / Consumers Grain transshipment  Transshipment

• f

grains for export is the Company’s main business segment  Due to high seasonality of this segment, the Company expands a range of handled cargo Trading  The aim of NGP’s trading business segment is to attract additional volume for the main activity – grain transshipment  Trading allows the Company to maintain high inventory turnover and to reduce vessels’ idle time, both of which make NGP more competitive among other terminals Own production  Production

• f

finished goods allows the Company to receive additional cash flows  The segment has large growth potential due to increasing export of flour in containers to South- East Asia RUB 3,090m

Source: Company data

RUB 2,335m

76% 13% 11% Grain transshipment Trading Own production 56% 39% 5% Wheat Barley Corn

774 398 973 2012 2013 2014 RUBm 117% 70% 74% 1,788 3,090 306 984 1,942 2013 2014 2015 RUBm 1H 25% 22% 30% 2013 2014 1H 2015

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Dynamically growing business with high performance results

Excellent operating results Comments

 Successful implementation of intermediary objectives within the long-term development strategy allowed NGP to become the leader in the Russian market of deep-sea port grain transshipment in 1H 2015  Trading results of 1H 2015 significantly exceeded the budget, which allow the Company to expect further growth in financial results at the end of the year and beyond  The Company’s capital structure and consistently sustainable financial position are the basis of NGP’s attractive investment history

Market share(1) Revenue

31% 46% 55% 2012 2013 2014

EBITDA margin Dividends(2)

As % of net income Source: Company data, NGP’s audited IFRS financial statements for 2012-14, NGP’s unaudited IFRS financial statements for 1H 2014 and 1H 2015, IKAR Notes: (1) Grain transshipment share in deep-sea ports of the Azov-Black Sea basin; (2) Announced dividends during the year. Percentage ratio is calculated based on net profit for the same year

+8 p.p. +24 p.p.

3,160 1,903 3,258 3,400 4,500 5,300 6,140 2012A 2013A 2014A 2015F 2016F 2017F 2018F kt Transshipment 90% 54% 93% 89% 90% 90% 94%

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Investment project of the Terminal – foundation for future business growth

…resulting in improved productivity and quality of the Terminal’s infrastructure The Company is implementing the large-scale investment project… Comments

Source: Company data Source: Company data

 The Company’s strategy is based on the investment project which would allow it to significantly increase grain transshipment volume up to 6,140kt per year as a result of infrastructure modernisation and construction of additional infrastructure  NGP’s strategy assumes that upon completion of the reconstruction the Company will be the absolute leader among grain terminals in the Azov Black Sea basin by transshipment capacity and quality of the infrastructure, allowing NGP to serve vessels with deadweight of 80kt

Parameter

Unit

2015A 2018F(2)

Transshipment volume(1) kt per year 3,400 6,140 Storage capacity kt 140 250 Capacity of grain receiving from rail t per day 10,350 14,500 Productivity of conveyor gallery (by sea) t per hour 1,600 3,500 Ability to receive wagons without sorting routes

• 



Possibility of simultaneous storage of different crops crops 4 8 Maximum deadweight of served ships t 72,000 80,000 Notes: (1) Forecasted transshipment volume for full year 2015; (2) Upon completion of the investment project Utilisation

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Strategy of growth and efficiency improvement

Source: Company data

Key means Key strategic goals

Compliance with government strategy on agricultural industry Significant increase of stake in deep-sea grain transshipment

Technical and technological support of anticipated grain export growth (by 55% compared to 2015) 1 Achievement of the state’s goals on efficient grain transshipment 2 Significant grain transshipment expansion to facilitate further growth of grain and legume export 3 Organic growth by implementing large-scale modernisation programme of the existing terminal (grain transshipment volume growth of 83% by 2018) 4 Non-organic growth by acquiring nearby terminals (if possible) 5

EBITDA maximisation by offering new in-demand services

Maintaining margin by providing a wide range of services (one- stop approach) 6 Client base diversification 7 Operating efficiency improvement 8

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Experienced and highly professional management team

Key management

Management team…  Has extensive experience in the industry  Has developed and actively implementing the investment project, which would allow to increase grain transshipment volume up to 6,140kt by 2018  Achieves excellent financial and operating results, despite difficult macroeconomic conditions: revenue in 1H 2015 is 97% higher than revenue in 1H 2014  Has diversified the Company’s business due to provision of quality  Maintains and develops long-term partnerships with key customers

Alexey Chemerichko Yuri Medvedev Evgeny Sutchenko Denis Guev Alexey Borisenko Olga Vodzinskaya CEO First Deputy CEO, Economics and Finance Deputy CEO, Manufacturing Commercial Director Chief Engineer Chief Accountant Working experience: 10 years Working experience: 22 years Working experience: 13 years Working experience: 11 years Working experience: 4 years Working experience: 30 years Working at NGP: 2 years Working at NGP: 22 years Working at NGP: 5 years Working at NGP: 2 years Working at NGP: 4 years Working at NGP: 30 years

Source: Company data

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Corporate governance and Board of Directors composition

