Segezha, 26 August 2016 - Segezha Group, a subsidiary of Sistema PJSFC and a leading Russian vertically integrated forest holding with a full cycle of logging and advanced wood processing, begins disclosing its financial results prepared in accordance with International Financial Reporting Standards (IFRS) and hereby announces its unaudited consolidated IFRS results for the six months ended 30 June 2016.

KEY OPERATING AND FINANCIAL RESULTS FOR 6M 2016

• The Group's revenue increased by 34% vs. 6M 2015 to RUB 21.4bln;
• OIBDA reached RUB 4.6bln, a year-on-year increase of 28%; OIBDA margin was 21.6%;
• Net income grew by 53.1% vs. 6M 2015 to RUB 1.6bln;
• Net debt / LTM OIBDA¹ equalled 1.9x as of 30 June 2016;
• Segezha Group's capital investment in 6M 2016 totalled RUB 4.4bln.

Sergey Pomelov, President and Chairman of the Management Board of Segezha Group, said:

“Despite the challenging market situation, Segezha Group demonstrated a strong revenue growth in 6M 2016 thanks to increased sales of its key products. We significantly expanded our sack paper capacity by launching a new sack factory in the Rostov region and a production line in Segezha, and almost doubled our sawn timber and fibreboard production capacity by acquiring Lesosibirsk Woodworking Plant No.1, Russia's biggest vertically integrated wood processing enterprise, in Q1 2016.

“Measures taken to cut production costs, additional advantages created by fluctuating exchange rates of currencies for which we export our goods and the focus on sales of high-margin products helped us to keep the OIBDA margin high.

“Access to wood resources and a significant allowable cut remain our fundamental competitive advantages. Thanks to implementation of an investment project for modernisation of our logging fleet, own logging grew by 64% year-on-year, and its share in wood resources used by Segezha Group rose to 59% from 40% in 6M 2015.

“Segezha Group continues actively investing in modernisation of its current production facilities and construction of new sites, with a particular forcus on increasing operational efficiency and automation of business processes. Implementation of our investment programme will be the key driver for expanding the business and securing our positions on the Russian and global markets.”

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[1]Debt from non-related parties and financial lease liabilities net of cash divided by OIBDA for the 12 months ended 30 June 2016.