Sistema PublicFinancial : Press release 4Q 2020

IFRS financial results 4Q and FY 2020

SISTEMA PJSFC IFRS FINANCIAL RESULTS

4Q AND FY 2020

IFRS financial results 4Q and FY 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 4Q and FY 2020 results.

To participate in the conference call, please dial:

Russia

[phone]

UK

[phone]

US

[phone]

Germany

[phone]

Sweden

[phone]

Conference ID: 657738

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

Or quote the conference call title: "Sistema Fourth Quarter and Full Year 2020 Financial Results".

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

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

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

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IFRS financial results 4Q and FY 2020

Moscow, Russia - 8 April 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, today announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the fourth quarter of 2020 (4Q 2020) and its audited consolidated financial results in accordance with IFRS for the full year ending 31 December 2020 (FY 2020).

FY 2020 FINANCIAL HIGHLIGHTS

• Consolidated revenue1 grew by 5.7% year-on-yearto RUB 691.6 billion.
• Adjusted OIBDA2 increased by 5.5% year-on-year to RUB 236.3 billion.
• Adjusted OIBDA margin remained flat year-on-year at 34.2%.
• Adjusted net profit attributable to Sistema was RUB 16.0 billion.

4Q 2020 FINANCIAL HIGHLIGHTS

• Consolidated revenue increased by 6.9% year-on-yearto RUB 193.4 billion.
• Adjusted OIBDA increased by 6.1% year-on-year to RUB 56.2 billion.
• Adjusted OIBDA margin decreased by 0.2 p.p. year-on-year to 29.1%.
• Adjusted net profit attributable to Sistema was RUB 20.9 billion.

KEY GROUP HIGHLIGHTS IN 4Q 2020

• IPO of Ozon3. In November 2020 Ozon held an IPO of American Depositary Shares (ADSs) on the NASDAQ and obtained a listing of its ADSs on Moscow Exchange. Total proceeds to the company, including the greenshoe as well as proceeds from a parallel private placement in which Sistema invested USD 67.5 million, totalled approximately USD 1.25 billion. Following completion of the IPO, fulfilment of the private placement agreement and conversion of convertible loans previously provided to Ozon,
  Sistema's total stake in Ozon stood at 33.1%4.
• Debt capital markets programme. In November 2020 the Corporation completed a secondary placement of series 001P-04exchange-traded bonds. The Corporation repurchased RUB 4.3 billion of bonds out of a total RUB 6.5 billion in the issue through a tender offer, and subsequently placed all of the repurchased bonds through a secondary placement with an annual coupon rate of 6.35% at 100.15% of the nominal value. Also in November 2020 Sistema placed RUB 5 billion of series 001Р-16 bonds with a put option after 2.25 years and a coupon rate of 6.10% per annum, and RUB 14 billion of series 001Р-17 bonds with a put option after 4.5 years and a coupon rate of 6.75% per annum.
• Extension of Sistema's buyback programme. In December 2020 Sistema announced an extension of the Corporation's buyback programme to 31 December 2021. Launched on 17 September 2019, the programme provides for the repurchase of up to RUB
  3.0 billion worth of the Corporation's ordinary shares by a wholly owned subsidiary of Sistema. The maximum number of Shares to be repurchased under the Programme is capped at 300 million. As of 8 April 2021, 120.6 million shares had been repurchased for a total of RUB 1.6 billion.
• MTS stock buyback. As part of MTS's programme to repurchase up to RUB 15 billion of shares, Sistema's wholly owned subsidiary
  Sistema Finance S.A. sold 14,534,801 ordinary shares of PJSC MTS for a total consideration of RUB 4.8 billion to LLC Bastion, a wholly owned subsidiary of MTS.

CORPORATE EVENTS AFTER THE END OF THE REPORTING PERIOD

• Development of the pharmaceuticals business. In February 2021 Sistema and its financial partner, VTB Group ("VTB"), contributed their 56.2% stake in OJSC Sintez to the equity of Binnopharm Group LLC. At the same time, Sistema, VTB and a consortium of investors consisting of the Russia-China Investment Fund (a fund established by the Russian Direct Investment Fund and China Investment Corporation) and major Middle East funds contributed an 85.6% stake in JSC Alium to the equity of Binnopharm Group LLC. As a result, the effective stake of Sistema together with VTB in Binnopharm Group is 79%, and the investor consortium holds 15.8%. In March 2021 Group acquired a 32.4% stake in Sintez from JSC National Immunobiological Company, controlled by State Corporation Rostec.

1. Here and hereinafter results for 4Q 2020 and FY 2020 are presented to reflect the divestiture of AGK Yuzhny. Results of previous periods have been restated to reflect the effect of the divestiture.
2. Here and hereinafter please see Appendix A of the financial results press-release for 4Q 2020.
3. Ozon's financial results are not consolidated within Sistema's financial statements. Investments in Ozon are reflected in Sistema's financial reporting using the equity method. The share of Ozon's profit/loss attributable to Sistema is included in Sistema's operating results. Investments are reflected at book value adjusted for attributable share of profit/loss for the period, and are not marked to market.
4. Assuming 4,472,969 ordinary shares issuable upon exercise of outstanding vested share-based awards under the employee incentive program of Ozon.