Corporate governance NGP’s Board of Directors composition

Stefan Frappa Chairman of the Board of Directors Independent Director Chairman of the Audit committee Member of the Remuneration and Nomination Committees Alexander Potapushin Independent Director Chairman of the Remuneration and Nomination committees Member of the Audit Committee Artem Tkachev Non-executive Director Member of the Audit, Remuneration, and Nomination committees Yuri Sakunov Non-Executive Director Andrey Titov Non-executive Director Evgeniya Tyurikova Non-Executive Director

Board of Directors  Consists

• f

7 members: 2 Independent Directors and 5 Non-Executive Directors Audit Committee  Consists of 3 members of the Board, 2 of which are represented by Non-Executive Directors Remuneration and Nomination committee  Consists of 3 members of the Board, 2 of which are represented by Independent Directors Audit  Audit of the Company is held in accordance with IFRS since 2012  Audit is performed by PwC

Andrey Melnikov Non-Executive Director

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Section 2 The Company’s Financial Position Overview

661 568 1,319 195 763 22% 32% 43% 20% 39% 2012 2013 2014 1H 2014 1H 2015 RUBm Net income Net income margin 953 830 1,713 287 1,114 31% 46% 55% 29% 57% 2012 2013 2014 1H 2014 1H 2015 RUBm EBITDA EBITDA margin 3,044 1,788 3,090 984 1,942 2012 2013 2014 1H 2014 1H 2015 млн. руб.

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Robust financial performance of NGP

EBITDA dynamics Revenue dynamics Comments Net income dynamics  In 1H 2015, NGP’s revenue amounted to c.RUB1.9bn (almost doubled compared to the respective period in 2014)  Factoring in approved and being implemented investment programme, revenue is expected to increase due to port infrastructure development and transshipment volumes build-up  Over the last few years, the Company has been enhancing its efficiency, which resulted in stable growth of EBITDA and net income margins  The Company plans to achieve and maintain EBITDA margin of c.60% by 2018

Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015

Growth: 97%

3,044 1,788 3,090 984 1,942 2,779 2,260 3,109 725 1,091 2012 2013 2014 1H 2014 1H 2015 RUBm Actual Budget 953 830 1,713 287 1,114 805 954 1,178 67 326 2012 2013 2014 1H 2014 1H 2015 RUBm Actual Budget

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NGP has been outperforming budgets

Sales dynamics Comments EBITDA dynamics  Despite unstable macroeconomic situation, over the last few years the Company outperforms budget targets − NGP consistently ramps up volumes and enhances its efficiency, which results in both revenue and EBITDA growth − underperformance in 2013 was caused by a bad harvest year. Notwithstanding that, the Company managed to maintain EBITDA at 2012 level − unique expertise of NGP, coupled with a streamlined management process, enabled the Company to achieve financial results in 1H 2015 which significantly exceeded those of 1H 2014, while 2014 was a record year in terms of grain crop  In 2014, the Company’s budget assumed transshipment volumes of 3mt, while actual volumes amounted to 3.3mt − budget targets were also met due to an increase of average transshipment rates for barley and corn from RUB629/t in 2013 to RUB806/t in 2014  Investment programme, which is currently being implemented by the Company, will allow NGP to maintain leading positions in the maritime grain transshipment segment, and at the same time, provide future growth of financial results

Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015, company data

1,583 1,230 2,335 544 1,445 1,073 174 415 303 288 384 376 339 136 208 4 8 2 1 1 3,044 1,788 3,090 984 1,942 2012 2013 2014 1H 2014 1H 2015 RUBm Grain transshipment Trading Own production Other

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Segment breakdown of key financial metrics of NGP

Sales breakdown by segment Comments EBITDA margin by segment

Segment 2012 2013 2014 1H 2014 1H 2015 Grain transshipment 60% 66% 72% 49% 75% Trading 2% 3% 6% 5% 11% Own production (5%) 4% 1% 2% 2% NGP 31% 46% 55% 29% 57%

 Historically, grain transshipment has accounted for the majority of the Company’s income flows: − in 2014, grain transshipment revenue contributed 76% of NGP’s total revenue − grain transshipment is the most profitable segment. EBITDA margin of the segment increased from 60% in 2012 to 75% in 1H 2015  Currency breakdown of NGP’s revenue: − grain transshipment – US Dollar − trading and own production – Russian Ruble  The Company plans to achieve the following target revenue breakdown structure: − grain transshipment – around 70% − trading – around 25% −

• wn production – around 5%

 The Company plans to achieve an EBITDA margin of c.60% by 2018

and maintain this level going forward

Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015 Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015

35% 49% 52% 47% 15% 25% 19% 35% 23% 1% 2012 2013 2014 Grain transshipment Trading Own production Other 2,248 1,097 1,534 RUBm Fixed costs Variable costs

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Operating costs breakdown

Costs breakdown and dynamics Comments  Company’s main costs are personnel costs (c.70% of which are variable), purchases of grain for sale and raw materials for own production  Transshipment segment accounts for half of Company’s costs − segment’s share in total costs increased due to grain transshipment volumes expansion  Due to the implementation of the modernisation programme, NGP enhances its efficiency, which results in optimisation and costs reduction along with sales growth − growing scale of business enables the Company to reduce unit costs per tonne of handled goods  Since July 2014, all grain transshipment contracts of NGP are denominated in US$, while the majority of costs remain RUB-

• denominated. This factor represents a natural hedge during high

volatility in the currency market  Reconstruction of current facilities and construction of new facilities will allow the Company to enhance its efficiency, which results in a significant rise in EBITDA margin

