SSA: JSFC Sistema: Final Results

  SSA: JSFC Sistema: Final Results

UK Regulatory Announcement

MOSCOW

          FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE FULL YEAR

                           ENDED DECEMBER 31, 2012

Moscow, Russia – April 16, 2013 – 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, 2012.

FULL YEAR HIGHLIGHTS

  *Consolidated revenues up 3.9% to US$ 34.2 billion
  *Adjusted OIBDA^1 up 3.3% YoY to US$ 8.5 billion, with an adjusted OIBDA
    margin of 25.0%
  *Adjusted net income attributable to the Group^2 up 80% YoY to US$ 1.8
    billion
  *Net debt^3 at the Corporate Holding level amounted to US$ 1.0 billion as
    at December 31, 2012, compared to net cash of US$ 580.5 million as at
    December 31, 2011, primarily due to the Company’s investments in 2012.

FOURTH QUARTER HIGHLIGHTS

  *Revenues up 13% YoY to US$9.5 billion
  *Adjusted OIBDA down 1.9% YoY to US$ 2.1 billion, with an adjusted OIBDA
    margin of 21.9%
  *Adjusted net income attributable to the Group up 36.9% YoY to US$ 357.9
    million

KEY CORPORATE HIGHLIGHTS FOR 2012

  *Acquired 100% of SG-trans OJSC, the Russian market’s largest independent
    operator of specialised railcars for transportation of liquefied petroleum
    gas, for a total cash consideration of RUB 22.77 billion.
  *Acquired 50% of the authorised capital of Financial Alliance LLC, a
    professional railcar operator, from Bashneft for a total amount of RUB
    3.41 billion.
  *Completed the reorganisation of OJSC Bashkirenergo by splitting it into
    JSC Bashkirian Power Grid Company, which combines transmission and
    distribution grids, and OJSC Bashenergoactiv, which integrates power
    generation assets. The later was sold to INTER RAO UES for RUB 11.2
    billion in cash and promissory notes.
  *Completed a US$ 145 million share repurchase programme between June 6,
    2012 and October 15, 2012.
  *Acquired 3,751,844 Bashneft ordinary shares and 2,131,226 Bashneft
    preferred shares, which represents approximately 2.6% of the Bashneft’s
    charter capital, for a total amount of approximately US$ 300 million^4.
  *Fully paid annual dividends of RUB 0.28 per ordinary share for 2011,
    amounting to a total of RUB 2.7 billion.
  *Established a joint venture with RZ Agro Ltd, an agricultural company
    controlled by certain members of the Louis-Dreyfus family. The joint
    venture consists of agricultural assets held by both parties totalling
    approximately 90,000 ha.
  *Issued a US$ 500 million Eurobond with an annual interest rate of 6.95%
    and a maturity in May 2019.

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

“2012 was marked by several accomplishments and substantial progress was made
on our new investment ideas. In the transportation segment, we established a
leading presence in the sector only months after acting on our initial
interest, whilst in our agriculture business, our partnership has delivered a
promising set of maiden results. The period was also dominated by prolonged
uncertainty in India. However, despite these difficulties, our perseverance
paid off in the first quarter this year when we managed to secure superior
licences for SSTL at no immediate cost, thereby strengthening its investment
case.

In 2012, our businesses continued to expand as existing investments
implemented their growth strategies, driving the Group’s solid topline and
adjusted OIBDA growth. Moreover, our net income increased by 334% to US$ 947
million, reflecting stronger profitability in a number of our smaller
investments. Most of these investments delivered positive OIBDA and four
businesses have now reported positive net income.

To reflect the strength of our financial position, management intends to seek
the Board’s approval for a substantially higher dividend for 2012. We have a
well-established track record for consistently increasing cashflow to the
holding level and for executing on our strategy for each of our portfolios,
leaving us well positioned to reward our shareholders and drive higher returns
in 2013.”

Conference call information

Sistema’s management will host an analyst conference call today at 9 am (New
York time) / 2 pm (London time) / 3 pm (CET) / 5 pm (Moscow Time) to present
and discuss the fourth quarter and full year 2012 results.

The dial-in numbers for the conference call are:

UK/ International:+ 44 20 8515 2301
US: +1 480 629 9819

And quote the conference call title: “Sistema Fourth Quarter and Full Year
2012 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:

Investor Relations         Public Relations
Evgeniy Chuikov               Vsevolod Sementsov
Tel: +7 (495) 692 11 00       Tel: +7 (495) 730 1705
ir@sistema.ru                 pr@sistema.ru

FINANCIAL SUMMARY

(US$ millions,                        Year on                         Year on
except per       4Q 2012  4Q 2011  Year     2012      2011      Year
share amounts)                        Change                          Change
Revenues          9,450.2   8,360.2   13.0%     34,240.7   32,940.9   3.9%
Adjusted OIBDA    2,073.5   2,114.2   (1.9%)    8,543.1    8,268.5    3.3%
Operating         967.5     299.1     223.4%    3,718.7    3,942.2    (5.7%)
income
Adjusted
operating         1,340.1   1,313.9   2.0%      5,383.6    4,999.2    7.7%
income
Net income/
(loss)            200.9     (530.2)   -         946.8      218.0      334.3%
attributable to
Sistema
Adjusted net
income            357.9     261.4     36.9%     1,794.5    996.8      80.0%
attributable to
Sistema
Basic and
diluted
earnings per      2.2       (5.7)     -         10.2       2.3        333.4%
share (US
cents)

GROUP OPERATING REVIEW

In 2012, Sistema’s consolidated revenues increased by 3.9% and 9.9%
year-on-year in US dollar and rouble terms, respectively, as a result of
organic growth at MTS, higher sales at Bashneft, RTI’s consolidation of
NVision Group, as well as strong performance at Detsky mir and MTS Bank. In
the fourth quarter, the Group’s revenues were up 13.0% year-on-year.

Selling, general and administrative expenses (SG&A) decreased by 1.6% to US$
3,855.8 million in 2012, mainly due to the cost efficiency measures taken at
MTS, as well as lower costs at the Corporate Centre’s level. Depreciation,
depletion and amortisation expense decreased by 3.4% to US$ 3,159.4 million in
2012.

The Group’s adjusted OIBDA increased by 3.3% year-on-year in 2012, largely as
a result of MTS’ growing profitability, as well as improved OIBDA in Detsky
mir and MTS Bank. Year-on-year decline in adjusted OIBDA by 1.9% in the fourth
quarter was mainly due to higher tax expenses at Bashneft. The Group’s
adjusted OIBDA margin was 21.9% in the fourth quarter and 25.0% in 2012.

Adjusted consolidated net income attributable to Sistema grew by 80.0%
year-on-year in 2012, reflecting excellent underlying results across most
portfolio companies. The Group reported a 36.9% year-on-year increase in
adjusted net income in the fourth quarter of 2012.

