AFK Sistema

Aktivs

As of June 2019, Sistema's assets include:

• MTS
• MTS Bank
• Segezha Group
• Children's world
• Medsi
• Bashkir Power Grid Company (BESK)
• RTI GROUP
• Cosmos Group - Hospitality
• Sistema Venture Capital
• Binnopharm
• Agroholding Steppe
• Leader-Invest (development)
• Business Real Estate (Rental Assets)
• Concept Group
• Kurgan Society of Medical Products and Products "Synthesis"
• "Biocom"

Board of Directors of AFK Sistema

Main article: AFK Sistema Board of Directors

Performance indicators

Main article: Financial indicators of AFK Sistema

2023: Revenue growth by 16.7% to RUB 1.05 trillion. And output to the FIN

Consolidated revenue of AFK Sistema in 2023 reached 1.05 trillion, rubles an increase of 16.7% compared to the previous year. The corporation's net loss in 2023 amounted to 5.3 billion rubles against 43.5 billion rubles of net profit in 2022. Such data IFRS were published on April 8, 2024.

The receipt of a net loss in 2023 at AFK Sistema was explained as "a conservative approach used by the group in the formation of reserves for financial investments in consolidated financial results." Excluding the influence of this factor, the profit is 6.2 billion rubles.

Consolidated revenue of AFK Sistema in 2023 reached 1.05 trillion rubles

As for revenue, exceeding the threshold of 1 trillion rubles per year is a record for AFK Sistema in history. It is noted that the largest contribution to revenue growth was made by such portfolio companies AFK as mobile operator MTS, agricultural holding "Steppe," developer Etalon Group, as well as hotel operator Cosmos Hotel Group.

The company's net financial liabilities by the end of 2023 amounted to 247.7 billion rubles, which is slightly less than a year ago (245.2 billion rubles).

In 2023, the holding's investments amounted to 36 billion rubles against 29 billion rubles a year earlier. Investments were directed to new industries (cosmetic, fishing, hotel), as well as to the development of current assets. EBITDA in 2023 decreased by 13% compared to the previous year and by 2% less one-time transaction revenues.

The company's OIBDA for 2023 amounted to 266.2 billion rubles. This indicator was influenced by the results of the timber industry asset for the reporting year and the recognition of one-time profits from the profitable acquisition of development assets in 2022. Excluding these factors, the group's OIBDA growth in 2023 exceeded 3% year-on-year.^[1]

2022: Revenue growth by 18% to RUB 912.66 billion

The revenue of AFK Sistema in 2022 increased by 18% compared to 2021 and reached 912.66 billion rubles. In 2021, the indicator was measured at 773.22 billion rubles. The corporation's net profit during this time also increased - from 16.76 billion to 19.4 billion rubles. Such data are contained in the reporting under IFRS, which was published on April 10, 2023.

AFK Sistema linked revenue growth to the consolidation of Etalon Group results since May 2022, as well as an increase in revenue of the following key assets:

• MTS - against the background of continued growth in Telecom, Fintech and Media business verticals;
• Agricultural holding "Steppe" - due to a record harvest and a significant increase in milk production;
• Segezha Group - thanks to increased production and sales of lumber;
• Medsi - thanks to the active expansion of the medical network, as well as an increase in the flow of patients;
• Binnopharm Group - as a result of a significant increase in sales in the retail and export segments.

From the materials of AFK Sistema, it also follows that the company's capital expenditures in 2022 decreased by 8.6 billion rubles compared to a year ago - to 158.6 billion rubles. Net financial liabilities of the corporate center of the company amounted to 245.2 billion rubles. The balance of funds of the corporate center amounted to 9.8 billion rubles.

In the reporting year, we faced new unprecedented challenges and large-scale transformational changes. Nevertheless, the results of the Corporation, as well as the entire 30-year history of sustainable business development of AFK Sistema, confirm that we are able to effectively manage investments, and our assets - to increase business volumes both in the growing market and in conditions of high volatility, - commented on the results of 2022, President of AFK Sistema Tagir Sitdekov.

Financial results of AFK Sistema for 2022 under IFRS

2020: Revenue growth by 5.7%, to 691.6 billion rubles

AFK Sistema ended 2020 with revenue of 691.6 billion rubles, which is 5.7% higher than a year ago. As reported in the statements, this growth is provided by increasing the income of key assets:

• MTS - due to an increase in both mobile service revenue and strong dynamics in new business segments (Fintech, Media and B2B Digital & Cloud);
• Segezha Group - due to increased revenue against the background of increased sales of paper packaging and lumber and rising prices for plywood and lumber;
• Agroholding "Steppe" - due to an increase in revenue in all key segments;
• Medsi - due to the growth of the average check in connection with the provision of services for the diagnosis and treatment of COVID-19, as well as the expansion of the outpatient network in Moscow and the purchase of clinics in Izhevsk.

Our key consolidated portfolio companies overcame the challenges associated with the COVID-19 pandemic, managed to quickly rebuild their business models, adapting products and services to new realities, which was reflected in the strong dynamics of annual results, - said the President of AFK Sistema Vladimir Chirakhov, whose words are quoted by the press service of the company.

Sistema's net profit at the end of 2020 amounted to 10.22 billion rubles, down 64.3% compared to 2019. The adjusted net profit fell even more - by 70%. The dynamics of profit was influenced by the results of the sale of 100% of the shares of Leader Invest and its deconsolidation, the public offering of 18.3% of the shares of Detsky Mir, deconsolidation and further reclassification of the remaining stake (33.4%) as an investment in an associated company in 2019.

Capital expenditures of AFK Sistema in 2020 increased by 8.6% and amounted to 127.8 billion rubles. The growth was due to an increase in MTS investments in the development of the network and under the influence of the currency component of capital expenditures against the background of the weakening ruble exchange rate, as well as due to the expansion and modernization of capacities in the Segezha Group.^[2]

Company history

2024

Renaming Sitronics Space and transferring the company to the direct ownership of AFK Sistema

Sitronics Space was excluded from the Sitronics Group and received a new name - Satellite Group. Now it is directly subordinate to AFK Sistema. The reorganization was completed in November 2024. Read more here.

