Sistema PJSFC: Sistema announces financial results for the fourth quarter and FY 2021

Sistema announces financial results for the fourth quarter and FY 2021

Moscow, Russia - 7 April 2022 - Sistema PJSFC ("Sistema", the "Corporation", or together with its subsidiaries and affiliates the "Group") (LSE: SSA, MOEX: AFKS), a Russian publicly traded investment company, announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the fourth quarter of 2021 (4Q 2021) and its audited consolidated financial results in accordance with IFRS for the year ending 31 December 2021 (FY 2021).

FY 2021 FINANCIAL RESULTS

• Consolidated revenue grew by 16.0% year-on-year to RUB 802.4 billion.
• Adjusted OIBDA[1] increased by 6.6% year-on-year to RUB 251.9 billion.
• Adjusted OIBDA margin was 31.4%.

4Q 2021 FINANCIAL RESULTS

• Consolidated revenue grew by 16.7% year-on-year to RUB 225.7 billion.
• Adjusted OIBDA increased by 13.0% year-on-year to RUB 63.5 billion.
• Adjusted OIBDA margin was 34.2%.

KEY HIGHLIGHTS IN 4Q 2021 AND AFTER THE REPORTING PERIOD

• Monetisation of stake in Segezha Group. In December 2021, Sistema completed the sale of an 8.7% stake in Segezha Group to Bonum Capital for USD 150 million (RUB 11 billion). Following the completion of the transaction, the Corporation held a 62.2% stake in Segezha Group.
• Increased stake in the pharmaceutical business. In December 2021, Sistema bought out its financial partner's stake in Binnopharm Group for a consideration of RUB 9.1 billion. As a result, Sistema's effective stake in Binnopharm Group increased to 75.3%.
• Sistema stock buyback. In January 2022, the Corporation completed the buyback programme launched in 2019, having paid out RUB 7 billion to repurchase 315.2 million ordinary shares, representing 3.3% of Sistema's share capital.

SUSTAINABILITY (ESG)

• ESG alliance. Sistema joined an initiative to create a National ESG Alliance, which aims to facilitate the transition to a sustainable economic development model. Leading Russian companies with over RUB 10 trillion in total revenue and more than 1.5 million employees have supported the initiative.
• Sistema's highly rated ESG practice. In October 2021, Sistema was rated among the top three companies in an ESG ranking of publicly traded Russian financial companies compiled by the National Rating Agency.

SISTEMA RESULTS REVIEW

In 2021, Sistema's consolidated revenue increased by 16.0% year-on-year to RUB 802.4 billion, driven by revenue growth at key assets: at MTS, thanks to higher consumption of telecoms services and internet traffic, increased consumption of ecosystem services and higher sales of handsets and accessories; at Segezha Group, on the back of an increase in production volumes and positive dynamics in prices for key products; at Steppe, thanks to an increased gross harvest in the Field Crops segment and increased milk production in the Dairy segment, as well as the successful development of agrotrading and the development of new business lines. The consolidation of Binnopharm Group's results in Sistema's financial statements from 25 June 2021 also had an impact on the Corporation's revenue.

The Group's adjusted OIBDA[2] increased by 6.6% year-on-year to RUB 251.9 billion in 2021 mainly as a result of higher adjusted OIBDA at subsidiaries: at MTS, partly as a result of higher demand for financial services, the recovery in the entertainment industry and changes to the product portfolio; at Segezha Group, due to an increase in prices across all of the Group's product types, and also due to increases in the efficiency of Segezha Group's own logging operations and overall productivity; at Steppe, on the back of improved operational efficiency and higher crop yields, upward price trends for the sale of agricultural products, an increase in the number of high-yield dairy Cattle and an increase in gross milk yield, as well as the development of new business lines.

The adjusted net loss in 2021 was RUB 8.9 billion (compared with a profit in 2020), mainly due to the creation of provisions for deferred tax assets at the Corporate Centre level associated with the decrease in the market value of Ozon shares.

Group SG&A costs increased by 15.0% year-on-year in 2021, mainly on the back of an increase in SG&A at MTS and Segezha Group, as well as the consolidation of Binnopharm Group's results. SG&A at MTS increased as a result of accruals under the updated options programme for management and increased advertising expenses to promote ecosystem products. SG&A at Segezha Group increased primarily driven by bonus payments to management triggered by the company's IPO and the costs associated with conducting M&A transactions.

