Gaining control of Binnopharm Group. On 25 June 2021, Ristango Holding Limited shareholders signed a new shareholder agreement. According to the agreement, Sistema had obtained control over the operating activities of Ristango Holding Limited, the 100% owner of Binnopharm Group, which provided the basis for consolidating Binnopharm Group's results in Sistema's financial statements as of that date.

Sale of a stake in Ristango Holding Limited to an investor. In June 2021, Sistema's wholly owned subsidiary Sistema Telecom Assets sold an 11.2% equity stake in Ristango Holding Limited, the 100% owner of Binnopharm Group, to Nevsky Property Investments Limited, controlled by VTB Capital, for a consideration of RUB 7 billion.

Execution of an agreement on the acquisition of VTB's stake in Ristango Holding Limited. In July 2021, Sistema exercised its right under a share acquisition agreement concluded with VTB Bank, and purchased, ahead of schedule, VTB Bank's 20.97% stake in Ristango Holding Limited for RUB 6.7 billion. BUSINESS NEDVIZHIMOST

RENTAL ASSETS WITH A UNIQUE POOL OF PROPERTIES 


(RUB mln)                             2Q 2021  2Q 2020 Change 1H 2021 1H 2020  Change 
Revenue                               948   996   (4.8%)    1,874 1,984  (5.5%) 
OIBDA                                 718   414   73.2%     1,012 686    47.5% 
OIBDA margin                          75.7% 41.6% 34.1 p.p. 54.0% 34.6%  19.4 p.p. 
Operating income                      580   273   112.5%    749   427    75.4% 
Net profit attributable to Sistema    263   88    199.2%    312   276    13.0%

Revenue at Business Nedvizhimost in 2Q 2021 decreased slightly, by 4.8% year-on-year, mainly due to lower revenue from the sale of land plots in the Moscow region.

In 2Q 2021, OIBDA increased by 73.2% year-on-year to RUB 0.7 billion, resulting in a 34.1 p.p. increase in the OIBDA margin to 75.7%. This growth was primarily the result of cost optimisation and a decrease in the cadastral value of land plots.

Net profit increased by 199.2% to RUB 0.3 billion on the back of operating income growth.

KEY HIGHLIGHTS IN 2Q 2021 AND AFTER THE END OF THE REPORTING PERIOD Business reorganisation. In July 2021, the Annual General Meeting of Shareholders of Business Nedvizhimost approved the restructuring of the company through a spin-off of the country properties segment. This reorganisation will enable Business Nedvizhimost to focus on improving the efficiency of its core business.

BPGC

ONE OF RUSSIA'S BIGGEST POWER GRID COMPANIES 


(RUB mln)                          2Q 2021 2Q 2020 Change    1H 2021 1H 2020 Change 
Revenue                            4,540   4,540   0.0%      9,772   10,381  (5.9%) 
OIBDA                              1,686   1,229   37.2%     2,660   3,139   (15.3%) 
OIBDA margin                       37.1%   27.1%   10.1 p.p. 27.2%   30.2%   (3.0 p.p.) 
Operating income                   975     526     85.4%     1,239   1,735   (28.6%) 
Net profit attributable to Sistema 716     373     92.2%     901     1,259   (28.4%)

Revenue at BPGC in 2Q 2021 was flat year-on-year at RUB 4.5 billion. Revenue growth was constrained by lower consumption in the oil and gas sector due to the OPEC+ deal that entered into force in May 2020.

In 2Q 2021, OIBD? increased by 37.2% year-on-year to RUB 1.7 billion mainly as a result of other operating income due to the resolution of disputes related to operating activities, which was partially offset by the higher cost of services provided by the Federal Grid Company.

OIBDA margin was 37.1% in 2Q 2021, an increase of 10.1 p.p. year-on-year.

Net profit in 2Q 2021 increased by 92.2% year-on-year to RUB 0.7 billion primarily as a result of OIBDA growth.

The company is currently carrying out the following key investment projects aimed at developing the region and improving the reliability of energy supply for consumers: construction of the 110 kW high-voltage Uzyan-Bainazarovo line, with a length of 60 km, in the Beloretsk region of Bashkortostan (implementation period from 2019 to 2022, at a planned cost RUB 325 million and with capex of RUB 33.5 million in 2Q 2021), construction of the 110 kW Romanovka substation with a power transmission supply line in the Ufa region of Bashkortostan (implementation period from 2020 to 2021, at a planned cost of RUB 250 million and with capex of RUB 36.5 million in 2Q 2021) and the design of the 110 kW Inors substation with a power transmission supply line in Ufa (implementation period from 2021 to 2023 at a planned cost RUB 460 million). COSMOS HOTEL GROUP[14]