The owner of AFK Sistema Vladimir Yevtushenkov created a book publishing house

In early August 2024, it became known that the owner of AFK Sistema Vladimir Yevtushenkov created a new company whose activities are related to the publication of books. The organization, registered in Moscow on Prechistenka, was named Region-S LLC. Read more here

Ex-President of AFK Sistema Yevgeny Novitsky detained in Moscow

On June 20, 2024, it became known that the former president of the AFK Sistema holding, Yevgeny Novitsky, was detained by Moscow in connection with the "investigation of a criminal case of an economic nature." According to available information, we are talking about fraud. Read more here.

AFK Sistema became the largest shareholder of the manufacturer Essentuki and Narzan

AFK Sistema has completed the merger of large water producers, becoming the largest shareholder of the Holding Aqua group of companies, which produces Essentuki and Narzan. This was announced on June 10, 2024 by a representative of the holding. Read more here.

Sberbank bought 40% of Gorno-Altaysk airport from AFK Sistema

Sberbank bought 40% of Gorno-Altaysk airport from AFK Sistema and became its sole owner. This was announced on April 23, 2024 by the chairman of the board of the credit institution German Gref without specifying the details of the transaction. Read more here.

AFK Sistema and KamAZ began to jointly create hydrogen transport

In February 2024, KamAZ and AFK Sistema signed an agreement on cooperation in the development of hydrogen technologies. Read more here.

2023

The structure of AFK Sistema became the owner of Honka Kamchatka

At the end of December 2023, the structure of AFK Sistema - Zarya LLC - became the owner of the former project of Oleg Tinkov's elite hotel in Kamchatka. We are talking about the sale of 100% of the Honka Kamchatka company, which was previously called La Dacha Kamchatka. Read more here.

US sanctions imposed on all companies with more than 50% of AFK Sistema

On November 2, 2023, the United States imposed blocking sanctions on all companies with a 50% stake in AFK Sistema, even if they are not included in the SDN-List.

In addition to the corporation, Luxembourg East West United Bank, Singapore Sistema Asia Pte, as well as the Smarttech System Foundation are included in the SDN list. The US authorities classify them as related to AFC structures.

Russian IT companies that fell under US, EU and British sanctions in 2022-2024 TAdviser map

Map of sub-sanctioned IT companies. Click to enlarge

TAdviser drew up a map of Russian IT companies in 2022-2024. which fell under the sanctions of the United States, the EU and Britain. It includes, among other things, AFK Sistema. The article about the map can be found here.

AFK Sistema invests in prosthesis manufacturer Motorika

In early June 2023, it became known about the investment of AFK Sistema in the manufacturer of bionic prostheses "Motorica." The interest of the state corporation in the startup is manifested against the background of increased demand for prostheses due to hostilities. Read more here.

AFK Sistema bought 100% of cosmetics manufacturer Natura Siberica

On May 2, 2023, AFK Sistema announced the purchase of a 100 percent stake in the authorized capital of Organik Rus JSC, which owns the Natura Siberica group of companies. The value of the transaction was not disclosed. Read more here.

Leaving the London Exchange

On April 13, 2023, AFK Sistema announced its departure from the London Exchange. The Company also instructed the depository bank to terminate the Global Depositary Receipts (GDR) program. Sistema plans to complete delisting on May 14, 2023, the press service of the corporation reports.

Sistema sent Great Britain a request to the Financial Conduct Authority (FCA) to delist GDRs issued in accordance with Regulation S (ISIN US48122U2042) and Rule 144A (ISIN US48122U1051). In addition, the Corporation filed an application with the London Stock Exchange to cancel the admission of the Corporation's GDRs to trading in the main LSE listed securities market.

AFK Sistema reminds that the provisions of Federal Law No. 114-FZ "On Amendments to the Federal Law" On Joint Stock Companies "and Certain Legislative Acts of the Russian Federation" (the "Delisting Law") obliges Russian issuers to cease circulation of shares outside the Russian Federation, except when such issuers have obtained appropriate permits from authorized state bodies to continue circulation of their shares in the form of depositary receipts outside the Russian Federation.

In accordance with the delisting law, Sistema is obliged and carries out actions to terminate depositary agreements and complete delisting on the LSE. After that, trading in ordinary shares of AFK Sistema will continue on the Moscow and St. Petersburg exchanges under the ticker symbol AFKS.

In April 2022, the president Russia Vladimir Putin signed a law on delisting depositary receipts of Russian companies from foreign sites with subsequent conversion into Russian securities. Amendments to the law were prepared Ministry of Economics against the background of a fall in the value of depositary receipts of the largest Russian issuers on the London Stock Exchange.^[3]

Termination of Melon Fashion Group purchase deal

AFK Sistema refused to buy Melon Fashion Group (MFG). This was announced on March 5, 2023 by the Swedish group Eastnine, which owns 36% of the retailer MFG. The AFC confirmed the termination of the transaction. Read more here.

Creating a Consumer Electronics Distributor

At the end of January 2023, it became known about the creation of Guru Electronics in the structure of AFK Sistema, which will supply consumer electronics and small household appliances. She has already issued declarations for the import into the EAEU of Apple phones and smartwatches, Dyson and Samsung equipment. Read more here.

2022

Purchase of a fishing company in Kamchatka

At the end of December 2022, AFK Sistema, through its subsidiary, UK Kamchatka Project, bought 99.99% of Loyd-Fish LLC and Loyd-Auto LLC. The financial terms of the transaction were not disclosed. Read more here.