Group capex increased by 30.8% to RUB 167.2 billion in 2021 as a result of investments by key assets in promising new business lines and in improving efficiency: at MTS, in network development with a focus on expanding 4G capacity, as well as in new business areas in its digital ecosystem; at Segezha Group, in the modernisation of the Segezha and Sokol PPMs, the expansion of the Vyatka Plywood Mill, the construction of a boiler and pellet plant in Sokol as well as the modernisation of the Onega woodworking plant; at Steppe, in the construction and modernisation of dairy farms and processing facilities, acquisitions of agricultural machinery and the development of logistics infrastructure.

OVERVIEW OF PORTFOLIO COMPANIES

MTS

LEADING TELECOMMUNICATIONS OPERATOR AND DIGITAL SERVICES PROVIDER IN RUSSIA

MTS's revenue increased in 4Q 2021 and FY 2021 by 7.5% and 8.0% year-on-year to RUB 143.7 billion and RUB 534.4 billion, respectively, due to increased consumption of telecom services and higher internet traffic; increased consumption of ecosystem services, including fintech and media solutions; as well as higher sales volumes of handsets and accessories.

In 4Q 2021, adjusted OIBDA increased by 7.1% year-on-year to RUB 55.8 billion following revenue growth, including as a result of an increase in telecom segment revenues, promotion of OTT platform services and the improved operational efficiency of the retail network. In FY 2021, adjusted OIBDA increased by 6.9% to RUB 229.8 billion, driven by higher demand for financial services, the recovery in the entertainment industry and changes to the product portfolio.

The adjusted OIBDA margin in 4Q 2021 and FY 2021 was 38.8% and 43.0%, respectively.

Adjusted net profit remained flat year-on-year in 2021, impacted by higher depreciation due to an increase in capex and M&A deals, higher interest expense driven by an increase in the key rate, as well as an increase in exchange rate variance and derivatives transactions.

Capex increased by 14.7% year-on-year in 2021 to RUB 111.7 billion, primarily due to increased investments in network development in order to expand 4G capacity, and also due to investment growth in new business lines as part of the company's drive to develop its ecosystem.

KEY HIGHLIGHTS IN 4Q 2021 AND AFTER THE REPORTING PERIOD

Dividends. In November 2021, MTS completed dividend payments for 1H 2021 of RUB 10.55 per ordinary share (RUB 21.1 per ADR). The Company's dividend policy expired in 2021; dividend payments for 2022 will be considered by MTS's corporate governance bodies in due course.

Share buyback programme. In December 2021, MTS completed a buyback connected to the EGM[3] held on 30 September 2021. In total, MTS repurchased 28.5 million ordinary shares for a total of RUB 9.3 billion in 4Q 2021.

Bolstering capacities in machine learning. In February 2022, MTS acquired VisionLabs B.V., a global leader in computer vision and machine learning products, for RUB 6.5 billion. VisionLabs software is used in more than 1.7 million cameras worldwide. VisionLabs' revenue in 2020 exceeded RUB 1.1 billion.

Ecosystem expansion. In February 2022, MTS purchased a stake in UrentBike.ru LLC ("Urent"), the leader in Russia's short-term scooter rental market, for RUB 740 million, to expand the range of services offered by the MTS ecosystem. The transaction was part of a funding round in which Urent raised more than RUB 2.0 billion in financing.

Partnerships. MTS has signed a memorandum of strategic cooperation with KT Corporation, a leading telecommunications company in South Korea. The partnership will involve the development of data centres, shared AI-based solutions as well as media content.

MTS President increases ownership stake. In March 2022, as part of the long-term incentive programme, Vyacheslav Nikolaev acquired 19,983,816 ordinary shares of MTS owned by Bastion LLC, a wholly owned subsidiary of MTS. With the transfer of shares to Mr Nikolaev, his stake in MTS increased to above 1%. Sistema's effective ownership stake in MTS decreased to 49.94%.