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IFRS financial results 4Q and FY 2020

PROGRESS IN ESG

• Debut ESG financing. In November 2020 Sistema secured its first ESG financing from Sberbank. The RUB 10 billion credit line includes an option to tie the interest rate on each loan to sustainability performance (Sustainability Improvement Loan). Under the agreement Sistema committed to adopting its Environmental Policy and integrating responsible investment principles into its investment process. The transaction was the first ESG loan agreement between a Russian borrower and a Russian bank, and sets new standards for responsible investment in Russia.
• Integration of ESG principles into portfolio management. In December 2020 the Board of Directors approved an updated set of investment criteria that integrate ESG factors into the investment process, thus fulfilling one of the KPIs under the Sberbank agreement.
• Improved CDP rating. Sistema and MTS were both ranked among the top seven out of 29 Russian companies that voluntarily disclosed climate data in line with the international CDP (formerly known as Carbon Disclosure Project) reporting system in 2020. As a result, Sistema and MTS improved their positions in the global CDP rating to "B".

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

"In 2020 the Corporation increased revenue by 5.7% and adjusted OIBDA by 5.5%, thanks to contributions from MTS, Segezha Group, Steppe and Medsi. Our key consolidated portfolio companies overcame the challenges resulting from the COVID-19 pandemic, and were able to quickly adjust their business models and adapt their products and services to the new realities, which is reflected in their strong annual financial performance. MTS delivered strong growth due both to revenue growth in the core telecommunications segment as well as strong performance in other segments. Segezha Group achieved record revenue for the year and maintained a high level of profitability. Steppe delivered significant growth across its financial metrics as global grain prices increased and due to higher operational efficiency. Medsi grew revenue and OIBDA even despite the impact of restrictions on patient footfall in the first half of the year.

"2020 was a year of transformation for our business. We completed our exit from Detsky Mir, held a successful IPO of Ozon that crystalised the value of this asset and established a foundation for the further expansion of the business. We also expanded our presence in the pharmaceuticals sector, combining our assets into Binnopharm Group, which is already one of Russia's largest pharma producers and has the potential to become a focus of consolidation in the industry.

"The Corporation continues to seek out new sources of growth, using the significant dividend income received from our portfolio companies as an investment resource. As part of this strategy our joint venture with Sber has acquired a stake in Elektrozavod Group, which includes transformer equipment production facilities in Moscow and Ufa, maintenance divisions, research and design institutes, an engineering centre and land plots totalling 19 hectares in the centre of Moscow. Our ambition is to create a leading Russian producer of transformer equipment using the acquired production facilities."

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IFRS financial results 4Q and FY 2020

SISTEMA RESULTS REVIEW

(RUB million)	4Q 2020	4Q 2019	Change	FY 2020	FY 2019	Change
Revenue	193,366	180,847	6.9%	691,626	654,303	5.7%
Adj. OIBDA	56,181	52,972	6.1%	236,340	224,016	5.5%
Operating income	22,581	7,476	202.1%	109,404	86,828	26.0%
Net profit attributable to Sistema	17,516	7,682	128.0%	10,216	28,597	(64.3%)
Adj. net profit attributable to Sistema	20,874	26,837	(22.2%)	15,998	53,379	(70.0%)

In 2020 Sistema's consolidated revenue increased by 5.7% year-on-year to RUB 691.6 billion, driven by revenue growth at key assets: at MTS thanks to higher mobile services revenue and strong growth in new business segments (Fintech, Media and B2B Digital & Cloud); at Segezha Group as a result of revenue growth due to increased sales volumes of paper packaging and sawn timber as well as higher prices for plywood and sawn timber; at Agroholding Steppe thanks to increased revenue in all key segments; and at Medsi as a result of a higher average cheque as Medsi delivered COVID-19diagnostics and treatment, as well as expansion of the out-patientnetwork in Moscow and the acquisition of clinics in Izhevsk.

Group Adjusted OIBDA5 grew by 5.5% year-on-year to RUB

236.3 billion in 2020 primarily due to increases in adjusted OIBDA at portfolio companies: at MTS following revenue growth, despite a significant decrease in revenues from international roaming and the creation of provisions at MTS and MTS Bank; at Segezha Group following revenue growth and despite higher logistics costs and pressure on prices for most products during the year; at Steppe due to increased operational efficiency at new land assets, the execution of an effective trading strategy, and growth of sales prices for own agricultural produce, increased profitability in the Agrotrading segment and positive dynamics in international trading, as well as growth of production volumes in the Dairy Farming segment and

successful execution of a time arbitrage strategy in the Sugar and Grocery Trading segment; and at Medsi following revenue and thanks to participation in a JV with Capital Group to build the Nebo residential complex.

In 2020 adjusted net profit decreased by 70.0% year-on- year to RUB 16.0 billion. The dynamics of net profit year-on- year were influenced by the sale of 100% shares in Leader- Invest and its deconsolidation, the public offering of18.3% of Detsky Mir shares, deconsolidation and reclassification of the remaining stake in Detsky Mir (33.4%) as investment in associates in 2019.

Group SG&A costs grew by 4.5% in 2020 primarily due to increased SG&A at the Corporate Centre as a result of the impact of higher costs and bonus payments connected to monetisations and capital markets transactions, as well as the renewal of the LTI programme previously suspended in 2018. Group SG&A costs were also impacted by higher SG&A at Segezha Group due to higher fees charged by logistics companies amid the COVID-19 pandemic, and the effect of currency fluctuations.

Group capex increased by 8.6% year-on-year to RUB 127.8 billion in 2020 as a result of increased investment at MTS in network development, and also impacted by the FX- denominated component of capex in the context of rouble depreciation, as well as expansion and modernisation of production capacities at Segezha Group.

5 Group adjusted OIBDA for 2020 reflects the net loss attributable to Sistema at Ozon, where the net loss increased by RUB 0.6 billion (loss for FY 2020 of RUB 8.4 billion vs loss for FY 2019 of RUB 7.8 billion).

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