The structure of AFK Sistema sold the German chain of hypermarkets Real

On October 19, 2022, it became known that Sistema Capital Partners (SCP Group, a former structure of AFK Sistema, sold the German a network of hypermarkets. Real According to data to the Federal Antimonopoly Committee, Germany local retailers became buyers of its facilities. Other details of the deal are unknown. More. here

AFK Sistema acquired 47.7% of Malon Fashion Group for 15.8 billion rubles

On October 19, 2022, AFK Sistema announced the purchase of 47.7% of Melon Fashion Group (MFG; manages the brands Zarina, Befree, Love Republic and Sela) from the Swedish companies Eastnine and East Capital Holding AB and a group of private investors for 15.8 billion rubles. Read more here.

Sistema Telecom Assets bought mineral mineral producer Arkhyz for 450 million rubles

On June 8, 2022, the value of the transaction for the sale of the mineral water producer Arkhyz was disclosed. For the purchase of this company, Sistema Telecom Assets (part of AFK Sistema) paid 450 million rubles. Most of these funds are paid for by converting the debt into the capital of Arkhyz. Its participants did not disclose other parameters of the deal. Read more here.

Increase in share in Etalon Group to 48.8% for 4.5 billion rubles

In early May 2022, an agreement was concluded, under the terms of which AFK Sistema increased its effective stake in Etalon Group to 48.8%. Sistema Finance, a member of the state corporation, bought 72,854,619 global depositary receipts (GDRs) of the developer for 4.5 billion rubles, the AFK press service said. Read more here.

Transfer of a 10% stake in AFK Sistema to Felix Yevtushenkov

On April 13, 2022, AFK Sistema announced the transfer of a 10% stake owned by the main owner of the company, Vladimir Yevtushenkov, his son Felix Yevtushenkov. As a result of the transaction, the share of Felix Yevtushenkov, who holds the post of senior managing partner, in the authorized capital of AFK amounted to 15.2%, and the share of his father - 49.2%. Read more here.

Reduction of the share in MTS to 49.94%

On March 24, 2022, it became known that AFK Sistema reduced its effective ownership in MTS to 49.94%. This happened as a result of the transaction, as a result of which the President and Chairman of the Board of MTS Vyacheslav Nikolaev received 19.9 thousand ordinary shares of the company in addition to his share of the shares of the telecom operator received earlier as part of long-term incentive programs. Read more here.

Sale to Roscosmos of a controlling stake in Yaroslavl Radio Plant

As Dmitry Rogozin, general director of Roscosmos, said on March 14, 2022 in his Telegram channel, the state corporation acquired a controlling stake in Yaroslavsky Radio Plant from Sistema and included it in its Russian Space Systems space instrument holding. This deal, he said, has become a landmark event in the rocket and space industry, since thanks to it, the state corporation Roscosmos now has the ability to mass-produce space-based electronic equipment on its own. Read more here.

Purchase of Arkhyz mineral water producer

In mid-February 2022, it became known about the sale of a 100% stake in Arkhyz Original LLC (owns the Arkhyz Vita trademark, a popular brand of bottled mineral water in Russia) to AFK Sistema. Sistema Telecom Assets (part of AFK Sistema) filed a corresponding petition with the Federal Antimonopoly Service (FAS ). Read more here.

Refusal to purchase Home Credit Bank

On February 10, 2022, it became known that the structures of AFK Sistema stopped negotiations on the purchase of Home Credit Bank, as they went to no avail. The parties could not agree on the price, the bank is no longer for sale.

The bank's management has notified leading employees that the asset has not yet been sold and will develop within the structure of the Czech PPF group, RBC writes, citing its own source in the organization. There is no talk of selling Home Credit now and the bank is working on a business strategy for a year, the publication claims, citing another interlocutor.

Information about the intention to acquire Home Credit appeared in January. The structures were interested in both buying a Russian bank and its subsidiary in Kazakhstan. But, besides the fact that the parties could not agree on the price, there was no consensus in the holding whether it should enter the Kazakh market in the current conditions.

This is due to mass protests in the country at the beginning of the year, against the background of which the redistribution of power began, Frank Media points out. According to the publication, the heirs of the founder of PPF Group Peter Kellner, who died in March 2021, decided not to change the structure of the group.

Earlier, the Company magazine reported that the structures of AFK Sistema Vladimir Yevtushenkov could pay over 1 billion euros for Home Credit Bank, which is owned by the Czech PPF Group. It was put up for sale after the death in 2021 of the founder of PPF Group, Czech billionaire Peter Kellner. The bank was also claimed by the Hungarian OTP Group with the Russian OTP Bank.

Cooperation with MSTU for the development of advanced technologies and industries

January 20, 2022 PJSC AFK Sistema and Moscow State Technical University named after N.E. Bauman (hereinafter - MSTU), announced the beginning of strategic cooperation in the field of scientific and technical cooperation, training, implementation of infrastructure and educational projects aimed at combining science and business for the development of new technologies, knowledge-intensive industries and human capital. Read more here.

2021

Increase to 75.3% of the share in Binnopharm Group

On December 14, 2021, AFK Sistema announced an increase to 75.3% of its effective stake in the Binnopharm Group holding, which, among other things, is engaged in the production of the Sputnik V coronavirus vaccine. Read more here.

Purchase of the pharmaceutical company Niarmedic

On September 15, 2021, the sale of Niarmedic to AFK Sistema and Sberbank for 1 ruble was announced. The symbolic value of the transaction is due to the large debts of the pharmaceutical company - about 5.9 billion rubles. Read more here.

Anatoly Chubais first became a shareholder of AFK Sistema

On July 13, 2021, it became known that Anatoly Chubais, Special Representative of the President of Russia for Sustainable Development, became a shareholder of AFK Sistema for the first time. Vedomosti writes about this with reference to a document published by the Center for Business Information Disclosure. Read more here.

