Moscow, Russia –  7 April 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 fourth quarter 2019 and audited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for full year ended 31 December 2019.

 KEY GROUP HIGHLIGHTS IN 2019

- Successful public offering of Detsky Mir shares with the proceeds of RUB 12.5 billion. In November 2019, Sistema and Russia-China Investment Fund (RCIF) successfully completed the offering of 175 million Detsky Mir shares at RUB 91 per share. As a result of the transaction, ownership stakes of Sistema and RCIF in Detsky Mir were reduced to 33.4% and 9.0%, respectively. The public offering has substantially increased the company’s free float, enhancing liquidity and further improving Detsky Mir’s investment proposition.

- Merger of assets and ongoing expansion in the pharmaceuticals business. In October 2019, OBL Pharm and Binnopharm merged under the Alium brand. As of the end of 2019, Sistema owned a 26.3% stake in the merged company. In August 2019, Sistema also acquired equity stakes in pharmaceutical assets Sintez and Biocom. In combination with Sintez and Biocom, Alium has potential to become a top-3 Russian pharmaceutical company in the commercial (non-state) segment.

- Creating a residential real estate leader in Moscow and Saint-Petersburg. In 2019, Sistema became the largest shareholder in the leading residential development company Etalon Group that subsequently consolidated a 100% stake in Leader-Invest, a large player in the Moscow residential development market, previously owned by Sistema.

- Strengthening the Group’s position in e-commerce. In 2019, Sistema gradually increased its share in Ozon by acquiring stakes from other shareholders, including an 18.7% stake from MTS. Following the debt to equity conversion in December 2019, Sistema’s stake in Ozon increased to 42.999%. Sistema’s building up of its holdings in Ozon is driven by the expectation of further growth in the e-commerce market and the Company’s strategy of increasing its presence in the sector by investing in the leading multi-category online retailer.

- Optimisation of debt portfolio. Throughout the year, the Company was active in capital market transactions aiming to diversify and optimise its debt portfolio. As a result, the Company has significantly extended its debt duration and shaped a comfortable repayment schedule. It has also increased the share of RUB-denominated financing to more than 95%. As of the end of 2019, the financial obligations of the Corporate Centre decreased by RUB 34.0 billion to RUB 189.2 billion.[1]

- Credit ratings upgrade. In 2019, the international credit rating agencies S&P Global Ratings and Fitch Ratings upgraded Sistema’s corporate credit ratings to ÂÂ- with a stable outlook, Expert RA rating agency increased the Company’s rating to ruA with a stable outlook.

-  Dividends. Sistema’s Annual General Meeting of Shareholders held in June 2019 approved the distribution of RUB 1,1 billion, or RUB 0.11 per ordinary share (RUB 2.2 per GDR), in dividends for FY 2018.

- Buy-back programme In September 2019, the Company launched a RUB 3.0 billion buy-back programme. In February 2020, the programme was extended until 31 December 2020.

CORPORATE EVENTS AFTER THE END OF THE REPORTING PERIOD

- Investing in technologies of the future.  In early 2020, the Company established Sistema SmartTech, a start-up fund specialising in early stage investment. Sistema SmartTech will primarily invest in projects of Russian origin, operating in a variety of sectors and demonstrating growth potential through the creation of new market niches.

- COVID-19 pandemic. Sistema keeps to a holistic approach to the management of its assets during the uncertainty surrounding the coronavirus outbreak. Protecting the safety and well-being of its employees and the employees of portfolio companies remains the top priority. Sistema is implementing plans for continuous business operation across the Group and its subsidiaries, while taking every necessary measure to protect the health and safety of its people. Sistema is closely monitoring the economic impact of the COVID-19 pandemic and its potential impact on the Group’s operating activity.

SUSTAINABLE DEVELOPMENT

- Progressing in sustainable development. In 2019, Sistema began the process of streamlining its sustainable development activities and reporting across the Group. In 2019, the Board of Directors approved Group ESG (Environment, Social and Governance)  strategy and action plan. The company has focused on strengthening its in-house expertise and initiated a proactive engagement with the sustainability analyst community. The Company formed a working group, which also includes dedicated - Ratings improvement. In 2019, Sistema re-affirmed its position in the FTSE4Good index, having improved its rating to BB in MSCI ESG Rating from B in 2018, and improving its position in the risk rating of Sustainalytics (Low Risk, 15.3), taking 37th place in the ranking of 578 diversified financial companies, as of February 2020. Since 2016, Sistema has been one of the leaders in the ESG ratings of the Russian Union of Industrialists and Entrepreneurs (RSPP), and since 2019 it has been included in the newly launched ESG indices MOEX-RSPP.

FY 2019 FINANCIAL HIGHLIGHTS

- Consolidated revenue[2] increased by 5.1% year-on-year and amounted to RUB 656.9 billion.

- Adjusted OIBDA[3] totaled RUB 223.9 billion, a decrease of 0.9% year-on-year.

- Adjusted OIBDA margin was 34.1%.

- Adjusted net profit attributable to Sistema amounted to RUB 53.4 billion.

4Q 2019 FINANCIAL HIGHLIGHTS

- Consolidated revenue increased by 2.7% year-on-year to RUB 181.1 billion.