Source: Audited IFRS financial statements for 2012-14 RUBm 2012 2013 2014 2012 2013 2014 Personnel costs 483 285 429 22% 26% 28% Purchases of grain for sale 1,031 166 383 46% 15% 25% Raw materials 374 334 305 17% 30% 20% Depreciation of PPE 150 138 125 7% 13% 8% Electricity and public utilities 38 31 42 2% 3% 3% Provision for unutilised vacations 26 11 27 1% 1% 2% Taxes 27 26 28 1% 2% 2% Transportation costs 22 14 25 1% 1% 2% Surveyor services 4 5 28 0% 0% 2% Repair and maintenance costs 75 35 51 3% 3% 3% Other costs 17 51 91 1% 5% 6% Total 2,248 1,097 1,534 100% 100% 100%

Costs breakdown by segment

774 398 973 2012 2013 2014 RUBm Dividends announced during the year 117% 70% 74%

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Working capital and dividends

Dividend payment history Working capital dynamics Comments Comments  Company has negative working capital due to high dividend payables − as of 31 December 2014, dividend payables reached RUB475m  Normalised turnover targets, which the Company plans to achieve by 2016: − inventories: 20 days − accounts receivable: 40 days − accounts payable: 60 days  Historically, the Company paid out a significant portion of net income in the form of dividends (see graph above)  Going forward, the Company’s management plans to adhere to its historically established dividend policy adjusted for investment programme financing needs partially funded by NGP’s own funds

% of net income(1) Source: Audited IFRS financial statements for 2012-14 Notes: (1) Ratio of announced dividends during the year to the net income for the same year

RUBm 2012 2013 2014 Inventories 135 102 307 Raw materials 113 71 288 Finished goods 22 26 18 Goods available for resale 5 Accounts receivable 73 302 432 Trade receivables 32 66 84 Advances to suppliers 8 214 260 Other 34 22 88 Accounts payable 345 426 803 Dividend payables 269 334 475 Trade payables 1 57 Other 76 92 271 Working capital (137) (22) (65)

400 2,100 1,100 2,500 2015F 2016F 2017F 2018F RUBm Tranche 1 Tranche 2 30.3% 69.7% Own capital Debt capital 51 266 1,854 2,668 198 132 2012 and 2013 2014 2015 2016 2017 2018 RUBm

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Investment project financing

Capital expenditures dynamics Comments Loan drawdown Financing structure

 In order to finance the investment project, the Company will use both its own funds as well as debt capital − debt capital will cover 69.7% of the financing needs of the investment project  Loan will amount to RUB3.6bn − drawdown: from December 2015 to July 2016; loan maturity: 5 years − accrual of interest (at an annual rate of 13.9%): monthly; interest payment: quarterly − debt repayment: quarterly starting since April 2018 for Tranche 1 and since November 2018 for Tranche 2  Management expects that net debt/EBITDA ratio will not exceed 2.5x RUB5.2bn(1)

Notes: (1) Financing structure based on capital expenditures of RUB5.2bn (excluding VAT) and loan of RUB3.6bn Source: Company data

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Annex I Market overview

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Fundamental attractiveness of the Russian grain export market

Potential for Russian grain export growth

 Growing world population twinned with increasing urbanisation and popularisation of western foods (larger share of protein products) in developing countries helps drive growth in world grain consumption, which is forecast to increase by 30-40% by 2030  Russia possesses significant potential to increase grain supply to the world

• market. Key growth drivers of Russian grain export include:

− vast unutilised land plots − improvements in crop yield to the level of developed countries  According to the Russian Ministry of Economic Development, potential of Russian grain export is forecast at over 30mt by 2020

Comments World grain consumption dynamics (mt)(1)

CAGR ’06-’16F: 2.3% Growth ’06-’16F: 23% Growth by 2030F: 30-40%

Notes: (1) Including wheat and feedgrain

5% Current share in world grain production 14% Potential by cultivation area Internal factors Russia: c.40% of world black soil area and 13.8m ha of unutilised cultivation area Improvements in crop yield to the level of developed countries 2.2 3.0 4.7 5.3 External factors

Growth of Russian grain export

World population growth Growing urbanisation +30-40% +31% +31%

Source: International Grains Council Source: International Grains Council, Company annual report 2014

1,610 1,690 1,720 1,750 1,790 1,850 1,818 1,936 1,976 1,978 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16F … 2030F 7.0 9.2 2015A 2050F 50% 70% 2015A 2050F

83% 94% 94% 98% 97% 96% 95% 93% 99% 17% 6% 6% 2% 3% 4% 5% 7% 1% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Export Import 13.7 18.0 15.1 22.7 14.5 19.9 23.8 20.6 30.1 2006 2007 2008 2009 2010 2011 2012 2013 2014 mt 86% 86% 70% 48% 38% 32% 32% 31% 30% 28% Share of Russia in grain import in 2014/15

740 1,575 5,947 940 1,785 1,161 11,063 1,523 2,632 1,487

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Export – the most important direction of grain transshipment in Russian ports