Sale of Binnopharm Group's stake to VTB Capital for 7 billion rubles

On June 29, 2021, Binnopharm Group informed Zdrav.Expert about investments from VTB Capital. 100% subsidiary of AFK Sistema - Sistema Telecom Assets LLC - sold a stake in 11.2% of the authorized capital of Ristango Holding Limited, the owner of 100% of the authorized capital of Binnopharm Group, to Nevsky Property Investments Limited, controlled by VTB Capital. The transaction amount amounted to 7 billion rubles. Read more here.

Yevtushenkov: The breakdown of the deal to buy Tinkoff Bank is caused by the complexity of combining different cultures

In early June 2021, the main owner of AFK Sistema, Vladimir Yevtushenkov, said that the company was interested in buying Tinkoff Bank, but refused the deal due to difficulties in combining "two different cultures," while the issue of its price was "secondary." Read more here.

Establishing a Company for Concessions in Healthcare

In May 2021, it became known about the creation of AFK Sistema a new company that will deal with concessions, including in the field. health care This structure was called System concessions"." More. here

Placement of bonds for 10 billion rubles

On May 12, 2021, the issue of AFK Sistema bonds was placed on the Moscow Exchange. Series 001R-20 bonds (ISIN RU000A103372) with a total face value of 10 billion rubles. The coupon rate on bonds is set at 8.2% per annum.

• Nominal value of bonds - 1,000 rubles,
• The placement price is 100% of the face value.
• The period of issue circulation is 10 years.
• The coupon period is 182 days.

The initial range on the coupon rate on bonds is 8.20-8.40% per annum. According to the results of bookbuilding, the rate of 1-10 coupons is set at 8.20% per annum.

The issue meets the requirements for investing pension savings and insurance reserves. The placement took place on the site of the Moscow Exchange. The depository of the issue is NPO JSC NSD.

The organizers of the placement of the bond issue were ITI Capital, BCS Global Markets, Zenit Bank, MTS Bank, SKB-Bank, Sber CIB, IFK Solid and Rosbank. Accommodation Agent - Sber CIB.

Transfer of 32.4% of the authorized capital of OAO Sintez to Binnopharm Group

On May 12, 2021, Binnopharm Group informed Zdrav.Expert that a 100% subsidiary of Sistema PJSC Sistema LLC Sistema Telecom Assets contributed its stake in 32.4% of the authorized capital of Sintez OJSC to the authorized capital of Binnopharm Group LLC. As a result of the transaction, Binnopharm Group increased its stake in OJSC Sintez to 88.6%. Read more here.

Investing 200 million rubles in the scooter rental service URent

On April 7, 2021, AFK Sistema announced the investment of 200 million rubles in the URent scooter rental service. The deal was concluded through the Sistema SmartTech fund, which is part of the state corporation. Read more here.

Purchase of a stake in the pharmaceutical company Sintez from Natsimbio

At the end of March 2021, Rostec"" announced the sale of its share in Synthesis"." We are talking about 32.4% of the authorized capital of the pharmaceutical company, which was acquired by AFK Sistema through its subsidiary Telecom System Assets. The seller as part of the transaction was the holding "" included in Rostec. Natsimbio The financial component of the agreement has not been disclosed. More. here

Finalization of Binnopharm Group Holding

A consortium of investors consisting Russian Direct Investment Fund of (RDIF, sovereign wealth fund), of the Russian Federation an RussianChinese investment fund (RCIF, created by RDIF and), China Investment Corporation as well as the largest Middle East funds in partnership with AFK Sistema, a public Russian investment company, and the Group VTB on February 19, 2021 announced the completion of the creation of the holding "." Binnopharm groups More. here

2020

Increase in share in Ozon

In mid-November 2020, Ozon filed documents with the US Securities and Exchange Commission (SEC), of which it became known that AFK Sistema and Baring Vostok are increasing the total share of the Internet retailer to 76% after buying back securities for $135 million. Read more here.

MTS sells NVision Group to AFK Sistema

On November 2, 2020, MTS announced the planned sale of a 100% stake in NVision Group to its largest shareholder, AFK Sistema. The company sells to Sistema the assets of NVision Group related to the system integration business, with the exception of those that participate in the formation of the MTS product portfolio. The transaction amount will be 401 million rubles, taking into account a possible adjustment, depending on the updated financial indicators at the closing date. Read more here.

Creation of Alium Group with the aim of combining all AFK Sistema pharmaceutical assets in it

On July 20, 2020, PJSC AFK Sistema announced the creation of the company Alium groups"," which transferred stakes in the Corporation pharmaceutical in the companies OJSC "" Synthesis(owns CJSC Biolump"") and JSC "Alium" (combines assets JSC FP Obolenskoye and JSC "" under the Alium brand Binnopharm). More. here

Increase to 56.2% of the share in the pharmaceutical company "Synthesis"

On May 26, 2020, AFK Sistema announced an increase in its share in the Kurgan Society of Medicines and Products Sintez from 46.51% to 56.2%. Read more here.

Vladimir Chirakhov - the new president of AFK Sistema

On April 20, 2020, Vladimir Chirakhov took office as president of AFK Sistema "instead of Andrei Dubovskov, who was elected deputy chairman of the board of directors of the corporation. Read more here.

Increase in share in Ozon to 31.3%

On March 31, 2020, TAdviser became aware that AFK Sistema increased its stake in Ozon from 21.9% to 31.3% as a result of the conversion of loans provided in 2019. Read more here.

Sistema SmartTech Venture Fund Launch

On February 27, 2020, Sistema announced the creation of Sistema SmartTech, a venture capital fund focused on supporting companies at an early stage of development (from seed investments to round A).

2019

Rostec and AFK Sistema have created a developer of microelectronics

On July 15, 2019, Rostec and AFK Sistema announced the creation of a joint venture in the field of microelectronics. The company was named "Element." Read more here.

Agreement with Rostec and his "daughter" on the creation of a joint venture in the field of microelectronics

CJSC RTI-Microelectronics (part of the RTI Group holding owned by AFK Sistema), the state corporation Rostec and its subsidiary JSC Roselectronics entered into a legally binding agreement providing for the creation of a united company in the field of microelectronic component base (MEKB). This is stated in the message of Rostec, published on the website of the state corporation on February 19, 2019. Read more here.