ONE OF RUSSIA'S LEADING HOTEL MANAGEMENT COMPANIES 


(RUB mln)                                   2Q 2021 2Q 2020    Change          1H 2021 1H 2020 Change 
Revenue                                           1,019 192    431.7%        1,663         1,003 65.8% 
Adj. OIBDA                                     286    (193)    -           220           (169)   - 
Adj. OIBDA margin                              28.1%  (100.6%) 128.7 p.p.  13.3%         (16.9%) 30.1 p.p. 
Operating profit/(loss)                        112    (366)    -           (126)         (1,628) - 
Adj. net profit/(loss) attributable to Sistema 15     (428)    -           (308)         (857)   -

Revenue at Cosmos Hotel Group increased by 431.7% year-on-year in 2Q 2021 to RUB 1.0 billion as most of the restrictions imposed on the operation of hotels due to the pandemic were lifted; the operations of nearly all hotels were suspended in 2Q 2020.

On the back of a partial recovery in revenue, adjusted OIBDA amounted to RUB 286 million in 2Q 2021, compared with a negative result a year earlier. Adjusted OIBDA margin was 28.1% in 2Q 2021.

Adjusted net profit amounted to RUB 15 million in 2Q 2021, compared with an adjusted net loss of RUB 428 million a year earlier.

The share of revenue from hotels outside Russia in 2Q 2021 was 15.5%.

ADR[15] for the Group's hotel portfolio in 2Q 2021 increased by 20.8% year-on-year to RUB 3.8 thousand.

RevPAR[16] for the hotel portfolio increased by 305% from RUB 0.6 thousand to RUB 2.3 thousand on the back of a recovery in occupancy.

Average occupancy in 2Q 2021 increased by 41.6 p.p. to 59.2% due to the lifting of restrictions on the operation of hotels and a partial recovery in tourist and business flows.

KEY HIGHLIGHTS IN 2Q 2021 AND AFTER THE END OF THE REPORTING PERIOD

Expansion of the hotel chain. In May 2021, an agreement was signed to manage a Hilton Garden Inn in Moscow. Scheduled to open in November 2021, the four-star hotel will offer guests 237 comfortable modern rooms. Hilton Garden Inn Moscow Paveletskaya will be the Cosmos Hotel Group's fifth hotel in Moscow. The hotel will be the first international-brand property to be operated, but not owned, by ?osmos Hotel Group, in line with the company's strategy aimed at creating the leading hotel chain in Russia.

In June 2021, an agreement was signed for the construction of a hotel complex at the Sheregesh alpine ski resort in the Kemerovo region. Total investment in the project will amount to RUB 1.2 billion. Scheduled to open in early 2023, the complex will consist of 200 rooms and will meet all international standards for four-star resort hotels.

Hotel rebranding. As part of the rebranding programme, the Park Inn hotels in Astrakhan, Volgograd, Izhevsk, Kazan, Sochi, Novosibirsk and Yaroslavl were renamed Cosmos Hotels in July 2021. New service standards were also rolled out, and the properties were linked to the Cosmos Travel booking system.

Corporate Centre 


(RUB mln)                                    2Q 2021  2Q 2020 Change 1H 2021  1H 2020  Change 
OIBDA                                        (11,859) (3,394) -      (16,859) (7,591)  - 
Net loss                                     (16,397) (6,620) -      (25,721) (18,413) - 
Corporate Centre's financial liabilities[17] 210,116  198,281 6.0%   210,116  198,281  6.0%

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

Corporate Centre expenses grew mainly due to the increase in SG&A costs driven by the variable part of the compensation from monetisations and transactions, and also reflected provisions for the LTI programme, suspended in 2018 and resumed in 2020, as well as the increase in net loss of OZON reflected in the Corporate Centre's OIBDA in the share of Sistema.

The Corporate Centre's financial liabilities increased by 6.0% year-on-year due to the issue of RUB-denominated bonds. As of 30 June 2021, RUB-denominated financing accounted for 100% of the Corporate Centre's financial liabilities. Bonds accounted for 73% of the Corporate Centre's debt as of the end of 2Q 2021, up from 50% a year earlier.

In May 2021, Sistema, through its 100% subsidiary Capgrowth Investments Limited ("Capgrowth"), participated in the offer of rights to subscribe to new-issue ordinary shares to existing holders of Etalon Group equity securities, in proportion to Capgrowth's share in the capital of Etalon Group - 25.6%. Capgrowth has subscribed for subscribed for 22.63 million shares of the Company at a price of USD 1.7 per ordinary share for a total amount of RUB 2.8 billion.

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