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Sistema JSFC

November 26, 2015

Sistema announces third quarter 2015 financial results

Moscow, Russia – November 26, 2015 – Sistema JSFC (“Sistema” or the “Company”, together with its subsidiaries, “the Group”) (LSE: SSA; ĚÎĹŐ: AFKS), a publicly-traded diversified holding company operating primarily in Russia and the CIS, today announces its unaudited consolidated IFRS financial results for the third quarter ended September 30, 2015. 

THIRD QUARTER FINANCIAL HIGHLIGHTS  

  • Consolidated revenues up 14.3% YoY to RUB 184.2 billion.
  • Adjusted OIBDA up 7.1% YoY to RUB 52.6 billion with an adjusted OIBDA margin of 28.5%.
  • Net income attributable to the Group of RUB 481 million.
  • Net debt at the Corporate Holding level decreased by 10.3% to RUB 40.2 billion as at September 30, 2015.
  • As at September 30, 2015, cash position at the Corporate Holding level amounted to RUB 47.9 billion, excluding RUB 33.2 billion represented by long-term deposits.

KEY CORPORATE HIGHLIGHTS IN THE THIRD QUARTER AND AFTER THE REPORTING PERIOD 

In July, Sistema’s subsidiaries LLC Sistema Telecoms Assets and JSC RTI (the “sellers”) signed legally binding agreements to sell their respective stakes in JSC NVision Group, including its debt obligations, to PJSC MTS for up to RUB 15 billion. The transaction was approved by the Boards of Directors of the sellers and MTS, and the Special Committee of independent directors under the MTS Board of Directors. Merrill Lynch International acted as financial advisor to the Special Committee to issue a Fairness Opinion on the transaction. 

In October, Sistema acquired JSC Kronshtadt Group and its subsidiaries from Industrial Investors Group and its partners for RUB 4.8 billion. Kronshtadt Group comprises a number of companies with innovative solutions producing world-class high-technology products and solutions for the aircraft manufacturing, defence, security and transportation industries, as well as natural resource exploration. Kronshtadt has significant synergies with Sistema’s RTI. 

In October, Sistema acquired an additional 25.02% stake in Medsi Group JSC from the State Unitary Enterprise Medical Centre under the Moscow Mayor and Government’s Department of Business Affairs for a consideration of RUB 6.1 billion, with 50% to be paid over the course of a year.  The increase of Sistema’s stake will enable Medsi to expand its private clinic network, build new medical facilities, and improve management efficiency. It is also expected to support Medsi’s further growth by bringing in strategic and financial investors as shareholders. 

In November, Sistema agreed to demerge its Indian telecommunications business from Sistema Shyam TeleServices Ltd (“SSTL”) and to merge this business with Reliance Communications Ltd (“RCom”), one of the leading telecom operators in India. As a result of the merger, SSTL will acquire and hold a 10% equity stake in RCom. Prior to the transaction's completion, SSTL plans to pay off existing debt. Following the completion of the transaction, RCom will take responsibility for payment of SSTL's frequency spectrum licensing fees, which are payable in instalments to the Department of Telecommunications of India. RCom will also pay SSTL an earn out of up to US$ 300 million in the event that Indian telecommunication authorities confirm that SSTL’s spectrum can be used for building-out a 4G network (at 5MHz contiguous spectrum) without any additional payments. 

Mikhail Shamolin, President and Chief Executive Officer of Sistema, commented: 

“Sistema’s third quarter results reflect the fundamental strength of our assets and their continued resilience to the economic challenges. Our four largest portfolio companies have delivered solid revenue growth. MTS achieved stronger data and handset sales, Segezha Group benefited from a continued rise in exports and improved business processes, Detsky Mir successfully implemented its operational strategy and increased its market share while RTI also demonstrated strong performance. 

Sistema is one of the largest investors in the Russian economy and now more than ever we are striving to enhance the efficiency of our assets. Our focus on cost optimisation enabled us to substantially reduce SG&A expenses at the Corporate Centre while also improving cost efficiency at subsidiaries. 

We continue to look for attractive opportunities to put capital to work by investing in new assets. In October, we acquired high-tech conglomerate Kronshtadt Group, a strong complement to our market-leading defence, microelectronics and IT asset RTI. We also increased our stake in Russia’s leading chain of private healthcare clinics, Medsi, as we continue to be firm believers in the great potential of the Russian private healthcare market. In addition, earlier this month we agreed to merge the telecommunications business of SSTL with RCom, a top Indian telecom operator. This demonstrates our ability to create value for us, our partners and shareholders.” 

DOWNLOAD FULL VERION OF THE PRESS RELEASE

Conference call information 

Sistema’s management will host an analyst conference call today at 9.00 am (EST)/ 2.00 pm (London time) / 3.00 pm (CET) / 5.00 pm (Moscow time) to present and discuss the third quarter 2015 results. 

To participate in the conference call, please dial:  

Russia

+7 495 705 9451

8 800 500 9312 (toll free) 

United Kingdom

+44 20 3427 1909

0800 279 5004 (toll free) 

US

+1646 254 3363

1877 280 1254 (toll free) 

Conference ID: 5248179 

Alternatively, you can quote the conference call title: “Sistema Third Quarter 2015 Financial Results”. 

A replay of the conference call will be available on the Company’s website www.sistema.com for 7 days after the event. 

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

Investor Relations

Yulia Katukova

Tel: +7 (495) 692 22 88

katukova@sistema.ru

Public Relations

Sergey Kopytov

Tel.: +7 (495) 228 15 27

kopytov@sistema.ru 

 

 

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