HMS Group announces management statement and financial highlights for 3 months 2015

Moscow, Russia – June 16, 2015 – 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 3 months ended March 31, 2015.

3 months 2015 HIGHLIGHTS:

  • Backlog increased by 4% yoy to Rub 26.8 billion, while order intake stayed almost flat yoy at Rub 6.7 billion, maintained by a steady demand for standard equipment
  • Revenue of Rub 7.6 billion grew by 25% yoy
  • EBITDA totaled Rub 1.6 billion, up more than twofold yoy, with EBITDA margin of 21.6%
  • Operating profit demonstrated substantial increase to Rub 1.0 billion with margin at 13.8%
  • Profit for the year turned positive Rub 0.3 billion, up from negative Rub 0.3 billion
  • Total debt grew by 23% yoy to Rub 15.8 billion from Rub 12.9 billion
  • Net debt increased by 30% yoy to Rub 14.5 billion resulting in Net debt-to-EBITDA ratio of 2.37x
  • Return on capital employed (ROCE) increased to 14.7% vs. 13.3% for the comparative period

Commenting on the financial results, Artem Molchanov, Managing Director (CEO) of HMS Group, stated:

“In the 1st quarter of 2015, we reached 25% year-on-year increase of HMS’ revenue and more than twofold growth of EBITDA, resulted in a substantial level of EBITDA margin. In some degree, this can be explained by a low base effect of the last 1st quarter. But, in the whole, these financial results are a direct subsequence of import substitution, positive currency effect, cost optimization and new contracts signed, both in Russia and abroad. Though we don’t wait for the sustainability of 22% EBITDA margin, achieved in the 1st quarter, we feel optimistic about the 2015 year and expect growing revenue and EBITDA compared to last year.

The Group’s business segments demonstrated mixed performance, but all our machine-building business segments grew in term of EBITDA, which, in turn, increased the whole EBITDA level more than twofold on year-on-year basis.

We remain cautious about economic uncertainties, including situation in Ukraine, economic downturn and financial instability in Russia, but we still feel confidence in 2015 financial results, guided at a conference call with investors at the end of this April, which is maintained by growing backlog and currently running process of import substitution”.

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1 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.

2 ROCE is calculated as EBIT LTM divided by (average total debt + average equity), where EBIT is derived as (Gross profit – SG&A expenses – Other operating expenses (net)).

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