Moscow, Russia  03 December 2020  Sistema PJSFC ("Sistema" or the "Company", together with its subsidiaries and associates, "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 2020 ended 30 September 2020.

KEY GROUP HIGHLIGHTS IN 3Q 2020

• Offering of Detsky Mir shares. In September 2020, Sistema and the Russia-China Investment Fund (RCIF) fully exited Detsky Mir shareholding through a public offering of Detsky Mir shares, resulting in an increase of Detsky Mir free float up to almost 100%. Proceeds to Sistema amounted to RUB 16.9 billion.

• MTS share buyback. As part of the MTS share buyback programme of up to RUB 15 billion, Sistema's wholly-owned subsidiary Sistema Finance S.A sold 7,445,927 ordinary shares of PJSC MTS to a wholly-owned subsidiary of MTS LLC Bastion for RUB 2.5 billion.

• Optimisation of the debt portfolio. In September 2020, Sistema and Sberbank signed an agreement that fully released Sistema's stake in MTS from pledge. A loan secured by a pledge of 16% MTS shares was signed in February 2018.

• Operations in the debt market. In September 2020, Sistema placed RUB 10 billion series 001Р-15 bonds at a 6.70% coupon rate and with a 4-year put option. In July 2020, the Corporation placed RUB 10 billion series 001Р-14 bonds at a 6.35% coupon rate and with a 2.75-year put option. In July 2020, Sistema also repurchased its series 001P-06 exchange-traded bonds in the amount of RUB 4.4 billion, and series 001P-09 bonds in the amount of RUB 6.2 billion.

• Credit ratings upgrades. In September 2020, S&P upgraded Sistemaâ rating from BB- to BB with stable outlook, and Expert RA upgraded Sistema rating by two notches from ruA to ruAA- with stable outlook.

CORPORATE EVENTS AFTER THE END OF THE REPORTING PERIOD

IPO of Ozon. In November 2020, Ozon held an initial public offering (IPO) of its American Depositary Shares (ADSs) on NASDAQ and obtained listing of the ADSs on the

• Moscow Exchange. Gross proceeds to the company, including the underwriters’ overallotment option and the concurrent private placement, where Sistema participated and invested USD 67.5 million, amounted to approximately USD 1.25 billion. Upon completion of the initial public offering of Ozon, fulfilment of the private placement agreement and conversion of the convertible loans previously provided to Ozon, Sistema total stake in Ozon will amount to at least 33.1% .

• Secondary placement of series 001Р-04 bonds. In November 2020, the Corporation held a secondary placement of series 001Р-04 exchange-traded bonds. During the tender offer, the Corporation repurchased bonds in the amount of RUB 4.3 billion out of the total RUB 6.5 billion issue. All bonds repurchased during the tender offer were placed through secondary bond placement at a 6.35% coupon rate at 100.15% of the nominal value.

• Placement of series 001Р-16 bonds and 001Р-17 bonds. In November 2020, Sistema completed the book-building process for RUB 5 billion series 001Р-16 bonds with a put-option in 2.25 years and RUB 14 billion series 001Р-17 bonds with a put-option in 4.5 years. As a result of the book-building, the coupon rate was set at 6.10% per annum for series 001Р-16 bonds and at 6.75% per annum for series 001Р-17 bonds.  

• MTS share buyback. As part of the MTS share buyback programme of up to RUB 15 billion, Sistema's wholly-owned subsidiary Sistema Finance S.A sold 14,534,801 ordinary shares of PJSC MTS to a wholly-owned subsidiary of MTS LLC Bastion for RUB 4.8 billion.

PROGRESS IN ESG

• Attracting ESG financing. In November 2020, Sistema for the first time attracted ESG-financing from Sberbank. The RUB 10 billion credit line comes with an option to tie the interest rate on each loan to sustainability performance (Sustainability Improvement Loan). Under this agreement, integration of ESG factors into Sistema investment process and the adoption of the Corporation Environmental Policy were set as KPIs to measure Sistema sustainability performance. This pioneering transaction, first between a Russian bank and a Russian borrower, positions Sistema among the leaders of sustainable investing in Russia.

3Q 2020 FINANCIAL HIGHLIGHTS

• Consolidated revenue  grew by 9.6% year-on-year and stood at RUB 184.9 billion.

• Adjusted OIBDA  increased by 14.0% year-on-year and amounted to RUB 71.7 billion 

• Adjusted OIBDA margin rose by 1.5 p.p. year-on-year to 38.8%.

• Adjusted net profit attributable to Sistema amounted to RUB 2.6 billion.

Vladimir Chirakhov, President and Chief Executive Officer of Sistema, noted:

"In the third quarter 2020, Sistema demonstrated strong business growth, increasing its revenue by 9.6% and adjusted OIBDA by 14.0% year-on-year due to the exceptional performance of its portfolio companies. MTS continued to strengthen its leadership in the telecom market by actively developing segments that are complementary to its core business, including fintech, media, and B2B digital and cloud-based services. Segezha Group achieved record revenue and OIBDA figures due to increases in production and sales volumes, and against the backdrop of a weakening rouble. Steppe achieved an impressive increase in revenue and OIBDA, on the back of an increase in its gross harvest and agricultural products sales amid an increase in grain prices. The growth in Medsi financial performance was driven by deferred demand for medical services caused by the lifting of lockdown restrictions, and ongoing work to diagnose, treat and rehabilitate COVID-19 patients.

Our pharmaceutical holding Binnopharm Group, which is engaged in the production of the Sputnik V vaccine and drugs for the treatment of COVID-19, saw significant growth in its financial performance as a result of strong sales growth in all segments: retail, tender and export. In October 2020, Binnopharm Group announced new strategic development priorities aimed at significantly increasing the scale of its business. The diversification of sales channels, new product development and updating the portfolio of medical products will become the main drivers of further growth.

The strong results of our portfolio companies during the first nine months of 2020 have created a solid basis for the Corporation's management to recommend to the Board of Directors to double the amount of dividends for FY 2020, provided that the positive trends continue in the fourth quarter. We are also continuing to work on modifying our dividend policy, and will present our proposals to the Board of Directors over the course of 2021. By then, we hope that further progress will have been made in the global fight against the COVID-19 pandemic, and the global and domestic economic outlook will sufficiently improve to provide a better visibility of future cash flows from our portfolio companies.

Crystallising the value of our private assets is an integral part of our portfolio strategy. On this front, I am delighted to highlight the initial public offering of American Depositary Shares (ADSs) of Ozon on NASDAQ with simultaneous listing of the ADSs on MOEX in November 2020. This offering raised gross proceeds of approximately USD 1.25 billion, including underwriters overallotment option and the concurrent private placement, and generated exceptionally strong interest from the international investment community. We are delighted that a wide range of investors  including Russian retail investors  now have the opportunity to share in the success of this outstanding company.

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