Sistema JSFC SG-trans Acquisition November 2012

Disclaimer

Certain statements in this presentation may contain assumptions or forecasts in respect to forthcoming events within JSFC . The words “expect”, “estimate”, “intend”, “will”, “could” and similar expressions identify forward- looking statements. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the above-mentioned date or to reflect the occurrence of unanticipated events. Many factors could cause the actual Sistema’s results to differ materially from those contained in our projections or forward-looking statements, including, among others, deteriorating economic and credit conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to Sistema and its operations.

2 Transaction Overview Transaction details • Acquisition of 100% stake in SG-trans for RUB 22.77 billion • Received Russian Government approval of the tender process and results • Completion of the acquisition expected by the end of November 2012 • Acquisition financed through Sistema’s existing cash resources, with majority of acquisition price expected to be recouped through debt and sale of non-core assets.

SG-trans • Largest specialised operator with fleet of approximately 15,000 railcars – 47% of the LPG market • In 2011 Revenues of RUB 8.5 billion and EBITDA of RUB 1.4 billion; Net cash of RUB 1.1 billion

Rationale • Attractive opportunity to establish a strong foothold in a consistently expanding transportation market • Increases existing rolling stock to 34,500 railcars – now top 5/6 railcar operator in the sector • Significant opportunities to improve margins and unlock synergies with existing rail investments

3 Rail Freight Transportation Market

• Railways are the backbone of the Russian transport system accounting for 85% of total cargo turnover Turnover structure* Rail freight turnover** in 2011, excluding pipeline transportation Large & by means of transport in Russia bln ton-km • Freight turnover depends on the volume of +8% +6% stable growth avia 100% industrial production, import, export and transit. river 2465 market sea 9% 2090 2116 2127 Market growth rate 6-8% per annum auto 1865 2011 +16%

• During the crisis period (2008-2009) the market rail 85% was relatively stable, similarly to telecoms

• No tariff regulation for private operators. Only 2011 2007 2008 2009 2010 2011 2015 Russian Railways (RZhD) services – infrastructure *Source: Federal State Statistics Service **Source: Ministry of Economic Development, Russian Federation and locomotives (motive power) parts – are regulated by the government bodies Free pricing & Market structure by railcars fleet* consolidation • Russian Railroads reform, introduced in 2003, Expected in 2015 opportunity creates an opportunity for private operators . 2002-2005 2012 Today ~80% of the fleet is private. Consolidation Others Others Private State Freight One Freight One #1 game due to commence among private players as private private (RZhD) 1% #1 the target industry model assumes only 3-4 large 20% 20% operators capable to operate on federal scale #2 #2 15% Freight 15% Freight 70% Two Two 5% 6% • High margins of market leaders (EBITDA 35-45%) 3% GLTR 30% #3 #4 High margin RailGarant NTS Leaders top#3 and #4 & return • High ROE return due to high margins of operations Sistema and use of operating and financial leverage *Source: RZhD data; Companies data; Ministry of Economic Development, Russian Federation

4 Sistema’s Portfolio Strategy and Transportation Investment Policy

Sistema Key Sector Criteria • Diversify portfolio to balance NAV contribution to the Large-scale Opportunity to build a market Group leader

Overall • Focus on larger investments in dynamically growing Profitable To allow for high returns and cash portfolio new sectors or businesses which can deliver step return strategy change transformation to assets in existing sectors Provide unique Consolidation, reforms, hidden • Actively monetise investments and attract strategic opportunities value partners Transportation industry fits all these requirements

Transportation investment policy Strategy Outline • Take part in market consolidation and establish one of Partner with experienced market Objective the largest players generating high returns on Professional player with industry know-how and investments, stable cash flow and dividends Partner financial resources

• Target lower risk assets Low risk Operator • Share investment risks with the Partner (Financial Adopt an operator business model to tolerance business Alliance LLC ) who has industry expertise get the greatest economies of scale model

• Long term with two stages Investment Value • Stage one: expansion and integration stage ~2-3 years Make decisions which fit investment time horizon accretive • Stage two: cash return principles, maintain price discipline decisions

