Sistema Public Joint Stock Financial : Press release 1Q 2020

SISTEMA PJSFC IFRS FINANCIAL RESULTS

1Q 2020

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 2020 results.

To participate in the conference call, please dial:

Russia [phone] 500 9283 (toll free)

UK [phone] 0800 358 6377 (toll free)US [phone]-394-8218 (toll free)

Conference ID: 7407014

Link to webcast:https://webcasts.eqs.com/sistema20200610

Or quote the conference call title: "Sistema First Quarter 2020 Financial Results".

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

For further information, please visitwww.sistema.com or contact:

Investor Relations	Public Relations
Nikolai Minashin	Sergei Kopytov
Tel.: [phone]	Tel.: [phone]
[e-mail]	[e-mail]

Moscow, Russia - 10 June 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 first quarter 2020 ended 31 March 2020.

KEY GROUP HIGHLIGHTS

• ✓ Investments in Ozon. Sistema invested an additional RUB 3 billion in Ozon to continue the implementation of its aggressive growth strategy.

• ✓ Establishing a new venture capital fund. The Company launched Sistema SmartTech, a start-up fund focused on 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.

• ✓ Development of one of the largest private laboratories in Russia. In January 2020, Sistema-Biotech signed an investment agreement with the International Medical Cluster Foundation to construct a multidisciplinary biotechnology R&D laboratory and centre for preclinical testing of cutting-edge developments and technologies in Skolkovo. The Sistema-Biotech laboratory will focus on genetic research, the production of diagnostic kits, cell-based biomedical products, biobanks and the production of biopharmaceuticals.

• ✓ Secondary placement of series 001P-05 bonds. In February 2020, the Group successfully completed a secondary placement of series 001P-05 exchange-traded bonds. During the tender offer, RUB 3.5 billion of bonds out of the total RUB 10 billion issue were repurchased. The Company placed all repurchased bonds through the secondary placement with a coupon rate of 6.85% at 100% of the nominal value.

CORPORATE EVENTS AFTER THE END OF THE REPORTING PERIOD

• ✓ Appointment of Sistema's new President. In April 2020, Vladimir Chirakhov was appointed President of Sistema.

• ✓ Dividends for 2019. In May 2020, the Board of Directors of Sistema recommended that the Annual General Meeting of Shareholders distribute RUB 1.25 billion as the final dividend for FY 2019 (RUB 0.13 per ordinary share or RUB 2.6 per GDR). The Annual General Meeting of Shareholders will be held on 27 June 2020.

• ✓ New bonds issue. In May 2020, Sistema placed 10-year exchange-traded bonds of series 001Р -13 of RUB 15 billion at a 6.60% coupon rate with a 4-year put option.

• ✓ In May 2020, recognising increased focus on ESG in modern corporate culture, Sistema's Board of Directors approved an amended version of the Corporate Governance Code consistent with the best international ESG practices and reflecting the Corporation's commitment to best in class ESG performance.

INITIATIVES TO COMBAT COVID-19

• ✓ Over RUB 1 billion of investments to combat COVID-19 related to medical aid, the production of personal protective equipment, employee healthcare and supporting the customers of the Group's companies.

• ✓ Increasing the capabilities for COVID-19 diagnostics. In April 2020, Sistema-Biotech obtained a registration certificate issued by Russian healthcare regulator Roszdravnadzor for its coronavirus detecting test system. In May 2020, Sistema-Biotech signed a contract with the healthcare department of the Moscow city government to supply 1 million test systems. Sistema-Biotech has also launched clinical and laboratory trials of a new rapid response test system able to detect the COVID-19 virus within 30 minutes and within the workplace.

• ✓ Creation of a Support Centre for medical personnel focused on providing organisational and financial support to healthcare workers during and in the aftermath of the coronavirus pandemic. RUB 500 million was raised to support the social initiative #StranaBezVirusa; 25,000 COVID-19 diagnostic test systems have been distributed for free to approximately 10 Russian regions; 200,000 protective suits purchased from China were provided for hospital staff in Moscow and the Moscow region.

• ✓ Leveraging digital technologies against COVID-19. MTS and Medsi have launched free online consultations with primary care doctors and pediatricians through their SmartMed telemedicine service across Russia. Medsi has also launched its quality of patient care monitoring system utilising artificial intelligence at its Clinical Hospital in Otradnoe, which was converted to admit patients with pneumonia and COVID-19. Over 1,500 patients were admitted in two months.

1Q 2020 FINANCIAL HIGHLIGHTS

• ✓ Consolidated revenue1 increased by 6.3% year-on-year to RUB 158.9 billion.

• ✓ Adjusted OIBDA2 grew by 1.5% year-on-year to RUB 54.0 billion.