SEGEZHA GROUP

LEADING RUSSIAN VERTICALLY INTEGRATED FORESTRY HOLDING

Revenue increased by 28.5% and 34.0% year-on-year to RUB 24.2 billion and RUB 92.4 billion in 4Q 2021 and FY 2021, respectively, on the back of increased production volumes and positive pricing dynamics for key products.

OIBDA increased by 22.1% and 67.6% year-on-year to RUB 7.5 billion and RUB 29.3 billion in 4Q 2021 and FY 2021, respectively, as prices increased across all of the Group's product types, and also due to increases in the efficiency of Segezha Group's own logging operations and overall productivity.

The OIBDA margin was 31.2% and 31.6% in 4Q 2021 and FY 2021, respectively.

In 2021, net profit amounted to RUB 12.0 billion, compared with a net loss of RUB 1.3 billion in 2020.

Capex in 4Q 2021 increased year-on-year to RUB 10.2 billion. Investment was focused on the implementation of Segezha Group's approved development strategy, in particular the purchase of a pulp and paper mill construction project in Krasnoyarsk region, the modernisation of the Segezha PPM and Sokol PPM, the expansion of the Vyatka plywood plant, the construction of a boiler room and pellet factory at the Sokol plant, as well as the modernisation of the Onega sawmill.

Net debt increased by 23.7% year-on-year as of the end of 4Q 2021 to RUB 60.9 billion as a result of cash payments for M&A transactions (NWCC and Inter Forest Rus).

Paper production in 4Q 2021 remained nearly flat year-on-year at 94.3 thousand tonnes. Paper sales volumes[4] for the period also remained practically unchanged year-on-year at 68.5 thousand tonnes.

In 4Q 2021, Segezha Group produced 319.7 million paper sacks and bags, an increase of 12.9% year-on-year thanks to the execution of the investment programme and the installation of new facilities. Segezha Group sold 354.8 million paper sacks,[5] an increase of 25.1% year-on-year. The increase was due to the development of the consumer packaging segment and expansion of production capabilities.

In 4Q 2021, production of birch plywood increased by 6.0% year-on-year to 50.1 thousand cubic metres. Sales volumes in 4Q 2021 totalled 38 thousand cubic metres, a decrease of 28.9% year-on-year amid reduced seasonal activity during the winter period; high sales volumes for same period in 2020 were due to sales of inventory stock.

In 4Q 2021, sawn timber production grew by 5.0% year-on-year to 315.4 thousand cubic metres, due in part to the consolidation of the assets of the Novoeniseisk Wood-Chemical Combine from 15 September 2021. Sales volumes[6] remained practically unchanged from the previous year. Sawn timber prices rose during the reporting period by 61% year-on-year amid high demand from the construction industry, significant price increases for raw materials and a global rise in logistics costs.

In 4Q 2021, production of glulam products and house kits decreased by 28.5% year-on-year due to the standstill of the Sokol PPM for capital repairs. Sales also decreased during the reporting period, by 26.3% year-on-year, amid a reduction in construction activity during the winter period, and also due to the high base in 4Q 2020 due to sales of inventory stock.

In 2021, the area reforested by Segezha Group increased by 20% year-on-year to 34.8 thousand hectares. The company's reforestation programme covers an area equivalent to 100% of the area logged the previous year.

KEY HIGHLIGHTS IN 4Q 2021 AND AFTER THE REPORTING PERIOD

Entering promising new markets. In November 2021, Segezha Group entered the Japanese market for glued laminated timber (glulam) and structural glued laminated beams. At the request of a Japanese customer, the Group is manufacturing glulam products designed to meet Japanese standards.

Pellet plant opening. In November 2021, Segezha Group opened a new pellet plant in the Vologda region with a capacity of 65 thousand tonnes per year. The addition of pellet-making capacities will not only expand the product line available from the industrial cluster in the city of Sokol but will also make the local plant more sustainable by becoming an important part of the cluster's closed production cycle. The company's total pellet production capacity has increased by 38%.

Strategic project in Siberia. In November-December 2021, the Group received final planning documentation for the construction of the strategic Segezha East PPM project in the Krasnoyarsk region, and the corresponding priority investment project totalling RUB 4.3 billion, through which the Group will have priority rights over an estimated 4.3 million cubic metres of annual allowable cut.

