Sistema PJSFC Financial Results 4Q 2017 and full year 2017 Andrey Dubovskov President and CEO Vladimir Travkov Vice-president, Chief Financial Officer

3 April 2018

2

DISCLAIMER

Certain statements in this presentation may contain assumptions or forecasts in respect to forthcoming events within Sistema PJSFC. The words “expect”, “estimate”, “intend”, “will”, “could” and similar expressions identify forward-looking statements. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the above-mentioned date or to reflect the occurrence of unanticipated events. Many factors could cause Sistema’s actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, deteriorating economic and credit 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.

3

FINANCIAL REVIEW 2017

4

13.5 20.4

13.6

2016 9M2017 2017

41.6 47.3

4Q 2016 4Q 2017

119.8 128.7 213.4

2016 9M2017 2017

183.3 198.6

4Q 2016 4Q 2017

184.8 199.5

2016 2017

+8.0% +13.8%

680.9

704.6

2016 2017

+3.5% +8.4%

54.5%

24.0% 22.2% 21.9% 21.8%

FASTEST GROWING ASSETS (BY REVENUE GROWTH IN 2017)

KEY HIGHLIGHTS 2017

Strong portfolio performance in 2017

- Revenue growth driven by publicly-traded assets (MTS and Detsky Mir), Medsi and hospitality business

- All key assets profitable on adj. OIBDA level. MTS, Detsky Mir, Medsi and Steppe improved margins, MTS Bank returned to profits

Strategic transactions

- Detsky Mir’s RUB 22.9 bn IPO in 1Q 2017

- SSTL-RCom merger deal completed in 4Q 2017

Settlement with Rosneft / Bashneft

- A settlement agreement (SA) fulfilled and RUB 100 bn paid out to Bashneft

- Financial liabilities at Corporate Centre including the SA indebtedness at RUB 227.0 bn, up 70.3% during 2017

Cash position at comfortable level

- Cash position at Corporate Centre largely flat vs. end of 2016, reflecting strong cash returns from portfolio companies

1Source: Management accounts 2Total borrowings, liability to Rosimushchestvo, liability to Rusnano (repaid at YE 2017) and liability under Settlement Agreement less cash at the Corporate Centre level

Hospitality assets

REVENUE ADJ OIBDA

NET FIN LIABILITIES AT CORP CENTRE1,2 CASH POSITION AT CORPORATE CENTRE1

+65.8% -33.6%

RUB bn RUB bn

RUB bn RUB bn

RUB bn

5

183.3

198.6

5.2 5.0 2.5 2.6

Revenue4Q 2016

Growth at MTS Growth atDetsky Mir

Growth atSteppe,

Segezha, Medsi

Growth net ofdecline at other

assets

Revenue4Q 2017

680.9

704.6 17.5

7.2 2.6 2.3 -2.7 -3.2

Revenue2016

Growth atDetsky Mir

Growth at MTS Growth atSegezha and

Steppe

Growth atMedsi

Declineat RTI

Other Revenue2017

FINANCIAL REVIEW: REVENUES

• Detsky Mir: 7.2% like-for-like sales growth and ramp-up of new stores (104 new stores opened in 2017)

• MTS: mobile revenue growth in Russia both in 2017 and 4Q 2017

• Segezha Group: growth in paper sales due to strong demand in global markets

• Medsi: stronger vertical integration, ramp-up of new clinics and higher capacity utilisation

• RTI: Rescheduling of contract work by clients

1Based on the IAS 18 standard 2Including the negative effect of deconsolidation of Moscapstroy since 3Q 2016 of RUB 3.3 billion

1

REVENUE 2017

REVENUE 4Q 2017

2

IFRS, RUB bn

IFRS, RUB bn

6

41.6

47.3

3.1 2.0

2.0 -1.4

OIBDA4Q 2016

Growth at MTS

Growth atMTS Bank

Growth atDetsky Mir, RTI

and improvementat Corp Centre

Declinenet of growthat other assets

OIBDA4Q 2017

184.8

199.5

10.7

3.8 3.3 -1.6

-1.5

OIBDA2016

Growth at MTS

Detsky Mirand Medsi

Growth atMTS Bank

Decline atSegezha Group

Declinenet of growthat other assets

OIBDA2017

ADJ. OIBDA 4Q 2017

FINANCIAL REVIEW: OIBDA

• MTS: strong revenue, recovery of demand for international roaming, lower sales of sim-cards

• MTS Bank: new strategy with tighter risk control and improved scoring, resulting in lower provision charges

• Detsky Mir: further improvement of operational efficiency with adj. SG&A/Revenue down by 0.9 p.p. in 2017 (to 22.8%) and by 0.5 p.p. in 4Q 2017 (to 21.4%)

• Medsi: continued expansion with increase in patient visits and higher average check

• Segezha Group: Pressures from stronger RUB and cost inflation during the year

1Based on the IAS 18 standard

1

ADJ. OIBDA 2017

IFRS, RUB bn

IFRS, RUB bn

7

13.5 13.6 22.2

12.8

11.6

11.8

11.8

9.5

16.3 -26.1

-20.0

10.5

-9.9

-6.2

31-Dec2016

Dividendsand cashreturns

Monetisations Net debtraising

Investments Paymentunder SA

Expenses Sistema'sdividends

Otheroutflows

net of inflows

31-Dec2017

CASH FLOWS AT THE CORPORATE CENTRE IN 2017

• Strong cash generation with RUB 34.0 bn of dividends and cash returns and RUB 34.1 bn of proceeds from asset monetisations

• Cash position impacted by first payment under the Settlement Agreement of RUB 20 bn maid in December 2017

• Largest investments include capital calls in funds, investments in agriculture, high-tech and real estate

• Other net outflows include RUB 2.1 bn of FX-revaluation effect, RUB 1.6 bn of one-off costs related to SSTL – RCom merger and RUB 1.5 bn paid for own shares in April 2017

34.0 -22.1

34.1

MTS dividends

Cash returns from non-MTS assets

MTS share buyback

Detsky Mir IPO

Other monetisations

SG&A costs and taxes

Interest expenses

1

1Excluding RUB 1.1 bn of dividends from Detsky Mir unfrozen in 1Q 2018

Management accounts, RUB bn

8

20.4

13.6

17.6

4.9

4.7

3.9

2.7 -20.0

1.3

-3.8 -2.1

-1.8 -2.3

30-Sept2016

Dividendsand cashreturns

Monetisations Paymentunder SA

Expenses Investments Sistema'sdividends

Net debtrepayment

Otheroutflows

net of inflows

31-Dec2017

CASH FLOWS AT THE CORPORATE CENTRE IN 4Q 2017

• Largest investments of 4Q 2017 include investments in agriculture, high-tech and investment funds

• Other net outflows include one-off costs related to SSTL – RCom merger of RUB 1.6 bn and a RUB 0.4 bn FX-revaluation effect

• During the quarter Sistema paid out an interim 9M2017 dividend of RUB 0.68 per share. Dividends totalling RUB 4.2 bn were not paid to the majority shareholder Vladimir Evtushenkov based on his request.