Sale of MTS 39.48% of MTS Bank shares

Russian telecommunication MTS On February 12, 2019, the operator and digital service provider announced the purchase through its 100% subsidiary Mobile TeleSystems B.V. 39.48% of the shares of PJSC "" MTS-Bank for 11.4 billion rubles from PJSC AFK Sistema, a public Russian diversified holding company, the largest shareholder of MTS and its subsidiaries. More. here

2018

Investment in the Swiss-Russian developer of AR solutions for WayRay cars

September 18, 2018 it became known about the attraction of WayRay investments in the amount of $80 million. The financial deal headed by Porsche was attended by the Russian Direct Investment Fund (RDIF) together with a consortium of sovereign wealth funds (Japan, Saudi Arabia, Kuwait, UAE, Bahrain), including the Russian-Japanese Investment Fund (created by RDIF and JBIC), as well as Hyundai Motor, Alibaba Group, AFK Sistema, China Merchants Capital funds and JVC Kenwood. Read more here.

Sale of MTS part of its shares

In July 2018, the Board of Directors of Mobile Telesystems (MTS) approved a new buy-back program. The program will be valid for two years. It is planned to purchase shares worth up to 30 billion rubles. The buyout will be handled by Bastion, a 100% subsidiary of MTS^[4]

At the same time, it became known that the controlling shareholder of the operator MTS AFK Sistema intends to take part in the buyout. Sistema-Finance, a subsidiary of AFK Sistema, has entered into an agreement with MTS on the purchase and sale of its shares.

The number of shares that AFK Sistema will sell to MTS will depend on the total number of shares that MTS will buy out, and at the same time will be proportional to the share of AFK Sistema in MTS.

Shares of AFK Sistema fell 10% after proposals from the United States to impose sanctions

The securities of the Russian investment company AFK Sistema began to fall after the publication of a letter from members of the US Congress Mark Walker and Ilean Ros-Leitinen to the heads of the Ministry of Finance Stephen Mnuchin and the State Department Mike Pompeo urging to study the possibility of including the Russian billionaire and the main beneficiary of AFK Sistema Vladimir Yevtushenkov in the sanctions list. Congressmen noted that he is mentioned in the "Kremlin report" along with other Russian billionaires^[5] after^[6]

In addition, American congressmen emphasize that Yevtushenkov's activities fall under the law "On Countering America's Opponents through Sanctions" (CAATSA). The document provides for the extension of restrictions to everyone who carried out operations in Crimea or heads companies that carried out any activities on the peninsula. The authors of the letter indicated that the basis for the extension of sanctions on Yevtushenkov is the investment made by his company in the construction of various facilities in Krymu.​

2017

Settlement agreement on the claim of Rosneft

AFK Sistema, whose asset is MTS, signed an amicable agreement with Rosneft, Bashneft and the Republic of Bashkortostan in December 2017 . Under the terms of the agreement, the parties withdraw all claims and refuse all mutual claims, and Sistema undertakes to pay Bashneft 100 billion rubles by March 30, 2018.

As stated in the message^[7] of the corporation, Sistema's own and borrowed funds will be attracted for payment. For assistance in reaching an amicable agreement, the holding expressed gratitude to the Russian Direct Investment Fund and Sberbank.

AFK Sistema filed a lawsuit against Rosneft for 330 billion rubles

AFK Sistema filed a lawsuit against Rosneft and Bashneft with the Moscow Arbitration Court: the company demands compensation for damage in the amount of about 330.45 billion rubles. This is stated in the message "Systems" received in RBC.

The plaintiff claims that Rosneft and Bashneft during 2017 "took and continue to take deliberately unfair actions with the aim of unjust enrichment, <…>destruction of the corporate value of AFK Sistema, bringing the corporation to bankruptcy, damaging the corporation, its shareholders and creditors."

In this regard, Sistema was "forced to take action to protect the interests of the corporation, its employees, partners and shareholders." At the same time, she notes that she is still ready to resolve the conflict with Rosneft "on an honest and objective basis in the interests of the participants in the dispute and the Russian economy as a whole."

Claim for recovery of losses in the amount of 131.6 billion rubles

Rosneft and its controlled company Bashneft filed lawsuits against AFK Sistema and its subsidiary Sistema-Invest to recover losses in the amount of 131.6 billion rubles. According to Interfax, the lawsuit was filed with the Arbitration Court of Bashkortostan^[8].

The amount of claims corresponds to the amount of dividends that Sistema received in 2009-2014 from Bashneft during the period of ownership of this company, net of taxes.

The plaintiffs point to the earlier decision made by the same court that AFK Sistema illegally owned Bashneft. The plaintiffs call the amount of dividends paid "unprecedented."

"AFK Sistema has consistently withdrawn from Bashneft the funds necessary to ensure the normal, uninterrupted and technically safe operation of the company," Rosneft said in a statement. - "The result of this activity was a violation of the terms and quality of repair service, wear of equipment, which led, in particular, to accidents at the factories of the Ufa group. All this caused the need to attract multibillion-dollar additional funds to ensure the industrial safety of Bashneft enterprises.

The court recovered 136 billion rubles from AFK Sistema at the suit of Rosneft

The Arbitration Court of Bashkiria recovered in August 2017 from AFK Sistema and its subsidiary Sistema-Invest 136.4 billion rubles in favor of Rosneft and Bashneft, which it owns. Rosneft demanded 170.6 billion rubles. Sistema shares rallied pending a court ruling, accelerating to 3.9 percent after the announcement, but then moved to a 2 percent decline.

Technical default

AFK Sistema announced the onset on July 17, 2017 of a technical default on the corporation's loan obligations in the amount of about 3.9 billion rubles.