Volume of grain foreign trade in Russia(1) (mt)  Russia possesses significant potential to increase grain supply to the world market  Volume of grain foreign trade in Russia has been demonstrating positive dynamics from 13.7mt in 2006 to 30.1mt in season 2014 (representing a CAGR of 10%)  In the structure of grain foreign trade, an export / import imbalance exists whereby exports account for the overwhelming majority of trade  Russia imports such grain crops as rice (less than 5% in the structure

• f grain transshipment). However, these crops are not transshipped at

Novorossiysk Grain Plant Comments

Notes: (1) Including grain transshipment from Russia and Kazakhstan

Structure of grain foreign trade in Russia

Source: FAOSTAT, Rosstat, Federal Customs Service Source: USDA

Russia – one of the world’s leading grain suppliers

Source: Federal Customs Service, USDA Volume of grain import in 2014/15

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Azov-Black Sea basin – the main Russian grain export channel

Structure of grain transshipment in Russian ports Grain terminals of the Azov-Black Sea basin Comments  Ports of the Azov-Black Sea basin are dominant in Russia and facilitate 97%(1) of grain transshipment in Russia − deep-sea ports handle over 60%(1) of total grain transshipment volumes in the Azov-Black Sea basin  NGP’s share in grain transshipment structure in deep-sea ports of the Azov-Black Sea basin reached 30% in 1H 2015  Major growth in grain transshipment capacity in the Azov-Black Sea basin is expected from deep-sea ports (mainly NGP) in order to meet exporters’ demand on vessels of larger sizes

Azov-Black Sea basin:

97%

Baltic basin: 0% Caspian basin: 3% Far East basin: 0% Arctic basin: 0% kt Capacity (1H 2015) Transshipment 2013 2014 1H 2015 Deep-sea terminals(2) 16,500 7,917 14,666 4,575 NGP 3,500 1,940 3,258 1,355 NGT 3,500 2,163 4,221 1,179 KSK 3,500 1,277 3,027 852 TGTC (Taman) 4,000 1,694 2,653 486 TCSP(Tuapse) 2,000 843 1,507 704 Shallow-water terminals(3) 16,048 8,643 10,348 2,364 Rostov-on-Don 7,098 2,974 3,508 600 Eysk 1,100 1,508 1,281 329 Azov 5,510 3,361 4,209 988 Taganrog 1,040 417 598 173 Temryuk 650 96 130 42 Kavkaz 650 286 621 231 TOTAL (market) 32,548 16,560 25,014 6,939 Notes: (1) In 1H 2015; (2) Not taking into account deep-sea ports of Kerch and Sevastopol, which jointly handled 32kt of grain in 1H 2015 (constituting less than 0.6%); (3) Not taking into account other shallow-water terminals, which account for less than 5% of grain transshipment capacity in ports of the Azov-Black Sea basin. In any given location there are several grain terminals (for instance, there are 6 grain terminals in the port of Rostov-on-Don, and 5 in Azov)

Structure of grain transshipment in the ports of the Azov-Black Sea basin in 1H 2015 Structure of grain transshipment in the deep-sea ports of the Azov-Black Sea basin in 1H 2015(2)

Source: IKAR Source: IKAR, Company data Source: IKAR 66% 34% Deep-sea terminals Shallow-water terminals 30% 26% 19% 15% 11% NGP NGT KSK TCSP TGTC

160 192 255 326 223 224 316 313 312 285 227 111 141 247 245 160 174 244 279 249 235 207 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H 2015 US$/t World prices Russian prices 16 14 22 20 21 22 23 24 25 26 27 28 29 30 3 3 3 4 4 4 5 5 5 6 6 6 7 7 2 2 4 3 3 3 3 4 4 4 4 5 5 5 22 19 29 27 28 29 31 32 34 35 37 39 41 42 2012A 2013A 2014A 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F mt Wheat Corn Barley

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Grain price dynamics Russian grain export dynamics(2) Comments

Overview of key market data(1)

 World grain market is controlled by five exporters (USA, Canada, Australia, Argentine and EU), which are represented by several of the largest international grain companies − total supply of the five exporters provides over 84% of world grain trade volume  Main consumers of grain are countries of the Asia-Pacific region  An important factor affecting the equilibrium of the world grain market, is the grain carryover inventory of the largest grain exporters  Over the last few years, demand on grain has been growing, which makes sustainable supply and accessibility to grain an important element of social and economic development for many developing countries − in accordance with the world trend, Russian grain exports are expected to grow to in excess of 40mt by 2024 − Russian grain is traditionally imported by countries of the Middle East, North Africa and Turkey  Russian grain prices are historically lower than world prices. However, the spread achieved in 1H 2015 (US$20/t) represents the minimum level seen since 2007

Notes: (1) Such grain crops as rice and flax are exported from Russia. However, shares of these crops are negligible; (2) Includes transshipment via railway (not only maritime transshipment) that accounts for less than 1% of total grain export Source: IKAR Source: FAOSTAT, UN Comtrade, Rosstat, Federal Customs Service

28

Annex II Overview of Company’s business and assets

29

Company overview

Terminal layout Summary overview  The terminal is located on the Black Sea coast in Krasnodar region  NGP is currently

• ne
• f

the most promising and dynamically developing grain terminals in Russia, providing a wide range of services associated with grain transshipment  The terminal is equipped with hi-tech modern equipment of leading international companies (BUHLER, NEUERO, OСRIM etc.), which helps to ensure the reliability of all operations: from grain receiving to vessel loading  NGP’s production facility occupies 14.54ha and is comprised of 71 buildings equating to a total area of 44,022 sqm  NGP’s infrastructure includes − railways and roads − transportation facility − mechanical facilities − power facility − administrative building − laboratory −

