AFK Sistema : FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE FULL YEAR ENDED DECEMBER 31, 2013

FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE FULL YEAR ENDED DECEMBER 31, 2013

Moscow, Russia - April 3, 2014 - Sistema JSFC ("Sistema" or the "Company", together with its subsidiaries, "the Group") (LSE: SSA), the largest publicly-traded diversified holding company in Russia and the CIS, today announces its consolidated US GAAP financial results for the fourth quarter and the full year ended December 31, 2013. 

FULL YEAR HIGHLIGHTS

Consolidated revenues up 5.9%YoY to US$ 35.9 billion

Adjusted OIBDA[1] up 5.8% YoY to US$ 8.9 billion, with an adjusted OIBDA margin of 24.8%

Adjusted net income attributable to the Group[2] up 11.1% YoY to US$ 2.0 billion

Consolidated net income attributable to the Group up 138.6% YoY to US$ 2.3 billion

Net debt[3] at the Corporate Holding level amounted to US$ 296.8 million as at December 31, 2013

Cash position[4] at the Corporate Holding level amounted to US$ 571 million, liquid investments in financial instruments amounted to US$ 707[5] million as at December 31, 2013 

FOURTH QUARTER HIGHLIGHTS

Revenues up 4.6% YoY to US$ 9.9 billion

Adjusted OIBDA up 9.9% YoY to US$ 2.3 billion, with an adjusted OIBDA margin of 23.1%

Adjusted net income attributable to the Group up 72.5% YoY to US$ 627.3 million

Consolidated net income attributable to the Group down 73.5% YoY to US$ 47.7 million due to recognised certain one-off items

KEY CORPORATE HIGHLIGHTS FOR 2013

Acquisition of a 51% stake in CJSC Business Nedvizhimost from CJSC MGTS-Nedvizhimost, for RUB 3.2 billion.

Announced reorganisation plan to eliminate cross ownership in Bashneft by restructuring Sistema's subsidiary Sistema-Invest[6].

Acquisition of a 100% stake in LLC Bashneft-Services Assets (BNSA) from Bashneft for a total cash consideration of RUB 4.1 billion. 

Acquisition of a 98% stake in OJSC United Petrochemical Company (UPC) from Bashneft for RUB 6.2 billion, and a joint venture agreement signed by UPC with a subsidiary of Alpek, S.A.B. de C.V. for the construction of an integrated purified terephthalic acid - polyethylene terephthalate plant in Ufa, Bashkortostan.

Sale of a 49% stake in OJSC Oil and Gas Company RussNeft, for a total cash consideration of US$ 1.2 billion.

Reorganisation of the Group's transportation assets:  sale of 70% and 15% of Sistema's shares in SG-trans to Financial Alliance[7]and Unirail for RUB 12.0 billion and RUB 2.5 billion, respectively. Sistema retained 100% of SG-trading.

Approved a new motivational programme for Sistema's portfolios and functional divisions, based on cash generation and share price performance principles.

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

"We are pleased to report excellent results after another strong year. Our numbers were largely driven by solid operating performance across our entire investment base and the consistent execution of our strategy. The Group's revenues exceeded RUB 1.1 trillion in 2013, which represents an 8.4% year-on-year annual growth in rouble terms. 

Our cash position was substantially strengthened with proceeds from dividends amounting to US$ 1.5 billion, as well as the divestment of RussNeft and cash back from the restructuring of our transportation business. At the end of the year, we conducted the reorganisation of Sistema Invest, which eliminated the cross shareholding at Bashneft and optimised the ownership structure of Sistema's petrochemical and power grid assets. As part of our efforts to realise hidden value, we acquired United Petrochemical Company, and completed the purchase of Bashneft-Services Assets, both of which have exciting prospects and turnaround potential as stand-alone businesses. Other key milestones for 2013 include the resolution of SSTL's licensing issues by repositioning the company into a more focused data operator with a better spectrum and lower capital requirements. 

In 2014, our focus will remain on balanced approach between monetising certain investments, sharpening the strategic and operational focus of our businesses and enhancing our portfolio through M&A. We are in an excellent financial position to deliver on all our promises, withstand any macroeconomic volatility and wisely take advantage of attractive asset opportunities when they arise."

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Conference call information

Sistema's management will host an analyst conference call today at 9.30 am (EST)/ 2.30 pm (London time) / 3.30 pm (CET) / 5.30 pm (Moscow time) to present and discuss the fourth quarter and full year 2013 results. 

The dial-in numbers for the conference call are:

UK/ International: + 44 (0) 20 3427 1928
US: +1 646 254 3387 

And quote the conference call title: "Sistema Fourth Quarter and Full Year 2013 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: 

Sistema is the largest publicly-traded diversified holding company in Russia and the CIS, which invests in and is a major shareholder of companies serving over 100 million customers in the sectors of telecommunications, high technology, oil and energy, radars and aerospace, banking, retail, mass-media, tourism and healthcare services. Founded in 1993, the Company reported revenues of US$ 35.9 billion for the full year of 2013, and total assets of US$ 43.2billion as at December 31, 2013. Sistema's global depository receipts are listed under the symbol "SSA" on the London Stock Exchange. Sistema's ordinary shares are listed under the symbol "AFKS" on the Moscow Exchange. Sistema was ranked number 308 in the 2013 edition of the Fortune Global 500 list. Website: www.sistema.com

The Company is not an investment company, and is not and will not be registered as such, under the U.S. Investment Company Act of 1940. 

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sistema. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. In addition, there is no assurance that the new contracts entered into by our subsidiaries referenced above will be completed on the terms contained therein or at all. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to Sistema and its operations.