As stated in the statement of AFK Sistema, the onset of technical default is associated with the ongoing seizure of MTS shares owned by the corporation and Sistema-Invest JSC, Medsi and BESK, imposed by the Arbitration Court of the Republic of Bashkortostan as part of the consideration of the claim of Rosneft, ANC Bashneft and the Republic of Bashkortostan to AFK Sistema and JSC Sistema-Invest on the recovery of 170.6 billion rubles. losses allegedly incurred by ANC Bashneft in connection with its reorganization.

At the same time, AFK Sistema emphasized that non-compliance with certain conditions for a number of loan obligations, which creates grounds for technical default, is due solely to the court's decision to seize the above assets and is "purely formal." The Corporation maintains and plans to continue servicing its credit and financial obligations in a timely and full manner.

The corporation considers interim measures in the form of the seizure of its assets unreasonable and continues to take the necessary actions to remove this arrest. To this end, AFK Sistema filed a complaint with the Eighteenth Arbitration Court of Appeal.

Rosneft seizes assets of AFK Sistema

AFK Sistema announced that it had received from the department Federal Bailiff Service in Moscow a decision to initiate proceedings and a copy of the writ of execution of the arbitration court of Bashkortostan. In accordance with these documents, the court, as interim measures, imposed arrests on a number of assets of Sistema and its subsidiary^[9]

31.76% of the shares of the mobile operator Mobile Telesystems"" MTS (), 100% of the shares of the medical company "" and Medsi 90.5% of the shares of the Bashkir Energy Sales Company were arrested. The report of AFK Sistema says that the bailiffs not only arrested these shares, but also banned the corporation from receiving dividends from them, although the court ruling itself did not say this.

Rosneft demands to recover 106.6 billion rubles from AFK Sistema

On May 2, 2017, Rosneft and Bashneft, which joined it, filed a lawsuit to recover 106.63 billion rubles from Sistema, a very sensitive amount for Vladimir Yevtushenkov's company. The negative news background led to a sharp drop in the value of AFK Sistema shares on the stock exchange - by almost 37% compared to the closing level a day earlier. The shares of MTS and Detsky Mir, which also belong to AFK Sistema, were under attack - at the end of the day they lost 10.4% and 7%, respectively.

Comment of JSC IC CERIH Capital Management:

To understand the essence of the claims, you need to turn to the history of the issue. In 2005, AFK Sistema became the owner of blocking stakes in six enterprises of the Bashkir fuel and energy complex, paying 600 million for them. In dollars 2009, having paid another 2.5 billion dollars, AFK Sistema acquired controlling stakes in these enterprises and consolidated them on the basis of Bashneft in order to get rid of the complex ring ownership structure. According to Rosneft, at that moment there was a withdrawal of assets, as a result of which the plaintiffs lost indirect ownership in the Bashkir Energy Sales Company and Ufaorgsintez, and also lost the right to Sistema's debt to Bashneft itself. Rosneft calculated that 106.6 billion rubles compensate for the losses incurred.

The question that immediately arises is why AFK Sistema turned out to be extreme. As we remember, in December 2014, AFK Sistema's stake in Bashneft was transferred to the state by a court decision, and in October 2016 Rosneft bought this stake from the Federal Property Management Agency. It is rather strange to make claims not to the seller, but to the previous owner. Generally speaking, such a situation would be possible if, as part of the investigation of a criminal case, it turned out that the previous owner had caused material harm - for example, in the form of asset withdrawal. However, representatives of the Federal Property Management Agency did not find anything that would indicate a withdrawal of funds from the company. In fact, Rosneft accuses AFK Sistema of violations without evidence of harm, as well as a causal relationship between the actions of the previous owner and the alleged damage.

A separate question is about the purchase price and the amount of possible compensation. In August 2016, First Deputy Prime Minister of the Russian Federation Igor Shuvalov announced an assessment of the state's share in Bashneft - according to him, the total volume of ordinary shares owned by the Russian Federation costs from 297 billion to 315 billion rubles. Thus, the starting price amounted to 306 billion rubles. Two months later, Rosneft paid 329.7 billion rubles for a 50.08% stake in Bashneft. Thus, compensation for the alleged withdrawal of assets will allow Rosneft to reduce the cost of buying a valuable asset by a third. On the other hand, losing in court will cost AFK Sistema four years of working in austerity and increasing debt burden - according to the crudest estimates of experts, based on the results of the company's work in 2016.

How likely such a development is is difficult to say. On the one hand, there have been no such precedents so far. Moreover, the behavior of Rosneft radically changes all the vowel and unspoken rules of the game on the economic field. At the same time, aggressive tactical moves are used by the company to achieve a strategic goal - to gain a dominant position in the Russian oil market. And the main tool of this struggle is the use of close relations with the first persons of the state. Such an effective administrative resource is not at the disposal of any of Rosneft's competitors.

Creation of Cosmos Group for Hotel Business Management

Cosmos Group was established in April 2017 as a result of the separation of the functions of ownership and management of hotel assets of AFK Sistema. The company's tasks include the management and development of hotels owned by AFK Sistema, as well as the provision of a wide range of hotel services to external counterparties: from developing a hotel concept and supporting design and construction to selecting a brand and managing hotels. Management fees make up the bulk of revenues - about 70%.

2016: Sistema acquires assets of Regional Hotel Chain Group of Companies

At the end of 2016, Sistema acquired the assets of Regional Hotel Network Group of Companies (RGS), increasing the number of rooms in the Group's hotel business by 1379 rooms.

2011

Owners

As of 2011, the owners of AFK Sistema were:

• Yevtushenkov Vladimir Petrovich - 64.18%
• Leiviman Alexander - 2.65%
• Goncharuk Alexander Yuryevich - 1.88%

19% traded on the London Stock Exchange as GDR. The rest of the shares were sprayed among individuals, including top managers of Sistema: First Vice President Ron Sommer - 0.0042%, Vice President Sergei Cheremin - 0.0026%, Vyacheslav Kopyev - 0.054, Dmitry Zubov - 0.8797.