5 Sistema’s position in the transportation market before SG-trans

• Partner – Financial Alliance LLC - strong management credentials, industry knowledge and ability to co-invest in projects 50/50 JV • The JV currently established between and Financial Alliance. with our • Alexey Taycher – Chairman of the Board of Directors of the JV (former First Deputy CEO of Freight One) Partner • Vladimir Yakovina is the CEO of the JV (former VP of CFTO JSFC RZhD – main RZhD business unit specialised in freight transportation)

Assets Diversified clients base

Bashneft former 4,500 oil products tank assets cars with an average age of 14,8 years

Financial Alliance 8,000 oil products tank JV assets cars in long-term lease with an average age of 3 years Contract with TLC – “Transportno- 7,000 oil products tank Logisticheskaya cars under management (Trans Synergia) kompaniya”

Total 19,500 railcars

6 Expansion Roadmap

Privatization and M&A Organic

• Take part in upcoming possible privatisations such as • Increase fleet through leasing and short-term rent Strategy Second Freight Company, Transcontainer

• Consider M&A opportunities in private sector

number of railcars in operation acquired Organic planned M&A Goal #3/4 on the SG-trans Total fleet of 34,500*; market

15,000 LPG railcars Currently top #5/6 in c. 100,000 railcars Entry point the sector by number 19,500 railcars of railcars

TODAY FUTURE • Immediate focus on tank railcars as one of the most • At later stage consider diversification into open cars but Fleet profitable and stable segments of the market only after market conditions stabilise considerations • Synergies with Bashneft’s tank car fleet

*Includes TLC rail cars under management

7 SG-trans Overview

History Financials, RUB b* 2011 2012E • Founded in 1959 (before 1992 - Soyuzgaz, later – Federal State Sales 8,5 9,5 Unitary Enterprise SG-trans, in 2004 transformed into OJSC) Transportation 4,9 5,7 Gas 3,4 3,8 • The only independent operator specialised in liquefied petroleum gas Gross profit 2,0 (24%)** 3,3 (35%)** (or LPG, the various mixes of propane and butane) transportation EBITDA 1,4 (17%)** 1,6 (17%)** with the largest specialised tank cars fleet Cash and Cash 1,1 1,3

equivalents *Source: SG-trans data **% = margin Transportation segment Gas segment

• Share in sales – 60% • Share in Sales – 40% • 15 branches providing LPG railroad • Types of activity: storage and distribution transportation services of liquefied petroleum gas (LPG) • Fleet – c.15,000 tank cars, average age – • Storage: 12 LPG terminals across Russia 24,5 years that accept, store and sell LPG (wholesale • Unique maintenance and testing assets distribution) which provide full-cycle maintenance and • Retail chain of gas stations: 64 points in 20 repair services for LPG tanks regions

8 LPG Transportation Market

LPG transportation market in Russia LPG transportation market in Russia* • LPG transportion in Russia is possible only in ths. t specialised tank cars 16 250 CAGR • Market is expected to grow at stable rate Growth factors +28% +8% • Growth of LPG production expected to be maintained 12 700 due to regulation on associated gas utilisation and 12 000 domestic demand stimulation programme 10 850 • Growth of LPG transportation to be driven by increasing export demand 2009 2010 2011 2020 Transportation services of SG-trans *Source: SG-trans data SG-trans transportation services* • SG-trans provides LPG transportation services for LPG producers (petrochemical, petroleum refining and gas ths. t factories) and consumers (petrochemical companies, +9% CAGR private and commercial heating, motor fuels) 5436 • SG-trans’ share in its clients operations: 5317 14% Sibur – 21% 4604 16% – 42% – 82%, – 98% 19% CIS 84% 86% Bashneft, , Nizhnekamskneftekhim, Russia Surgutneftegaz – 100% 81% 2009 2010 2011 *Source: SG-trans data

9 LPG Transportation: SG-trans Railcars Fleet and Market Position

SG-trans railcars fleet* Pentane and oil Comments products tank cars • Specialised railcars fleet ~15,000 LPG tank cars which accounts for 47% of the total fleet in Russia

LPG tank cars • Average age – 24,5 years ~15,000 47% 54m3 LPG tank cars 51% • Life cycle – 40 years for LPG tank cars and pentane tank cars and 32 years for 73-75 m3 oil products tank cars which can be extended further *Source: SG-trans data Market position* • More than 90% of the railcars are owned (the rest are in leasing)