• ✓ Adjusted OIBDA margin amounted to 34.0%.

• ✓ Adjusted net loss attributable to Sistema was RUB 9.4 billion.

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

"Despite the negative impact of the COVID-19 pandemic and subsequent lockdown measures in our core markets, Sistema increased both its revenue and adjusted OIBDA in 1Q 2020 as a result of the strong performance of the Group's portfolio of diversified assets.

Although there remains a substantial uncertainty about the length of the pandemic and economic recovery, our portfolio companies are pressing ahead with investment programmes: MTS is investing in network construction; Segezha Group has entered the active construction phase of a plywood production mill in the Kostroma region; Steppe enhances presence in crop production and dairy farming segments and pursues its strategy of increasing land bank; Medsi is preparing to open a new medical centre in Michurinsky prospekt in Moscow; Detsky Mir continues to open new stores; and Ozon is focused on building fulfilment centres and the expansion of its delivery infrastructure.

While lockdown measures have challenged our portfolio companies operating in consumer-facing markets, they managed to promptly restructure business processes and strengthen both online sales and client communication channels. MTS raised online smartphone sales by 70% compared to the pre-lockdown period. Detsky Mir increased its share of online sales up to 25% from total sales in 1Q 2020 and up to 42% in April. Etalon Group was one of the first companies in the real estate market to launch online bookings and sales of apartments. Finally, Ozon, which operates solely online, has not only managed to maintain record growth in GMV but has significantly increased it to 115% year-on-year in 1Q 2020 and up to almost 200% in April.

Sistema's assets demonstrated resilience in the face of the global pandemic measures, successfully adjusting their business processes to the new environment. And while we may see a stronger impact of COVID-19 on the performance of some of our portfolio companies in the second quarter 2020, I am convinced that this crisis will allow our assets to further increase efficiency and continue market consolidation. Likewise, at the Corporate Centre level, we have focused on costs optimisation and introduced measures to reduce SG&A, which will be fully reflected in 2021 results."

1 Hereinafter the results for 1Q 2019 are presented taking into account reclassification of Detsky Mir, Leader-Invest, MTS operations in Ukraine and RTI microelectronics businesses as discontinued operations.

2 Hereinafter see Appendix A for the definitions of adjusted OIBDA, adjusted operating profit, adjusted net profit attributable to Sistema, consolidated debt and consolidated net debt and their reconciliation to IFRS financials.

SISTEMA RESULTS REVIEW
(RUB million)	1Q 2020	1Q 2019	Change
Revenue	158,885	149,465	6.3%
Adj. OIBDA	54,045	53,234	1.5%
Operating profit	23,172	24,649	(6.0%)
Net profit/ (loss) attributable to Sistema	(10,214)	16,641	-
Adj. net profit / (loss) attributable to Sistema	(9,409)	15,713	-

In 1Q 2020, Sistema's consolidated revenue increased by 6.3% year-on-year to RUB 158.9 billion primarily driven by strong performance of MTS due to revenue growth amid strong dynamics of mobile services revenue, increased smartphone sales and MTS Bank's contribution; BPGC due to revenue growth as a result of higher electricity transmission tariffs, an increase in utility connection services and higher rental payments; and Medsi due to significant revenue growth from the Voluntary Health Insurance (VHI), Mandatory Health Insurance (MHI) and individual patients segments.

Adjusted OIBDA increased by 1.5% year-on-year driven by improved results at BPGC due to an increase in revenue while costs remained flat compared with 1Q 2019; at Medsi due to an increase in revenue; and at Steppe due to positive dynamics in its key operating segments. The dynamics of the Group's adjusted OIBDA was also impacted by the decrease in OIBDA of Segezha Group, as well as by the reflection of Sistema's share in the increase of Ozon's net loss: in 1Q 2020, the Group's share in Ozon's net loss amounted to RUB 2.4 billion compared to RUB 1.1 billion in 1Q 2019.

Year-on-year adjusted net income dynamics is primarily accounted for by the recognition of the gain from the divestiture of Sistema's 51% stake in Leader Invest and subsequent revaluation of investments in associates (remaining 49% stake in Leader Invest) in the first quarter 2019.

The Group's selling, general and administrative expenses (SG&A) increased by 7.7% year-on-year to RUB 30.5 billion in 1Q 2020 primarily driven by higher SG&A at MTS due to increase in headcount as MTS enhances presence in the digital areas. The SG&A/revenue increased slightly year-on-year and amounted to 19.2%.

CAPEX grew by 31.9% year-on-year and amounted to RUB 28.1 billion in 1Q 2020, mainly driven by CAPEX growth at MTS related to network development, as well as investments in the capacity increase at Segezha Group.