OPERATING REVIEW^5

MTS

                                     Year on                         Year on
(US$ millions)  4Q 2012  4Q 2011  Year     2012      2011      Year
                                     Change                          Change
Revenues         3,167.6   2,981.7   6.2%      12,435.7   12,318.7   0.9%
OIBDA            1,344.9   1,287.3   4.5%      4,275.7    5,187.0    (17.6%)
Operating        813.1     731.7     11.1%     2,000.8    2,851.8    (29.8%)
income
Net income
attributable     289.0     208.5     38.6%     533.9      769.5      (30.6%)
to Sistema

Despite the weakening of the Russian rouble against the US dollar and the
mid-year suspension of the company’s operations in Uzbekistan, MTS’ revenues
increased by 0.9% year-on-year in 2012 primarily due to the growth in sales of
handsets and data products. The total subscriber base (including Belarus
subscribers) decreased to 101 million customers as of December 31, 2012,
following the suspension of MTS’ operations in Uzbekistan. Excluding customers
in Uzbekistan, the company’s subscriber base grew by 4.4% year-on-year due to
resumed operations in Turkmenistan, as well as the growing subscriber base in
Russia and Ukraine.

In 2012, MTS’ OIBDA decreased year-on-year due to recognised loss relating to
impairments and provisions in Uzbekistan. MTS’ adjusted OIBDA increased
slightly year-on-year in 2012 as a result of growing income from data services
and a reduction in marketing expenses.

The average monthly service revenue per subscriber (ARPU) in Russia increased
to RUB 306 in the fourth quarter of 2012, compared to RUB 284 in the
corresponding period of 2011, as a result of MTS’ on-going efforts to
stimulate voice and data usage. Russian subscribers’ monthly minutes of use
(MOU) increased by 35.7% to 323 minutes in the fourth quarter of 2012,
compared to 283 minutes in the fourth quarter of 2011, as MTS continued to
focus on increasing voice usage to drive loyalty and customer value.

In the fixed broadband business, the number of households passed increased by
3.0% year-on-year to 11.7 million at the end of the fourth quarter of 2012.
The Pay-TV customer base totalled 2.9 million subscribers at the end of the
reporting quarter. The number of broadband Internet subscribers increased to
2.3 million year-on-year.

In November 2012, MTS announced a strategic initiative with Microsoft, the
global IT leader, to promote innovative mobile solutions by launching Windows
8 “Ecosystem Demo Zones” in MTS retail stores.

In October 2012, Sistema, MTS and MTS Bank signed a non-binding indicative
offer regarding the issuance of up to a 25.095% stake in MTS Bank to MTS
through an additional share issue by MTS Bank. In March 2013, the transaction
was concluded in line with the terms announced on October 25, 2012.

Bashneft

                                     Year on                          Year on
(US$ millions)  4Q 2012  4Q 2011  Year      2012      2011      Year
                                     Change                           Change
Revenues         4,498.6   4,083.0   10.2%      17,125.2   16,549.1   3.5%
OIBDA            648.4     835.2     (22.4%)    3,150.1    3,390.7    (7.1%)
Operating        511.0     683.3     (25.2%)    2,557.7    2,778.8    (8.0%)
income
Net income
attributable     264.2     265.6     (0.5%)     1,279.5    1,220.7    4.8%
to Sistema

Bashneft’s revenue increased by 3.5% year-on-year in 2012 due to an increase
in export volumes, and by 10.2% year-on-year in the fourth quarter of 2012, as
a result of higher exports of oil products, particularly to non-CIS countries.

Bashneft’s OIBDA decreased by 7.1% year-on-year in 2012, primarily due to
higher tax expenses.

In 2012, Bashneft’s oil production increased by 2.2% year-on-year to 15.4
million tonnes. The company sold 4.9 million tonnes of oil products in the
fourth quarter of 2012, a 2.1% year-on-year increase, with exports amounting
to 1.1 million tonnes of crude oil and 2.2 million tonnes of oil products.

Refining volumes from the company’s refinery in 2012 slightly decreased to
20.8 million tonnes of crude oil following the planned repairs to the Ufimsky
refinery plant. In 2012, the average refining depth was 84.9% and
light-product yield amounted to 59.7%, while the Nelson complexity index
increased from 8.3 to 8.55 as a result of the process of increasing the
capacity of a delayed coking Branch “Bashneft Ufaneftekhim” from 1.2 million
to 1.6 million tonnes per year.

As at December 31, 2012, Bashneft operated a total of 488 petrol stations.

In December 2012, Bashneft acquired LLC Garsar and LLC Mobel-Neft holding
licences for oilfields and promising subsoil areas in the Ermekeyevsky
district in the west of the Republic of Bashkortostan.

In November 2012, the Consortium comprising Bashneft (70%) and Premier Oil
(30%) signed the exploration, development and production service contract
(EDPSC) with South Oil Company acting on behalf of the Republic of Iraq for
Block 12 in Baghdad. In accordance with the signed contract, the Consortium
will conduct an obligatory geological exploration programme at Block 12 for
the 2D seismic survey totalling 2,000 linear kilometres and drilling one
exploration well. In addition, the Consortium will invest US$ 120 million in
geological exploration over a five-year period.

In October 2012, Bashneft completed itsreorganisation through the
consolidation ofits subsidiaries (OJSC Ufimsky refinery plant, OJSC Novoil,
OJSC Ufaneftekhim, OJSC Bashkirnefteprodukt and OJSC Orenburgnefteprodukt),
resulting in the transition to a single share.

Bashkirian Power Grid Company^6

                                          Year on                     Year on
(US$ millions)       4Q 2012  4Q 2011  Year       2012   2011   Year
                                          Change                      Change
Revenues              91.5      96.6      (5.2%)      373.1   387.7   (3.8%)
OIBDA                 6.8       0.5       1,177.4%    129.0   99.3    29.9%
Operating (loss)/     (5.1)     (9.5)     -           84.2    57.7    45.9%
income
Net (loss)/ income
attributable to       (3.6)     (3.3)     -           24.4    20.4    19.7%
Sistema

Bashkirian Power Grid Company’s revenues decreased by 5.2% year-on-year in the
fourth quarter and by 3.8% year-on-year in 2012, mainly due to changes in the
payment procedure for power transmission services effective from July 1, 2012,
as well as rouble depreciation against the US dollar.

The company’s OIBDA grew significantly year-on-year in the reporting quarter
and increased by 29.9% year-on-year in 2012, mainly due to the optimisation of
the company’s organisational structure and decreased operating expenses. The
OIBDA margin expanded to 34.6% in 2012, compared to 25.6% in 2011.

In 2012, distribution grid losses decreased by 0.6 p.p. year-on-year as a
result of the reduced commercial losses, an increased number of installed
electricity meters, and tests conducted to detect non-contractual and
non-metered consumption and control over electricity meter readings.
Transmission grid losses increased in 2012 mainly due to decline in consumer
demand and operational factors.

The effective transmission grid output remained stable year-on-year in the
fourth quarter of 2012, while the effective distribution power output was up
2.6% year-on-year.

In July 2012, the EGM of Bashkirenergo’s shareholders approved the decision to
reorganise the company by splitting it into two companies: generating company
Bashenergoactiv, and Bashkirian Power Grid Company. Following the completion
of the reorganisation process in November, Sistema-Invest obtained a 92.48%
voting stake in Bashkirian Power Grid Company and received RUB 11.2 billion in
cash and promissory notes from INTER RAO UES, payable in installments by
September 29, 2013. Sistema no longer has any interest in the power generation
assets.

