Moscow, Russia - June 3, 2014 - Sistema JSFC ("Sistema" or the "Company", together with its subsidiaries, "the Group") (LSE: SSA), the largest publicly-traded diversified holding company in Russia and the CIS, today announces its unaudited consolidated US GAAP financial results for the first quarter ended March 31, 2014. 

FIRST QUARTER FINANCIAL HIGHLIGHTS 

- Consolidated revenues in roubles grew by 13.1% and fell in US dollars by 1.6% YoY to US$ 8.2 billion

- Adjusted OIBDA[1]in roubles grew by 10.7% and fell by 3.7% YoY in US dollars to US$ 1.9 billion, with an adjusted OIBDA margin of 23.0%

- Net income attributable to the Group[2]up 19.0% in roubles and 3.5% in US dollars YoY to US$ 363.3 million

- Net debt[3]at the Corporate Holding level amounted to US$ 491 million as at March 31, 2014. The  cash position at the Corporate Holding level amounted to US$ 1,220 million

- Average rouble exchange rate vs. US dollar in the first quarter of 2014 decreased by 14.9% YoY 

KEY CORPORATE HIGHLIGHTS IN 1Q 2014 AND AFTER THE REPORTING PERIOD 

- Acquired a 38.75% stake in CJSC NVision Group ("NVision") for US$ 82.5 million, with US$ 45 million paid in Sistema shares and US$ 37.5 million in cash. As a result, the Group's voting interest in NVision increased to 88.75%.

- Acquired 49% of the ordinary shares of CJSC Business Nedvizhimost from CJSC MGTS-Nedvizhimost, for RUB 3.1 billion. As a result, Sistema's ownership in CJSC Business Nedvizhimost increased to 100%.

- Sistema's subsidiary LLC LesInvest signed legally binding agreements with the Bank of Moscow to acquire 100% of OJSC Segezha Pulp and Paper Mill and 100% of LLC Derevoobrabotka-Proekt, together with all of its debt obligations to the Bank of Moscow.

- Sistema's Board of Directors recommended a total dividend payment of RUB 19.879 billion for 2013, representing a payment of RUB 2.06 per ordinary share.

- Signed binding agreements with a German pharmaceutical company, Fresenius Kabi, and Zenitco Finance Management, another shareholder[4]of Binnopharm CJSC, to establish a pharmaceuticals joint venture ("JV") for operations in Russia and the CIS. The JV will combine 100% of Binnopharm and 100% of Fresenius Kabi's Russian and CIS business. Upon completion, Sistema will own 37% of the JV.

- Acquired 10.8% stake in OZON Holdings Limited ("OZON"), one of Russia's largest e-commerce businesses, for US$ 75 million. MTS also acquired 10.8% stake in OZON at the same price.

- Completed the reorganisation of Sistema-Invest CJSC and eliminated the cross ownership structure of Bashneft. As a result, Sistema's effective ownership at Bashneft amounted to 78.8%.

- Approved changes in the composition of Sistema's Management Board. To reflect changed management responsibility,   Alexey Buyanov and Alexey Chupin  will leave Sistema's Management Board, and Andrey Terebenin has been appointed as Head of an Investment Portfolio. 

Mikhail Shamolin, President and Chief Executive Officer of Sistema, commented: 

"Despite a challenging macro environment, we generated double digit year-on-year growth in rouble terms across our businesses in the first quarter of 2014. The resilience of Sistema's business model helped deliver a 13.1% year-on-year increase in consolidated revenues in rouble terms, and a 10.7% growth in OIBDA. 

As at the end of the reporting quarter, we accumulated US$ 1.2 billion in cash for future M&A activities. We expect our cash position to be further strengthened through a dividend inflow of approximately US$ 1.3 billion from MTS and Bashneft, announced in April and subject to the companies' AGM approvals. 

We continued to actively pursue our M&A strategy as we look to enter attractive new growth sectors. Over the past few months, we acquired a 10.8% stake in OZON Holdings Limited, one of Russia's largest e-commerce businesses, providing the Group with an excellent entry into Russia's rapidly growing e-commerce sector and the potential for synergies within the Group. In the pharmaceutical sector, we combined our operations with Fresenius Kabi, one of the global leaders in clinical nutrition and IV drugs, in a joint venture to develop a leading pharmaceutical business in Russia and the CIS. We also recently entered the pulp and paper market, by investing in industry leaders with exciting prospects and substantial turnaround potential. 

Looking ahead, we will continue to actively manage our investment portfolio with discipline and a focus on projects that generate attractive returns on invested capital and healthy cash flows." 

Conference call information 

Sistema's management will host an analyst conference call today at 9.00 am (EST)/ 2.00 pm (London time) / 3.00 pm (CET) / 5.00 pm (Moscow time) to present and discuss the first quarter results.

The dial-in numbers for the conference call are:

UK/ International: +44 (0)20 3427 1904
US: +1 212 444 0895 

And quote the conference call title: "Sistema First Quarter 2014 Financial Results". 

A replay of the conference call will be available on the Company's website www.sistema.com for 7 days after the event. 

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

[1]See Attachment A for definitions and reconciliation of adjusted OIBDA to GAAP financial measures.

[2]See Attachment A for definitions and reconciliation of adjusted net income attributable to the Group to GAAP financial measures.

[3]Including highly liquid deposits and liquid financial investments, based on management accounts.

[4]Sistema  and Zenitco Finance Management own 74% and 26% of Binnopharm, respectively.