Stronger positions through asset acquisitions. In December 2021, Segezha Group completed its acquisition of Inter Forest Rus. The transaction includes 24 forestry assets in the Krasnoyarsk and Irkutsk regions as well as substantial forest resources. As a result, Segezha Group doubled its annual allowable cut to 22.7 million cubic metres, and the company became one of the largest leaseholders of forest land in the world.

High dividend payouts. In January 2022, Segezha Group completed the payment of interim dividends for 9M 2021 in the amount of RUB 6.6 billion, or RUB 0.42 per share, which is higher than amount stipulated by the dividend policy of RUB 3 billion to RUB 5.5 billion annually from 2021 to 2023.

AGROHOLDING STEPPE

ONE OF RUSSIA'S LARGEST AGRICULTURE HOLDINGS AND LANDOWNERS

Steppe's revenue in 4Q 2021 and FY 2021 increased by 69.9% and 74.1% year-on-year to RUB 17.9 billion and RUB 57.2 billion, respectively. The increase was driven primarily by an increase in the gross harvest in the Field Crops segment, an effective sales strategy in the Agrotrading segment and the intensive development of international agrotrading, as well as the launch of the Niche Crops Trading business line. Revenue growth was also supported by increased milk production in the Dairy segment and the development of new business lines including production of packaged cheese and distribution of dairy products and plant-based alternatives.

In 4Q 2021 and FY 2021, adjusted OIBDA increased by 35.7% and 54.1% year-on-year to RUB 6.0 billion and RUB 14.4 billion, respectively, mainly due to improved operational efficiency and higher crop yields, upward price trends for the sale of agricultural products, improved performance in international agrotrading, expansion of the herd of high-yield dairy cattle and an increase in gross yield, as well as the development of new business lines, such as exports of niche agricultural crops, production of packaged cheese and distribution of dairy products and plant-based alternatives.

The adjusted OIBDA margin was 33.6% and 25.1% in 4Q 2021 and FY 2021, respectively.

In 4Q 2021 and FY 2021, Steppe's adjusted net profit increased by 66.1% and 92.0% year-on-year to RUB 3.8 billion and RUB 7.5 billion, respectively.

Steppe's capex[9] in 2021 amounted to RUB 4,2 billion. Investments were made in construction and modernisation of dairy farms and processing facilities, acquisitions of agricultural machinery and development of logistics infrastructure.

Net debt in 2021 amounted to RUB 31.8 billion, an increase of 24.9% since the end of 2020 due to the financing of projects to expand processing capacity.

Steppe's land bank stood at 578,000 hectares as of the end of the reporting period. In 2021, Steppe collected a record harvest: the gross harvest totalled more than 1.8 million tonnes, an increase of 45% from 2020. This record result was driven by effective management teamwork, the use of state-of-the-art agricultural technologies and the installation of advanced IT solutions.

Operating results in the Dairy segment saw significant growth: gross yield for 4Q 2021 totalled 25.3 thousand tonnes, up 34% year-on-year, and the dairy herd totalled 10,405 head of cattle at the end of the reporting period. Average productivity per cow in 4Q 2021 was 30.4 kg per head per day. Steppe maintained its leading position in Russia in terms of dairy farming productivity.

Sales volumes in the Agrotrading segment in 2021 increased by 47% year-on-year to 1,761 thousand tonnes. The average sales price of wheat for export increased by 25% year-on-year in 2021. In 2021, revenue from international agrotrading increased threefold, and the new Niche Crop Trading business line was created. In the first half of the 2021 season, Steppe exported 208 thousand tonnes of niche crops, a record for Russian exporters of niche agricultural products.

Sales volumes in the Sugar and Grocery Trading segment in 2021 totalled 306 thousand tonnes. Sales of packaged products, including private labels, are one of the priorities for Sugar and Grocery Trading. Sales volumes of packaged products increased by 27% in 2021.

KEY HIGHLIGHTS IN 4Q 2021 AND AFTER THE REPORTING PERIOD

Increased production capacity of dairy livestock. In 4Q 2021, Steppe opened a new dairy farm and processing facility in the Krasnodar region for 3,000 head of dairy cattle.