21.5

MTS dividends

Cash returns from non-MTS assets

MTS share buyback

Other monetisations

SG&A costs and taxes

Interest expenses

7.6

-5.91

1 Numbers may not add up due to rounding 2Payment of dividends completed in January 2018

2

Management accounts, RUB bn

9

• Financial liabilities at Corporate Centre up by 70.3% in 2017 driven by liability under the Settlement Agreement (SA)

• Financing to repay the SA-related indebtedness secured in 1Q 2018 at single-digit interest rates

• In 1Q 2018 Sistema obtained waivers from creditors in connection with technical defaults announced in 3Q 2017

Settlement Agreement

35%

Bank loans and other 25%

RUB bonds 20%

Liabilities on SSTL shares 10%

Eurobonds 10%

80.0

20.7 40.3 42.6

5.4

15.0 9.6

6.7 6.7

2018 2018 2019 2020 2021 2022

MATURITY PROFILE AND STRUCTURE ANALYSIS

CORPORATE CENTRE’S FINANCIAL LIABILITIES DURING 2017

61.1 90.5

35.9 33.4 36.3

45.0 28.3 3.1

23.0

80.0 80.0

31 Dec 2016 31 Dec 2017

CORPORATE CENTRE’S FINANCIAL LIABILITIES Management accounts, RUB bn

227.0

RUB and USD liabilities

repayment

RUB debt raised

FX- revaluation

30.3

49.3 47.0

1FX-Debt and USD-denominated liability to Rosimuschestvo are presented at RUB/USD exchange rate as of 31 December 2017. Liability to Rusnano for Mikron shares repaid in 2017

133.3

Liability under SA

USD debt1 Liabilities to Rosimuschestvo and Rusnano1 RUB debt Liabilities under SA

Debt (USD, RUB) Liability to Rosimushchestvo Liabilities under SA

10

Bank loans and other

55% RUB bonds 17%

Eurobonds 11%

Settlement Agreement

13%

Liabilities on SSTL shares

4%

STRUCTURE ANALYSIS

CONSOLIDATED FINANCIAL LIABILITIES1: COMPOSITION BY BORROWERS AND MATURITY PROFILE

CONSOLIDATED FINANCITAL LIABILITIES

284.3 287.8 303.6

133.3 149.1 147.0

96.8 117.3 108.2

80.0

4Q 2016 3Q 2017 4Q 2017

MTS Corp Centre Other Settlement Agreement

142.1

140.1 134.4

57.1 48.0 37.1

80.0

2018 2019 2020 2021 2022 Thereafter

Debt and other liabilities Settlement Agreement

33% 27% 23%

64% 67% 60%

3% 6% 4% 13%

4Q 2016 3Q 2017 4Q 2017

USD RUB Other Settlement Agreement

81% 78% 65%

19% 22% 22%

13%

4Q 2016 3Q 2017 4Q 2017

Long-term Short-term Settlement Agreement

Management accounts, RUB bn

638.8 554.2

514.4

Consolidated financial liabilities up 24.2% during 2017 and 17.3% in 4Q 2017 driven by liability under the Settlement Agreement, as well as borrowings at MTS and the Corporate Centre

222.1

1Include financial liabilities at Corporate Centre and total borrowings at portfolio companies in accordance with IFRS

11

86.1 76.4

9.4 11.3

27.4 16.7

122.9

104.4

2016 2017

MTS Segezha Other assets

SG&A EXPENSES AND CAPEX

12.6

10.0 1.9%

1.4%

2016 2017

SG&A at Corporate Centre

Corporate SG&A/Group revenue

• SG&A down YoY reflecting lower compensation costs in 2017, including freeze of LTI payments

• Corporate Centre’s SG&A/Revenue ratio decreased from 1.9% in 2016 to 1.4% in 2017

IFRS, RUB bn

90.2 91.3

18.9 22.1 6.6 6.9

12.6 10.0

23.8 24.2

2016 2017

MTS Detsky Mir

Segezha Corporate Centre

Other

154.5 152.1

• Group SG&A costs under control with consolidated SG&A/Revenue ration down to 21.9% from 22.3% in 2016

• Improvements of SG&A/Revenue ratio at:

- MTS: down to 20.6% from 20.7%

- Hospitality assets: down to 26.0% from 27.9%

- Detsky Mir: down to 22.8% from 23.7%

• Group CAPEX decreased by 15.0% YoY, driven mainly by MTS (-11.3% YoY)

• CAPEX at Segezha Group up by 20.5% YoY mainly due to strong investments in the expansion of capacity in sack paper and plywood production

IFRS, RUB bn Management accounts, RUB bn

GROUP SG&A EXPENSES CORPORATE CENTRE’S SG&A EXPENSES GROUP CAPEX

12

MANAGEMENT UPDATE

13

1Entered into by Sistema PJSFC, its subsidiary Sistema-Invest, Bashneft, Rosneft and the Republic of Bashkortostan on 22 December 2017 2The court case under the claim filed by Rosneft and Bashneft in May 2017

3Contemplated pledge of BPGC shares will be possible after the arrest imposed on BPGC shares in 2014 is lifted. Sistema is undertaking all reasonable necessary actions to get this arrest lifted.