LPG transportation market structure by volumes Comments Others • SG-trans accounts for 37% of all volumes in the LPG transportation segment 5% • Strong competition from captive operators of vertically integrated companies Largest operators 37% SG-trans – main consumers of LPG transportation services 12,7mt

58%

*Source: SG-trans data trans

10 SG-trans Transportation Clients and Services

SG-trans transportation services main clients by turnover, 2011 SG-trans transportation services structure by turnover, 2011

Sibur Others Petrochemical 19% 1.151 27% Export Sub rent in CIS 2.110 5 436 5 436 Households ths. t ths. t 21% 785 Rosneft 16% Novatek 17% *Source: SG-trans data 1.390 *Source: SG-trans data Lukoil

SG-trans services by key clients SG-trans services by segments ths. t ths. t 2009 2-years CAGR 2009 2-years CAGR +7% 2010 2010 +10% +1% 2011 2000 2011 +42% +11% 2110 +17% 989 960 983 +14% 1850 889 892 -4% 740 770 727 722 1244 1390 1229 1151 609 590 1013 844 887 854 380 785

Sibur Rosneft Lukoil Novatek Households Petrochemical Export CIS *Source: SG-trans data *Source: SG-trans data

11 Unlocking SG-trans’ Hidden Value

Sum of the parts valuation Optimisation plan

Cash Non-core • Non-core assets predominantly relate to real estate. Various monetisation assets options will be considered

• LPG storage assets to be monetised through strategic options Gas business • Value from retail segment to be unlocked through disposal Acquisition price for 100% • Double EBITDA from current levels of SG-trans - RUB • Restore and grow market share. Improve fleet capacity usage 22,77b • Bring tariffs to the market level – current tariffs on average over 20% lower than market rates

Transport • Optimise LPG tanks structure for bigger size cars (savings on empty run) business • Implement cost efficiency programme

• Introduce market-oriented business model and good corporate governance principles by professional management teams

Majority of the acquisition price is expected to be recouped through unused debt capacity and sale of non-core assets.

12 Next Steps in the Transportation Sector

• Implement reorganisation plan 1) increase operational effectiveness and profitability ; 2) split SG- trans’ transport and gas assets SG-trans • Use debt capacity: Increase in EBITDA level to allow greater leverage and recoup a substantial part of initial investment

• Sistema in discussions to purchase Bashneft’s 50% stake in the JV in the near term

JV with • Rebranding of the JV (LLC “Financial Alliance”) to Unirail Partner • All transportation assets to be consolidated under one entity – different options currently being explored (operations benefits, economic rationale, legal and tax)

Sector • Evaluate and consider M&A opportunities in the sector

13 Investment Summary

 Strong sector fundamentals and good scope for consolidation

 Clear sector strategy based on disciplined investment approach

 Partnership with industry expertise and financial resources in place

 Acquisition of market leader in a growing LPG transportation segment

 Synergies with existing assets and excellent platform for further expansion

 Clear roadmap to unlock SG-trans’ hidden value

14 Appendix

15 Gas Segment: Business Description

LPG storage and retail market LPG retail market* ths. t • LPG storage in Russia is possible only in specialised +7% 0% terminals, tanks and balloons 3 831 3 842 • LPG demand in Russia is growing in households sector, 3 568 Commercial commercial and transport segments 61% 59% 60% and transport 39% 41% 40% Households

2009 2010 2011 *Source: SG-trans data SG-trans’ LPG Market share, 2011*

Others 21% Gas storage and retail services of SG-trans 3 842 9% • SG-trans services: ths. t 70% retail and wholesale trade of LPG, SG-trans gas storage services in LPG terminals for others *Source: SG-trans data LPG trading companies (including state-owned SG-trans retail and storage services* regional gas trading companies) ths. t 371 368 330 40% • Competitive advantages: SG-trans is able to 48% 43% Balanced gas accumulate gas reserves in LPG terminals across Storage 56% Russia and manage reserves to compensate for 49% 53% Commercial gas volatility of supplies 2009 2010 2011 *Source: SG-trans data

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