4Q2013 trading update

MOSCOW, January 21, 2014 - PIK Group (LSE: PIK) released today its trading update for the twelve months ended December 31, 2013. The operational and financial data are based on management assessment only and have not been reviewed by external auditors.

2013 key operational highlights:

• Total net cash collections grew by 11.8% to RUB 74.6 billion (2012: RUB 66.7 billion)
  • Cash collections from sale of apartments to individuals rose by 32.3% to RUB 59.3 billion (2012: RUB 44.8 billion) driven both by sales price growth and higher volumes;
  • Cash collections from construction services and others were down by 19.3% to RUB 11.6 billion (2012: RUB 14.4 billion) caused by a shift in revenue mix towards an increased share of own development projects;
• New sales contracts to customers grew by 2.9% to 677 th. sq. meters (2012: 658 th. sq. meters)
• In 2013, PIK increased the number of new projects launched to 52 new projects compared to 49 new projects in 2012 
• Mortgage backed sales increased significantly, reaching a share of 39.0% in 2013 compared to 28.5% in 2012, which was driven by a slight reduction in interest rates and an overall continuing expansion of the mortgage market in Russia
• PIK’s average selling prices in 2013 increased by 17.0% in Moscow, 21.5% in New Moscow, 1.1% in the Moscow region and 7.7% in other regions. Pricing expansion was one of the key factors supporting stronger net cash collections  
• Net debt (including accrued interest) more than halved from RUB 38.1 billion as of December 31, 2012 to RUB 18.1 billion as of December 31, 2013. This was achieved due to a stronger operating cash flow and a successful equity issuance in 2013. 

2014 Outlook

• PIK Group maintains a solid position in the residential real estate market and provides the following guidance for 2014:
  • Total new sales to customers between the range of 690-710 sq. meters, with total gross cash collections of RUB 76-78 billion.

Pavel Poselenov, PIK Group’s President and Chief Executive Officer, commented,

“PIK Group’s 2013 operating results were in line with our earlier guidance. In accordance with our strategy we have significantly deleveraged our balance sheet and increased financial and investment flexibility. This important milestone has transformed PIK into a healthy company able to focus on profitability improvements, as well as invest in new development projects and fixed assets’ upgrades. 

Operationally in 2013, PIK Group demonstrated stable growth in cash collections from retail residential sales, improved its revenue mix by reducing lower margin wholesale sales and benefited from a significant increase in the share of mortgage backed sales. 

Despite taking a conservative view on any material pricing expansion in 2014, we expect the overall outlook for 2014 to be positive, driven by a continued growth in demand for affordable mass-market residential real estate in Russia.”