Sistema Shyam TeleServices Ltd. (SSTL)

                                        Year on                       Year on
(US$ millions)     4Q 2012  4Q 2011  Year     2012     2011     Year
                                        Change                        Change
Revenues            72.0      76.1      (5.3%)    303.0     262.3     15.5%
OIBDA               (113.8)   (437.4)   -         (546.5)   (730.0)   -
Operating loss      (132.4)   (463.3)   -         (621.2)   (828.1)   -
Net loss
attributable to     (114.4)   (318.7)   -         (462.9)   (636.1)   -
Sistema

In 2012, SSTL’s revenues increased by 15.5% year-on-year in US dollar terms
and by 31.0% in local currency terms mainly due to the growth in revenue share
from non-voice and mobile value-added services (VAS).

SSTL’s total wireless (voice and data) subscriber base reached 15 million
customers as of December 31, 2012. Blended mobile ARPU for the fourth quarter
and the full year of 2012 amounted to US$ 1.48 and US$ 1.52, respectively. The
data card subscriber base increased by 36.9% year-on-year in 2012 and amounted
to 1.78 million subscribers.

Non-voice revenues from both data and VAS in 2012 increased to US$ 109
million. The share of non-voice revenue as a percentage of total revenue stood
at 36%.

In February 2012, the Supreme Court of India revoked 122 licences issued to
eight Indian operators in 2008, including 21 out of 22 licences held by SSTL.

In October 2012, Indian mobile operators were due to submit their applications
to bid in the country's upcoming 2G spectrum auction. SSTL did not submit its
application.

In March 2013, SSTL participated in new spectrum auctions, acquiring licences
in eight circles, resulting in a nine circle footprint, including Rajasthan
circle.

Sistema Mass Media^7 (SMM)

                                         Year on                     Year on
(US$ millions)      4Q 2012  4Q 2011  Year     2012    2011    Year
                                         Change                      Change
Revenues             22.9      23.7      (3.4%)    81.8     101.9    (19.8%)
OIBDA                7.8       (56.8)    -         20.5     (32.0)   -
Operating loss       (2.7)     (74.1)    -         (14.7)   (73.7)   -
Net loss
attributable to      (3.0)     (57.0)    -         (11.1)   (63.9)   -
Sistema

Sistema Mass Media’s revenues decreased by 19.8% year-on-year in 2012 largely
due to the closure of studio in Moscow as a result of business restructuring,
changes in the accounting methods for revenue at the advertising segment and
the rouble depreciation against the US dollar.

Sistema Mass Media’s OIBDA stabilised in 2012 due to the cost optimisation
programme, business restructuring and organic growth in key high-margin
segments.

The Stream-TV subscriber base increased by 21.0% in 2012 to 7.5  million
subscribers, while the share of revenue from advertising on Stream-TV as a
percentage of total revenue grew by 0.6  p.p. year-on-year to 15.4%. In 2012,
the RWS content library grew by 7.3% to 1,600 hours. RWS produced 109 hours of
content in-house and sold 140 hours of content in the reporting year.

In the third quarter of 2012, SMM continued its business restructuring and
closed its film studio in Moscow. The studio production business was divided
into OJSC ORK (studios) and RWS (production).

In June 2012, SMM began managing the multimedia content portal Stream.ru
(formerly Omlet.ru).

RTI^8

                                       Year on                       Year on
(US$ millions)    4Q 2012  4Q 2011  Year     2012     2011     Year
                                       Change                        Change
Revenues           1,068.3   765.8     39.5%     2,376.3   2,093.0   13.5%
OIBDA              (49.8)    63.4      -         12.5      154.4     (91.9%)
Operating          (74.9)    30.5      -         (83.2)    50.4      -
(loss)/ income
Net loss
attributable to    (87.0)    (1.7)     -         (129.9)   (18.3)    -
Sistema

RTI consolidates SITRONICS, NVision Group and RTI Systems and is comprised of
four principal business units (“BU”) – Defence Solutions BU, Comprehensive
Security Systems BU, Microelectronics Solutions BU and System Integration BU.

RTI revenues were up 13.5% year-on-year in 2012 due to the consolidation of
NVision Group in the third quarter of 2012 and growing revenue in Defence
Solutions BU.

The OIBDA loss in the fourth quarter and in 2012 is the result of recognised
loss from impairment of investments in INTRACOM in Greece, as well as higher
operating expenses following the restructuring.

In December 2012, RTI, X5 Retail Group N.V. and RUSNANO launched the trial
operation of Perekrestok Store of the Future. The project benefited from the
interaction of NVision Group, and NIIME^9 and Micron.

In November 2012, RTI and its subsidiaries acquired 83.54% of the voting
shares in OJSC NIIDAR. Following the transaction, RTI made a mandatory offer
to acquire up to 100% of NIIDAR's ordinary shares.

In September 2012, RTI completed the strategic integration of the assets of
RTI Group and NVision Group for IT and communication technologies. Following
the transaction, RTI became the owner of 50%+0.5 shares of NVision Group.

In August 2012, after a mandatory buyout process, RTI became the owner of 100%
of the shares of SITRONICS. Following the buyout, SITRONICS was delisted from
the London Stock Exchange, and the depositary receipts and Depositary
Agreements were terminated.

In June 2012, RTI was included in the Defence News TOP 100 list of the largest
defence companies in the world.

In February 2012, RUSNANO and SITRONICS launched the production of microchips
on the basis of the 90 nm technology. The project is budgeted at RUB 16.5
billion, including co-financing from RUSNANO in the amount of RUB 6.5 billion.

Binnopharm

                                    4Q      Year on                  Year on
(US$ millions)           4Q 2012  2011   Year     2012  2011   Year
                                            Change                   Change
Revenues                  20.1      14.7    36.7%     73.8   38.5    91.5%
OIBDA                     (3.8)     4.2     -         16.0   1.3     1103.2%
Operating (loss)/         (10.2)    3.0     -         6.1    (3.6)   -
income
Net (loss)/ income        (9.1)     2.4     -         2.1    (4.4)   -
attributable to Sistema

Binnopharm’s revenues increased by 36.7% year-on-year in the fourth quarter
and nearly doubled in 2012, reflecting the higher sales of Binnopharm’s own
products, and the expansion of its distribution volumes.

Binnopharm’s OIBDA demonstrated significant growth in 2012, mainly due to
improvements in operating efficiency, and as a result of completing the
government contract for delivering the Hepatitis B vaccine ahead of schedule.

During the reporting year, a new bio-technology product Erythropoietin β 2000
МЕ was added to the company’s product portfolio. In 2012, Binnopharm also
reopened the production lines for tablets and aerosols.

In 2012, Binnopharm agreed on a merger with Alium, a leading pharmaceutical
company. As part of the agreement Sistema’s shareholding decreased to 74%,
while 26% is held by Zenitco Finance Management Ltd. The integration was
completed in April 2013.