“…To settle by mutual agreement the dispute in case No А07-14085/20172, as well as other litigations between the claimants and the defendants

related to the ownership and/or control of Bashneft and/or its affiliates by Sistema and Sistema-Invest”

PURPOSE OF THE SETTLEMENT AGREEMENT (SA)1

SETTLEMENT AGREEMENT WITH ROSNEFT/BASHNEFT: KEY TERMS AND EXECUTION

PAYMENTS BY SISTEMA FINANCING COLLATERAL UNWINDING OF INJUNCTIONS

RUB 20 bn Paid on 22 Dec 2017

• Released dividend from MTS and Bashkirian Power Grid Co (BPGC) + Sistema’s cash

– MTS (31.8%), BPGC

(90.5%), Medsi (100%) –

RUB 40 bn Paid on: 27 Feb 2018

• Targeted credit facility by RDIF and Gazprombank – Signed in Feb 2018 – Maturity: 180 days

Detsky Mir (52.1%), BPGC (90.5%)3 Detsky Mir (52.1%)

Detsky Mir (52.1%), BPGC (90.5%)3

RUB 40 bn Paid on 5 March 2018

• Part of an up to RUB 105 bn credit line from Sberbank – Signed in Feb 2018 – Maturity: 5 years

MTS (up to 31.8%) • Arrest lifted on 31.8% of MTS

• Arrest and all other limitations lifted on all other assets under injunction

• All parties to the SA have withdrawn and waived all legal claims against each other in connection with the Bashneft dispute

• Sistema can make investments and pay dividends using part of proceeds from asset monetisations w/o creditors’ approvals. Using funds from other sources for these purposes is possible with creditors’ approvals

• Sistema is entitled to repay loans received for the SA execution ahead of schedule and obtain early pledge release from creditors

DIVIDEND RELEASED ARREST LIFTED 1

2

3

BPGC BPGC

BPGC

14

SISTEMA’S STRATEGIC FOCUS

Executing the Settlement agreement

Maximising shareholder return and reducing Sistema’s MCap discount to NAV

Deleveraging and building up investment resource

Strategic and structural optimisation

Executing the Settlement Agreement

Financing the liability of RUB 80 bn

Unwinding of injunction measures

Withdrawal of filed claims

Diversify investment resource

Sharpen digital focus

Optimise structure/motivation

Strengthen the balance sheet

Monetise selected assets

STRATEGIC INITIATIVES

Diversify the source of investment by expanding into management of third-party capital

- Attract co-investors at the Corporate Centre level (large investment transactions)

- Develop own funds within the Corporate Centre as an additional investment tool and source of income

Enhance digital focus and the share of tech investments in the portfolio

- Set-up Digital vertical to capture growth opportunities in tech-driven sectors

- Promote digital transformation in portfolio companies: MTS, Detsky Mir, Medsi and other

Optimise Corporate Centre’s structure and motivation

- Sistema’s business leaders – Managing Partners – to fully share risks and returns with shareholders

- Introduce agile approach to management and optimise headcount

1

2

3

Investment process and

portfolio structure

Costs and cash

conversion

15

DIVERSIFICATION OF INVESTMENT SOURCES BY MANAGING THIRD-PARTY CAPITAL

DEVELOPMENT OF OWN FUNDS

• Sistema will develop own funds that will raise and manage external capital based on the standard 20%/2% fee model

• Capital calls from Sistema and limited partners to be triggered by decisions of investment committee (comprised of Sistema’s investment experts) and BoD

Fund

Limited partners

Management Company

100%

Advisory Board

Investment Committee

BoD

Fees

Via Corporate Centre

Via PE / VC funds

Via portfolio companies

APPROACH

INVESTMENT CRITERIA

POTENTIAL PARTNERS

≈80% of Sistema’s investments

• Corporate Centre will continue to focus on large investments mainly within Sistema’s current sectors of presence and will attract co-investors in new projects to generate management fees

• Sistema will gradually strengthen its investment funds franchise to generate additional source of capital and income

• Investments in large assets, incl. those with strong turnaround potential and large high-tech companies

• Investments in promising tech and digital businesses, incl. start-ups (large and small stakes)

• Growth of business and market shares via M&A, entering new segments with synergy opportunities

• Mainly in Russia

• Stage: mature business

• Stake: ≥ 50% + 1 share

• Size: > $100 mn

• Target IRR: 25% in RUB

• In Russia and abroad

• Stage: A and higher

• Stake: >25%

• Fund size: > $150 mn

• Target IRR: >20% in USD, hurdle rate: 5%

• In Russia and abroad (if consistent with strategy)

• Co-investments from partners to generate management fees

• Bringing in a limited partner (LP) is a prerequisite for launching a fund

• Industrial or financial partner if relevant

16

• Advanced Enterprise Digital Rights Management Solution

• Prepaid gift cards and stored-value card tech solutions

• Online and mobile fashion discovery and shopping app

MANAGING THIRD-PARTY CAPITAL: SISTEMA’S VENTURE FUNDS

• Sistema’s funds provide access to unique asset mix with a strong focus on technology-driven industries

• High-profile co-investors brought into Sistema_VC and Rusnano Sistema SICAR

1RUB equivalent as of 31 March 2018

INVESTMENT FOCUS

CAPITAL DEPLOYED1

TARGET SIZE / RETURN

CO-INVESTORS SELECTED INVESTMENTS

• AI, machine learning, cognitive tech, VR/AR, IoT, SDN technology

• Series A

RUB 4.7 bn RUB 10 bn

25-30% in RUB

• Sberbank • Viktor Rashnikov

• Consumer tech, incl. e-commerce, AI, machine learning, VR/AR, IoT,

• Series B-C

RUB 1.5 bn RUB 7 bn

3x cash-on-cash in US$

Soft commitments from Russian and Indian investors

• IT, robotics, software and cloud tech, renewable energy, microelectronics

• Series A-D

RUB 0.3 bn RUB 6 bn

>6% in US$ Rusnano

Corporation

• Russia’s leading multi-category online retailer

• A developer of face recognition solutions

• A developer of educational VR/AR products

• Developer of unique construction 3D printers

• Developer of technologies for marker monitoring of horizontal well inflow profiles

VC fund (Russia and world)

VC fund (India, Southeast Asia)

PE/VC fund (Russia, CIS, EU, Israel)

17

INVESTMENT FOCUS

CAPITAL DEPLOYED1

TARGET SIZE / RETURN

CO-INVESTORS SELECTED INVESTMENTS

• Real estate in Europe and US

• Mid-cap private equity in Europe (industrials, healthcare)

RUB 8.2 bn IRR: >15% in EUR and US$

Russian and international

investors

• Sistema Capital actively manages mutual funds and investment accounts

• Investments in public equity, debt, derivatives, other

Assets under management

Russian and international

investors

Performance of mutual funds managed by SC

10.7

22.3 23.7

51.6

2014 2015 2016 2017

MANAGING THIRD-PARTY CAPITAL: PRIVATE EQUITY AND ASSET MANAGEMENT

• Strong private equity and asset management franchises established in both Russia and developed markers (Europe, US)

• High returns generated in asset management and first exits from PE investments completed in 2017, generating IRRs of 28-36% in EUR

