IFRS Financial Results for 3Q 2021

IFRS Financial Results

3Q 2021

IFRS Financial Results for 3Q 2021

Sistema's management will host a conference call today at 9:00 am (New York time) / 2:00 pm (London time) / 3:00 pm (CEST) / 5:00 pm (Moscow time) to present and discuss the 3Q 2021 results.

To participate in the conference call, please dial:

Russia

+7 495 283 98 58

United Kingdom

+44 203 984 9844

United States

+1 718 866 4614

Germany

+49 30 25 555 323

Sweden

+46 10 551 30 20

Conference ID: 657738

Link to webcast:https://mm.closir.com/slides?id=657738

Or quote the conference call title: Sistema Third Quarter 2021 Financial Results.

A replay of the conference call will be available on Sistema's website www.sistema.rufor at least seven days after the event.

For further information, please visit www.sistema.ruor contact:

Investor Relations

Public Relations

Sergei Levitskiy

Sergei Kopytov

Tel: +7 (495) 730 66 00

Tel.: +7 (495) 228 15 32

s.levitskiy@sistema.ru

kopytov@sistema.ru

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IFRS Financial Results for 3Q 2021

Moscow, Russia - 2 December 2021 - Sistema PJSFC ("Sistema", the "Corporation", or together with its subsidiaries and affiliates the "Group") (LSE: SSA, MOEX: AFKS), a Russian publicly traded investment company, announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the third quarter of 2021 (3Q 2021) ending 30 September 2021.

KEY HIGHLIGHTS IN 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD

  • Monetising stake in Segezha Group. In October 2021, Sistema signed an agreement to sell a stake in Segezha Group to Bonum Capital for USD 150 million.
  • Segezha Group's acquisition of forestry assets in Siberia. In October 2021, Segezha Group reached an agreement to acquire 100% of LLC Inter Forest Rus, which owns 24 forestry assets in Krasnoyarsk Krai and the Irkutsk region with a substantial forest resource base, from Bonum Capital for USD 515 million. The transaction will double Segezha Group's annual allowable cut and make the Company one of the largest leaseholders of forest land globally.
  • Acquisition of Nearmedic Group. In September 2021, JSC New Investment Holding, jointly controlled by Sistema and Sberbank, acquired Nearmedic Group, which does business in the pharmaceuticals, biotechnology and healthcare sectors. Sistema has the right to acquire Sberbank's equity interest in JSC New Investment Holding and Sberbank has the right to sell its interest to Sistema on certain conditions.
  • Sistema's divestment of Sistema Capital LLC. In September 2021, Sistema signed binding agreements for the sale of a 70% stake in the charter capital of Sistema Capital for RUB 3.5 bln.
  • Payment of dividends for FY 2020. In August 2021, Sistema, in line with its approved dividend policy, paid dividends for FY 2020 of RUB 2,991.5 million, or RUB 0.31 per ordinary share.
  • Sistema stock buyback. In 3Q 2021, Sistema repurchased 74.7 million ordinary shares, representing 0.77% of its charter capital, for RUB 2,201 million. The current buyback programme provides for the repurchase of up to RUB 7.0 billion worth of the Corporation's ordinary shares by a wholly owned subsidiary of Sistema through 17 September 2022. The maximum number of shares to be repurchased under the Programme is capped at 343 million.
  • Continued debt portfolio optimisation. In 3Q 2021, the Corporation placed RUB 15 billion of series 001P-21 bonds with a semi- annual coupon rate of 8.40% per annum, as well as RUB 15 billion of series 001P-22 bonds with a quarterly coupon rate of 8.20% per annum. The put option on both series of bonds is in five years. In November 2021, the Corporation completed bookbuilding for a RUB 5 billion series 001P-23 bond issue with a quarterly coupon rate of 9.95% per annum.
  • Improved credit rating outlook. In September 2021, Expert RA revised the outlook for the Corporation's credit rating upward from stable to positive, and affirmed the rating at ruAA-.

SUSTAINABILITY (ESG)

  • Superior ratings for Sistema's ESG practices. In October 2021, Sistema rated among the three leading companies in an ESG ranking of Russian publicly traded financial companies compiled by the National Rating Agency (NRA). The NRA ranking included 30 leading banks, financial institutions, infrastructural institutions and insurance companies, and named Sistema among the companies with the highest level of sustainability practice in their core operations.

3Q 2021 FINANCIAL RESULTS

  • Consolidated revenue grew by 21.8% year-on-year to RUB 225.1 billion.
  • Adjusted OIBDA1 increased by 4.7% year-on-year to RUB 75.0 billion.
  • Adjusted OIBDA margin was 33.3%.
  • Adjusted net profit was RUB 2.3 billion.

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

"Sistema's results for 3Q 2021 underscore the Corporation's ability to grow the value of its portfolio assets. We again accelerated the growth of our business, increasing Group revenue by 22% year-on-year and adjusted OIBDA by 5%. The key drivers of Sistema's growth were our consolidated public assets - MTS and Segezha Group - as well as the performance of our fast-growingnon-public asset Steppe.

"MTS maintained high revenue and adjusted OIBDA growth rates thanks to increased consumption of telecoms services and the

(1) Here and hereinafter, see Annex A.