MTS Bank^10

                                           Year on                    Year on
(US$ millions)        4Q 2012  4Q 2011  Year     2012   2011    Year
                                           Change                     Change
Revenues               211.1     150.8     40.0%     712.3   560.8    27.0%
OIBDA                  53.4      25.7      107.7%    50.7    (6.2)    -
Operating income/      49.4      21.1      134.0%    32.3    (23.5)   -
(loss)
Net income/ (loss)
attributable to        46.8      16.8      178.5%    15.7    (19.9)   -
Sistema

MTS Bank’s revenues increased by 40.0% year-on-year in the fourth quarter and
by 27.0% year-on-year in 2012. The loan portfolio from joint projects with MTS
grew by 57% quarter-on-quarter to US$ 234 million. MTS Bank reported
significant growth year-on-year in OIBDA in 2012 and 107.7% rise in the fourth
quarter, largely due to the increased interest and commission income from its
retail business.

MTS Bank’s loan portfolio, excluding leases, increased by 11.8% to US$ 5,593
million in 2012, compared to US$ 5,004 million in 2011. Despite the relatively
small increase in the loan portfolio before provisions, the structure of the
portfolio changed significantly in 2012 with higher volume of retail loans,
including mortgages, consumer loans and credit cards. The volume of mortgage
loans grew by 38% to US$ 623 million, while the consumer loans portfolio more
than doubled to US$ 558 million. In the fourth quarter of 2012, interest
income from retail and corporate client transactions grew by 18.4%
quarter-on-quarter and amounted to US$ 161.6 million. In 2012, interest income
grew by 20.3% year-on-year to US$ 575.2 million.

In October 2012, Sistema, MTS and MTS Bank signed a non-binding indicative
offer. Under the terms of the indicative offer, MTS would acquire up to
25.095% stake in MTS Bank through an additional share issue by MTS Bank for up
to RUB 5.09 billion. The proceeds from the transaction would be added to MTS
Bank’s charter capital. In March 2013, the transaction was concluded in line
with the terms announced on October 25, 2012.

In April 2012, the EGM of MTS Bank’s shareholders initiated the reorganisation
of MTS Bank through a merger with Dalcombank.

Detsky mir

                                            Year on                   Year on
(US$ millions)         4Q 2012  4Q 2011  Year     2012   2011   Year
                                            Change                    Change
Revenues                313.8     253.7     23.7%     892.5   782.9   14.0%
OIBDA                   49.7      34.6      43.9%     54.3    27.4    97.9%
Operating income        44.7      30.4      47.2%     35.6    9.8     264.5%
Net income/ (loss)
attributable to         23.4      18.6      25.8%     11.1    (5.6)   -
Sistema

Detsky mir’s revenues increased by 23.7% year-on-year in the fourth quarter
and by 14.0% in 2012 as a result of regional store expansion and higher
like-for-like sales. OIBDA increased by 43.9% year-on-year in the reporting
quarter and by 97.9% in 2012, which was primarily driven by higher revenues
and the cost optimisation programme.

The network of retail outlets amounted to 216 stores, including 20 Early
Learning Centre’s (ELC) franchised stores acquired in the third quarter of
2012, located in 96 cities across Russia and Kazakhstan. The aggregate retail
space was 291 th.sq.m. as of December 31, 2012. In the fourth quarter of 2012,
Detsky mir opened 23 new stores. The online store’s delivery network expanded
to all the cities covered by the Detsky mir retail chain, with revenues more
than tripling to US$ 4.1 million.

In October 2012, the Board of Directors appointed Vladimir Chirakhov as CEO of
Detsky mir.

Intourist

                                          Year on                    Year on
(US$ millions)       4Q 2012  4Q 2011  Year     2012    2011   Year
                                          Change                     Change
Revenues              24.1      21.1      14.3%     87.5     276.6   (68.4%)
OIBDA                 (17.2)    (2.0)     -         (13.5)   43.8    -
Operating (loss)/     (20.2)    (3.6)     -         (23.2)   34.5    -
income
Net (loss)/ income
attributable to       (14.6)    (2.6)     -         (24.7)   8.9     -
Sistema

Intourist reported a decrease in revenues for the full year of 2012, as a
result of the change in accounting method for the company’s tour operating and
retail sales businesses following the transaction with Thomas Cook.
Year-on-year revenue growth by 14.3% in the fourth quarter was mainly due to
the success of the company’s hotel division, which saw an increase in sales
and improved quality of services.

Intourist reported an OIBDA loss in 2012 due to recognised losses from the
tour operating business in its JV with Thomas Cook.

The termination of a management contract with the owners of Oktyabrskaya Hotel
(Nizhniy Novgorod) and Severnaya Hotel (Petrozavodsk) led to a decrease in the
number of rooms owned, managed and rented in 2012. The number of tourists
travelling through the Thomas Cook JV fell by 19.4% in 2012, mainly due to a
decrease in package sales to travel agencies as a result of the growing trend
for tourists to make their travel arrangements independently.

Medsi

                          4Q      4Q      Year on                    Year on
(US$ millions)           2012   2011   Year      2012   2011   Year
                                          Change                     Change
Revenues                  81.9    51.9    57.7%      223.9   199.0   12.5%
OIBDA                     9.9     10.4    (5,7%)     29.1    31.1    (6.4%)
Operating income          6.7     7.5     (10.0%)    12.0    19.6    (38.8%)
Net income attributable   4.0     5.4     (25.5%)    0.6     6.7     (90.1%)
to Sistema

Medsi revenues increased by 57.7% year-on-year in the fourth quarter and by
12.5% in 2012, reflecting the wider range of services provided and growth in
patient’s visits.

Medsi’s OIBDA declined year-on-year in the fourth quarter and for 2012, due to
increased expenses relating to the integration with the assets of Medical
Center for the Mayor and Government of Moscow (MCMGM), and consultancy
services expenses.

In 2012, the number of patient visits and services provided increased by 20.9%
and by 47.6% year-on-year, respectively, while the average cheque amounted to
RUB 1,400. In the fourth quarter of 2012, the number of services provided
increased by 77.0% year-on-year, while the number of patient visits was up
25.5%, and the average cheque grew by 28.6% to RUB 1,800. This is mainly due
to an increase in the range of services and an expansion in the number of
hospitals, clinics and rehabilitation centres operated by Medsi.

In April 2012, Medsi agreed on a merger of its assets with SUE, a large group
of healthcare institutions in Moscow, which now holds a 25% share in the
enlarged company. Following the completion of the merger in the fourth quarter
of 2012, Medsi manages 22 medical clinics in Moscow and 11 clinics in the
regions, 3 in-patient clinics with a total bed count of 1160, more than 80
first aid stations across Russia, an ambulance service, 3 wellness centres in
Moscow and 3 sanatoriums in Moscow and Crimea. As of December 31, 2012, the
total floor space of healthcare facilities was over 230,000 sq.m.

