Moscow, 10 October 2018– Sistema PJSFC (“Sistema” or “the Corporation”) (LSE: SSA, MOEX: AFKS), a publicly traded diversified Russian holding company, announces that its portfolio company Agroholding Steppe (“Steppe”), and the government of Rostov region have signed a Memorandum of Cooperation committing to building the largest dairy farm in the region. The Memorandum was signed by Steppe CEO Andrey Neduzhko and Rostov region governor Vasily Golubev at the Golden Autumn agricultural forum.

The facility, which can accommodate up to 7,000 head of cattle, including 3,000 milk-producing cows, will be designed to European standards and construction will begin in Rostov’s Salsk district later this year. Investment will total RUB 2 billion and the construction is expected to generate more than 150 new jobs.

The new farm will be built out in stages: Stage 1 will be completed in 2020 and Stage 2 in 2021. The facility is expected to operate at full capacity by 2022, generating a gross yield of 33,000 tonnes of milk based on per cow production of 11,000 litres of milk per year.

Plans also call for the purchase of high-quality pedigree livestock to fill out the farm.

Construction will be financed with a targeted credit facility from Alfa Bank. The bank will extend a loan of approximately RUB 2 billion to Agroholding Steppe for a period of ten years.

The farm will leverage modern technologies including a real-time automated system to monitor the herd that will decrease the incidence of disease and enhance survivability, thereby increasing productivity and improving quality of the end product. Leading-edge technologies will be used on the farm, including gene and reproduction management, production of high-quality feed and the creation of unique conditions for the maintenance of animals, such as the use of open-stall housing and a regulated microclimate at the farm.

At present, Agroholding Steppe's dairy division consists of five dairy farms located in Krasnodar region. In 2017 four farms housed 4,000 cows and produced 40,000 tonnes of milk. An additional 1,800-cow farm with a projected output of 20,000 tonnes of milk per year began operations in March 2018.

Andrey Neduzhko, Chief Executive Officer of Agroholding Steppe, said:

“Steppe’s strategy in the dairy segment is focused on becoming one of Russia’s largest milk producers and delivering a consistent, high-quality supply of milk certified to European standards. Steppe plans to expand its herd of dairy cows and bring new dairy farms on line, and the expansion in the Rostov region is a key step toward the realisation of the strategy.”

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Agroholding Steppe, a Sistema company, is one the largest agricultural holdings in the south of Russia and combines a number of high-opportunity agriculture businesses. Steppe operates across four main business units: open-field crops, dairy, fruit and vegetables. The company’s key assets are located in the Krasnodar region, Stavropol region, Rostov region and Karachay-Cherkess Repubic.

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