Sistema acquires Kronshtadt Group

Sistema acquires Kronshtadt Group

Moscow, Russia - 02 October 2015 - Sistema JSFC ("Sistema" or "the Company"), a publicly-traded diversified holding company in Russia and the CIS, today announces the acquisition of JSC Kronshtadt Group ("Kronshtadt") and its assets from Industrial Investors Group and its partners for a consideration of RUB 4.8 billion.

Kronshtadt Group comprises a number of innovative companies producing world-class high-technology products and solutions for the aircraft manufacturing, defence, security and transportation industries, as well as natural resource exploration (including in the Arctic region).

Kronshtadt possesses a number of core technological competencies and unique intellectual potential in mathematical modelling and the development of advanced information systems, development and manufacturing commercial UAV systems, advanced integrated simulators and visualisation systems, and on-board and ground-based radioelectronic navigation. Kronshtadt's competencies are strategically complementary to Sistema's portfolio company RTI Group. By utilising and leveraging these synergies, Sistema expects both companies to strengthen market positions while creating a platform for their future growth.

"Kronshtadt Group is a prominent player on the Russian high-tech market with a set of competencies, products and solutions that complement those of RTI Group," Sistema President and Chief Executive Officer Mikhail Shamolin said. "This acquisition will strengthen RTI's current and future ventures, including its new business of developing and producing aerospace, monitoring and communications systems for government and commercial customers. It will also help RTI to enter new markets including airborne control and navigation equipment, as well as simulators and training systems."

"Sistema's interest in Kronshtadt Group testifies to the success of our strategy as shareholders of this asset, and is the result of our efforts to create a competitive business with unique technological competencies and significant potential in high-demand market segments such as products and solutions for aircraft manufacturing and the security industry," said Andrei Burlinov, CEO of Industrial Investors Group. "Being part of Sistema will have a positive impact on Kronshtadt's growth prospects, and will allow Industrial Investors Group to focus on developing other projects, including its global technological solutions for maritime sector under the Transas brand, which will remain under our management."

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Sistema is a 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, radars and aerospace, banking, retail, mass-media, tourism and healthcare services. Founded in 1993, the Company reported revenues of RUB 164.0 billion for the second quarter of 2015, and total assets of RUB 1,175.7 billion as at June 30, 2015. 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. 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.