• ther facilities (including canteen)

 Strategic location (aquatic area of the largest non-freezing port in Russia) helps facilitate continuous transshipment operations for 365 days a year

30

Overview of key production facilities

Storage facilities  12 granaries(1) − total area: 16,756 sqm  2 grain elevators − storage volume: 140kt 2 Milling plant  Product: wheat flour  Equipment: OСRIM  Productivity: 150t per day  Capacity

• f

finished products storage facilities: 3,810t 4 Handling terminal  Grain receiving equipment: − simultaneously from 5 wagons − simultaneously from 6 cars 1  Grain loaders: − quantity: 3 units − equipment: BUHLER, NEUERO − productivity: 2,200t per hour  Conveyor gallery: − length: 1.6km − capacity: 1,600t per hour − 4 conveyors with 400t per hour capacity each Berth  Length: 268.5m  Handled vessels: − deadweight: 72,000t − draft: 13.1m − length: 229m 3 3 4 2 2 1 1 1 2 1

Notes: (1) Storage yards

31

Comparison to main competitors

After completion of the modernisation initiatives, the Company is expected to outperform all of its competitors in terms of both infrastructure quality and transshipment capacity

Indicator Metrics 2018(1) 1H 2015 NGT(2) KSK GTCT TCSP Location (port) Novorossiysk Novorossiysk Novorossiysk Taman Tuapse Total area ha 14.5 14.5 7.2 12.6 3.6 part of TSCP Capacity of grain receiving from: railway t per day 14,500 10,350 12,560 6, 900 Not available 7,590 auto t per day 9,800 9,800 11,200 12,600 18,000 n/a Grain transshipment capacity (3) kt per year 6,500 3,500 3,500 3,500 4,000 2,000 Productivity of conveyor gallery t per hour 3,600 1,600 1,600 1,600 1,500 1 400 Ability to receive wagons without sorting routes Yes No No No No No Total storage capacity in grain elevators t 250,000 140,000 120,000 115,600 192,000 98,000 Possibility of simultaneous storage of different crops Crops 8 4 3 3 6 3 Features of served vessels maximum deadweight t 80,000 72,000 65,000 45,000 45,000 50,000 maximum draft m 13.1 131 13.1 11.8 12.8 12.5 maximum length m 240 229 229 225 230 230 Milling plant

     

Notes: (1) After modernization; (2) NGT – “Novorossiysk Grain Terminal”, KSK – “Kombinat “Stroykomplekt”, TCSP – “Tuapse Commercial Sea Port”, TGTC – “Taman Grain Terminal Complex”; (3) Capacity of competitors as of 2015 Source: Company analysis, public sources

1.7 1.7 2.2 2.1 2.4 1.8 1.6 2.3 1.0 2.0 0.8 0.6 0.5 0.2 0.6 0.3 0.9 0.4 0.6 0.8 0.9 1.3 0.3 0.8 2.2 2.0 2.8 2.5 3.3 2.2 2.2 3.2 1.9 3.3 1.1 1.4 6.1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H 2014 1H 2015 Target level mt Wheat Barley and corn 493 662 658 1 083 538 629 806 1 112 2012 2013 2014 2015 RUB Wheat Barley and corn 15.9/17.3 20.8/19.7 17.0/20.9 19.0/19.5 21% 20% 8% 8% 5% 5% 33% Egypt Saudi Arabia Jordan Turkey Nigeria Libya Other

32

Grain transshipment for export – the main business segment of NGP

Transshipment structure by direction (2014) Transshipment dynamics Business overview Weighted average transshipment rate dynamics  Grain transshipment for export is the main business segment of NGP (historically it comprised c.70% of total revenue)  Currently the Company is implementing a large-scale investment programme that seeks to increase transshipment volume to 6.1mt due to modernisation and construction of additional infrastructure  NGP mainly exports to Middle Eastern and African countries  As a result of high demand for grain transshipment, the Company managed to increase rates(1) c.2x compared with 2012 rates (RUB- denominated)  Since June 2014, all transshipment rates have been denominated in US$

Source: Company data Source: Company data Source: Company data

(2)

Notes: (1) Weighted average rates for grain transshipment are in RUB; (2) Will be achieved by 2018; (3) Based on 9m 2015 actual data and current contracts. Tariffs are calculated based on an average US$/RUB exchange rate for the corresponding period: average exchange rate for the period since January to August 2015 is RUB58.12

(3)

Transshipment rate in US$ for wheat / barley and corn

1,414 1,630 306 1,482 984 2,106 1,942 1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 2H 2014 1H 2015 2H 2015 RUBm 0.1 0.0 0.9 0.8 0.6 0.5 1.1 1.1 0.8 0.6 0.9 1.1 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 mt

33

Seasonality in grain transshipment for export

Grain harvest NGP’s transshipment volume dynamics Comments NGP’s revenue dynamics  NGP’s seasonal business model is a reflection of its dependence on harvest and weather (including “cold period”) − agricultural season starts in June, with peak harvest season

