SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER 2019

Sistema PJSFC (SSA) 
SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER 2019 
 
04-Jun-2019 / 10:00 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 FIRST QUARTER 2019 
 
   Moscow, Russia - 4 June 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 first quarter ended 31 March 
            2019. 
 
            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, and Medsi driven by excellent operating results and 
  financial discipline. 
 
  · Increased operational scale in real estate development: 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-three player in the Moscow and St Petersburg markets, bring 
  together complementary development portfolios, and allow Leader Invest to 
  leverage Etalon's general contracting capacity and regional sales network 
  to accelerate the construction and sales of its own projects, as well as 
  generating significant synergies in construction and reducing 
  administrative expenses. 
 
  · 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 Company has 
  also acquired shares from a number of minority shareholders in Ozon. As a 
  result, Sistema's direct ownership in Ozon stands at 21.9%. In addition, 
  venture fund Sistema_VC holds a 16.3% stake in Ozon. 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. 
 
  · Increased and crystalized value of pharmaceuticals business: In December 
  2018, Sistema acquired a stake in leading pharmaceutical company OBL Pharm 
  for RUB 1.83 billion, as part of an investment consortium consisting of 
  VTB and members of the OBL Pharm management team. The strategic aim of the 
  transaction is to merge OBL Pharm with Sistema's pharmaceutical holding, 
  Binnopharm, and to build the combined company, operating under the Alium 
  brand, into a top-five pharmaceutical producer in the commercial segment, 
  the fastest-growing segment of the Russian pharma market. In April 2019 
  the Russian Direct Investment Fund (RDIF), the Russia-China Investment 
  Fund (RDIF) and major Middle Eastern investors joined the project, and 
  will invest more than RUB 4 billion to acquire a stake in OBL Pharm. 
 
  · Debt portfolio optimisation via an active presence on the public bond 
  market: In February - April 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 via a 
  tender offer, and completed a secondary placement of the same amount, 
  issued two RUB 10 billion series 001P-009 and series 001P-10 bonds. The 
  placements generated significant investor interest in Sistema's debt 
  securities and demonstrated positive market perception of the 
  Corporation's investment case. Proceeds from these placements were used in 
  May 2019 to redeem at maturity the Company's USD 500 million Eurobond. 
 
  · Dividend payments: In March 2019, Sistema's Board of Directors resolved 
  to recommend that the Annual General Meeting of Shareholders approve 
  dividends for the full year 2018 of RUB 1,061.5 million (which corresponds 
  to RUB 0.11 per ordinary share or RUB 2.2 per GDR). 
 
            1Q 2019 FINANCIAL RESULTS 
 
  · Consolidated revenue increased by 10.4%[1] year-on-year to RUB 185.5 
  billion. 
 
  · Adjusted OIBDA[2] increased by 4.5% year-on-year to RUB 62.0 billion; 
  the adjusted OIBDA margin was 33.4%. 
 
  · Adjusted net profit attributable to Sistema[3] was RUB 15.7 billion. 
 
   Andrey Dubovskov, President and Chief Executive Officer of Sistema, said: 
 
"Sistema continues to excel in our core competency: developing assets. Our 
portfolio companies go off to a strong start to the year, delivering 
excellent operational and financial results. Our portfolio companies 
continued to set the trend in their respective markets, expanded the range 
of products and services they offer customers, and increased their market 
shares. 
 
"Leveraging its core user base and advantages of scale, MTS is expanding in 
attractive complementary digital industries - cloud services, e-sports and 
Internet of Things. Detsky Mir continues to open new stores in Kazakhstan 
and Belarus, transforming from a national to an international brand, while 
simultaneously strengthening its e-commerce presence in the rapidly 
developing Russian market. Segezha Group showcased historically strong 
efficiency by posting a record OIBDA margin, while growing sales. 
Agroholding Steppe continues to expand its business: revenue grew by triple 
digits primarily due to growth in the Agrotrading segment. Steppe is also 
continuing to build a port on the Azov Sea and two dairy farms in the Rostov 
and Krasnodar regions. Medsi extended its lead over its competitors in the 
private healthcare market, delivering high-quality growth in both the 
Mandatory and Voluntary Health Insurance segments, as well as the individual 
patients segment. 
 