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IFRS Financial Results for 3Q 2021

contribution of segments beyond connectivity, which accounted for more than 60% of the Company's growth. Segezha Group continues to develop its vertically integrated business model, and as a result revenue for the period grew by more than a third, while adjusted OIBDA more than doubled. Steppe achieved accelerated revenue and adjusted OIBDA growth rates of 88% and 134% year- on-year, respectively, due to a record grain harvest and growth of global wheat prices.

"In the third quarter we fully consolidated the results of Binnopharm Group, our pharmaceuticals holding, for the first time. The company accelerated revenue growth to 28%, while OIBDA increased by almost 1.5x year-on-year. We believe that Binnopharm Group could become a major driver of growth in the value of the Corporation's portfolio.

"OZON continues to set new records across all key metrics. In 3Q growth of GMV including services reached 145% year-on-year, driven by record order numbers as well as record numbers of active users and marketplace sellers. Importantly, we continue to see substantial growth potential for OZON and support the Company's strategy to grow its presence in the Russian e-commerce market, including by increasing investments in logistics infrastructure and assortment.

"Major events of recent months include Segezha Group's announcement of the acquisition of forestry assets in Siberia from Bonum Capital for USD 515 million. Sistema has also agreed to sell a minority stake in Segezha Group to Bonum Capital for USD 150 million. Both transactions create significant value: Segezha Group will practically double its annual allowable cut and become one of the largest leaseholders of forest lands globally, while Sistema will be able to partially monetise its investments in Segezha Group.

"Finally, we continue to invest in fast-growing and high-potential sectors. In September we took an important step to further strengthen our presence in the Russian pharmaceuticals market through the joint acquisition with Sberbank of Nearmedic Group."

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IFRS Financial Results for 3Q 2021

SISTEMA RESULTS REVIEW

(RUB mln)

3Q 2021

3Q 2020

Change

9M 2021

9M 2020

Change

Revenue

225,118

184,890

21.8%

576,662

498,260

15.7%

Adj. OIBDA

75,029

71,662

4.7%

190,450

180,159

5.7%

Operating income

38,985

39,862

(2.2%)

90,139

86,824

3.8%

Net profit/(loss)

888

2,334

(61.9%)

(5,395)

(7,299)

n.a.

Adj. net

2,292

2,598

(11.8%)

(3,494)

(4,876)

n.a.

profit/(loss)

Sistema's consolidated revenue increased by 21.8% year-on- year to RUB 225.1 billion, driven by revenue growth at key assets: at MTS, thanks to higher consumption of telecoms services and accelerated revenue growth in the fintech and media segments as well as digital and cloud-basedsolutions for business; at Segezha Group, thanks to a favourable pricing environment across all product types and a recovery in demand from the construction industry; at Steppe, thanks to a record harvest, higher crop prices, and the launch and development of new segments. The consolidation of Binnopharm Group's results in Sistema's financial statements from 25 June 2021 also had an impact on the Corporation's revenue.

The Group's adjusted OIBDA2 increased by 4.7% year-on-year to RUB 75.0 billion mainly as a result of higher adjusted OIBDA at subsidiaries: at MTS, partly due to increased revenues in the telecoms segment, including roaming, and the contribution of the fintech business; at Segezha Group, on the back of revenue growth, and also thanks to execution of a strategy to produce higher-marginplywood and packaging products, as well as measures to control growth of production costs; at Steppe, due to a favourable pricing environment for the company's products, a more effective sales strategy for the company's own and third-partyagricultural products, an increase in gross milk yield, and the development of new business segments including packaged cheese, dairy products and plant-basedalternatives as well as the export of specialty agricultural crops.

Adjusted net profit in 3Q 2021 was RUB 2.3 billion.

Group SG&A costs increased by 39.1% to RUB 39.9 billion mainly due to higher SG&A costs at MTS, the Corporate Centre and Segezha Group. The increase in the Corporate Centre's SG&A costs was due to accruals for the LTI programme. The increase in MTS's SG&A costs was driven by increased advertising expenses for the promotion of ecosystem products as well as accruals for the updated options incentive programme. Segezha Group's SG&A costs increased mainly due to bonus payments for management following the IPO. Group SG&A also increased due to the consolidation of Binnopharm Group.

Group capex increased to RUB 47.5 billion as a result of investments by key assets in projects focused on growing scale, diversification and improving efficiency: at MTS, in network development with a focus on expanding 4G capacity, as well as in new business areas in its digital ecosystem; at Segezha Group, in the modernisation of the Segezha and Sokol PPMs and the expansion of the Vyatka Plywood Mill, as well as in the construction of a boiler and pellet plant in Sokol; at Steppe, in the development of dairy farms and processing facilities, upgrades to agricultural equipment and acquisitions of land plots.

  1. Group adjusted OIBDA in 3Q 2021 was impacted by the reflection of the Group's share in the RUB 2.9 billion increase in Ozon's net loss from RUB 1.6 billion in 3Q 2020 to RUB 4.5 billion in 3Q 2021, as well as by the sale of PJSC Detsky Mir shares in 3Q 2020 (RUB 3.7 billion).

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Afk Sistema OAO published this content on 02 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 December 2021 07:10:05 UTC.