• ccurring between July to October

− shallow-water ports, serving ships when deep-sea ports are loaded, significantly reduce activity during cold weather periods  Thus, between December to February NGP has an opportunity to increase transshipment rates  Historically, Q3 is the most productive season for grain transshipment in Russia

January February March April May June July August September October November December Wheat Barley Corn

Source: Company data Source: Company data, 3Q 2015 – actual, 4Q 2015 – Company’s budget Source: Company’s management accounts, unaudited IFRS financial statements for 1H 2015

16.6% 15.3% 13.4% 10.4% 7.5% 7.1% 6.6% 5.5% 3.2% 2.6% 12.0% OZK Olam Int. Louis Dreyfus Glencore Vitol Artis Cargill Miro Group TD RIF KZP Other 585 541 473 367 266 250 233 888 1,615 1,291 2,538 389 764 2,142 OZK Olam Int. Louis Dreyfus Glencore Vitol Artis Cargill kt Grain transshipment volume through NGP Total grain transshipment volume in Russia

34

Diversified and reliable customer base

Reliable customer base Comments  The Company has established long-term relationships with its customers: − NGP’s largest customer with a 17% share is OZK that collaborates with the Company since its establishment − with such clients as Glencore and Louis Dreyfus, NGP cooperates for the last 20 years  For many customers NGP is the main partner for grain transshipment. For instance, OZK’s transshipment volume share through NGP amounts to 66%, Vitol’s – 68%, Louis Dreyfus’ – 37%, Olam’s – 33%, etc.  Typical transshipment agreement is signed in June for a year and gives the Company sufficient flexibility in choosing clients Largest NGP’s customers by transshipment volume in season 2014–2015 Key transshipment contract terms

 Agricultural year (from July to June) Term  NGP has an option to increase tariffs following a 30- day client notification period Change in terms  US$ denominated (since July 2014 all contracts are US$ denominated) Currency  Fines can equate to 50% of the cost of service in case of failure to meet a plan (agreed on a monthly basis) Fines, sanctions

Source: Company data Source: Company data Source: Company data Notes: (1) During 2014-2015 ; (2) Krasnodarzernoprodukt

(2) (1) (1)

8,445 7,577 8,534 9,293 13,092 7,909 5,617 5,939 5,832 10,122 2012 2013 2014 1H 2014 1H 2015 RUB/t Wheat Barley and corn 128.2 12.6 34.1 22.0 12.5 225.5 3.3 15.5 20.8 16.9 12.2 14.5 131.5 28.1 54.9 38.9 24.7 240.0 2012 2013 2014 1H 2014 1H 2015 Target level kt Wheat Barley and corn 35% 10% 13% 31% 15% 2012 2013 2014 1H 2014 1H 2015

35

NGP’s trading

Trading’s share in revenue Trading volume dynamics Business overview Weighted average grain resale price  Trading mainly involves resale  Key objective of the trading business segment is to expand a customer base rather than generate income − in the long-term, average trading mark-up will not exceed 2-3%  Main NGP’s clients are the same as those who the Company provides transshipment services to  In a period of stable grain prices trading will generate c.25% of total revenue

Notes: (1) Will be achieved by 2016, suppose the structure of transshipment in 2016 as in 2015 (c.90% of transshipment volume is attributable to wheat, 10% - to barley and corn; (2) Includes insignificant transshipment volume of chickpeas and flax Source: Company data Source: Company data

(1) (2)

Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015

13% 21% 11% 14% 11% 2012 2013 2014 1H 2014 1H 2015 8,897 10,988 10,278 11,708 14,877 2012 2013 2014 1H 2014 1H 2015 RUB/t 43 34 33 13 17 44 2012 2013 2014 1H 2014 1H 2015 Target level kt 90% 71% 69% 91%

36

Own production

Contribution of own production to NGP’s revenue Own production dynamics Overview Sale price of finished goods dynamics

 Production of finished goods (flour and bran as a byproduct) is one of the three business segments of NGP  The purchasing of raw materials and sale of finished goods are based on market terms − main suppliers: OZK, TD “Rif”, Miro Group and Petrokhleb-Kuban − main customers: Confectionery plant “Kuban”, Slavyansky khlebokombinat, Afipsky khlebokombinat, consumers from South-East Asia and Middle East  Existing technological capabilities will enable own production to increase c.2x without significant costs. Given the focus attributed to the modernisation of the core business segments, the Company does not see the need to increase the production of finished goods in the mid-term

(2)

Notes: (1) Since preventive maintenance of the milling plant was carried out in 1H 2015, no production shutdowns are expected to happen in 2H 2015; (2) Will be achieved by 2016 Utilization rate Own production volume

(1)

Source: Company data Source: Company data Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015

37

Government support of NGP’s business development

Tax preferences

 Granting investment tax credit in relation to income tax attributable to regional budget  Exemption from tax on new property of an organization for the period less than 3 years (“tax holidays”)

Subsidising interest expense

 The Company expects to receive subsidies in the amount of 2/3 of the Russian Central Bank’s refinancing rate for payment of interest expenses on loans obtained to finance the investment programme (applies to financing of the grain elevator construction)  Subsidies will be granted from federal and regional budgets Attracting investment for the implementation of strategic investment projects in the agricultural sector, as well as the development of infrastructure in the grain market of Krasnodar region in particular, is one of the major priorities of social and economic development of the region