"As our portfolio companies continue to deliver strong results and generate 
stable cash flow for the Corporation, work is underway at the Corporate 
Centre to further crystallise the value of our businesses. In the first 
quarter we focused on three areas: real estate, pharmaceuticals and 
e-commerce. 
 
"With the sale of a controlling stake in Leader Invest to Etalon Group and 
the subsequent acquisition of a stake in Etalon, we laid the groundwork for 
creation of a new residential real estate market leader in Moscow and St. 
Petersburg. Integration of the two businesses is underway and we expect to 
see benefits of synergies and scale in the near future. Another major 
project relates to our pharmaceuticals business. We acquired leading Russian 
pharmaceutical company OBL Pharm as part of a consortium of investors, and 
are currently working to merge it with our existing asset, Binnopharm, under 
the brand name Alium. In April, the RDIF, RCIF and major Middle Eastern 
sovereign wealth funds signed on as co-investors, confirming the strong 
investment case for this project. 
 
"We also increased our stake in leading multi-category online retailer Ozon 
through the consolidation of a stake owned by MTS and acquisition of shares 
of several minority shareholders. Ozon is well placed to emerge a 
market-leader from the fragmented e-commerce sector as the market leader, 
which will enhance the value of Sistema's stake in the company. By 
increasing our stake, Sistema aims to focus more resources and energy toward 
this goal." 
 
      *** 
 
Conference call information 
 
Sistema's management will host a conference call today at 10:00 am (New York 
   time) / 3:00 pm (London time) / 4:00 pm (CEST) / 5:00 pm (Moscow time) to 
            present and discuss the 1Q 2019 results. 
 
            To participate in the conference call, please dial: 
 
            Russia 
 
            [phone] 
 
            8 10 8002 8675011 (toll-free) 
 
            UK 
 
            [phone] 
 
            0800 279 7204 (toll-free) 
 
            US 
 
[phone] 
 
            866 575 6539 (toll-free) 
 
            Conference ID: 7037035 
 
            Link to webcast: https://webcasts.eqs.com/sistema20190604 [1] 
 
   Or quote the conference call title: "Sistema First Quarter 2019 Financial 
            Results". 
 
      A replay of the conference call will be available on Sistema's website 
            www.sistema.com [2] for at least seven days after the event. 
 
       For further information, please visit www.sistema.com [2] or contact: 
 
      Investor Relations         Public Relations 
 
        Nikolai Minashin Sergei Kopytov 
 
Tel.: [phone] Tel.: [phone] 
 
   [e-mail]       [e-mail] 
 
FINANCIAL SUMMARY AND GROUP OPERATING REVIEW 
 
(RUB million)                             1Q 2019 1Q 2018 Change 
Revenue                                   185,544 168,014  10.4% 
Adj. OIBDA                                 61,962  59,269   4.5% 
Operating profit                           27,885  26,490   5.3% 
Net profit/(loss) attributable to Sistema  16,641 (1,243)      - 
Adj. net profit / (loss) attributable to   15,713   (215)      - 
Sistema 
 
  In 1Q 2019, Sistema's consolidated revenue increased by 10.4% year-on-year 
     as a result of increased revenue from key assets: MTS, thanks to strong 
 results from the business in Russia and Ukraine; Detsky Mir, as a result of 
    the ramp-up of stores opened in 2017-18, improved like-for-like sales in 
       Russia and Kazakhstan and increased contributions from the e-commerce 
  segment; Segezha Group, primarily as a result of strong sales in the paper 
  and packaging segment; Agroholding Steppe, due to positive dynamics in the 
     agrotrading business, launch of the sugar and grocery product marketing 
      division, and stronger revenue from the Dairy and Vegetable divisions; 
    Medsi, as a result of a nearly three-fold increase in in-patient volumes 
       under the Mandatory Health Insurance programme, revenue growth in the 

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