1RUB equivalent as of 31 March 2018

• European leader in castings of thin-walled large engine blocks

• Leader in castings for wind energy and drive tech

• Real estate assets (shopping centers) in Germany

• First exits: two portfolios of

retail property in Germany exited in 1H 2017 with IRRs of 28% and 36% in EUR

Russia’s top-6 asset manager by volume of

mutual funds under management

International investment platform

in Europe and US

RUB bn 2015 2016 2017

“SC-Reserve.FX” – Eurobond fund, USD

+20.4% +7.2% +5.2%

“SC-Reserve” - Bonds fund, RUB

+17.3% +12.1% +14.3%

“SC-Mobile. Bonds. FX“- Eurobond fund, USD

- - +15.1%

“SC-Mobile. Bonds” - Bond fund, RUB

- - +5.8%

18

FINANCIAL STRATEGY: DELEVERAGING PRIORITISED

1Ratio of net fin. liabilities at Corporate Centre, incl. the liability under SA, to the sum of dividends and cash returns from portfolio companies and MTS share buyback

CORP CENTRE’S NET LIABILITIES / DIVIDENDS1

Sistema prioritises deleveraging and will work to actively reduce financial liabilities at the Corporate Centre level

4.7 3.4

4.8

2015 2016 2017

2.9 2.5

2.9

2015 2016 2017

13.0 11.6

17-19

2016 2017 2018E

GROUP NET FIN LIABILITIES2 / ADJ. OIBDA INTEREST PAID AT CORPORATE CENTRE

RUB bn

FINANCING UPDATE

• Liability under Settlement Agreement (SA) successfully repaid

- A 5-year RUB 105 credit facility raised from Sberbank in March 2018 (RUB 40 bn used for a SA payment)

- A 180-day RUB 40 bn target facility raised from RDIF and Gazprombank

• Financial position remains comfortable and the debt profile fully restored

- Domestic bonds totaling RUB 25 bn issued in January and March with strong investor demand

- All necessary waivers related to previous incompliance with conditions of credit agreements obtained in 1Q 2018

• Leverage metrics increased and the flexibility in making investments and paying dividends reduced

2Net consolidated indebtedness, incl. the liability under SA, liability to Rosimushchesvo and Rusnano to Group adj. OIBDA

3

3Subject to the pace of deleveraging in 2018

19

IPO-ready from Strategy

2020 • Sistema may bring in co-investors via private placements of the assets before IPOs

• Equity value target for all IPO candidates is US$ 1-2 bn

2020

2020

2021

FOCUS ON CASH RETURNS FROM PORTFOLIO AND ASSET MONETISATIONS

• Dividends from MTS stable YoY in-line with the operators dividend policy

• Dividends from non-MTS portfolio companies are growing steadily, contributing to further diversification of cash flows

• Monetisatisation of assets to intensify in 2018-2019

• A number of key assets will be IPO-ready starting from 2020 and may bring in financial and strategic investors before that

1Management accounts. 2Including Detsky Mir’s dividends unfrozen in February 2018, excluding MTS shares buyback 3Excluding inflows from deposits of Ural-Invest

• Improved OIBDA margin, strong FCF

• Constant focus on shareholder return

• Revenue growth of ≈22% in 2017

• Declared dividends up 8% YoY in 2017

• Extensive portfolio of unique projects

• Cash from sales up ≈11% YoY in 2017

RENTAL ASSETS

• Continued monetisation of property bank

• Growth of rental rates & profitability

• Growth driven by bigger capacity and weaker RUB

• Will resume cash returns in 2018

• Expanded land bank and strong harvesting track record with focus on efficiencies

24 24 23 22

5 8 12 13

2014 2015 2016 2017

MTS Other assets

Dividends and cash returns2, RUB bn

3

11

24

34

2014 2015 2016 2017

Divestments, RUB bn

3 3

29 32

35 35

CASH RETURNS FROM ASSETS1 KEY ASSETS RETURNING CASH TO SISTEMA

MONETISATION OF INVESTMENTS IPO CANDIDATES WITHIN THE PORTFOLIO

20

KEY PORTFOLIO ASSETS

21

78.0

15.3

2.0 17.7

Mobile service

Fixed line

Integrated services

Handset sales75.2

15.4

0.8 14.8

Revenue growth and OIBDA margin improvement

> In 4Q 2017, MTS’s strong revenue growth was driven by the Russian mobile business, which grew by 3.8% YoY, and strong handset sales, which increased by 20.0% YoY.

> In addition to revenue growth, factors affecting adj. OIBDA and adj. OIBDA margin included decline in SIM-card sales in Russia, higher gross margins on handset sales and a 12.4% decrease of MTS’s retail network during the year to 5,696 stores at year-end 2017.

Digital strategy

> In 2017 MTS launched and continued to develop the MTS Money Wallet service, which brings together a variety of means of payment – electronic wallet, bank cards and customers’ mobile account balances – in a single platform. In 4Q 2017, more than 12.1 million users, or 15% of MTS customers, used My MTS app.

> New markets entered: e-sports (via acquisition of the Gambit Esports club) and online ticketing (through the acquisition of control in the leading players in the Russian event ticketing industry, Ticketland.ru and Pononimanlu.ru)

Focus on shareholder returns

> As well as dividends, MTS has additionally launched a share repurchase programme totalling up to RUB 20 bn. To date, MTS has repurchased from Sistema and minority shareholders shares worth RUB 19.8 bn.

51.0 47.0 71.3

2015 2016 2017

МТS: DELIVERING ON DIGITAL STRATEGY AND STRONG FINANCIAL RESULTS

MY MTS APP. CUSTOMERS

STRUCTURE OF REVENUE IN RUSSIA

7.9 8.6 9.3 11.0 12.1

4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

109.8 RUB bn

4Q 2017

mn

Retail stores

5,696

Total 2017 traffic, minutes

363.4 bn

My MTS 3-month active users

≈ 12.1 mn

Market share in Russia2

31.0% FREE CASH FLOW

RUB bn +40.2%

1Here and thereafter profit is presented in Sistema’s share 2The share in total subscriber base of Russia’s Big4 telecom operators as of end of 4Q 2017. 3Numbers for active users and retail stores are presented as of 31 December 2017

4Q 2016

103.8 RUB bn

RUB bn RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 116.8 111.6 4.7% 442.9 435.7 1.7%

Adj. OIBDA 44.3 41.2 7.5% 178.4 167.6 6.4%

Adj. OIBDA margin 37.9% 36.9% 1.0p.p. 40.3% 38.5% 1.8p.p.

