PIK.L Regulatory News (PIK)

PIK GROUP REPORTS 2015 CONSOLIDATED FINANCIAL RESULTS

Moscow, March 31, 2016 - PIK Group (LSE: PIK), ("The Group" or "PIK"), one of the leading Russian residential developers, today announces its audited Consolidated Financial Statements prepared in accordance with IFRS, for the year ended December 31, 2015.

2015 Financial Highlights:

· Total revenue decreased by 16.5% to RUB 51.1 billion (2014: RUB 61.3 billion); revenue from sale of apartments decreased by 20.9% to RUB 42.9 billion (2014: RUB 54.3 billion);

· Gross profit margin amounted to 34.5% (2014: 26.2%). Gross profit margin in the Real Estate Development segment amounted to 38.9% (2014: 27.2%);

· Adjusted EBITDA increased by 9.5% to RUB 13.7 billion (2014: RUB 12.5 billion). Adjusted EBITDA margin amounted to 26.8% (2014: 20.4%);

· Net profit for the year increased and amounted to RUB 11.4 billion(2014: RUB 3.8 billion);

· Free cash flow decreased by 9.5% to RUB 8.7 billion (2014: RUB 9.6 billion);

· Net debt as at December 31, 2015 was negative and amounted to RUB 3.9 billion (2014: positive net debt RUB 10.2 billion);

· Transfers of apartments to customers decreased by 24.4% to 487 th. square meters (2014: 644 th. square meters).

2015 Operational Highlights:

· Total cash collections increased by 11.4% to RUB 68.7 billion (2014: RUB 61.7 billion)

- Cash collections from sale of real estate increased by 7.9% to RUB 55.0 billion (2014: RUB 51.0 billion);

- Cash collections from construction services and others were up by 28.0% to RUB 13.7 billion (2014: RUB 10.7 billion);

· New sales contracts to customers increased by 0.8% and amounted to 625 th. sq. meters (2014: 620 th. sq. meters).

· In 2015, PIK put on sale 50 new buildings compared to 43 buildings in 2014. New sellable area in the buildings put on sale rose by 40.8% to 908 th. sq. meters (2014: 645 th. sq. meters)

· Share of mortgage backed sales in 2015 increased by 2.9 p.p and totaled 39.1% (2014: 36.2%)

· PIK's average selling prices in 2015 stayed flat in Moscow and the Moscow region and decreased 6% in other regions.

Additional documents:

The Audited Consolidated Financial Statements, prepared in accordance with IFRS, for the year ended December 31, 2015 can be found under the following link:

http://pik-group.com/investors/financial-statements/2015/http://www.rns-pdf.londonstockexchange.com/rns/7103T_-2016-3-31.pdf

 Conference Call Dial-In Details:

PIK Group's Management will host a conference call for investors and analysts followed by a Q&A session.

Date: Thursday, March 31, 2016

Time: 15:00 Moscow / 13:00 London / 8:00 New York

Title: PIK Group 2015 IFRS Results

Main Conference ID (Russian line): 3020254 

Secondary Conference ID (English line): 8457289

Domestic line: +7 (499) 922-39-67

UK international tel.: +44 20 3427 1902

Enquiries:

Management review of financial conditions, results of operations and portfolio of projects for the year ended December 31, 2015

Discussion of operating environment and results

In 2015, PIK Group's new sales to customers increased by 0.8% to 625 th square meters.

New sales contracts (2013-2015)

Note: including contracted retail and wholesale volumes

Source: Management accounts

In 2015, PIK launched 50 new projects compared to 43 new projects in 2014 with a total sellable area of 908 th square meters (2014: 645 th square meters).

Key operational data (2013-2015)

Note : (1) as per revenue recognition policy under IFRS;

(2) PIK share only

Source: (1) - IFRS financial report, (2) - Management accounts.

Transfers of properties to customers according to IFRS amounted to 487 th. square meters, down by 24.4% compared to 2014 primarily due to the decrease in the number of buildings recognized in revenue under the IFRS.

Housing completions attributed to the Group were down by 9.4% to 510 th. square meters. The decline in completions in 2015 was explained by modernization of the production capacities and development of the new housing series. The construction of most new projects was commenced in the second half of 2015;

Average net selling prices for PIK properties (based on cash collections data) in 2015, stayed flat in Moscow and the Moscow region and decreased by 6% in other regions.