Source: Company data, Government Resolution, as of 28 December 2012 № 1460, the law of Krasnodar region, as of 2 July 2004 N 731–KZ «On incentivising investment activity in Krasnodar region»

38

Annex III Investment project

3,160 1,903 3,258 3,400 4,500 5,300 6,140 2012A 2013A 2014A 2015F 2016F 2017F 2018F kt Transshipment 90% 54% 93% 89% 90% 90% 94% 49% 47% 4% Equipment (with delivery) Construction and installation Other

39

Investment project of terminal reconstruction

Terminal layout Comments Capacity expansion schedule Structure of capital expenditure

RUB5.2bn(1)

 Lack of receiving, storage and handling capacity constrains NGP’s transshipment ability  Expansion

• f

storage capacity will improve the Company’s competitiveness and increase its market share of growing grain export volumes  Investment project of terminal reconstruction and construction of new facilities would help facilitate an increase in the average annual transshipment volumes to 6,140kt by 2018  According to the Company’s management, the project is investment- attractive and economically efficient

Utilisation rate Notes: (1) Capital expenditure (excluding VAT) Source: Company data

40

Strategic goals and visualisation of the investment programme

Source: Company data

Visualisation of the investment programme(1) High demand for technical modernisation…  During the peak harvest season the Terminal is not able to handle all volumes requested by clients due to limited storage capacity for vessel

• parties. Historically, these volumes were handled by other deep-sea

and shallow-water terminals  During the wheat harvest season, due to storage capacity constraints it is impossible to accumulate vessel parties of 50-60kt of corn and barley, export of whose has been growing during last years  Vessel delay or bad weather conditions for a few days stop grain receiving, which cause a number of claims from clients and railway  Storage capacity expansion to accumulate additional vessel parties  Increase of grain receiving capacity from railway  Increase of vessel loading capacity …underlied key strategic goals of the investment project

Notes: (1) Black colour denotes existing facilities, orange – facilities that will be reconstructed or built Grain elevator #1 (96kt) Grain elevator #2 (45kt) Receipt from auto Receipt from rail Receipt from rail Receipt from auto and rail Grain warehouse (100kt) Receipt from rail Construction of new grain railway receipt Construction of the 1st line of new grain conveyor gallery (to berth №21) Construction of the 2nd line of new grain conveyor gallery (to berth №22) 21 berth reconstruction Reconstruction of current grain conveyor lines Reconstruction

• f current rail

receipt facilities New grain elevator construction

2х350t per hour 2х500t per hour 2х500t per hour 2х350t per hour 2х350t per hour

41

Key milestones of the investment programme

Investment programme

(1)

(RUBm) Stage Scope of work Total amount Utilised as of 30 June 2015 2014A 2015A/F 2016F 2017F 2018F 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 1  Modernisation

• f

auto and railway grain receiving equipment  Modernisation of grain elevator and berth  Automation of processes 821 406 2  Reconstruction of internal railways  Reconstruction of Verhny park 273 18 3  Construction of granary with capacity of 100kt  Construction

• f

railway grain receiving equipment connected to existing conveyor gallery and elevators 2,330 42 4  Reconstruction of berth  Installment of new vessel loading machine 569 1 5  Construction of new conveyor gallery from grain storage facilities to berth  Installment of new vessel loading machine 1,136

• 6

 Installment of mooring post to accommodate vessels with deadweight of 80kt 38

• Total:

5,168 468

Notes: (1) Investment programme amount excluding VAT Source: Company data

42

NGP’s infrastructure development

Source: Company data

Indicator Before reconstruction (2015) After reconstruction (2018) Layout Transshipment volume (kt per year)

3,400 6,140

Storage capacity (kt)

140 250

Capacity of grain receiving from railway (t per day)

10,350 14,500

Conveyor gallery productivity (t per hour)

1,600 3,500

Ability to receive wagons without sorting routes

No Yes

Possibility of simultaneous storage of different crops (crops)

4 8

Maximum deadweight of served vessels (t)

72,000 80,000

43

Annex IV Legal structure and financial statements

44

NGP’s ownership structure

Summa Group Public Stock Company “Novorossiysk Grain Plant” Ziyavudin Magomedov Ivianto Services Limited JSC “OZK” Belcarra Services Limited Other individuals and legal entities (total ca. 370) Russia

100% 100% 50% - 1 share 50% + 1 share 18.4890% 50.9993% 10.7860% 19.7257% Source: Company data

45

Income statement

Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015 Notes: (1) Other operating income (net) in 1H 2014 and 1H 2015

‘000 RUB 2012 2013 2014 1H 2014 1H 2015 Revenue 3,043,774 1,787,835 3,090,273 983,841 1,942,375 Cost of goods sold (1,995,495) (915,665) (1,211,748) (617,007) (702,361) Gross profit 1,048,279 872,170 1,878,525 366,834 1,240,014 Selling expenses (35,470) (24,366) (84,339) (26,438) (22,444) Administrative expenses (200,120) (117,620) (189,874) (90,442) (138,157) Other operating expenses(1) (17,150) (38,874) (48,314) (19,668) (28,881) Other operating income 7,070 454 31,961