CORPORATE

                                     Year on                          Year on
(US$ millions)  4Q 2012  4Q 2011  Year        2012     2011     Year
                                     Change                           Change
OIBDA^11         (190.1)   (129.5)   -            (240.7)   (219.0)   -
Net loss         (196.1)   (72.2)    -            (251.7)   (380.6)   -
Indebtedness     1,646.8   1,246.8   32.1%        1,646.8   1,246.8   32.1%

The Corporate segment comprises the companies that control and manage the
Company’s interests in its subsidiaries.

In the fourth quarter of 2012, Corporate segment’s OIBDA loss increased to US$
190.1 million due to sale of Sistema-Inventure (MGTS) to MTS in December,
2011. In the fourth quarter of 2011, OIBDA loss included the positive effect
of the equity income from MGTS.

In addition, in the fourth quarter of 2012, the net loss at Corporate level
increased to US$ 196.1 million year-on-year, as Sistema recognised deferred
income tax benefit resulting from the sale of SITRONICS shares in the fourth
quarter of 2011.

The dividends declared by subsidiaries to Sistema’s Corporate segment in the
second quarter of 2012, amounted to US$ 842.0 million.

In 2012, the Corporate Centre’s SG&A decreased by 18.1% to US$ 225.7 million.

In October 2012, Sistema replaced Deutsche Bank Trust Company Americas with
Deutsche Bank Aktiengesellschaft as the depositary for its GDR programme,
effective from October 22, 2012.

In September 2012, the Board of Directors approved a new composition of
Sistema’s Management Board. The Board also approved a decision to place a new
bond issue by public subscription, comprising series 01, 02 and 03 three-year
unconvertible interest-bearing bonds. Each series will consist of 10 million
bonds with a face value of RUB 1,000 per bond. The EGM later approved the
amendments to the Company's Charter in order to allow the Company to increase
share capital by issuing additional 386 million ordinary shares with a par
value of RUB 0.09 per share.

In August 2012, Sistema paid its annual dividends of RUB 0.28 per ordinary
share for 2011, amounting to a total of RUB 2.7 billion.

FINANCIAL REVIEW

Net cash provided by operations in the fourth quarter year-on-year decreased
by 36.5% to US$ 1,312.3 and slightly increased by 4.9% for the full year of
2012 to US$ 5,844.3 million.

Net cash used in investing activities totalled US$ 4,672.3 million in 2012,
compared to US$ 5,185.9 million in 2011, and totalled US$ 209.6 million of
outflow in the fourth quarter 2012 compared to outflow of US$ 2,203.6 million
in the fourth quarter 2011.

The Group spent US$ 4,209.6 million on capital expenditure in the reporting
year, compared to US$ 4,132.1 million spent in 2011, as a result of MTS’
planned investment in further deploying its networks, and as it develops its
LTE network. The Group paid US$ 889.4 million for the acquisition of
businesses, net of cash received, in 2012 including the purchase of SG-trans
by Sistema, the cash consideration for the completion of the transaction with
NVision paid by RTI, the acquisition the Russian franchise of the Early
Learning Centre by Detsky mir and also purchases made by MTS and Bashneft. The
Group also used US$ 367.3 million for increase in banking assets and US$
3,438.4 million to increase short-term and long-term investments.

Net cash outflow from financing activities amounted to US$ 3,098.6 million in
2012, compared to US$ 481.9 million in 2011. In the fourth quarter of 2012
cash outflow from financing activities amounted to US$ 1,353.2 million
compared to cash inflow of US$ 1,157.3 million in the corresponding quarter of
2011. The Group’s proceeds from borrowings in 2012 totalled US$ 3,057.4
million, whereas the principal payments on long-term and short-term borrowings
amounted to US$4,444.2 million. In addition, cash outflow from financial
activities in 2012 resulted from the payments to shareholders of subsidiaries
of US$ 575.8 million compared to US$ 871.0 million in 2011, and dividends paid
by Sistema of US$ 82.3 million compared to US$ 89.4 million in 2011.

The Group’s cash balances of continuing operations stood at US$ 1,872.7
million as of December 31, 2012 (excluding an amount of US$ 769.4 million
which comprises the Group’s banking activities and cash and equivalents of
discontinued operations US$ 0.9 million) compared to US$ 2,919.2 million as of
December 31, 2011 (excluding an amount of US$ 1,315.1 million which comprises
the Group’s banking activities and cash and equivalents of discontinued
operations US$ 88.4 million). The Group’s net debt (short-term and long-term
debt less cash and cash equivalents and highly liquid deposits) amounted to
US$ 13,509.0 million as of December 31, 2012, compared to US$ 12,454.5 million
as of December 31, 2011.

SIGNIFICANT EVENTS FOLLOWING THE END OF THE REPORTING PERIOD

MTS

In April 2013, MTS successfully placed its first exchange-traded rouble bond
on the Moscow Interbank Currency Exchange (MICEX). The bond is worth RUB 10
billion and has a maturity of ten years.

In February 2013, MTS’ Extraordinary General Meeting of Shareholders elected
three new members to the company’s Board of Directors - Michel Combes, Thomas
Holtrop and Alexander Gorbunov. The EGM also approved MTS’ participation in
the National Payments Council Association.

In January 2013, Uzdunrobita FE LLC, MTS’s wholly-owned subsidiary in
Uzbekistan, filed a petition to declare bankruptcy in the Tashkent Commercial
Court. The petition was filed due to the company’s inability to fulfil
obligations pursuant to the verdict of the Tashkent City Criminal Court from
September 17, 2012, in relation to the criminal case against Uzdunrobita's
employees and to the decision of the Appeals Court of the Tashkent City
Criminal Court from November 08, 2012, which determined the total amount of
fines and penalties to be paid by Uzdunrobita to be at approximately US$ 600
million. Uzdunrobita continues to defend its rights in accordance with the
laws of the Republic of Uzbekistan. MTS also reserves the right to use all
legal options in the international arena in order to claim damages incurred as
a result of an unwarranted attack on its subsidiary in Uzbekistan.

Bashneft

In March 2013, Bashneft established an oilfield service holding company on the
basis of LLC Bashneft-Service Assets, its wholly owned subsidiary. The newly
established oilfield service holding company comprises 11 oilfield service
organizations with market development potential.

In February 2013, the Board of Directors of OJSC United Petrochemical Company,
a wholly owned subsidiary of JSOC Bashneft, appointed Kirill Tyurdenev as
President of the company.

In January 2013, Bashneft opened a new oil deposit located in the
Khasanovskoye licence area.

In January 2013, the Extraordinary Meeting of Shareholders of Bashneft
approved the decision to increase a number of members of the company’s Board
of Directors from 10 to 12. The number of independent directors on the Board
has also been increased.

Binnopharm

In April 2013, Binnopharm and Alium Group of Companies, a producer of infusion
solutions and blood substitutes, completed a deal that combines their assets.

SG-trans

In February 2013, the Board of Directors of SG-trans, which is 100% owned by
Sistema, approved the company’s reorganisation, which is intended to separate
SG-trans’ trading assets into a standalone business.

Corporate

In February 2013, Sistema successfully completed a secondary placement of
Series 03 bonds with a par value of RUB 1,000. The bonds will mature on
November 24, 2016. The Series 03 bonds were placed at the price of 100.65% of
the nominal value, which corresponds to an effective yield to maturity of
8.72% per annum. The secondary placement raised RUB 10 billion at its nominal
value.

