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Press-releases

29.04.2014

HMS Group full year 2013 IFRS financial results

Moscow, Russia – April 29, 2014 – 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 audited IFRS financial results for the twelve months ended December 31, 2013.

In December 2013, HMS Group sold 67.3% shares in Trest Sibkomplektmontazhnaladka (SKMN), having recognised a loss from disposal of Rub 746 million. The performance of SKMN represented a separate major line of business within EPC business segment. The Group’s performance for 2013 excludes the results of SKMN, unless otherwise stated.

2013 HIGHLIGHTS

(Figures in brackets are for the twelve months ended December 31, 2012)

  • Backlog increased by 18% year-on-year to Rub 22.3 billion (Rub 19.0 billion) and order intake was up 5% year-on-year to Rub 34.8 billion (Rub 33.1 billion) driven by a steady demand for pumps, compressors and oil & gas equipment
  • Revenue increased by 3% year-on-year to Rub 32.4 billion (Rub 31.5 billion)
  • EBITDA1 totaled Rub 5.2 billion, down 14% year-on-year (Rub 6.1 billion); EBITDA margin was 16.2% compared to 19.4% in the previous year
  • Operating profit was Rub 4.2 billion, almost flat year-on-year; operating margin stood at 13%
  • Profit for the period from continuing operations reached Rub 2.1 billion, down 12% year-on-year; earnings per share (EPS) were Rub 16.79 (Rub 17.99)
  • Profit for the period including the results of discontinued operations decreased from Rub 2.3 billion to Rub 1.15 billion; earnings per share (EPS) were Rub 8.99 (Rub 17.91)
  • Total debt contracted by 5% year-on-year to Rub 12.7 billion (Rub 13.4 billion)
  • Net debt decreased by 8% year-on-year to Rub 11.1 billion (Rub 12.1 billion), resulting in Net debt-to-EBITDA ratio at 2.1x (2.0x)
  • Return on capital employed (ROCE)2 was 13.9% versus 18.7% in the previous year

Commenting on the results, Artem Molchanov, Managing Director (CEO) of HMS Group, said,
“The year 2013 was a challenging year for HMS Group. The slowdown of the Russian economy and investment activity led to delays in large projects, targeted by the Company, and as a result we were mainly involved in supply of less margin standard products. Moreover, last year, we developed primarily organically, without major M&A transactions, which previously supported the Group’s growth.

Despite these setbacks, we were able to demonstrate a sound performance in 2013. The achieved results proved the sustainability of our business. A stable inflow of small and medium sized orders helped us to build a solid Rub 22.3 billion backlog. Our revenue reached Rub 32.4 billion. The weaker margins had a negative impact on our profitability. In 2013, the Group’s EBITDA contracted by 14%.

Except for construction sub-segment, all our business segments performed in line with the management’s expectations. Weak results of the construction sub-segment were the direct consequence of extremely negative trends in oil and gas construction market. In 2013, we made a decision to dispose our loss-making construction business, in line with the Group’s strategy to withdraw from construction business. We sold one of our construction subsidiaries SKMN and intend to either sell or close-down the other one.

At the same time, we are pleased with the results achieved by our compressor division last year. Since joining HMS Group in mid-2012, Kazankompressormash (KKM) noticeably improved its portfolio of orders, which boosted the segment’s revenue and EBITDA. Moreover, we further strengthened our capabilities in the compressor business through acquisition of NIITurbokompressor (NIITK).

Despite the mixed business climate and uncertainties relating to tenders, we believe that HMS will continue to benefit in the long term. Overall, we are confident that our strong fundamentals, proven strategy and attractive industry prospects will position HMS Group to deliver future development”.

1 EBITDA is defined as operating profit/loss adjusted for other income/expenses, depreciation and amortization, impairment of assets, provision for obsolete inventory, provision for impairment of accounts receivable, unused vacation allowance, defined benefits scheme expenses, warranty provisions, provision for legal claims, provision for VAT and other taxes receivable, other provisions, excess of fair value of net assets acquired over the cost of acquisition. This measurement basis excludes the effects of non-recurring income and expenses on the results of the operating segments.

2 ROCE is calculated as EBIT divided by average total debt plus average equity


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For further information, please contact:

Vera Timoshenko
Head of IR
Tel: +7 (495) 730-66-01, ext. 1302
timoshenko@hms.ru
Nozima Karimova
Head of Press Service
Tel: +7 (495) 730-66-10
karimova@hms.ru

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