• Operating profit

802,609 691,764 1,587,959 230,286 1,050,532 Interest income 25,706 23,734 61,327 19,586 60,937 Profit before tax 828,315 715,498 1,649,286 249,872 1,111,469 Income tax expense (167,782) (147,668) (329,855) (55,294) (348,324) Profit attributable to Company shareholders 660,533 567,830 1,319,431 194,578 763,145 Comprehensive income attributable to Company shareholders 660,533 567,830 1,319,431 194,578 763,145

46

Balance sheet

Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015

‘000 RUB 31 December 2012 31 December 2013 31 December 2014 30 June 2015 Assets Non-current assets Property, plant and equipment 1,429,983 1,313,960 1,321,867 1,379,167 Advances for property, plant and equipment 20,004 23,907 191,384 222,710 Other non-current assets

• 1,711

4,630 1,199 Total non-current assets 1,449,987 1,339,578 1,517,881 1,603,076 Current assets Inventories 135,084 101,599 306,625 170,412 Trade and other receivables 31,970 62,606 83,736 1,252,053 Advances 40,942 239,772 347,786 225,269 Short-term investments 73,219 325 30,745 60,006 Cash and cash equivalents 496,118 729,137 905,059 1,040,442 Other current assets

• 89

507 230 Total current assets 777,333 1,133,528 1,674,458 2,748,412 TOTAL ASSETS 2,227,320 2,473,106 3,192,339 4,351,488 EQUITY Share capital 67,597 67,597 67,597 67,597 Retained earnings 1,724,224 1,893,580 2,240,140 2,653,611 TOTAL EQUITY 1,791,821 1,961,177 2,307,737 2,721,208 Liabilities Non-current liabilities Deferred tax liabilities 90,727 85,867 81,949 202,540 Total non-current liabilities 90,727 85,867 81,949 202,540 Current liabilities Trade and other payables 332,142 398,511 712,392 1,383,587 Current income tax liabilities 176 21,389 64,854 19,308 Other taxes payables 12,454 6,162 25,407 24,845 Total current liabilities 344,772 426,062 802,653 1,427,740 TOTAL LIABILITIES 435,499 511,929 884,602 1,630,280 TOTAL LIABILITIES AND EQUITY 2,227,320 2,473,106 3,192,339 4,351,488

47

Cash flow statement (1/2)

Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015 Notes: (1) Change in provisions for revaluation of inventories in 1H 2014 and 1H 2015; (2) Unrealised gain from foreign exchange differences in 1H 2014 and 1H 2015

‘000 RUB 2012 2013 2014 1H 2014 1H 2015 Cash flows from operating activities Profit before tax 828,315 715,498 1,649,286 249,872 1,111,469 Adjusted for: Depreciation of property, plant and equipment 150,376 138,090 124,753 56,602 63,060 Loss from investments revaluation

• 325
• 325

Change in provisions for trade and other receivables, revaluation of trade and other receivables 8,673 5,170 1,295 (53) (810) Proceeds from disposal of property, plant and equipment (net) (23,906) (523) (4,385) 4,759 7,820 Interest income (25,706) (23,734) (61,327) (19,586) (60,937) Revaluation of inventories(1) 4 366 486

• 209

Change in provisions for law suits and similar expenses 104

• (1,804)
• 98

Net profit from foreign exchange differences(2) (7,174) (454) (30,157) (386) (1,627) Net loss from foreign currency purchases

• 9,749
• Cash flows from operating activities before changes in working capital

930,686 834,413 1,688,221 291,208 1,119,607 Change in trade and other receivables 186,384 (233,212) (123,964) 73,207 (1,045,123) Change in inventories (69,272) 33,119 (205,512) 28,369 136,004 Change in trade and other payables (60,072) (4,357) 185,767 214,790 781,381 Change in other current assets and liabilities 1,373 (1,800) (1,533) 317 3,610 Cash flows from operating activities before tax 989,099 628,163 1,542,979 607,891 995,479 Income tax paid (194,986) (131,314) (291,969) (297,520) (293,700) Cash flows from operating activities 794,113 496,849 1,251,010 310,371 701,779

48

Cash flow statement (2/2)

Source: Audited IFRS financial statements for 2012-14, unaudited IFRS financial statements for 1H 2014 and 1H 2015

‘000 RUB 2012 2013 2014 1H 2014 1H 2015 Cash flows from investing activities Purchases of property, plant and equipment (69,690) (25,447) (295,752) (30,515) (159,506) Return of funds from deposit accounts

• 72,894
• (30,746)

30,420 Allocation of funds on deposit accounts (72,894)

• Purchases of financial assets
• (30,745)
• (60,006)

Interest received 22,839 22,580 58,220 16,541 61,675 Net cash inflow (outflow) used in investing activities (119,745) 70,027 (268,277) (44,720) (127,417) Cash flows from financing activities Dividends paid (646,309) (334,041) (823,850) (294,973) (440,000) Net cash used in financing activities (646,309) (334,041) (823,850) (294,973) (440,000) Net increase in cash and cash equivalents 28,059 232,835 158,883 (29,322) 134,362 Effect of translation into presentation currency on cash and cash equivalents 4,678 184 17,039 266 1,021 Cash and cash equivalents at the beginning of the period 463,381 496,118 729,137 729,137 905,059 Cash and cash equivalents at the end of the period 496,118 729,137 905,059 700,081 1,040,442