                                     ***

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

Investor Relations       Public Relations
Evgeniy Chuikov            Vsevolod Sementsov
Tel: +7 (495) 692 1100     Tel: +7 (495) 730 1705
ir@sistema.ru              pr@sistema.ru

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$ 34.2 billion for the full year of 2012, and total assets of
US$ 44.7 billion as at December 31, 2012. 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 MICEX-RTS Stock
Exchange, and under the symbol “SIST” on the Moscow Stock Exchange (MSE).
Sistema was ranked number 315 in the 2011 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.

SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND THE YEARS ENDED DECEMBER 31, 2012 AND 2011
(Amounts in thousands of U.S. dollars except per share amounts)

                       Year ended                    Three months ended
                       December 31,                  December 31,
                       2012           2011           2012          2011
                                                                   
Sales                $ 33,572,283   $ 32,411,864   $ 9,260,915   $ 8,222,268
Revenue from banking   668,384        529,012        189,285       137,916
activities
                                                                
TOTAL REVENUES         34,240,667     32,940,876     9,450,200     8,360,184
                                                                   
Cost of sales,
exclusive of
depreciation,          (13,492,237)   (13,007,420)   (4,042,463)   (3,378,378)
depletion and
amortization shown
separately below
Cost related to
banking activities,
exclusive of           (372,921)      (310,332)      (96,470)      (52,946)
depreciation and
amortization shown
separately below
Selling, general and
administrative         (3,855,771)    (3,917,623)    (1,114,190)   (998,370)
expenses
Depreciation,
depletion and          (3,159,433)    (3,269,374)    (733,360)     (800,383)
amortization
Transportation costs   (861,933)      (789,785)      (222,624)     (187,457)
Impairment of          (108,544)      (348,679)      (22,879)      (348,679)
goodwill
Impairment of
long-lived assets
other than goodwill    (1,222,402)    (818,550)      (377,200)     (667,910)
and provisions for
other assets
Provisions for         (496,504)      (11,816)       10,464        (9,936)
claims
Taxes other than       (6,790,244)    (6,257,642)    (1,812,752)   (1,546,577)
income tax
Other operating        (165,214)      (450,937)      (110,550)     (87,047)
expenses, net
Equity in results of   (9,138)        120,929        17,620        9,381
affiliates
Gain on disposal of
interests in           12,394         62,514         21,720        7,254
subsidiaries
                                                                
OPERATING INCOME       3,718,720      3,942,161      967,516       299,136
                                                                   
Interest income        274,818        176,584        41,987        46,088
Change in fair value
of derivative          (2,144)        (2,268)        (295)         (587)
instruments
Interest expense,
net of amounts         (1,351,239)    (1,740,774)    (328,406)     (419,578)
capitalized
Foreign currency
transactions           93,797         (326,415)      13,848        (98,616)
gains/(losses)
                                                                
Income from
continuing             2,733,952      2,049,288      694,650       (173,557)
operations before
income tax
                                                                   
Income tax expense     (1,153,673)    (1,084,384)    (290,445)     (285,160)
                                                                
Income from
continuing             1,580,279      964,904        404,205       (458,717)
operations
                                                                   
(Loss)/gain from
discontinued           (50,422)       61,206         (104,442)     (12,393)
operations, net of
tax effect
Gain on disposal of
discontinued           131,039        161,817        117,227       12,337
operations, net of
tax effect
                                                                
NET INCOME           $ 1,660,896    $ 1,187,927    $ 416,990     $ (458,773)
                                                                   
Noncontrolling         (714,137)      (969,925)      (216,107)     (71,459)
interest
                                                                
NET INCOME
attributable to      $ 946,759      $ 218,002      $ 200,883     $ (530,232)
Sistema JSFC
                                                                   
Income per share,
basic and diluted,     10.18          2.35           2.18          (5.72)
U.S. cent

SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2012 AND 2011
(Amounts in thousands of U.S. dollars, except share amounts)

                                       December 31, 2012    December 31, 2011
                                                             
ASSETS
                                                             
CURRENT ASSETS:
Cash and cash equivalents            $ 1,872,741           $ 2,919,189
Short-term investments                 1,214,869             767,560
Assets from banking activities,
current portion (including cash and    4,342,984             4,204,961
cash equivalents of $769,411 and
$1,315,075)
Accounts receivable, net               2,265,127             1,748,028
VAT receivable                         611,097               709,099
Inventories and spare parts            1,814,022             1,627,336
Deferred tax assets, current portion   348,773               311,891
Disposal group held for sale           105,327               1,571,996
Other current assets                   1,678,992             1,703,361
                                                            
Total current assets                   14,253,932            15,563,421
                                                             
NON-CURRENT ASSETS:
Property, plant and equipment, net     21,205,611            18,397,951
Advance payments for non-current       239,707               324,709
assets
Goodwill                               1,699,881             1,511,178
Other intangible assets, net           2,211,266             2,219,331
Investments in affiliates              1,482,721             1,553,651
Assets from banking activities, net    2,255,709             2,303,120
of current portion
Debt issuance costs, net               155,895               171,951
Deferred tax assets, net of current    348,558               348,589
portion
Long-term investments                  269,180               1,060,912
Other non-current assets               603,827               461,684
                                                            
Total non-current assets               30,472,355            28,353,076
                                                            
TOTAL ASSETS                         $ 44,726,287          $ 43,916,497

SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2012 AND 2011 (CONTINUE)
(Amounts in thousands of U.S. dollars, except share amounts)

                                       December 31, 2012    December 31, 2011
                                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                                             
CURRENT LIABILITIES:
Accounts payable                     $ 2,508,831           $ 2,170,725
Liabilities from banking activities,   4,131,390             3,152,989
current portion
Taxes payable                          764,683               794,117
Deferred tax liabilities, current      139,842               168,545
portion
Subscriber prepayments, current        615,651               605,545
portion
Accrued expenses and other current     2,908,468             2,259,508
liabilities
Short-term loans payable               292,260               278,110
Current portion of long-term debt      2,909,729             4,097,076
Disposal group held for sale           73,132                333,498
                                                            
Total current liabilities              14,343,986            13,860,113
                                                             
LONG-TERM LIABILITIES:
Long-term debt, net of current         12,462,339            12,006,322
portion
Subscriber prepayments, net of         112,805               106,586
current portion
Liabilities from banking activities,   1,057,072             1,644,478
net of current portion
Deferred tax liabilities, net of       2,046,603             1,404,846
current portion
Asset retirement obligation            228,627               214,121
Postretirement benefits obligation     89,038                77,591
Property, plant and equipment          88,380                86,081
contributions
Other long-term liabilities            250,599               86,577
                                                            