Restructuring and Mikhail Shamolin appointed President of AFK Sistema

In March 2011, it became known that AFK Sistema is completing the transformations launched during the crisis. The corporation changed its structure and became an investment fund. The industry divisions of Sistema will be disbanded, instead of them two business units will be created, the assets of which will be divided by maturity:

• "Basic assets," which included MTS and the Bashkir fuel and energy complex, and
• "Emerging assets," which will include high-tech, industrial and consumer assets.

Instead of Leonid Melamed, MTS CEO Mikhail Shamolin has been appointed president of Sistema. Melamed will remain a member of the board of directors of Sistema and chairman of the board of directors of Russneft. Felix Yevtushenkov will lead the Basic Assets business unit, and the head of the developing assets block has not yet been found, Vladimir Yevtushenkov, owner of AFK Sistema, said in an interview with Vedomosti.

Sistema classified those companies that pay medium-industry dividends and have a reasonable debt burden as basic assets - less than four EBITDA indicators, Potekhina says, companies that do not yet give dividends, have a high debt burden and do not have a stable market share in their industries fell into the second category.

In 2011, OJSC Sistema-Invest was reorganized by merging with CJSC Bashkir United Energy Systems, CJSC UNH-EnergoInvest, CJSC UNPZ-EnergoInvest and CJSC Novoil-EnergoInvest, which previously belonged to enterprises of the Bashkir fuel and energy complex group.

The changes in the structure reflect the transformation of AFK from an operating holding to an investment fund, Potekhina said. The management of Sistema will not be engaged in the operational activities of controlled companies, but will focus on the search for new assets and financial transactions, Yevtushenkov told Vedomosti: Sistema will pay more attention to the return on assets than to their financial performance.

The upcoming changes in the ideology of management of Sistema were announced in the summer of 2010, and in October 2010 the board of directors of the corporation approved this transition. Sistema has consistently moved away from the operational management of its subsidiaries over the past year, notes Evgeny Golosnoy, an analyst at Troika Dialog. Now the transformation is being completed, Potekhina agrees.

Golosnaya considers the departure from full control over the operating activities of assets to be correct, but doubts that Sistema will be able to become a pure investment fund: it owns control packages, which means it should be engaged in the formation of a strategy for the development of companies, and not just look for attractive projects for investments and determine the points of entry and exit from them.

The development of the strategy will take place at the level of the boards of directors of subsidiaries, which will include managers of Sistema, says Potekhina, under the boards "offices" will be created, to which part of the employees of the Sistema divisions subject to disbandment will move. The staff of the AFC itself will be significantly reduced, Potekhina said.

Yevtushenkov explained the replacement of Melamed by the fact that he "for the fifth time" asked to let him go to the operating business. By nature, he likes to dig to the depths, to all the details, and he needs an operating company.

Shamolin was not the only candidate for Melamed, Yevtushenkov continues, he was played by the fact that he and Melamed are similar in character, strategic vision and style of work. In addition, Shamolin has foreign work experience (he worked at the consulting company McKinsey) reminds Yevtushenkov.

MTS instead of Shamolin will be headed by the general director of MTS Ukraine Andriy Dubovskov. "We in Ukraine for many years tried to catch up with Kyivstar, replaced three leaders, but, unfortunately, we lost the market all the time. Dubovskov was the only one who managed to reverse this trend, he even had plans in 2011 to narrow the gap [with Kyivstar] to zero, "says Yevtushenkov. According to him, Dubovskova, as a replacement, advised Yevtushenkov himself Shamolin.

• Sistema J.P.Morgan Business Overview February 25, 2011 (Eng, PDF)

• Together with OJSC Bank of Moscow, OJSC RTI Group was established; The sale of Sistema's 63% stake in SITRONICS OJSC to RTI Group OJSC was approved.

• VAO Intourist and Thomas Cook Group Plc. completed the transaction to create a joint venture based on the tourism and retail business of VAO Intourist.

• In August and October 2011, during two repurchase programs, shares and GDRs of AFK Sistema were acquired, as well as ADRs of MTS for a total amount of about US $90 million.

• The deal on the entry of the Government of the Russian Federation into the authorized capital of SSTL was completed, the Government acquired a 17.14% stake in SSTL for about US $600 million.

• The transaction to sell 100% stake in ZAO Sistema Invenchur (24.4% of the authorized capital of OJSC MGTS) to MTS OJSC for RUB 10.56 billion was completed.

• The group's new dividend policy has been approved, according to which the amount of minimum dividend payments is 10% of net profit under US GAAP, and special dividends are also provided in the amount of 10% of net profit from transactions with incoming cash flow.

• AFK Sistema acquired a 100% stake in Donskoye OJSC from the state for 476.5 million rubles. OJSC Donskoye is located in the Rostov region and has a land fund of 25.4 thousand hectares.

• AFK Sistema acquired a 100% stake in OJSC "Stud Farm named after First Horse Army," owned by the state, for 303 million rubles. OJSC "Stud Farm named after the First Mounted Army" is located in the Rostov region of the Russian Federation; the total area of ​ ​ agricultural land that the farm has is 21.5 thousand hectares, including 17.5 thousand hectares of arable land.

• The new organizational and management structure was approved, in accordance with the new investment model of the group.

In 2011, the company has two business units in which assets are divided by maturity:

"Underlying Assets":

• OJSC MTS","
• OAO Bashkirenergo.

"Emerging Assets":

• "JSC RTI Group,"
• "M2M telematics" - 51%
• "Children's World,"
• IBRD,
• Sistema Shyam Teleservices,
• "Intourist."
• CJSC Binnopharm""
• OJSC MTS-Bank""
• CJSC GC Medsi""
• JSC "Navigation and Information Systems" (NIS)
• Mass Media System, which owns the following media assets:
  • "Literary newspaper,"
  • the newspaper "Rossіya,"
  • Maxima advertising agency,
  • newspaper "Metro,"
  • Rosbalt IA,
  • Sistema Multimedia LLC,
  • CTV LLC.

