SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2018

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Sistema PJSFC (SSA) 
SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2018 
 
03-Apr-2019 / 10:15 MSK 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2018 
 
Moscow, Russia - 3 April 2019 - 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 fourth quarter 2018 and audited 
consolidated financial results in accordance with International Financial 
Reporting Standards (IFRS) for full year ended 31 December 2018. 
 
SUCCESSFUL DELIVERY AGAINST STRATEGIC AND OPERATIONAL GOALS 
 
  · Sustained revenue growth1 due to strong results from the majority of 
  portfolio companies. 
 
  · At least double digit OIBDA growth at MTS, Detsky Mir, Segezha Group, 
  Agroholding Steppe, Medsi, RTI, BPGC and hospitality assets under new IFRS 
  standards, driven by excellent operating results and financial discipline. 
 
  · Added operational scale in real estate development and increased sector 
  attractiveness for investors: In February 2019, Sistema sold 51% of JSC Leader 
  Invest to Etalon Group, while retaining a 49% stake in the company. Following 
  this transaction, Sistema acquired 25% of Etalon Group for USD 226.6 million. 
  The transactions create a top-3 player in the Moscow and St Petersburg 
  markets, bring together complementary development portfolios, allow Leader 
  Invest's projects to leverage Etalon's general contracting capacity and 
  regional sales network to accelerate construction and sales, and realise 
  significant synergies in construction as well as reduction of administrative 
  expenses. 
 
  · Increased and crystalized value of pharmaceuticals business: In December 
  2018, Sistema acquired a stake in a leading pharmaceutical company, OBL Pharm, 
  for RUB 1.83 billion. Sistema made the acquisition as a member of a consortium 
  of investors that also included VTB Bank and members of the OBL Pharm 
  management team. The strategic aim of the transaction is the merger of OBL 
  Pharm with Sistema's pharmaceutical holding, Binnopharm, and utilisation of 
  synergies in marketing and sales, combining R&D functions and reducing 
  administrative costs. The medium-term goal of the combined company is to 
  become a top-5 Russian pharmaceuticals producer in the non-state segment, the 
  fastest-growing segment in the Russian pharma market. 
 
  · Strengthened position in the fast-growing e-commerce market: In February 
  2019, Sistema acquired 18.7% of Russia's leading multi-category online 
  retailer, Ozon Holdings, from MTS for RUB 7.9 billion. The decision to 
  increase the stake is based on Sistema's strategic bet on growth prospects for 
  e-commerce and market consolidation through investments in the market leader. 
 
  · MTS Bank divestment to maximise synergies between telecommunications and 
  banking businesses: In February 2019, Sistema sold 39.5% of PJSC MTS Bank to 
  PJSC MTS for RUB 11.4 billion. As a result of the transaction, Sistema's stake 
  in MTS Bank declined to 5.0% and MTS's stake increased from 55.2% to 94.7%. 
  MTS's consolidation of MTS Bank will facilitate deeper integration of the bank 
  with MTS and rapid development of an ecosystem of digital bank services. 
 
  · Debt portfolio optimisation via an active presence on the public bond 
  market: In February-March 2019, Sistema successfully returned to the local 
  capital market. The Corporation repurchased series 001P-07 bonds in the amount 
  of RUB 482.2 million out of the total of RUB 10 billion during a tender offer, 
  and completed a secondary placement of this amount, issued a RUB 10 billion 
  001P-090 series bond and successfully closed the books on a RUB 10 billion 
  001P -10 series issue. The placements generated significant investor interest 
  in Sistema's debt securities and demonstrated positive market perception of 
  the Corporation's investment case. The funds raised will be used to refinance 
  existing debt. 
 
  · Dividend payments: In March 2019, Sistema's Board of Directors resolved to 
  recommend to the Annual General Meeting of Shareholders to be held on 29 June 
  2019 to pay dividends based on 2018 results in the amount of RUB 1,061.5 
  million (which corresponds to RUB 0.11 per ordinary share or RUB 2.2 per GDR). 
 
FY 2018 FINANCIAL RESULTS 
 
  · Consolidated revenue[1] increased by 12.1% year-on-year to RUB 777.4 
  billion. 
 
  · Excluding the impact of new IFRS standards,[2] Group revenue increased by 
  11.1% year-on-year to RUB 770.2 billion. 
 
  · Adjusted OIBDA[3] increased by 34.3% year-on-year to RUB 265.3 billion; the 
  adjusted OIBDA margin was 34.1%. 
 
  · Excluding the impact of new IFRS standards, adjusted OIBDA increased by 
  11.3% year-on-year to RUB 219.8 billion; the adjusted OIBDA margin was 28.5%. 
 
