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OFFON

SISTEMA PUBLIC JOINT STOCK FINANCIAL CORPORATION

(AFKS)
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Sistema PJSFC: Sistema announces financial -4-

06/15/2021 | 03:02am EDT

In 1Q 2021, OIBDA amounted to RUB 1.0 billion. The year-on-year decrease resulted from lower revenue and higher costs, including payments for Federal Grid Company (FGC) services, as well as payments for technical losses.

The OIBDA margin was 18.6% in 1Q 2021.

BPGC's net profit declined in 1Q 2021 on the back of the lower OIBDA and a reduction in finance income.

KEY HIGHLIGHTS IN 1Q 2021 AND AFTER THE END OF THE REPORTING PERIOD

ESG progress. In March 2021, BPGC was placed in the highest category in the environmental efficiency rating compiled by ERA for 2020. This result testifies to the company's transparency, operational improvements in terms of quality and environmental performance, as well as the efficient use of resources to achieve these results.

Infrastructure expansion. Construction of the 110/10 kW Romanovka substation continues; the substation will provide electricity to household and industrial consumers in the Demsky district of Ufa and the Ufimsky district of Bashkortostan, including large residential complexes. Completion of construction and commissioning of the power plant is scheduled for the end of 2021. COSMOS HOTEL GROUP[14]

ONE OF RUSSIA'S LEADING HOTEL MANAGEMENT COMPANIES

(RUB mln)                              1Q 2021 1Q 2020 Change 
Revenue                                644     811     (20.7%) 
Adj. OIBDA                             (66)    24      - 
Adj. OIBDA margin                      (10.2%) 2.9%    (13.2) p.p. 
Operating loss                         (238)   (1,261) - 
Adj. net loss attributable to Sistema  (323)   (428)   - 

Revenue at Cosmos Hotel Group amounted to RUB 0.6 billion in 1Q 2021, a year-on-year decrease due to the continued restrictions and operating challenges in the tourism and hospitality industries amid the COVID-19 pandemic, while hotels operated under normal conditions in 1Q 2020.

Adjusted OIBDA declined in 1Q 2021 on the back of the drop in revenue, despite the fact that hotels continued to implement austerity measures to minimise losses during the pandemic.

The adjusted net loss was the result of negative adjusted OIBDA dynamics.

The share of revenue from hotels outside Russia in 1Q 2021 was 3.5%, versus 15.4% in 1Q 2020, as hotels outside Russia were not permitted to operate and were thus closed during this period.

ADR[15] for the Group's hotel portfolio in 1Q 2021 decreased by 13.8% year-on-year to RUB 3.0 thousand.

RevPAR[16] across the hotel portfolio declined by 2.8% from RUB 1,500 to RUB 1,400 on the back of a dramatic decrease in occupancy. Russian hotels managed to show growth of 27% year-on-year thanks to the lifting of some restrictions on domestic tourism.

Average occupancy in 1Q 2021 increased by 5.5 p.p. to 48.3% thanks to positive dynamics in the Russian segment. Some international destinations remained closed to Russian citizens, which drove an increase in domestic tourism.

KEY HIGHLIGHTS IN 1Q 2021 AND AFTER THE END OF THE REPORTING PERIOD

Vaccination tours. In April 2021, Cosmos Travel, an online platform for foreign tourists booking travel to Russia and part of Cosmos Hotel Group, launched COVID-19 vaccination packages for Russians living abroad. Medsi Group is a programme partner.

In May 2021, Cosmos Hotel Group signed an agreement to operate Hilton Garden Inn, located at 2-4 Kozhevnicheskaya St in Moscow. The opening of the hotel is scheduled for November 2021. Hilton Garden Inn Moscow Paveletskaya will be a 4* hotel with 237 comfortable modern rooms. It will be become the fifth hotel of ?osmos Hotel Group in Moscow. This is the first hotel which is part of an international chain which will be operated by ?osmos Hotel Group but not owned by the company, in line with Cosmos Hotel Group's current strategy aimed at creating the leading hotel chain in Russia.

Corporate

(RUB mln)                                     1Q 2021 1Q 2020  Change 
Adj. OIBDA                                    (5,000) 4,198    - 
Adj. net (loss)                               (9,324) (11,793) - 
Corporate Centre's financial liabilities[17]  207,874 207,808  0.0% 

The Corporate Centre comprises Sistema and companies that control and manage Sistema's interests in its subsidiaries and associates.

In 1Q 2021[18], the Group's SG&A to revenue ratio decreased year-on-year from 19.2% to 18.0%. SG&A to revenue across most assets declined in the first quarter year-on-year due to a focus on operational efficiency. The Corporate Centre's SG&A increased as a result of accruals for the LTI programme.

The Corporate Centre's financial liabilities remained unchanged year-on-year. As of 31 March 2021, RUB-denominated bonds accounted for 69% of the Corporate Centre's financial liabilities.

In March 2021, LLC Megapolis-Invest ("Megapolis-Invest"), jointly controlled by the Group (75.86%) and LLC Sberbank Investments ("SberInvest") (24.14%), acquired an additional 29.64% stake in JSC Electrozavod from a private investor for RUB 5.8 billion, which was provided to Megapolis-Invest in the form of a loan by SberInvest, thus giving Megapolis-Invest a 94.01% stake in JSC Electrozavod.