Share of mortgage-backed sales in 2015 increased by 2.9 p.p and totaled 39.1% (2014: 36.2%) due to the Government program of subsidizing mortgages.

Discussion of the Group's IFRS financial results

Group revenues in 2015 decreased by 16.5% to RUB 51.1 billion compared to RUB 61.3 billion in 2014 primary due to deferred development in Moscow Metropolitan Area in 2013-2014. Revenues from apartment sales accounted for 84.0% of total revenues, decreasing from 88.6% in 2014.

Sales revenue by segment

Source: IFRS

Revenue from the sale of apartments decreased by 20.9% due to the decrease in transfers of properties to customers (-24.4%) which was partially compensated by higher implied revenue per square meter of transferred properties due to change in the project mix of recognized projects.

Implied revenue per sq. meter of transferred properties

Note: calculated as revenue from apartment sales divided by transfers to customers

Source: IFRS

Gross profit increased by 10.1% to RUB 17.6 billion from RUB 16.0 billion due to higher gross profit margin across all segments. The Group's profit margin increased to 34.5% from 26.2% in 2014 driven primarily by investment budget revisions.

In 2015, administrative expenses increased by 9.3% and amounted to RUB 3.6 billion (2014: RUB 3.3 billion). Distribution expenses increased by 70.6% and amounted to RUB 1.6 billion (2014: RUB 0.94 billion).

Personnel and social costs demonstrated an aggregate decrease of 7.1% to RUB 8.3 billion, due to production process optimization.

As a result of the above factors, adjusted EBITDA from core activities increased by 9.5% to RUB 13.7 billion from RUB 12.5 billion in 2014, whilst adjusted EBITDA margin increased 6.4 ppt to 26.7% from 20.4%.

EBITDA increased by 123.7% to RUB 16.8 billion from RUB 7.5 billion in 2014, primarily due to recognition non-cash impairment losses of RUB 5.2 billion in 2014 and same factors which affected adjusted EBITDA. 

Adjusted EBITDA reconciliation

Source: IFRS

As a result of the above factors, profit for the period (net profit) increased by 201.9% to RUB 11.4 billion from RUB 3.8 billion.

Discussion of Group's current financial position, cash flows and liquidity

Net cash from operating activities in 2015 reached RUB 9.2 billion (2014: RUB 10.1 billion). Decrease of the operating cash flow was primarily due to higher expenses on launching new projects.

Due to the same factors free cash flow (defined as net cash generated from operating activities, less acquisition of property, plant & equipment) amounted to RUB 8.7 billion in 2015, compared to RUB 9.8 billion in 2014.

As at December 31, 2015, the Group had RUB 13.2 billion of gross debt (down from RUB 24.5 billion of gross debt as at December 31, 2014). Net debt as at December 31, 2015 amounted to a negative value of RUB 3.9 billion, down from RUB 10.2 billion at the end of 2014.

Directors' Responsibility Statement

The attached Annual Financial Report (Consolidated Financial Statements) and the financial information contained herein, are the responsibility of, and have been approved by, the directors of PIK Group. The directors are responsible for ensuring that management prepares the Financial Report in accordance with the IFRS and the Listing Rules of the Financial Conduct Authority.

Notice to readers

The calculation of certain measures used in this announcement may be different from the calculation used by other companies and therefore comparability may be limited. Some of the measures (e.g. EBITDA, adjusted EBITDA, normalized net income, net debt, free cash flow) are not measures of financial performance under IFRS.

Some of the information in this press release may contain guidance, projections or other forward-looking statements regarding future events or the future financial performance of PIK Group. You can identify forward-looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might," or the negative of such terms or other similar expressions. These statements are only predictions and actual events or results may differ materially. PIK Group does not intend to or undertake any obligation 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 PIK Group's projections, guidance or forward-looking statements, including, among others, general economic and market conditions, PIK Group's competitive environment, risks associated with operating in Russia, rapid market change, and other factors specifically related to PIK Group and its operations.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of PIK Group, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of PIK Group.