Last checked at 28 Apr 2016 17:17
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 billionOperating profit adj. up 61% yoy to Rub 4.9 billion
Profit for the year up to Rub 1.8 billionProfit 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 1.66x2015 FY Operational Highlights:
Backlog down by 14% yoy to Rub 24.4 billion Order intake down by 5% yoy to Rub 33.0 billionArtem 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 1.66x. 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.”
OPERATING REVIEW
BACKLOG & ORDER INTAKE
Backlog2 of HMS Group by the end of 2015 decreased to Rub 24,409 million, down 14% yoy mainly due to a 54% yoy decline in the large contracts portfolio.
As regards standard equipment, the backlog grew by 9% yoy from Rub 18,081 million to Rub 19,741 million. Swings in the backlog for large contracts are incidental to a normal volatility of the portfolio and depend on large contracts signed, a client’s production cycle, etc.
| Backlog, Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Industrial pumps | 10,075 | 11,076 | -9% | ||||
| Oil & Gas equipment | 5,716 | 12,343 | -54% | ||||
| Compressors | 6,915 | 2,131 | 224% | ||||
| EPC | 1,702 | 2,693 | -37% | ||||
| Construction | 581 | 1,671 | -65% | ||||
| Project and design | 1,121 | 1,022 | 10% | ||||
| Total | 24,409 | 28,243 | -14% |
In the pump business segment the backlog declined by 9% yoy to Rub 10,075 million due to fewer contracts signed for standard equipment.
The oil & gas equipment business segment’s backlog declined to Rub 5,716 million, because of ongoing recognition of revenues from the Group’s large contracts in the oil & gas equipment business segment. However, the backlog for standard oil & gas equipment increased by 76% yoy.
The compressors business segment grew more than threefold and reached Rub 6,915 million not only because of a large contract signed in the 3rd quarter, but also thanks to an explosive growth in small- and middle-size orders (+83% yoy).
The EPC segment’s backlog was down by 37% yoy to Rub 1,702 million due to negative performance of the construction sub-segment.
Order intake3 for FY 2015 decreased to Rub 32,979 million, down 5% yoy compared to FY 2014 mainly because fewer large-scale orders were received in 2015. In addition, an almost 50% drop in the EPC segment affected the whole order intake. The volume of large contracts signed declined by 42% yoy, and, in contrast, the number of standard equipment orders increased by 6% yoy.
| Order intake, Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Industrial pumps | 15,399 | 15,592 | -1% | ||||
| Oil & gas equipment | 7,919 | 13,963 | -43% | ||||
| Compressors | 8,145 | 2,168 | 276% | ||||
| EPC | 1,517 | 2,983 | -49% | ||||
| Construction | -181 | 1,559 | n/a | ||||
| Project and design | 1,698 | 1,424 | 19% | ||||
| Total | 32,979 | 34,705 | -5% |
GROUP PERFORMANCE
Revenue reached Rub 37,296 million, 15% yoy higher than Rub 32,351 million the year before.
EBITDA grew by 41% yoy to Rub 7,446 million. As the result, EBITDA margin for the full year reached 20.0% versus 16.3% for the comparative period.
| Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Revenue | 37,296 | 32,351 | 15% | ||||
| EBITDA | 7,446 | 5,272 | 41% | ||||
| EBITDA margin | 20.0% | 16.3% |
The main reason for the higher revenue and EBITDA for the full year 2015 is the execution of large contracts on the back of slow but stable growing revenue and EBITDA from standard production.
Export sales of the Group amounted to Rub 3,819 million (10% share of HMS’ revenue).
| Cost of sales, Rub mn | 2015 FY | 2014 FY | Change yoy | Share of revenue 2015 | Share of revenue 2014 | ||||||
| Cost of sales | 25,783 | 23,511 | 10% | 69.1% | 72.7% | ||||||
| Supplies and raw materials | 16,520 | 13,400 | 23% | 44.3% | 41.4% | ||||||
| Labour costs | 5,928 | 5,677 | 4% | 15.9% | 17.5% | ||||||
| Construction & design and engineering services of subcontractors | 1,135 | 1,763 | -36% | 3.0% | 5.4% | ||||||
| Depreciation and amortization | 1,281 | 1,264 | 1% | 3.4% | 3.9% | ||||||
| Others | 919 | 1,407 | -35% | 2.5% | 4.4% |
Cost of sales grew by 10% yoy to Rub 25,783 million from Rub 23,511 million. The growth was mainly due to a 23% yoy increase in the costs of supplies and raw materials, which accounted for 44% share of the revenue compared to 41% last year. This significant growth was the result of execution of large contracts in the oil & gas business segment, which are more material-intensive.
