JSFC Sistema (“Sistema” or the “Group”) (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, today announced its unaudited consolidated US GAAP financial results for the first quarter ended March 31, 2011.

First quarter highlights

Revenues up 25.8% YoY to US$ 7.8 billion

OIBDA up 13.0% YoY to US$ 1.9 billion, with an OIBDA margin of 23.7%

Operating income up 10.6% YoY to US$ 1.0 billion, with an operating margin of 13.2%

Net income attributable to the Group without one-offs increased by 30.5% year-on-year from US$ 78.4 million in the first quarter of 2010 to US$ 102.3 million

Net debt at the Corporate Holding level reduced by 38.5% YoY to US$ 1,182.8 million from US$ 1,922.3 million

The Group’s core assets contributed US$ 7.1 billion and US$ 2.0 billion to the Group’s consolidated revenues and OIBDA, respectively.

Key corporate highlights for the first quarter

Completed the purchase of non-convertible amortizing Series 02 and Series 03 bonds with annual coupon rates of 14.75% and 12.50% respectively for the total amount of RUB 19.5 billion

Successfully placed RUB 19.5 billion of non-convertible amortizing Series 04 five-year bonds with a coupon rate of 7.65% per annum for the ten semi-annual coupon payments

Established OJSC RTI, the company founded with the participation of the Bank of Moscow and approved the sale of Sistema’s stake of approximately 63% in SITRONICS to OJSC RTI for US$ 0.9228 per GDR

SSTL increased its share capital by INR 28,894.5 million (approximately US$ 647 million). The Russian Government, represented by the Federal Agency for State Property Management («Rosimushchestvo»), acquired a 17.14% stake in SSTL for INR 26,988 million (approximately US$ 600 million).

Appointment of Mikhail Shamolin, the former President and CEO of Mobile TeleSystems (MTS), as President of Sistema

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

«Sistema maintained its momentum in the first quarter of this year reporting double digit year-on-year consolidated revenue and OIBDA growth. In our core businesses, Bashneft continued to set the pace and has delivered an 11.5% increase in revenues quarter-on quarter and a 46% increase year-on-year, thanks to higher oil prices and growth in production. At MTS, strong subscriber and data traffic growth lifted revenues 12% year-on-year, with the OIBDA margin in Russia expanding in the first quarter. Encouraging performance is also reported at our developing assets Detsky Mir and Medsi, with the latter returning to profitability in Q1 compared to Q4, 2010.

The first quarter was also characterized by restructuring at the holding company level and the execution of several important deals such as Bashneft’s partnership with LUKOIL on Trebs & Titov, SSTL’s circa US$ 600 million equity issuance and the creation of RTI.

Importantly, our solid financial position and our stable portfolio mean that Sistema is well placed to focus on new M&A opportunities and deliver our key objective of creating another core, industry leading business.»