ESG progress. In January 2022, the company approved a Sustainability Policy. The policy is in line with Sistema's ESG strategy and provides the basis for the creation of a long-term strategy for Steppe that will include a detailed action plan and timeline for implementation.

Innovations in seed production. In March 2022, Steppe, in conjunction with Schelkovo Agrohim, developed a new high-yield variety of winter wheat called "Sistema". In the context of their joint venture, the two companies are already planning several projects in seed production and plant protection. By 2025, they plan to submit five new varieties of winter wheat and three varieties of soybean to the State Commission of the Russian Federation for the Testing and Preservation of the Achievements of Selective Breeding.

MEDSI

LEADING PRIVATE HEALTHCARE OPERATOR IN RUSSIA

Medsi's revenue increased by 6.5% and 20.2% year-on-year to RUB 8.3 billion and RUB 30.1 billion in 4Q 2021 and FY 2021, respectively, due to an increase in the utilisation of medical centres; the opening of new clinics in Moscow, the Moscow region and other regions of Russia; developments in telemedicine; the provision of in-home care; as well as the launch of a company-owned lab network.

Adjusted OIBDA increased by 5.3% year-on-year to RUB 7.3 billion in 2021 thanks primarily to positive revenue trends and against a backdrop of indexation of salaries to market levels. In 4Q 2021, adjusted OIBDA dropped by 21.4% year-on-year partly due to a decreased contribution from participation in the Nebo project. The company's participation in the Nebo residential development project made a RUB 1.4 billion contribution to adj. OIBDA in 2021 in comparison with RUB 1.6 billion in 2020. As of the end of 2021, the net debt / adjusted OIBDA ratio remained at a comfortable 1.2x.

Adjusted net profit decreased by 26.6% year-on-year in 4Q 2021 to RUB 1.4 billion, driven by adjusted OIBDA dynamics. Adjusted net profit increased by 7.4% year-on-year in 2021, following operating profit.

Clinic utilisation[11] increased by 2 p.p. year-on-year in 4Q 2021 to 51%. The 23 p.p. decrease in hospital utilisation,[12] to 83%, was associated with a decrease in the amount of daytime in-patient care provided for chemotherapy due to insurance-related limits as well as a decrease in in-patient services for COVID-19. The total number of services provided by Medsi in 4Q 2021 increased by 8.3% year-on-year to 5.3 million.

The average cheque in 4Q 2021 decreased by 2.1% year-on-year to RUB 3,100 due to a decrease in the average cheque in the VHI segment due to the accrual of provisions, which was partially offset by an increase in the average cheque in the retail segment and an increase in the retail segment's share of revenue. The number of patient visits increased by 8.8% year-on-year to 2.7 million in 4Q 2021. The company's total capacity is 4.8 million visits.[13]

The 29.4% year-on-year increase in floor space in 4Q 2021, to 279.2 thousand square metres, was due to the commissioning of the Michurinsky multifunctional medical centre and the acquisition of clinics belonging to National Medical Network in Ufa and Volgograd in December 2021, as well as the opening of other clinics during 2021.

Rapid growth in installations of the SmartMed telemedicine app. In 2021, installations of the SmartMed app increased by 53.6% year-on-year to 376 thousand. The app was used to book 2.5 million appointments for admission to clinics (excluding instrumental and laboratory diagnostics), a 3.1x increase year-on-year.

KEY HIGHLIGHTS IN 4Q 2021 AND AFTER THE REPORTING PERIOD

Launch of laboratory network. In November 2021, Medsi launched its own SmartLab network at the Otradnoe clinical hospital with a worksite covering more than 2 thousand square metres and a capacity to analyse 20 million samples per year. Investments in the project amounted to more than RUB 400 million.

Network expansion. In November 2021, Medsi opened a children's hospital at the Otradnoe clinical hospital, with total investment of more than RUB 1 billion. In December 2021, Medsi opened a multifunctional medical centre on Michurinsky Prospekt, with a total area of 33.5 thousand square metres. Total investment in the project amounted to more than RUB 8 billion.