Earlier, in December 2020, Megapolis-Invest had acquired a 64.37% stake in JSC Electrozavod and a 100% stake in LLC Electrokombinat ("Elektrozavod Group") from a group of private investors for RUB 24.7 billion.

Elektrozavod Group includes transformer equipment production facilities in Moscow and Ufa, maintenance divisions, research and design institutes, an engineering centre and land plots totalling 19 hectares near the Elektrozavodskaya metro station in Moscow.

In May 2021, Sistema, through its wholly-owned subsidiary Capgrowth Investments Limited, participated in portfolio company Etalon Group's rights offering for newly issued ordinary shares to existing holders of Etalon Group equity securities (the "Rights Offering") pro rata to Capgrowth's share in the capital of Etalon Group PLC (25.6%). Capgrowth subscribed for 22,632,806 shares of Etalon Group at the price of USD 1.7 per ordinary share.

Sistema also executed with JSC Alfa Bank a non-deliverable swap agreement passing through economic, but not voting, rights with respect to Etalon Group's global depositary receipts ("GDRs") (the "Swap Agreement"), under which the Alfa Bank intends to acquire in aggregate up to 20% of Etalon Group's capital in the form of GDRs via their acquisition from existing shareholders of Etalon Group (including Capgrowth) as well as via participation of Alfa Bank in Etalon Group's rump offering of GDRs which took place on 13 May 2021, following the Rights Offering. The term of the Swap Agreement is 30 months, subject to early termination events set out in the Swap Agreement.

Along with the Swap Agreement, an Option Agreement has been entered into between Alfa Bank and Capgrowth under which (i) Capgrowth has the right to purchase all GDRs acquired by Alfa Bank pursuant to the Swap Agreement (the "Call Option") and (ii) should Capgrowth not exercise the Call Option, Alfa Bank has the right to sell all such GDRs to a third party and, further, in the absence of an interested purchaser, to Capgrowth, in each case within the periods and on the terms and conditions set out in the Option Agreement.

In June 2021, ?apgrowth increased its stake in Etalon Group from 25.6% to 29.8% as a result of acquisition of shares from minority investors.

***

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

Investor Relations       Public Relations 
Nikolay Minashin         Sergey Kopytov 
Tel.: +7 (495) 730 66 00 Tel.: +7 (495) 228 15 32 
n.minashin@sistema.ru    kopytov@sistema.ru Sistema PJSFC is a publicly traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, high technology, financial services, retail, paper and packaging, agriculture, real estate, tourism and medical services. The company was founded in 1993. Revenue in 2020 was RUB 691.6 billion; total assets equalled RUB 1.4 trillion as of 31 December 2020. Sistema's global depositary receipts are listed under the "SSA" ticker on the London Stock Exchange. Sistema's ordinary shares are listed under the "AFKS" ticker on the Moscow Exchange. Website: www.sistema.ru. 

The Company is not an investment company, and is not and will not be registered as such, under the U.S. Investment Company Act of 1940.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sistema. You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might", the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. In addition, there is no assurance that the new contracts entered into by our subsidiaries referenced above will be completed on the terms contained therein or at all. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, impact of COVID-19 pandemic on macroeconomic situation in the markets of presence and financial results of Sistema and its subsidiaries and associates, as well as many other risks specifically related to Sistema and its operations.

Appendix A

(MORE TO FOLLOW) Dow Jones Newswires

June 15, 2021 03:01 ET (07:01 GMT)

Stocks mentioned in the article
ChangeLast1st jan.
COSMOS GROUP CO., LTD. -1.04% 2.85 End-of-day quote.-7.17%
DJ INDUSTRIAL -0.24% 35058.52 Delayed Quote.14.56%
ETALON GROUP PLC 0.97% 1.66 Delayed Quote.-4.05%
LONDON STOCK EXCHANGE PLC -1.02% 7348 Delayed Quote.-18.54%
PJSC SBERBANK -0.81% 299.5 End-of-day quote.10.48%
RTS INDEX -0.04% 1599.75 Real-time Quote.15.33%
SISTEMA PUBLIC JOINT STOCK FINANCIAL CORPORATION -0.76% 29.815 End-of-day quote.4.10%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) -0.05% 73.634 Delayed Quote.-0.30%
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Financials (USD)
Sales 2021 10 642 M - -
Net income 2021 376 M - -
Net Debt 2021 10 275 M - -
P/E ratio 2021 9,20x
Yield 2021 1,36%
Capitalization 3 835 M 3 835 M -
EV / Sales 2021 1,33x
EV / Sales 2022 1,19x
Nbr of Employees -
Free-Float 33,2%
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Number of Analysts 9
Last Close Price 0,40 $
Average target price 0,61 $
Spread / Average Target 51,1%
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Managers and Directors
Vladimir Sanasarovich Chirakhov President, Chief Executive Officer & Director
Vladimir Petrovich Evtushenkov Chairman
Vladimir Semenovich Shukshin VP, Head-Information Technologies & Security
Ali Mussayevich Uzdenov Chief Investment Director
Roger Llewelyn Munnings Independent Director