Total long-term liabilities            16,335,463            15,626,602
                                                            
TOTAL LIABILITIES                      30,679,449            29,486,715
                                                             
Commitments and contingencies          -                     -
                                                             
Redeemable noncontrolling interests    731,661               723,819
                                                             
SHAREHOLDERS’ EQUITY:
Share capital (9,650,000,000 shares
issued; 9,209,574,962 and
9,267,985,025 shares outstanding       30,057                30,057
with par value of 0.09 Russian
Rubles, respectively)
Treasury stock (440,425,038 and
382,014,975 shares with par value of   (501,109)             (467,198)
0.09 Russian Rubles, respectively)
Additional paid-in capital             2,882,819             2,575,601
Retained earnings                      7,111,088             6,418,649
Accumulated other comprehensive loss   (327,622)             (518,354)
                                                            
Total Sistema JSFC shareholders’       9,195,233             8,038,755
equity
                                                             
Non-redeemable noncontrolling          4,119,944             5,667,208
interests
                                                             
TOTAL EQUITY                           13,315,177            13,705,963
                                                            
TOTAL LIABILITIES AND EQUITY         $ 44,726,287          $ 43,916,497

SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
(Amounts in thousands of U.S. dollars)

                                                       2012         2011
                                                                     
CASH FLOWS FROM OPERATING ACTIVITIES:
                                                                     
Net income                                           $ 1,660,896   $ 1,187,927
                                                                     
Gain on disposal of discontinued operations            (131,039)     (161,817)
Loss/(income) from discontinued operations             50,422        (61,206)
                                                                     
Income from continuing operations                      1,580,279     964,904
                                                                     
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation, depletion and amortization               3,159,433     3,269,374
Equity in results of affiliates                        9,138         (120,929)
Deferred income tax expense/(benefit)                  114,730       (14,934)
Foreign currency transactions (gains)/losses           (93,797)      326,415
Impairment of goodwill                                 108,544       348,679
Impairment of long-lived assets other than goodwill    1,222,402     818,550
and provisions for other assets
Provisions for claims                                  496,504       11,816
Loss on disposal of property, plant and equipment      12,802        24,160
Dividend income from Russneft                          (42,155)      -
Amortization of connection fees                        (73,568)      (96,676)
Allowance for loan losses                              60,672        10,563
Dividends received from affiliates                     92,322        42,328
Non-cash compensation to employees of subsidiaries     24,015        51,037
Gain on disposal of subsidiaries                       (12,394)      (62,514)
Other non-cash items                                   55,212        80,922
                                                                     
Changes in operating assets and liabilities, net of
effects from purchase of businesses:
Trading securities                                     (30,044)      (121,253)
Accounts receivable                                    (640,181)     (165,462)
VAT receivable                                         99,452        (167,818)
Inventories and spare parts                            (417,944)     (170,760)
Other current assets                                   105,855       (129,451)
Accounts payable                                       323,158       562,841
Subscriber prepayments                                 61,965        99,340
Taxes payable                                          (99,951)      97,105
Accrued expenses and other liabilities                 (248,770)     (245,596)
                                                                     
Net cash provided by operating activities of           5,867,679     5,412,641
continuing operations
Net cash provided by operating activities of           (23,385)      158,717
discontinued operations
                                                                     
Net cash provided by operating activities            $ 5,844,294   $ 5,571,358

SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
(Amounts in thousands of U.S. dollars)

                                                   2012           2011
                                                                   
CASH FLOWS FROM INVESTING ACTIVITIES:
                                                                   
Payments for purchases of property, plant and      (3,853,968)     (3,680,939)
equipment
Payments for purchases of intangible assets        (355,583)       (451,151)
Payments for purchases of businesses, net of       (889,373)       (375,245)
cash acquired
Purchase of investments in affiliated companies    (136,073)       -
Payments for purchases of long-term investments    (539,299)       (929,097)
Payments for purchases of short-term investments   (2,899,100)     (893,682)
Payments for purchases of other non-current        (11,214)        (173,816)
assets
Decrease/(increase) in restricted cash             70,073          (45,299)
Cash disposed on loss of control less              (49,238)        -
consideration received
Proceeds from sale of subsidiaries, net of cash    132,123         184,596
disposed
Proceeds from sale of property, plant and          60,941          170,178
equipment
Proceeds from sale of long-term investments        934,434         165,629
Proceeds from sale of other non-current assets     92,259          -
Proceeds from sale of short-term investments       3,139,025       1,184,068
Net decrease in loans to customers and banks       (367,321)       (341,126)
                                                                   
Net cash used in investing activities            $ (4,672,314)   $ (5,185,884)
                                                                   
CASH FLOWS FROM FINANCING ACTIVITIES:
                                                                   
Principal payments on from short-term              (93,749)        (276,885)
borrowings, net
Net increase/(decrease) in deposits from           77,046          (1,108,968)
customers of the banking division
Proceeds from sale of treasure stock               73,083          -
Proceeds from long-term borrowings, net of debt    3,057,463       6,421,015
issuance costs
Debt issuance costs                                (16,056)        (69,860)
Principal payments on long-term borrowings         (4,350,409)     (4,350,610)
Acquisition of non-controlling interests in        (1,118,653)     (261,295)
existing subsidiaries
Dividends paid                                     (658,144)       (960,486)
Proceeds from capital transactions with shares     73,987          153,710
of existing subsidiaries
Purchases of treasury shares                       (143,201)       (28,559)
                                                                   
Net cash used in financing activities            $ (3,098,633)   $ (481,938)
                                                                   
Effect of foreign currency translation on cash   $ 247,013       $ (154,384)
and cash equivalents
                                                                   
Net decrease in cash and cash equivalents        $ (1,679,640)   $ (250,848)
                                                                   
Cash and cash equivalents at the beginning of
the period (including cash of discontinued         4,322,708       4,573,556
operations)
                                                                   
Cash and cash equivalents at the end of the
period (including cash of discontinued             2,643,068       4,322,708
operations)
Cash and cash equivalents of discontinued          (916)           (88,444)
operations at the end of the period
                                                                   
Cash and cash equivalents of continuing          $ 2,642,152     $ 4,234,264
operations at end of the period *
                                                                   
CASH PAID DURING THE PERIOD FOR:
Interest paid, net of amounts capitalized        $ (1,384,730)   $ (1,802,826)
Income taxes paid                                  (1,125,941)     (1,069,790)
* Cash and cash equivalents at the end of the
period comprised of the following:
Non-banking activities                           $ 1,872,741     $ 2,919,189
Banking activity                                   769,411         1,315,075
                                                 $ 2,642,152     $ 4,234,264

SISTEMA JSFC AND SUBSIDIARIES
UNAUDITED SEGMENTAL BREAKDOWN FOR THE  YEARS ENDED DECEMBER 31, 2012 AND 2011
(Amounts in thousands of U.S. dollars)

For the year                                                                                  Total
ended              MTS         Bashneft    SSTL       MTS Bank   RTI        Corporate  reportable  Other      Total
December 31, 2012                                                                             segment
                                                                                                                       