Adj. Profit 6.8 6.3 7.9% 29.9 25.4 17.9%

Net debt 273.0 265.9 2.7% 273.0 265.9 2.7%

CAPEX 27.7 25.7 7.7% 76.4 86.1 (11.3%)

22

25.9% 23.7% 22.8%

2015 2016 2017

3.6 4.3

4Q'16 4Q'17

25.3 30.4

4Q'16 4Q'17

10.2% 10.3%

11.0%

2015 2016 2017

596 596 604 631 688

525 521 528 557 622

31-Dec-16 31-Mar-17 30-Jun-17 30-Sep-17 31-Dec-17

Retail space, thsd sq m Stores

SELLING SPACE (THSD M2) AND NUMBER OF STORES1

Continued revenue and OIBDA margin growth

> Detsky Mir continued to consolidate the market for children’s goods in Russia, growing its market share from 17% to 20% over the course of 2017.

> In 4Q 2017 and in 2017 revenue increased due to the roll-out of new stores and the strongest growth in like-for-like sales among Russia’s publicly traded retailers (+7.2% YoY both).

> E-commerce continued to be the fastest-growing sales channel, with revenue growth in 4Q 2017 of 79.6% YoY. Online sales accounted for 4.8% of total sales in 2017, and developing the e-commerce platform is one of management’s top priorities for 2018.

> Adj. OIBDA margin of 14.1% in 4Q 2017 is a result of continued improvements to operational efficiency on the back of stronger labour productivity and strict control of rental costs. Adj. SG&A/revenue ratio declined by 0.5 p.p. YoY to 21.4% in 4Q 2017.

Business expansion and growth plans

> Detsky Mir plans to open at least 250 new stores in 2018-2021, with a targeted IRR of at least 40%, and to lead the market among children’s goods retailers in 2018 in terms of like-for-like sales growth.

Shareholder returns

> Management plans to recommend that all net profit for 2017 be distributed to shareholders in the form of dividends, which would represent a dividend yield averaged over 2017 of 6.8%.

Detsky Mir loyalty cardholders3

18.1 mn

E-commerce revenue CAGR (2011-17)

121%

Dividends declared in 2017

RUB 4.8 bn

Market share in Russia (2017)

20%

DETSKY MIR: OVERDELIVERING ON BUSINESS EXPANSION TARGETS AND FURTHER EFFICIENCY IMPROVEMENTS

1In 2017, Detsky Mir closed 4 stores to relocate them. 2 LfL growth in RUB terms. LfL growth includes only DM stores in Russia that have been in operations for at least 12 full calendar months. 3As of 30 December 2017

Adj. SG&A/Revenue Adj. OIBDA margin

REVENUE

RUB bn

ADJ. OIBDA

19.9% 20.4%

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 30.4 25.3 19.9% 97.0 79.5 21.9%

Adj. OIBDA 4.3 3.6 20.4% 10.7 8.2 30.0%

Adj. OIBDA margin 14.1% 14.1% 0.1p.p 11.0% 10.3% 0.7p.p.

Adj. profit 1.4 1.6 (11.7%) 2.9 2.8 3.5%

Net debt 10.4 12.2 (14.4%) 10.4 12.2 (14.4%)

SGA/revenue 21.4% 21.8% (0.5 p.p.) 22.8% 23.7% (0.9 p.p.)

Like-for-like growth2 7.2% 9.0% (1.8p.p.) 7.2% 12.3% (5.1p.p.)

Traffic growth 14.1% 7.2% 6.9p.p. 12.2% 6.0% 6.2p.p.

Average ticket dynamics -6.0% 1.7% (7.7p.p.) -4.4% 5.9% (10.3p.p.)

CAPEX 1.2 0.8 52.8% 2.5 1.7 41.2%

23

Results and key events of 2017

˃ Revenue increased mainly due to higher sales of sack paper (on the back of a strong growth of demand globally) and plywood. Revenue growth was impacted by:

- lower sales of paper sacks in Russia due to increased competition; - temporary decline in demand in the Russian sack market; - strengthening of the RUB vs key foreign currencies (69.6% of Segezha Group’s revenues are

denominated in foreign currencies).

˃ Adj. OIBDA in 4Q 2017 increased on the back of higher revenue and due to implementation of the efficiency plan. Decrease in adj. OIBDA and profit in 2017 was mainly due to FX-rate pressures as well as inflation of logistics and raw material costs.

˃ Segezha’s main investments in 2017 were the upgrade of the Segezha PPM and construction of the Kirov Plywood Mill (KPM) with capacity of 86,000 cu m of plywood per year, which together accounted for more than 81% of Segezha Group capex in 2017. In 4Q 2017 a new paper machine was launched at the Segezha Mill, boosting output capacity to 319,000 tonnes per year. KPM is expected to launch in 1H 2018.

Mikhail Shamolin appointed as President

˃ In March 2018 Mikhail Shamolin, previously President of Sistema, was named President of Segezha Group.

24.1

13.4

5.9 0.4

4.9 1.6 1.8

-1.3

Paper&paper sacks Wood processing Plywood Other

Revenue Adj. OIBDA

912 894

FY 2016 FY 2017

92 95

FY 2016 FY 2017

SEGEZHA GROUP: CONTINUED GROWTH DESPITE EXTERNAL PRESSURES

170 204

FY 2016 FY 2017

1270 1191

FY2016 FY 2017

SAWN TIMBER PLYWOOD

REVENUE AND ADJUSTED OIBDA BY BUSINESS SEGMENTS IN 2017

PAPER SACKS SACK PAPER1

-6.2% +20.1%

-2.0% +3.2%

Main operating performance: sales

RUB bn

thsd tonnes mn

thsd m3 thsd m3

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 11.4 11.1 2.0% 43.7 43.0 1.6%

Adj. OIBDA 2.1 1.8 14.4% 7.1 8.7 (18.2%)

Adj. OIBDA margin 18.1% 16.1% 2.0p.p. 16.2% 20.1% (3.8p.p.)

Adj. Profi t 0.3 0.2 29.0% 0.1 2.0 (95.9%)

Net debt 33.6 23.7 41.6% 33.6 23.7 41.6%

CAPEX 2.2 2.0 9.8% 11.3 9.4 20.5%

Share of FX-denom. revenues 71.6% 62.0% 15.5p.p. 69.6% 67.4% 2.2p.p.

Own forestry consumption 57.8% 64.0% (9.7p.p.) 61.7% 63.0% (1.3p.p.)

