AFK Sistema : Offering of Detsky mir shares cancelled due to arrest of Sistema’s assets initiated by Rosneft and Bashneft

13/12/2017

Offering of Detsky mir shares cancelled due to arrest of Sistema's assets initiated by Rosneft and Bashneft

Moscow, Russia- 13 December 2017 - Sistema PJSFC ('Sistema' or 'the Corporation') (LSE: SSA; MOEX: AFKS), a publicly traded diversified Russian holding company, announces that due to investor concerns triggered by hostile actions initiated by Rosneft and Bashneft resulting in court injunctions and arrest of all Sistema's shares in PJSC Detsky mir ('Detsky mir' or the 'Company'), the previously announced offering of Detsky mir shares (the 'Offering') can not be completed.

On 12 December 2017, after Sistema had successfully priced the Offering, the Arbitration Court of the Republic of Bashkortostan, at the request of Rosneft and Bashneft, granted injunctive measures ordering the arrest of Sistema's assets, including all Detsky mir shares owned by the Corporation.

Sistema highly values its reputation among the investment community and regrets that the participants of the Offering can not proceed with the transaction.

The majority of participants in the Offering are leading international investors. The claims and actions of Rosneft and Bashneft have thus put obvious obstacles to the inflow of new foreign investments into the Russian economy. Apart from the deliberate destruction of Sistema's and its subsidiaries' value, the irresponsible actions of Rosneft and Bashneft have now impacted global and Russian institutions.

It is Sistema's firm belief that the key aims of the Rosneft's and Bashneft's lawsuits against the Corporation are unjust enrichment, the destruction of Sistema's shareholder value, bringing the Corporation to bankruptcy, regardless of resulting negative impact on other parties and investment environment.

Sistema will defend its own interests and interests of its investors and stakeholders by all legal means.

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

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This announcement contains inside information. Full name and position of person making the announcement - Yuri Krebs, Director, Investor Relations

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Copies of this announcement are not being made and may not be distributed or sent, directly or indirectly, into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan

This announcement is not and does not form part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein are not registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. PJSC Detsky mir does not intend to register any portion of the offering of any securities referred to herein in the United States or to conduct a public offering of the securities in the United States.

This communication does not constitute an offer of the securities to the public in the United Kingdom. No prospectus has been or will be approved in the United Kingdom in respect of the securities. This communication is being distributed to and is directed only at (i) persons who are outside the United Kingdom; (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the 'Order'); (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50 and 50A, respectively of the Order; and (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as 'Relevant Persons'). Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

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