In December 2021, Medsi acquired 31 clinics (with a total area of 22,585 square metres) belonging to the Promeditsina network in Ufa and the Dialine network in Volgograd. The acquisition enabled Medsi to take a leading position in the economically attractive cities of Ufa and Volgograd.

BINNOPHARM GROUP

LEADING PHARMACEUTICAL PRODUCER

Revenue in 4Q 2021 and in FY 2021 increased by 13.0% and 19.3% year-on-year, respectively, as Binnopharm Group products strengthened their positions across various segments of the pharmaceutical market. Sales in 2021 grew in all channels: retail, export and the hospital segment. The hospital segment grew by 27% year-on-year in FY 2021, while export sales grew by 15%. Retail sales increased by 20% year-on-year. Sales of products aimed at improving quality of life - Angiorus (venotonic), Maksilak (synbiotic), Oflomelid (antimicrobial and anti-inflammatory cream), and Neobutin (anti-spasmodic) - were the main drivers of this growth.

In 2021 OIBDA grew by 48.7% year-on-year on the back of revenue growth, control of SG&A expenses and optimisation of the product portfolio. The OIBDA margin in 2021 increased by 6.3 p.p. year-on-year to 31.8%. In 4Q 2021, OIBDA totalled RUB 2.2 billion, unchanged year-on-year. The OIBDA margin was 29.5%.

Net profit increased by 72.9% year-on-year in 2021, driven by OIBDA trends.

Net debt as of the end of 2021 decreased by 16.9% year-on-year to RUB 7.6 billion. At the same time, the net debt/OIBDA ratio improved from 1.7x in 2020 to 0.9x in 2021.

KEY HIGHLIGHTS IN 4Q 2021 AND AFTER THE REPORTING PERIOD

Entering new markets. In December 2021, the Company announced the beginning of its international expansion and opened offices in CIS countries: Kazakhstan, Belarus, Azerbaijan, Moldova, Armenia and Uzbekistan. The Company has been working in CIS markets through partners for a number of years and is a leader among Russian companies in export of medicines in CIS countries. The opening of representative offices outside Russia enables the Company to create its own local development systems to support accelerated growth in these markets.

Rights to a new medication. At the beginning of 2022, Binnopharm Group signed an agreement to acquire the rights for two antibacterial medications from Dr Reddy's in Russia, Uzbekistan and Belarus.

CORPORATE CENTRE

The Corporate Centre comprises Sistema and companies that control and manage Sistema's interests in its subsidiaries and associates.

OIBDA trends at the Corporate Centre level during the reporting period were driven by a decrease in the wage bill and additional transaction-linked remuneration for management, as well as derecognition of a share of Ozon's losses in Sistema's consolidated financial statements.

The adjusted net loss at the Corporate Centre level in 4Q 2021 was RUB 13.0 billion (compared with a profit in 4Q 2020), mainly due to the creation of provisions for deferred tax assets at the Corporate Centre associated with the decrease in the market value of Ozon shares.

The Corporate Centre's financial liabilities increased by 20.5% year-on-year due to the issue of RUB-denominated bonds. As of 31 December 2021, RUB-denominated liabilities accounted for 100% of the Corporate Centre's financial liabilities. Bonds accounted for 82% of the Corporate Centre's debt as of the end of 4Q 2021, up from 66% at the end of 4Q 2020.

In December and July 2021, Sistema exercised its right and acquired shares in Sinocom Investments Limited and Ristango Holding Limited for a total of RUB 15.76 billion from VTB Bank. As a result of the transaction, Sistema's effective stake in Binnopharm Group increased to 75.3%

In December 2021, Sistema completed a transaction to sell an 8.7% stake in Segezha Group to Bonum Capital for USD 150 million. The Corporation retained a 62.2% stake in Segezha Group following the transaction.

In June 2021, Sistema announced an expansion of the buyback programme launched on 17 September 2019 to RUB 7.0 billion and extended the programme to 17 September 2022. In January 2022 the Corporation realised the programme in full, having repurchased a total of 315,195,371 ordinary shares in the Corporation.