Total forestry, ‘000 m3 1042.4 1110.1 (6.1%) 3939.1 3827.7 2.9%

Exports destinations

88 countries

Leased forest fund2

6.8 mln ha

Capacity in paper sacks

1.5 bn pcs

Capacity in sack paper

360 thsd tonnes

Capacity in plywood

99.5 thsd m3

1Including sales of paper and paper board 2Metrics in the tables hereinafter are presented as of 01 April 2018

24

Dairy farming

Vegetable growing

Field crop production

Apple orchards

9.2 9.5

10.4

26.6 28.1 28.2

4Q 2016 3Q 2017 4Q 2017

Production, thsd tonnes

Price per litre, RUB

15.1 15.9

21.8

2015 2016 2017

2.1

3.8

1.1 2.3

10.1

4.6

4Q 2016 3Q 2017 4Q 2017

Cucumbers Tomatoes

547

1,041

1,355

2015 2016 2017

VEGETABLES PRODUCTION

MILK PRODUCTION

thsd tonnes PRODUCTION1

thsd tonnes

APPLE PRODUCTION

1Including Steppe and RZ Agro 2Excluding the results of the RZ Agro joint venture (Steppe owns 50% of RZ Agro)

Apple orchards

780 ha

Greenhouses area

144 ha

Total land bank

380 thsd ha

Dairy cows herd

≈4,300

AGROHOLDING STEPPE: RECORD HARVEST AND HIGH OPERATIONAL AND FINANCIAL RESULTS

Strong operational results

> Record harvest of 1.4 mn tonnes (incl. ≈720,000 tonnes of wheat), +30% increase vs 2016, driven by expansion of the land bank and use of modern agriculture technologies. A portion of 2017 harvest allocated for sale in 1Q 2018 to maximise revenue: carryover inventory at YE 2017 at 152,000 tonnes, more than 6x higher than a year earlier.

> Milk production grew by 9.0% YoY to ≈40,000 tonnes in 2017, driven by expansion of the herd and high yields. Total apple harvest up by 37.4% YoY to 22,000 tonnes on the back of higher yields as well as younger orchards achieving their fruit-bearing targets. Tomato production increased by 8.6% YoY to 23,200 tonnes, while cucumber production decreased by 11.2% YoY to 21,800 tonnes due to amended production programme.

> Revenues up by 22.2% in 2017, despite pressures stemming from lower global wheat prices and strengthening of the RUB.

> Adj. OIBDA in 2017 up 40.6% YoY. The decline in adj. OIBDA and the net loss in 4Q 2017 were the result of a fair value loss of biological assets by RUB 0.7 bn (excluding the fair value loss, adj. OIBDA was RUB 0.9 bn) and an increase in carryover inventory.

CAPEX and land bank expansion

> In 2017 Steppe continued to invest in renewal of its stock of equipment and construction of a new 1,800-head dairy farm. The new farm is expected to reach full capacity in 2021 and yield 20,000 tonnes of milk per year. In 2017 Steppe’s land bank increased by 65,000 ha. to a total of 380,000 ha.

Agroholding Steppe2

thsd tonnes thsd tonnes

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 3.4 2.0 67.4% 10.2 8.4 22.2%

Adj. OIBDA 0.1 1.1 (88.6%) 4.0 2.9 40.6%

Adj. OIBDA margin 3.8% 55.6% (51.8p.p) 39.4% 34.2% 5.2p.p.

Adj. (Loss)/Profit (0.7) 0.6 n/a 1.1 0.9 29.7%

Net debt 11.8 8.3 43.2% 11.8 8.3 43.2%

CAPEX 0.1 0.5 (81.4%) 1.6 1.0 58.9%

25

41%

17%

17%

12%

8% 5% Clinics

Hospitals

CDC at Belorusskaya

Children clinics

CDC at Krasnaya Presnya

Other

55% 36%

6% 3% Insurance

Individuals

Corporate

Other

1.9

2.2

4Q 2016 4Q 2017

3.1 3.4

4Q 2016 4Q 2017

51.1% 52.6%

4Q 2016 4Q 2017

220.6 233.4

4Q 2016 4Q 2017

MEDSI: SIGNIFICANT GROWTH DRIVEN BY IMPROVED CAPACITY UTILISATION AND CONTINUED EXPANSION

REVENUE IN 2017

Services provided (capacity)

17,200 thsd

Out-patient visits2

11,033 thsd

Doctors employed

2.5 thsd

15.9% 9.2% mn mn

Number of facilities1

39

FLOOR SPACE

1.5 p.p. 5.8%

thsd %

CAPACITY UTILISATION

By clients By assets

PATIENT VISITS SERVICES PROVIDED

1Metrics in the tables hereinafter are presented as of 31 December 2017 2Capacity metric, calculated as the number of possible ambulance visits of Medsi’s facilities

> In 4Q 2017 revenue growth was driven by an increase in patient visits and a higher average check as Medsi delivered a broader array of integrated services and high-tech surgeries. Revenue from the mandatory medical insurance segment, derived primarily from high-tech services, increased more than 5x in 2017 to RUB 1.2 bn.

> CDC at Krasnaya Presnya increased capacity utilisation to 23% in 2017 and delivered 8% of Medsi’s total revenue, with OIBDA margin of 21.8% in 4Q 2017. Assets acquired in 2017, including the MEDEM clinic in St Petersburg and the Medlife chain in Perm, accounted for 7.8% of Medsi’s revenue in 4Q 2017.

> Adj. OIBDA and adj. OIBDA margin increased year-on-year by 36.3% and 0.2 p.p., respectively. For 2017, the OIBDA margin was 16.9%, vs 6.3% in 2016.

> Adj. profit attributable to Sistema was RUB 837 mn in 2017, vs a loss in 2016.

> Medsi continues to invest in the expansion of its business in Moscow and in the Russian regions. In 2017 the company opened 3 new clinics in Moscow, completed the aforementioned regional acquisitions and sold or closed non-utilised facilities for a net increase in facility space of 12,800 sq m.

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 3.5 2.6 33.5% 11.7 9.4 24.0%

Adj. OIBDA 0.3 0.2 36.3% 2.0 0.6 3.3x

Adj. OIBDA margin 8.7% 8.5% 0.2p.p. 16.9% 6.3% 10.6p.p.