Net sales to
external            12,426,353   17,113,023   303,032     668,384     1,826,969   38,876      32,376,637   1,864,030   34,240,667
customers^(a)
Intersegment        9,302        12,210       -           43,887      549,366     38,889      653,654      23,120      676,774
sales
Equity in net
loss/(net income)   27,929       (11,610)     -           -           (15,745)    -           574          (9,712)     (9,138)
of affiliates
Net interest        -            -            -           21,393      -           -           21,393       -           21,393
expense ^ (b)
Depreciation,
depletion and       2,222,256    592,384      74,653      18,470      95,683      12,350      3,015,796    143,637     3,159,433
amortization
Operating           2,053,438    2,557,696    (621,167)   32,266      (83,154)    (253,001)   3,686,078    82,476      3,768,554
income/(loss)
Interest income     84,359       179,344      6,423       -           6,680       136,718     413,524      5,070       418,594
Interest expense    568,184      353,173      176,481     -           86,362      153,860     1,338,060    108,946     1,447,006
Income tax          589,353      465,896      -           16,125      18,364      (25,144)    1,064,594    89,079      1,153,673
expense/(benefit)
Investments in      165,233      942,247      -           -           251,747     117,233     1,476,460    6,261       1,482,721
affiliates
Segment assets      15,606,599   15,211,987   630,300     7,023,706   3,336,508   2,629,385   44,438,485   4,631,302   49,069,787
Indebtedness^(c)    7,631,207    3,601,385    1,046,717   -           1,338,205   1,646,799   15,264,313   400,015     15,664,328
Capital             2,902,768    890,472      83,500      31,210      102,782     11,651      4,022,383    187,168     4,209,551
expenditures ^(d)

For the year                                                                                    Total
ended              MTS         Bashneft    SSTL         MTS Bank   RTI        Corporate  reportable  Other      Total
December 31, 2011                                                                               segment
                                                                                                                         
Net sales to
external            12,312,501   16,537,117   262,264       529,012     1,355,363   37,551      31,033,808   1,907,068   32,940,876
customers^(a)
Intersegment        6,187        11,969       -             31,894      737,676     26,998      814,724      27,537      842,261
sales
Equity in net
loss/(net income)   49,443       75,245       -             -           -           -           124,688      (3,759)     120,929
of affiliates
Net interest        -            -            -             (1,912)     -           -           (1,912)      -           (1,912)
revenue ^ (b)
Depreciation,
depletion and       2,293,021    611,876      99,424        17,339      104,010     9,399       3,135,069    134,305     3,269,374
amortization
Operating           2,893,938    2,778,789    (1,196,084)   (23,510)    50,382      (228,712)   4,274,803    (128,673)   4,146,130
income/(loss)
Interest income     62,559       74,021       34,152        -           13,028      102,685     286,445      74,310      360,755
Interest expense    656,898      559,806      162,442       -           83,403      274,569     1,737,118    108,768     1,845,886
Income tax          613,681      527,117      (6,747)       (5,118)     28,854      (82,225)    1,075,562    8,822       1,084,384
expense/(benefit)
Investments in      176,659      1,108,601    -             -           214,625     37,239      1,537,124    16,527      1,553,651
affiliates
Segment assets      15,928,150   13,530,524   1,113,191     6,978,934   2,629,665   3,135,691   43,316,155   4,084,583   47,400,738
Indebtedness^(c)    8,700,407    3,393,314    1,573,523     -           1,126,471   1,246,786   16,040,501   341,007     16,381,508
Capital             2,584,467    877,442      178,156       34,360      127,166     8,797       3,810,388    321,702     4,132,090
expenditures ^(d)

a. Interest income and expenses of the MTS Bank are presented as revenues from
financial services and cost of financial services, correspondingly, in the
Group’s consolidated financial statements.

b. Represents the net interest result of banking activities. In reviewing the
performance of MTS Bank, the chief operating decision maker reviews the net
interest result, rather than the gross interest amounts.

c. Represents the sum of short-term and long-term debt.

d. Represents purchases of property, plant and equipment and intangible
assets.

Attachment A

Non-GAAP financial measures. This press release includes financial information
prepared in accordance with accounting principles generally accepted in the
United States of America, or US GAAP, as well as other financial measures
referred to as non-GAAP. The non-GAAP financial measures should be considered
in addition to, but not as a substitute for, the information prepared in
accordance with US GAAP.

Operating Income Before Depreciation and Amortization (OIBDA) and OIBDA
margin. OIBDA represents operating income before depreciation and
amortization. OIBDA margin is defined as OIBDA as a percentage of our net
revenues. Our OIBDA may not be similar to OIBDA measures of other companies;
is not a measurement under accounting principles generally accepted in the
United States and should be considered in addition to, but not as a substitute
for, the information contained in our consolidated statement of operations. 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 generally accepted accounting principles, these expenses
primarily represent the non-cash current period allocation of costs associated
with long-lived assets acquired or constructed in prior periods. Our OIBDA
calculation 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. OIBDA can be reconciled to our
consolidated statements of operations as follows:

Operating income and OIBDA reconciliation

                          4Q 2012  4Q 2011  2012       2011
Operating Income            967.5     299.1     3,718.7     3,942.2
One off items               372.6     1,014.8   1,664.9     1,057.0
Adjusted operating income   1,340.1   1,313.9   5,383.6     4,999.2
Depreciation, depletion
                            (733.4)   (800.4)   (3,159.4)   (3,269.4)
and amortization
Adjusted OIBDA              2,073.5   2,114.2   8,543.1     8,268.5

Net income reconciliation

                    4Q 2012  4Q 2011  2012     2011
Net income            200.9     (530.2)   946.8     218.0
One off items         157.1     791.6     847.7     778.8
Adjusted net income   357.9     261.4     1,794.5   996.8

^1 See Attachment A for definitions and reconciliation of adjusted OIBDA to
GAAP financial measures.

^2 See Attachment A for definitions and reconciliation of adjusted net income
attributable to the Group to GAAP financial measures.

^3 Including highly liquid deposits.

^4 Sistema’s voting stake in Bashneft is now 89%, effective ownership is 75%

^5 Here and from hereon, the comparison of period to period revenues are
presented on an aggregated basis, excluding revenues from intra-segment
(between entities in the same segment) transactions, but before inter-segment
(between entities in different segments) eliminations, unless accompanied by
the word “consolidated”. Amounts attributable to individual companies, where
appropriate, are shown prior to both intra-segment and inter-segment
eliminations and may differ from respective standalone results due to certain
reclassifications and adjustments.

^6 On November 7, 2012, Bashkirenergo was split into JSC Bashkirian Power Grid
Company, which combines transmission and distribution grids, and OJSC
Bashenergoactiv, which integrates power generation assets. Sistema-Invest
obtained a 92.48% voting stake in Bashkirian Power Grid Company. In accordance
with US GAAP requirements all operations of the power generation segment were
excluded.

^7 Financial results of Stream.ru are included into SMM segment for all
periods presented.

^8 Financial results of OJSC “Concern “RTI Systems” and OJSC SITRONICS are
included into RTI segment for all periods presented.

^9 Molecular Electronics Research Institute

^10 In February 2012, MBRD changed its name to OJSC MTS Bank.

^11 Here and further, OIBDA and net income (loss) of the Corporate & Other
category are shown without an effect of intragroup dividends.

Contact:

JSFC Sistema