Moscow, Russia – 27 November 2018 – Sistema PJSFC (“Sistema” or the “Company”, together with its subsidiaries, “the Group”) (LSE: SSA, MOEX: AFKS), a publicly-traded diversified Russian holding company, today announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the third quarter ended 30 September 2018.

SUCCESSFUL DELIVERY ON STRATEGIC AND OPERATIONAL GOALS

• Continued robust revenue growth due to strong results from the majority of portfolio companies
• MTS, Detsky Mir, Segezha Group, Medsi, Agroholding Steppe, the hospitality and real estate assets delivered  double-digit increases in OIBDA due to strong revenue growth, cost discipline. The introduction of IFRS 15 and 16 also had a positive impact on OIBDA
• SG&A/revenue ratio down from 20.6% to to 16.5%. Excluding the impact of the new IFRS standards, successful cost control initiatives at portfolio companies and the Corporate Centre drove SG&A/revenue ratio down to 19.4%

THIRD QUARTER 2018 FINANCIAL RESULTS

• Group revenue[1]up 13.9% year-on-year to RUB 204.6 billion
• Excluding the effect of the new IFRS standards[2], Group revenue up 13.6% year-on-year to RUB 204.1 billion
• Adjusted OIBDA[3]up 29.7% year-on-year to RUB 73.6 billion, with an adjusted OIBDA margin of 36.0%
• Excluding the effect of the new IFRS standards, adjusted OIBDA up 10.9% year-on-year to RUB 62.9 billion, with an adjusted OIBDA margin of 30.8%
• Adjusted net profit attributable to Sistema3 down 69.4% to RUB 1.6 billion
• Excluding the effect of the new IFRS standards, adjusted net profit attributable to Sistema3 down 72.7% to RUB 1.4 billion

CASH POSITION AND FUNDING

• In July 2018, Sistema refinanced three loans from Sberbank maturing in 2019-2020 and totalling RUB 24 billion with a new three-year unsecured line of credit from Sberbank
• In July 2018, Sistema completed repayment of the RUB 40 billion loan arranged by the Russian Direct Investment Fund (RDIF) and financed by Gazprombank in February 2018 for the fulfilment of Sistema’s obligations under the settlement agreement with PJSOC Bashneft, Rosneft and the Republic of Bashkortostan
• The loan from Gazprombank was repaid using RUB 5 billion of the Corporation’s own funds and a new three-year RUB 15 billion unsecured loan from Otkritie Bank, and removed the pledge from Sistema’s shareholding in Detsky Mir
• At the end of the reporting period, cash position at the Corporate Centre level strengthened thanks to dividends from portfolio companies, while net financial liabilities declined due to repayment of the bridging loan from Gazprombank, partially using the Company’s own funds, and payment under the liability to the Federal Agency for State Property Management (Rosimushchestvo)

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

“Sistema’s financial and operational results for the third quarter of 2018 grew at a significantly faster pace than during the same period last year. Impressive revenue and adjusted OIBDA growth of 14% and 30%, respectively, was driven by rapid growth both at our publicly traded assets and at key privately held portfolio companies. MTS, Detsky Mir, Segezha Group, Agroholding Steppe and Medsi are not only leaders in their respective markets – they are on many measures growing faster than the market, all while entering new regions and business segments.

“MTS continues to deliver robust top line and OIBDA growth and roll out its digital strategy, as can be seen from its investments in recent months – increasing its stake in the high-tech MTS Bank; the acquisition of Avantage, one of Russia’s biggest data processing centres; and investing in Youdo.com, a leading online marketplace for freelance work in Russia.

“Detsky Mir maintained its high growth rate and is successfully executing on its strategy despite a challenging market. The company continues to roll out new stores in Russia and Kazakhstan at a fast clip, and intends to enter the children’s goods market in Belarus.

“Similarly, Segezha Group has not only increased its output and sales of paper, paper sacks and timber, but is entering new business segments and sales markets. In September, Segezha’s Sokol Plant launched production of pellets  with capacity of 10-12 thousand tons per year, while at Lesosibirsk a 70 thousand ton per year pellet facility that will export its products to Europe is being constructed. In October, Segezha also introduced a new product line with the launch of paper bag production for the high-growth consumer packaging segment.

“Agroholding Steppe increased revenue by 125% in the reporting period and for the first time became one of Russia’s 10 biggest grain exporters thanks to growth of grain output, continued favourable market conditions and aggressive build-out of the Agrotrading division. Steppe also continues to expand its high-margin Dairy division. Having achieved milk yields at existing farms that are twice the national average, Steppe has begun construction of a major farm in the Rostov region with a projected capacity of 33 thousand tons of milk per year.

“Medsi is now the undisputed leader in the Russian private healthcare market based on its results for the first half of the year, and has strengthened its position based on reults for nine months of 2018. In January - September 2018,  Medsi generated RUB 12.2 billion in revenue, up nearly 50% year on year, several times faster than growth of the healthcare market overall. This rapid growth was achieved as a result of higher utilisation rates at Moscow clinics and in-patient facilities due to growth in both patient traffic and the average check in the MHI, VHI and individual segments, as well as the successful integration of regional clinics acquired in 2017. These results underscore that Medsi’s business model can be successfully scaled, and the company is planning to continue expanding apace both through organic growth and via M&A in the regions.

"Increasing shareholder value is our overriding long term priority. We believe that the optimal strategy to achieve this goal is to focus on developing our key portfolio companies and reducing Sistema's debt. As a result the corporation has decided not to pay an interim dividend for 2018 and rather to use cash resources to pay down debt. We understand the importance of the dividend for shareholders and will consider the payment of a full year dividend for 2018 based on the results for the full year.”

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Conference call information

Sistema’s management will host a conference call today at 9:00 am (New York time) / 2:00 pm (London time) / 3:00 pm (CET) / 5:00 pm (Moscow time) to present and discuss the third quarter 2018 results.

To participate in the conference call, please dial:

Russia

+7 495 213 1767

8 800 500 9283 (toll free)

United Kingdom

+44 330 336 9127

0800 358 6377 (toll free)

United States

+1 323 794 2093

866 548 4713 (toll free)

Conference ID: 6113453

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

A replay of the conference call will be available on Sistema’s website www.sistema.comfor 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 and results of its subsidiaries for 3Q 2018 and 9M 2018 are presented in accordance with new accounting standards IFRS 9, 15 and 16 unless specified otherwise. Results for Binnopharm are not presented excluding the impact of the new standards. However, Sistema estimates that the impact on the consolidated Group results of this subsidiary’s transition to the new IFRS standards is not material. The results for 3Q 2017 and 9M 2017 are presented without the impact of new IFRS standards 9, 15 and 16. Here and hereafter in this press release Sistema’s consolidated results for 3Q 2017 and 9M 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 mentions of new IFRS standards refer to IFRS 9, 15 and 16.

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