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

Sistema PJSFC is a publicly traded diversified Russian holding company in the sectors of telecommunications, high technology, financial services, retail, paper and packaging, agriculture, real estate, tourism and medical services. The company was founded in 1993. Revenue in 2021 was RUB 802.4 billion; total assets equalled RUB 1.8 trillion as of 31 December 2021. Sistema's global depositary receipts are listed under the "SSA" ticker on the London Stock Exchange. Sistema's ordinary shares are listed under the "AFKS" ticker on the Moscow Exchange. Website: www.sistema.ru.

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. 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 the deterioration of the geopolitical situation, as well as many other risks specifically related to Sistema and its operations.

Appendix A

Operating Income Before Depreciation and Amortisation (OIBDA) and OIBDA margin. OIBDA represents operating income before depreciation and amortisation. OIBDA margin is defined as OIBDA as a percentage of our net revenues. Our OIBDA may not be similar to the OIBDA measures of other companies; is not a measurement under accounting principles generally accepted under IFRS and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of profit and loss. We believe that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions of businesses and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under IFRS, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. OIBDA is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies.

Adjusted OIBDA, operating income and profit attributable to Sistema shareholders. The Company uses adjusted OIBDA, adjusted operating income and adjusted profit/(loss) attributable to Sistema shareholders to evaluate financial performance of the Group. These represent underlying financial measures adjusted for a number of one-off gains and losses. We believe that adjusted measures provide investors with additional useful information to measure our underlying financial performance, particularly from period to period, because these measures are exclusive of certain one-off gains and losses.

Adjusted operating income and adjusted OIBDA can be reconciled to our consolidated statements of profit and loss as follows:

Adjusted loss attributable to Sistema shareholders can be reconciled to our consolidated statements of profit and loss as follows:

Consolidated net debt. We define consolidated net debt as consolidated total debt less cash, cash equivalents and deposits in banks. Consolidated total debt is defined as total borrowings plus finance lease. The total borrowings is defined as long-term borrowings, short-term borrowings and liability to the Russian Federation. We believe that the presentation of consolidated net debt provides useful information to investors because we use this measure in our management of consolidated liquidity, financial flexibility, capital structure and leverage.         

         Consolidated net debt can be reconciled to the borrowings as follows:

(1) Accruals except for Segezha and MTS LTI.

(2) In accordance with the standard IAS 17.

(3) Including RUB 1,847 million of short-term finance lease.

(4) Including RUB 1,778 million of short-term finance lease.

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Full press please including financial statements is available on Sistema's website https://www.sistema.com/investors-shareholders/financial-results/ and in the Attachment to the current release.

([1]) Here and hereinafter, see Annex A.

([2]) Group adjusted OIBDA for 4Q 2021 was impacted by the reduction of the Group's recognized share in Ozon's net loss by RUB 2.3 billion from 3.0 billion rubles in 4Q 2020 up to 0.7 billion rubles in 4Q 2021.

([3]) Holders of MTS's ordinary shares who voted against or abstained on individual agenda items concerning the reorganisation had the right to submit their shares for repurchase.

([4]) Approximately 42% of paper produced was supplied to Segezha Group's own converting facilities to produce paper packaging.

([5]) Including 37.8 million consumer paper bags.

([6]) Including sawn timber produced at the Sokol PPM.

([7]) RZ Agro is reflected in Steppe's IFRS accounts as an investment in a joint venture. Agroholding Steppe's financial results reflect the divestiture of AGK Yuzhny in May 2020.

([8]) Adjusted for allocations related to the LTI programme. Including the effect of the acquisition of subsidiaries in 2020.

([9]) Capex excluding investments in M&A.

([10]) For all adjusted indicators, adjustments are made for accruals related to the LTI programme and impairment of goodwill.

([11]) Outpatient facilities in Moscow.

([12]) Utilisation accounts for the multiple use of one in-patient bed at daytime in-patient facilities.

([13]) Metrics are for 4Q 2021, with capacity calculated as the total number of possible outpatient visits at Medsi facilities, and visits as the actual number of patient visits for the period.

([14]) Because Sistema has consolidated Binnopharm Group's financial results since 25 June 2021, and also due to the absence of comparable IFRS data for the preceding periods, Binnopharm Group's management accounting data is presented here. Consequently, net profit for Binnopharm Group has not been adjusted to reflect the amount attributable to non-controlling interests.

([15]) Based on management accounts.