Adj. Profit/(Loss) 0.3 (0.1) n/a 0.8 (0.7) n/a

Net debt/cash 0.7 (1.3) n/a 0.7 (1.3) n/a

Patient visits, ‘000 2,273 1,976 15,0% 7,901 7,314 8,0%

Services provided, ‘000 3,381 3,080 9,8% 12,359 11,483 7,6%

Average bill, ‘000 RUB 1.5 1.3 16,7% 1.5 1.3 14,8%

26

0

1,000

2,000

3,000

0%

10%

20%

30%

01-2012 01-2013 01-2014 01-2015 01-2016 01-2017

MTS BANK: RETURN TO PROFITS IN 2017 DUE TO IMPROVED ASSET QUALITY AND COST OF RISK

MTS MONEY CARDS ISSUANCE (ALL TYPES OF CARDS)

ISSUANCE OF POS LOANS: ENHANCED RISK MANAGEMENT IN PLACE

ACTIVE RETAIL CUSTOMERS

+32.4% mn cards

mn

1Loans classified as 90 days+ NPLs within 12 months after issuance (2017 numbers are based on the model forecast) 2All metrics in the table exclude results of East-West United Bank (EWUB) and the result of divestment of 47% in EWUB in 2Q 2017 3Metrics hereinafter are presented as of 31 December 2017 in accordance with IFRS

3.44 3.64 3.73 3.95 4.25

4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017

Customer deposits

RUB 114.7 bn

Total loan book, gross

RUB 66 bn

Total assets3

RUB 142.4 bn

Retail deposits

RUB 71.7 bn

0.99 1.18 1.26 1.36 1.45

4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017

+47.1%

˃ MTS Bank returned to profitability by pursuing a strategy of partnering with MTS and other Sistema portfolio companies

˃ In 2017, interest income decreased by 5.4% as a result of lower interest rates in Russia and contraction of loan book following the deconsolidation of East-West United Bank. This was partially mitigated by an 8.3% increase in higher-margin retail loans, with retail loans accounting for 59% of the total loan book at the end of the reporting period, vs 53% in 2016.

˃ In line with the strategy of building a leading digital bank, MTS Bank grew fee and commission income by 67.2% in 4Q 2017 and by 31.6% in 2017.

˃ The Bank is actively developing digital channels for servicing its clients, including in the online-lending segment. In 2017 sales of credit cards through digital channels grew from 0.1% to 14% of the total number of new cards issued. Digital sales accounted for 7% of total sales in 2017.

˃ The Bank recorded a net profit in 2017 of RUB 169 mn. The loss in 4Q 2017 was due to the creation of loan-loss provisions. During the year the bank significantly improved the quality of its loan book and the quality of newly issued loans.

˃ MTS Bank continues to deepen its partnerships with MTS and other Sistema companies. In October 2017, the Bank signed an Internet Acquiring contract with Ozon, Russia’s leading multi-category online retailer.

Issuance, RUB mn (right scale)

Share of NPL 90+ (left scale)1

Forecast 90+1

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 4.7 4.3 9.4% 18.1 18.3 (0.9%)

(Loss)/Profit (0.5) (2.1) n/a 0.2 (2.6) n/a

Interest income 3.6 3.4 5.4% 14.0 14.8 (5.4%)

Commission income 1.2 0.7 67.2% 4.1 3.1 31.6%

Net assets 22.1 20.2 9.2% 22.1 20.2 9.2%

Capital adequacy ratio (N1.1) 8.4% 10.1% (1.7 p.p.) 8.4% 10.1% (1.7 p.p.)

27

49%

51%

Dekart

StPetersburg

85%

15% ATS

Other

86%

14% Housing

Commercialproperties

39%

59%

2%

Comfort

Business

Premium

REAL ESTATE ASSETS: CREATION OF VALUE

Leader Invest

Leader Invest

> Sales volumes in Moscow amounted to ≈10,000 sq m in 4Q 2017, cash collections from sales – to RUB 1.9 bn.

> Revenue in 4Q 2017 was RUB 3.1 bn, driven primarily by sales at the Dayev and Serpukhovsky premium-class projects. Revenue decline in 4Q 2017 was due to the high base effect as several large projects were delivered in 4Q 2016.

> Sales portfolio amounted to ≈209,700 sq m of real estate in Moscow at the end of 4Q 2017. Leader Invest launched sales for its business-class project 120 Lobachevsky St., which will have 1,473 apartments ranging in size from 45.5 to 135 sq m. Sberbank signed an agreement in 1Q 2018 to provide project finance lending of RUB 14.6 bn for the first stage of the project.

> In November 2017, Standard & Poor’s assigned Leader Invest a B/Stable long-term credit rating, citing the company’s high levels of profitability among Russian developers as one of the key factors supporting the rating.

Rental assets (Business-Nedvizhimost)

> Revenue grew by 172.5% YoY due to the sale of an asset during the period. Adj. OIBDA increased 4.2x YoY to RUB 1.8 bn, and adj. profit increased 46.8x to RUB 1.3 bn.

8.3 7.8 8.8 10.0

1Q 2017 2Q 2017 3Q 2017 4Q 2017

Portfolio by class

Cash generation from real estate sales, RUB mn

Leader Invest sales, m2

2.91

mn sqm 2.91

mn sqm

1100% of Zil-South included 2Leader Invest results for 4Q 2017 and 2017 are presented in accordance with IFRS 15. 4Q 2016 and 2016 results are presented in accordance with IAS 18

Rental assets

LEADER INVEST

2.0 2.0 1.9 1.9

1Q 2017 2Q 2017 3Q 2017 4Q 2017

Portfolio by segment

RENTAL ASSETS

Ownership Management

297.3 thsd sqm

63.7 thsd sqm

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 3.1 3.6 (14.0%) 9.2 8.8 4.8% OIBDA 1.2 1.1 10.9% 3.1 3.0 1.8% OIBDA margin 38.0% 29.4% 8.6p.p. 33.0% 34.2% (1.2p.p.)

Profi t 0.1 0.6 (79.5%) 0.8 2.3 (65.3%)

Net debt 2.5 0.6 4.3x 2.5 0.6 4.3x

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 2.4 0.9 2.7x 6.0 4.0 51.1% Adj. OIBDA 1.8 0.4 4.2x 2.9 2.2 30.1%

Adj. OIBDA margin 73.2% 47.2% (38.9 p.p.) 48.0% 55.7% (5.2p.p.)

Adj. Profi t 1.3 0.03 46.8х 1.7 0.6 2.8хNet cash 1.2 1.2 (1.2%) 1.2 1.2 (1.2%)

2 2

28

HIGH-TECH (RTI) AND ELECTRIC POWER GRIDS (BPGC)

> Revenue grew in 4Q 2017 and in 2017 mainly as a result of the indexation of tariffs for electricity transmission services from 1 July 2017. In 4Q 2017 it was also driven by increase in paid capacity (+ 13.7% YoY including the effect of changes between tariff plans) and productive supply of electricity (+ 0.8% YoY).

> In 4Q 2017 OIBDA and profit declined YoY due to the release of provisions related to potential disputes with counterparties in the same period in 2016 as well as due to an increase in the cost of network losses as the market price for electricity rose.

> In 4Q 2017 network losses as a percentage of electricity supplied decreased YoY due to on-going implementation of an automated electricity metering system, as well as increased control over risks and uncontracted use of electricity.