Purchase of NVision Group

In January 2011, it became known that AFK Sistema, more precisely, the RTI Group holding owned by it, agreed to buy a 100% stake in the system integrator NVision Group for $200 million and a share in the authorized capital of RTI Group, which will be received by the shareholders of the integrator.

2010

Acquisition of 49% stake in OAO NK RussNeft

• A framework agreement has been signed between Sistema and ONGC Videsh, India's oil and gas corporation. The parties agreed to consider joint investments in the assets of AFK Sistema and ONGC Videsh.

• The sale of 27.6% of Sistema-Hals OJSC for $70 million was completed.

• Sberbank completed the acquisition of a 25% + 1 stake in Detsky Mir Center as a result of an additional issue of shares under a closed subscription for 3.4 billion rubles (approximately $113 million).

• An agreement was signed on the creation of a joint venture between VAO Intourist, a subsidiary of JSC AFK Sistema, and Thomas Cook Group Plc., As well as the sale of a controlling stake in the tour operator and retail business of Intourist for $45 million.

• An agreement was signed with the Government of the Russian Federation on its participation in the capital of Sistema Shyam TeleServices Ltd. in the amount of Indian rupees equivalent to $600 million and calculated at the exchange rate. The transaction was completed in March 2011.

• The reorganization of telecommunication assets (an agreement between Comstar-OTS, Sistema and Svyazinvest) was completed, including the exchange of shares in Sky Link and MGTS.

• 49% of the shares of OAO NK RussNeft were acquired.

• OJSC AFK Sistema acquired a share of 51% of the authorized capital of LLC M2M Telematics. In accordance with the agreements reached, AFK Sistema will redeem the remaining 49% of the authorized capital of M2M Telematics LLC in the period from 2012 to 2015.

Promotions to Managers and Board Members for 2009

On July 16, 2010, it became known that AFK Sistema paid managers remuneration for 2009. The remuneration was paid by AFK shares on the balance sheet of Sistema itself, a representative of the corporation said. According to the Sistema report, at the end of the first quarter, it had just over 2.3% of its own shares at its disposal. Each of the 10 members of the board of directors, including the founder and main shareholder of Sistema Vladimir Yevtushenkov and President Leonid Melamed, received a 0.0009% stake in the corporation - following the results of the last trading of Sistema GDR on the LSE, such a package costs $110,000. Melamed becomes a shareholder of Sistema for the first time, the company said in a statement.

Together with him, ex-President of Armenia Robert Kocharian and founder of the Indian subsidiary of Sistema Shyam Teleservices corporation Rajiv Mehrotra, who are also members of the board of directors, received for the first time. Based on the quotations of Sistema on the LSE, the total value of shares aimed at remuneration amounted to $1.1 million.

Company Ownership Structure

• Yevtushenkov Vladimir Petrovich - 64.18%
• On the London Stock Exchange - 19%
• Novitsky Evgeny Grigorievich - 1.9938%
• Goncharuk Alexander Yuryevich - 1.89%

The rest of the shares are sprayed among individuals, including top managers of Sistema:

• First Vice President Ron Sommer - 0.0042%,
• Vice President Sergey Cheremin - 0.0026%,
• Vyacheslav Kopyev - 0.054,
• Dmitry Zubov - 0.8797.

2009

Exchange of the mobile operator Sky Link for an increase in the share in MGTS

In November 2009, Sistema signed a memorandum of intent with Svyazinvest and Comstar-OTS and began negotiations on asset reorganization. The result of this may be the exit of AFK Sistema from the share capital of Sky Link, the exit of Komstar-OTS from the share capital of Svyazinvest, as well as an increase in the share of Komstar-OTS in the share capital of the Moscow City Telephone Network (MGTS).

Loan from the EBRD for €120 million and redemption of its stake in Sitronics for $87 million

In July 2009, Sistema announced a three-year loan of €120 million from the European Bank for Reconstruction and Development (EBRD). It was announced that the loan provided by the EBRD AFK Sistema will be used to finance high-tech projects of Sitronics. Sistema also bought its stake in Sitronics from the EBRD - thus, the bank exercised the put option received in September 2006 during the acquisition of 3.074% of Sitronics shares from Sistema. The amount of the transaction, according to two sources close to it, is about $87 million. The liabilities will be refinanced through a loan.

VTB sale to construction company

In the spring of 2009, due to the financial crisis, AFK Sistema lost 51.2% of the shares of the construction company to VTB for a symbolic 60 rubles. And in December 2010, AFK Sistema sold its remaining 27.6% for $70 million.

Company Ownership Structure

For 2009, the ownership structure of the company was as follows:

• 64.18% - Evtushenkov Vladimir Petrovich, Chairman of the Board of Directors of AFK.
• 19% - circulate on the London Stock Exchange in the form of ADR.

The rest of the shares are sprayed among individuals, including top managers of Sistema:

• its president, Alexander Goncharuk, owns 2% of the shares,
• Vice President of Strategy Levan Vasadze - 0.3%,
• Senior Vice President of Finance Alexey Buyanov - 0.2%)

and members of the Board of Directors:

• Alexander Leiviman owns 3.6%,
• Evgeny Novitsky - 3.2%,
• Alexander Gorbatovsky - 2.4%,
• Dmitry Zubov - 1.4%,
• Vyacheslav Kopyev, Nikolai Mikhailov and Sergei Drozdov - 0.2% each).

2005: London Stock Exchange IPO

In 2005, Sistema held an IPO on the London Stock Exchange and raised $1.3 billion during it

Listing on the exchanges

Depositary receipts of AFK Sistema were listed under the symbol "SSA" on the London Stock Exchange. Sistema shares were listed under the symbol "AFKS" on the RTS Stock Exchange, under the symbol "AFKC" on the MICEX Stock Exchange and under the symbol "SIST" on the Moscow Stock Exchange.

Notes