- Adjusted OIBDA amounted to RUB 52.7 billion, decreasing by 4.6% year-on-year.

- Adjusted OIBDA margin stood at 29.1%.

- Adjusted net profit attributable to Sistema was RUB 26.8 billion.

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

 “In 2019, Sistema delivered sustained growth in its public and key non-public assets, significantly lowered its financial obligations both at Group level and at the Corporate Centre, continued to invest in high-potential businesses, and conducted several successful monetisations.

 In 2019, the revenue of the Group increased by 5.1% year-on-year to RUB 656.9 billion thanks to the contribution of MTS, Agroholding Steppe, Medsi, BPGC and RTI. Adjusted OIBDA of the Group in 2019 remained largely unchanged year-on-year and amounted to RUB 223.9 billion. The results of the Group were affected by OIBDDA dynamics a of export-oriented businesses, impacted by weaker global environment.

 We continued to expand our presence in segments where we identified a significant potential for growth due to market consolidation. Acquisition of a stake in Etalon Group, one of the leading residential real estate developers, and its further integration with Leader-Invest, our developer in Moscow, allowed us to create one of the biggest players in the property markets of Moscow and Saint Petersburg. The merger of pharmaceutical assets Binnopharm and OBL Pharm under Alium brand, and the acquisition of a stake in Sintez, have created the opportunity to establish a TOP-3 player in the commercial (non-state) segment of the pharmaceutical market. Having increased our holdings in Ozon through acquisition of stakes from other shareholders and providing equity financing, Sistema PJSFC is supporting the development of Russia’s largest multi-category online platform which is rapidly increasing its market share. 

 Among the key achievements of the last year was the successful SPO of Detsky Mir, which allowed us to significantly increase its free float and liquidity, and expand the investor base. Proceeds from this transaction and other monetisations along with the dividend flow from portfolio companies were used to reduce the overall Group debt load. Financial liabilities at the Corporate Centre were reduced by RUB 34.0 billion rubles to RUB 189.2 billion. Deleveraging and derisking of the debt portfolio will help the Corporation to navigate the turbulence caused by the coronavirus pandemic and the worsening macroeconomic situation.

 Faced with unprecedented challenges, Sistema has promptly taken measures to protect our employees, clients and partners. The Corporation, together with its portfolio companies, is actively engaged in the fight against the spread of coronavirus, and has invested approximately RUB 1 billion in antiviral initiatives as of early April 2020. We are investing in the development of modern and accessible test kits, repurposing Medsi hospital for treating COVID-19 patients, and deploying industrial facilities to produce protective equipment. Our pharmaceutical assets are addressing heightened demand for antiviral drugs and antibiotics. All of our portfolio companies are adjusting their operations to ensure the continued provision of uninterrupted services. With internet traffic increasing, MTS is taking all necessary measures to enhance the network capacity. To support its customers, MTS has launched a number of special promotions and free services that help subscribers organize their lives and leisure time in self-isolation. Ozon is experiencing a sharp increase in the number of orders and is strengthening its network of couriers to provide customers with items they need, as well as popularizing safe contactless manner of delivery.

 It is difficult to assess the full gravity or the duration of the crisis, as well as the time it will take to eliminate its social and economic consequences, and the potential impact on the operational and financial performance of our portfolio companies. However, I am confident that at this time of uncertainty there is a source of strength in our diversified portfolio that includes assets in sectors resilient in the face of the deteriorating economic situation including telecommunications (MTS), children’s goods retail (Detsky Mir), power grid market (BPGC); export-focused businesses that benefit from the weakening of the ruble (pulp&paper business Segezha Group and our agriculture holding Steppe), as well as companies that in this crisis are key to fulfil customer’s everyday needs, and are operating at expanded capacity. (Ozon)."

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Sistema’s management will host a conference call today at 10:00 am (New York time) / 3:00 pm (London time) / 4:00 pm (CET) / 5:00 pm (Moscow time) to present and discuss the FY 2019 results.

 To participate in the conference call, please dial:

 Russia

+7 495 705 9270

8 10 800 2796 5011 (toll free)

 UK

+44 330 336 9401

0800 279 4827 (toll free)

 US

+1 929 477 0630

866 519 2796 (toll free)

 Participant passcode: 963235

 Link to webcast: https://webcasts.eqs.com/sistema2020040717

 Conference call title: “Sistema Fourth Quarter and Full Year 2019 Financial Results”.

 A replay of the conference call will be available on Sistema’s website www.sistema.com for at least seven days after the event.

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

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[1] Including all borrowing and liabilities to Rosimuschestvo, finance leases and liabilities under the Settlement Agreement at the Corporate Centre level

[2] Hereinafter the results for 2019 are presented taking into account reclassification of Detskiy Mir, Leader-Invest, MTS business in Ukraine and RTI enterprises in the field of microelectronics as part of discontinued operations. The results for 2018 have been restated to reflect the results of this reclassification.

[3] Hereinafter see Appedix A: definition of adjusted OIBDA, adjusted operating profit, adjusted net profit attributable to Sistema, consolidated debt and consolidated net debt and their reconciliation to IFRS financials