Moscow, Russia – 5 June 2018– Sistema PJSFC (“Sistema” or the “Company”, together with its subsidiaries, “the Group”) (LSE: SSA, MOEX: AFKS), a publicly-traded diversified holding company operating primarily in Russia and the CIS, today announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the first quarter ended 31 March 2018.

OPERATIONAL AND STRATEGIC HIGHLIGHTS

• Continued revenue growth driven by publicly traded assets, as well as Segezha, Steppe, Medsi and MTS-Bank
• MTS, Detsky Mir, Segezha, Steppe and Binnopharm all delivered at least double-digit OIBDA increase as a result of healthy business performance and under the impact of new IFRS standards 15 and 16
• New concept of diversification of the investment resources by managing third-party capital introduced in the Group
• New Digital vertical launched to capture exceptional growth opportunities in tech- and Internet-driven industries
• Andrey Dubovskov appointed as Sistema President and CEO in March 2018; Vladimir Travkov appointed as Sistema Vice President and CFO in April 2018
• Rosneft/Bashneft dispute resolved, and Sistema’s financial obligations under the Settlement Agreement fully performed 
• Board of Directors recommended a final dividend for 2017 of RUB 1,061.5 million (RUB 0.11 per ordinary share, RUB 2.2 per GDR). Subject to approval by the Annual General Meeting of Shareholders (AGM), this would bring total 2017 dividends (including those paid for 9M 2017) to RUB 7,623 million

FIRST QUARTER 2018 FINANCIAL RESULTS

• Group revenues[1]up 6.2% YoY to RUB 170.9 billion
• Excluding the effect of the new IFRS standards[2], Group revenues up 6.1% YoY RUB 170.7 billion
• Adjusted OIBDA[3]up 30.0% YoY to RUB 59.5 billion[4], with an adjusted OIBDA margin of 34.8%
• Excluding the effect of the new IFRS standards[5], adjusted OIBDA up 7.5% YoY to RUB 49.2 billion, with an adjusted OIBDA margin of 28.8%
• Adjusted loss attributable to Sistema[3] of RUB 215 million
• Excluding the effect of the new IFRS standards, adjusted net profit attributable to Sistema[3] of RUB 612 million

Andrey Dubovskov, President and Chief Executive Officer of Sistema, said:

“Sistema delivered strong results in the first quarter of 2018, underpinned by the Group’s diversified portfolio of high-quality businesses. All key holdings contributed to revenue growth. Our publicly traded assets – MTS and Detsky Mir – continue to consolidate their positions as leaders in their respective sectors, while the success of Segezha, Steppe, Medsi, MTS-Bank and other key non-public assets demonstrate they have the right strategies in place and the efficient management teams to execute on those strategies. Our Russian consumer-focused businesses grew against a positive macroeconomic backdrop, while our exporters benefitted from strong external demand for their products as well as the weakening of the rouble.

“The Group’s adjusted OIBDA grew by 30%, with MTS and Segezha delivering double-digit percentage increase and Detsky Mir and Steppe triple-digit percentage increase Much of this was attributable to the impact of the new IFRS standards 15 and 16, but on a like-for-like basis we also saw a strong growth, reflecting top-line dynamics and sustained control of costs. 

“Sistema companies are increasingly looking to benefit from synergies with other companies across the Group. In April, MTS and Medsi jointly launched SmartMed, a telemedicine platform for digital medical products and services. And MTS Bank is leveraging MTS’s brand strength as it continues partnership with MTS with a goal of building a digital bank.

“During the reporting quarter, we raised  bank financing sufficient to meet our obligations under the Settlement Agreement with Rosneft, Bashneft and the Republic of Bashkortostan and have fully performed our financial obligations under the Agreement.

“As we build out our investment fund business, we aim to position the Group in the global markets as an investor with strong expertise in high-tech sector and significant business capabilities that can benefit start-ups. As part of this strategy, in May 2018, our venture fund Sistema Venture Capital invested in TraceAir, a start-up developing a platform for monitoring construction sites using drones; and  in Connecterra, which deploys AI solutions for dairy farming; and with other investors which include Alibaba invested in SQream, a company that enables enterprises to leverage their Big Data analytics by using GPU. Another investment arm, Sistema Asia Fund, added HealthifyMe, an Indian mobile health and fitness application, to their portfolio. We expect to be able to announce more high-tech investments in the months ahead.   

“Finally, I would note that Sistema’s Board recommended that the AGM approve a final dividend for 2017 of RUB 1,061.5 million. The proposal represents a balance between maintaining our ability to reduce the Company’s debt while retaining some dry powder for exceptionally attractive investment opportunities and returning cash to shareholders.”

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Conference call information

Sistema’s management will host a conference call today at 10:00 am (New York time) / 3:00 pm (London time) / 4:00 pm (CET) / 5:00 pm (Moscow time) to present and discuss the first quarter 2018 results.

To participate in the conference call, please dial: 

Russia

+7 495 646 9190

8 10 8002 8675011 (toll free)

United Kingdom

+44 330 336 9411 

0800 279 7204 (toll free)

United States

+1 646 828 8143

800 347 6311 (toll free)

Conference ID: 3273966

Or quote the conference call title: “Sistema First Quarter 2018 Financial Results”.

A replay of the conference call will be available on Sistema’s website www.sistema.com for at least seven days after the event.

For further information, please visit www.sistema.com or contact:

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[1]Here and hereafter in this press-release Sistema’s consolidated results for 1Q 2017 and full year 2017 are restated to reflect deconsolidation of SG-Trading JSC and disposal of operating business of Sistema Shyam TeleServices Ltd. (SSTL)

[2]Here and hereafter in this press-release Sistema’s consolidated results and results of its subsidiaries for 1Q 2018 are presented in accordance with new accounting standards IFRS 9, 15 and 16 unless specified otherwise. The results for 1Q 2017 are presented without the impact of new IFRS standards 9, 15 and 16.

[3]See Attachment A for definitions and reconciliation of adjusted OIBDA, adjusted profit attributable to Sistema and consolidated total debt  to IFRS financial measures.

[4]Here and hereafter mentions of new IFRS standards refer to IFRS 9, 15 and 16.

[5]Results for MTS-Bank and Binnopharm are not presented excluding the impact of the new standards. However, Sistema estimates that the impact on the consolidated Group results of these subsidiaries’ transition to the new IFRS standards is not material