> In 2017, as part of modernisation of Ufa’s electricity grid using Smart Grid technologies, BPGC completed the reconstruction of 87 distribution points and transformer substations, routed 20.3 km of cabling and installed a new metering system, as well as ≈8,700 individual meters.

> In 4Q 2017, BPGC put into operation 3 major new substations in Bashkortostan – Kustarevskaya, Spartak and Alekseevka.

Losses on distribution and transmission grids

1.43% 1.29%

11.21% 10.38%

4Q'16 4Q'17

Transmission Distribution

BPGC RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 5.1 4.6 10.0% 17.7 16.1 10.1%

OIBDA 1.1 1.7 (34.8%) 5.3 5.6 (6.7%)

OIBDA margin 21.8% 36.9% (13.4p.p.) 29.8% 35.1% (5.3p.p)

Profit 0.4 0.9 (57.7%) 2.4 2.7 (12.5%)

CAPEX 1.2 1.6 (22.9%) 3.7 4.5 (17.6%)

RTI1

1 Financial results are shown in accordance with IFRS 15 standards due to early adoption of the standard by RTI. In Sistema Group’s consolidated statements, RTI’s results are presented in accordance with IAS 18 standard. 2 Debt relating to government procurement (effectively zero interest rate) 3 Formerly known as the Defence Solutions segment

Results by key business segments

> Moderate decline in revenue in 2017 was due to 6.8% YoY decrease in revenue from the radio-technical systems business unit3 (BU), as well revenue volatility in relation to a major government contract. This was partially mitigated by 15.7% YoY revenue growth in the Microelectronics BU as a result of increased import substitution of electronic components and heightened demand for Mikron’s products. Lower revenue YoY in 4Q 2017 also reflects non-uniform work stages as part of a major government contract.

> Growth in adj. OIBDA is largely connected to strong OIBDA dynamics in the Microelectronics BU.

> Net loss for the year and quarter decreased thanks to reduced financial expenses.

> RTI's total debt decreased by 8.7% as of the end of the year mostly as a result of the Defence Ministry’s gradual transition away from credit financing for defence procurements. RTI also has on its accounts additional funds earmarked for state defence orders amounting to RUB 8.6 bn that are not included in the net debt calculation.

> In 4Q 2017, RTI Group recorded a one-off charge for provisions on receivables related to an uncompleted project and lawsuit in the total amount of RUB 6.0 bn.

30.1 28.0

13.5%

16.2%

2016 2017Revenue, RUB bn Adj. OIBDA margin

9.6 11.1

9.7% 18.1%

2016 2017

Radio-technical systems3 Microelectronics

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 16.1 23.1 (30.1%) 50.6 52.6 (3.9%)

Adj. OIBDA 3.6 1.9 95.0% 6.6 5.9 14.1%

Adj. OIBDA margin 22.4% 8.0% 14.4 p.p. 13.1% 11.1% 2.0 p.p.

Adj. profit/(loss) 1.4 (2.7) n/a (2.6) (4.7) n/a

Net debt 27.3 27.1 1.0% 27.3 27.1 1.0%

Share of debt related to state

defence contracts20% 11.4% (11.4 p.p.) 0% 11.4% (11.4 p.p.)

29

1 777 1 777 440

1 847 152

152

4Q 2016 4Q 2017

Abroad

Russia

Kosmos hotel

HOSPITALITY ASSETS AND PHARMACEUTICALS (BINNOPHARM)

Hospitality assets

Number of hotel rooms by regions

> In 2017 revenue increased driven by consolidation of RHC, as well as by a higher occupancy rate at Hotel Cosmos, the largest of Sistema’s hospitality assets. In 4Q 2017, revenue increased YoY following the opening of new 243-room Holiday Inn Express Paveletskaya and the addition of rooms at the Emerald Forest eco-hotel in the Moscow region.

> Losses on OIBDA and profit in 4Q 2017 were due to seasonal factors in the hospitality sector. In 2017 OIBDA and OIBDA margin increased thanks to the consolidation of RHC properties and improved efficiency at Hotel Cosmos.

> A number of initiatives under the new Cosmos Group strategy are planned for 2018, including renaming the Onego Palace hotel in Petrozavodsk and the Intourist Kolomenskoe in Moscow with the Cosmos brand, and likewise using the Cosmos Collection brand for the Emerald Forest eco-hotel and Altai Resort.

> Also in 2018, Cosmos Group plans to open 3 new Ramada and Ibis Budget hotels with a total of 434 rooms as well as the group's first two CosmoStay-branded apartment hotels in Moscow with a total of 258 units.

> In February 2018, Christian Meyer was promoted to the position of President of Cosmos Group.

34.0% 63.0%

66.0% 37.0%

2016 2017

Hospital

Commercial

Growth of commercial segment in revenue

> In 2017 Binnopharm successfully delivered on its strategy to grow the commercial segment, with commercial sales accounting for 63% of total revenue, vs 34% in 2016. In 4Q 2017 Binnopharm's revenue increased on the back of 3.7% increase in sales of its own products and 87.8% increase in commercial distribution sales.

> In 4Q 2017 and 2017 OIBDA margin declined as government sales of higher-margin drugs fell, though this trend was partially offset by increase in OIBDA from sales of the company's own products as well as distribution products in commercial segment.

> In 4Q 2017 pricing was approved for Binnopharm products Neurocholine and Erythropoietin 500, and Moxifloxacin received registration. Sales of these products began at the end of 1Q 2018.

> In 2018 Binnopharm plans to continue developing its product portfolio: the company anticipates it will bring 4 new drugs to market, receive registration of additional 10 new drugs and complete development of a number of other new products.

Binnopharm

3,771

4,040

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 1.1 0.8 39.4% 4.3 2.8 54.5%

OIBDA (0.01) 0.04 n/a 0.8 0.5 74.5%

OIBDA margin n/a 4.6% n/a 19.7% 17.5% 2.2p.p.

Loss (0.4) (0.3) n/a (0.5) (0.3) n/a

Net debt 3.4 4.4 (23.8%) 3.4 4.4 (23.8%)

Room capacity 4,040 3,771 7.1% 4,040 3,771 7.1%

RUB bn 4Q 2017 4Q 2016 YoY 2017 2016 YoY

Revenue 1.0 0.8 23.3% 2.4 1.9 21.8%

OIBDA 0.33 0.32 2.5% 0.5 0.4 16.3%

OIBDA margin 32.4% 39.0% (6.6p.p) 20.4% 21.4% (1.0p.p)

Profit 0.12 0.14 (16.1%) 0.01 0.01 31.8%

Net debt 1.8 1.5 19.5% 1.8 1.5 19.5%

30

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