  · Adjusted net profit attributable to Sistema was RUB 1.1 billion. 
 
  · Excluding the impact of new IFRS standards, adjusted net profit attributable 
  to Sistema declined by 98.5% to RUB 0.1 billion. 
 
4Q 2018 FINANCIAL RESULTS 
 
  · Group revenue increased by 15.5% year-on-year to RUB 225.1 billion. 
 
  · Excluding the impact of new IFRS standards, Group revenue increased by 12.7% 
  year-on-year to RUB 219.8 billion. 
 
  · Adjusted OIBDA increased by 45.5% year-on-year to RUB 66.8 billion; the 
  adjusted OIBDA margin was 29.7%. 
 
  · Excluding the impact of new IFRS standards, adjusted OIBDA increased by 
  15.5% year-on-year to RUB 53.0 billion; the adjusted OIBDA margin was 23.8%. 
 
  · Adjusted net profit attributable to Sistema was RUB 391 million. 
 
  · Excluding the impact of new IFRS standards, the adjusted net loss 
  attributable to Sistema was RUB 2.0 billion. 
 
  · Net financial liabilities[4],[5] at the Corporate Centre were RUB 213.4 
  billion as of 31 December 2018. 
 
  · Cash position5 at the Corporate Centre as of 31 December 2018 was RUB 9.8 
  billion. 
 
SISTEMA'S CURRENT STRATEGIC IMPERATIVES 
 
  · Maximise shareholder value and reduce market capitalisation discount to NAV 
 
  · Attract third-party capital to enhance investment resources 
 
  · Reduce gross debt at the Corporate Centre to RUB 140-150 billion 
 
Andrey Dubovskov, President and Chief Executive Officer of Sistema, said: 
 
"Sistema delivered impressive financial and operating results in 2018. Group's 
revenue for the year increased by 12% to RUB 777 billion on the back of robust 
growth of our key assets. Most assets grew at significantly above the average 
growth rates of the markets in which they operate. Notably, MTS, Detsky Mir, 
Segezha Group, Agroholding Steppe and Medsi strengthened their leadership 
positions in their respective industries. MTS is not only increasing revenue 
from mobile services and smartphone sales, but is also entering new, adjacent 
high-growth markets including IT outsourcing, Internet of Things, cloud 
services, e-sports and web-based event ticket sales. Detsky Mir continues to 
grow its business in Russia and Kazakhstan, and has expanded to Belarus and 
launched a pet supplies business - all while increasing profitability. Segezha 
Group continues to expand its product lines, focusing on demand from 
high-opportunity export markets. Agroholding Steppe is now a top-6 Russian grain 
exporter and continues to demonstrate strong growth across all its main business 
segments. Steppe also launched its own retail brand as it aims to grow closer to 
consumers. Based on FY 2018 performance, Medsi has established itself as the 
leading private healthcare business in Russia by revenue and one of the 
fastest-growing healthcare businesses globally. 
 
"Group adjusted OIBDA increased by 34% thanks to double-digit OIBDA growth at 
all key portfolio companies. The new IFRS accounting standards had a significant 
impact on the results of MTS and Detsky Mir, though on a like-for-like basis 
these companies also delivered strong OIBDA growth. 
 
"In late 2018 and early 2019 we completed a number of strategic transactions, 
demonstrating that we continue to add value to our assets in an environment 
where we have limited investment resources. As part of a consortium of investors 
we acquired a leading Russian pharmaceutical company, OBL Pharm, and plan to 
merge it with our pharmaceutical holding, Binnopharm, significantly increasing 
the value of that business. In future we plan to bring the combined company to 
the public markets. As a result of transactions involving Leader Invest and 
Etalon Group, we have changed the landscape of the Russian residential property 
market, establishing a company that is a top-3 developer in the Moscow and St 
Petersburg markets by construction volumes and sales. Additionally, we continued 
to increase our exposure to Ozon, the leading multi-category online retailer. 
This transaction represents Sistema's strategic investment in the fast-growing 
e-commerce industry through a company that is poised to consolidate this highly 
fragmented market. 
 
"We have somewhat modified the Group strategy adopted last year to reflect 
current market conditions, though our key objectives remain unchanged: maximise 
shareholder value and reduce the discount between market capitalisation and net 
asset value, attract third-party capital to diversify and expand our investment 
resources, and reduce gross debt to RUB 140-150 billion. In the coming years our 
focus will be on growing the value of four portfolio companies - Agroholding 
Steppe, Segezha Group, Medsi and Ozon. We are targeting valuations of USD 1-2 

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