28.04.2016

HMS Group announces management statement and financial highlights for FY 2015

Moscow, Russia – April 28, 2016 – HMS Group plc (the “Group”) (LSE: HMSG), the leading pump and compressor manufacturer and provider of flow control solutions and related services in Russia and the CIS, today announces its financial results for FY 2015.

2015 FY Financial Highlights:

  • Revenue up by 15% yoy to Rub 37.3 billion
  • EBITDA1 up by 41% yoy to Rub 7.4 billion
  • EBITDA margin up to 20.0%
  • Operating profit up 429% yoy to Rub 4.5 billion
       Operating profit adj. up 61% yoy to Rub 4.9 billion
  • Profit for the year up to Rub 1.8 billion
       Profit for the year adj. up 239% to Rub 2.1 billion
  • Net debt at a stable level of Rub 12.4 billion
  • Net debt-to-EBITDA LTM down to 1.66x

2015 FY Operational Highlights:

  • Backlog down by 14% yoy to Rub 24.4 billion
  • Order intake down by 5% yoy to Rub 33.0 billion

Artem Molchanov, CEO (Managing Director) of HMS Group, said:

“I am proud to announce that the year 2015 was a successful one for HMS Group in terms of revenue and EBITDA, despite a decrease in Russia’s GDP, volatility of the ruble, international sanctions, low oil prices, high interest rates, and other negative factors affecting business in Russia.

We demonstrated a stable increase in standard production as well as in new large projects. I am particularly pleased to point out that the efforts we have put into developing relationships with Russian major gas companies in the last few years have started to pay off. We have reinforced our presence in the markets for gas production, transportation and refinery. Two out of three major contracts successfully carried out in 2015 were with gas companies, making a significant contribution to the company’s financial results. We intend to continue our efforts in this direction.

In particular, I would like to draw your attention to the export activity of HMS Group. In 2015 foreign currency revenue accounted for 10% percent of the total ruble revenue, which was not due to the depreciation of the ruble, but largely the result of the Group’s long-term efforts over the years, which made the development of exports one of its top priorities.

Despite the challenging conditions in the financial markets, we successfully refinanced our loans, as well as received new limits with Sberbank, VTB Bank, and UniCredit Bank. In addition, we decreased the net debt-to-EBITDA down to 1.66 times. We succeeded in keeping the net debt in absolute terms at the level of the previous year of 12.4 billion rubles.

In the Orel region HMS Group is continuing to develop a so-called “The Localization Project” intended to domestically produce high-capacity oil refining and transport pumps and nuclear pumps, worth Rub 2.6 billion. We are thankful to the Ministry of Industry and Trade of the Russian Federation for supporting this project in the form of a five-year loan, worth 500 million rubles, from the Fund of Industry Development of the Russian Federation, at a 5 percent interest rate.

The Group plans to continue its revenue growth from both large-scale projects and standard products. However, increasing competition amidst economic uncertainty, low oil prices, decreases or postponements of key customers’ capital investments may lead to a decrease in profitability of the Group’s major projects in 2016, and might increase the risk of a slight decline in EBITDA. Yet, at the same time, based on our current portfolio of large-scale projects to be developed in the near future, we feel optimistic about the years to come in 2017-2018.”

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1 Management of the Group assesses the performance of operating segments based on a measure of adjusted EBITDA, which is derived from the management report. For this purpose, adjusted EBITDA is defined as operating profit/loss from continuing operations adjusted for other operating income/expenses, depreciation and amortisation, impairment of assets, excess of fair value of net assets acquired over the cost of acquisition, defined benefits scheme expense and provisions (including provision for obsolete inventory, provision for impairment of accounts receivable, unused vacation allowance, warranty provision, provision for legal claims, tax provision and other provisions). This measurement basis, therefore, excludes the effects of a number of non-recurring income and expenses on the results of the operating segments.