Since large contracts are more material-intensive but less labor-intensive, the labor costs demonstrated only a slight increase, but as a share of revenue they decreased to 16% from 18% in the comparative period.
| Operating expenses, Rub mn | 2015 FY | 2014 FY | Change yoy | Share of revenue 2015 | Share of revenue 2014 | ||||||
| Distribution and transportation | 1,378 | 1,237 | 11% | 3.7% | 3.8% | ||||||
| General and administrative | 4,603 | 4,340 | 6% | 12.3% | 13.4% | ||||||
| Other operating expenses | 624 | 222 | 181% | 1.7% | 0.7% | ||||||
| Total operating expenses | 6,605 | 5,798 | 14% | 17.7% | 17.9% | ||||||
| Finance costs | 2,087 | 2,148 | -3% | 5.6% | 6.6% |
Distribution and transportation expenses increased by 11% yoy to Rub 1,378 million rubles. As a percentage of revenue the figure went down to 3.7% from 3.8% for the full year 2014.
General and administrative expenses totaled Rub 4,603 million for FY 2015, up 6% yoy because of a 16% yoy growth of labour costs due to an increase in compensation to employees combined with a change in the base for statutory social insurance contributions (SICs). From 2015 onwards all payments to employees are included in the base for SICS. Limits for some SIC bases were raised and limits for some SICs were scrapped. Despite the increase of labour costs in absolute terms, general and administrative expenses, as a share of revenue, declined to 12% compared to 13% for the FY 2014.
In absolute figures, SG&A expenses4 grew by 7% yoy, but in terms of share of revenue they decreased to 16% from 17% for 2014. This is a direct consequence of the operating leverage, when revenue is growing faster than expenses.
Total operating expenses5 grew by 14% yoy to Rub 6,605 million from Rub 5,798 million, but as a percentage of revenue they declined to 17.7% from 17.9% in the comparative period.
Operating profit increased more than five-fold and reached Rub 4,525 million versus Rub 855 million in the previous year. Operating margin grew to 12.1% from 2.6% for the FY 2014.
In 2014, the Group recognized Rub 2,186 million impairment of goodwill, which reflected geopolitical risks and worsened economic conditions in Russia. And in 2015, HMS recognized impairment of property, plant and equipment of Giprotyumenneftegaz and Bobruisk Machine Building Plant in total amount of Rub 364 million, and impairment of investment property of Rub 19 million (Rub 383 in total).
If adjusted, the Group’s operating profit increased by 61% yoy to Rub 4,909 million with operating margin adj. at 13.2% versus 9.4% last year.
| Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Operating profit | 4,525 | 855 | 429% | ||||
| Impairment of property, plant and equipment and investment property | 383 | 0 | |||||
| Impairment of goodwill | 0 | 2,186 | |||||
| Operating profit, adj. | 4,909 | 3,041 | 61% | ||||
| Operating margin, adj. | 13.2% | 9.4% |
Finance costs decreased by 3% yoy, where interest expenses for 12 months 2015 were 28% yoy higher and reached Rub 1,804 million while foreign exchange loss went down by 52% yoy to Rub 343 million from Rub 720 million in the previous year.
Interest expenses’ growth is the result of the average debt burden6 growth (Rub 16.4 billion for the FY 2015 vs. Rub 14.8 billion for the FY 2014) combined with an increase in the average interest rate7:
10.7% for 2015 vs. 9.8% for 2014 for all loans, including FX-denominated, 11.7% for 2015 vs. 10.6% for 2014 correspondingly for Rub-denominated loans.HMS Group undertook major efforts to keep interest rates at a manageable level.
Profit for the period reached Rub 1,764 million versus loss for the period of Rub 1,575 million in the previous year. If adjusted for one-off impairments, profit for the year adjusted increased by 239% yoy to Rub 2,071 million from Rub 611 million, and profit for the year margin adjusted was 5.6% this year versus 1.9% last year.
| Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Profit / (Loss) for the year | 1,764 | -1,575 | n/a | ||||
| Impairment of property, plant and equipment and investment property (net of tax 20%) | 307 | 0 | |||||
| Impairment of goodwill | 0 | 2,186 | |||||
| Profit for the year, adj. | 2,071 | 611 | 239% | ||||
| Profit for the year margin, adj. | 5.6% | 1.9% |
SEGMENT PERFORMANCE
The reportable operating segments derive their revenue primarily from the manufacture and sale of industrial pumps, oil and gas equipment, compressors, oil and gas construction and the other products and services. From 2015 onwards, HMS Group will report a total segment’s revenue, which includes external revenue and intersegment revenue, for more consistent demonstration of the performance of each segment.
Industrial pumps Business Segment
The industrial pumps business segment designs, engineers, manufactures and supplies a diverse range of pumps and pump-based integrated solutions to customers in the oil and gas, power generation and water utilities sectors in Russia, the CIS and internationally. The business segment’s principal products include customized pumps and integrated solution as well as standard pumps; it also provides aftermarket maintenance and repair services and other support for its products.
| Industrial pumps, Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Revenue | 17,925 | 16,899 | 6% | ||||
| EBITDA | 4,098 | 3,137 | 31% | ||||
| EBITDA margin | 22.9% | 18.6% |
The industrial pumps business segment’s revenue grew to Rub 17,925 million from Rub 16,899 million (+6% yoy). EBITDA increased by 31% yoy to Rub 4,098 million due to several factors: input of large-scale contracts in the oil & gas equipment business segment, import substitution, and costs optimization along with NEM’s costs depreciation because of deprecation of the Ukrainian hryvnia against the Russian ruble. EBITDA margin grew up to 22.9% not only because of execution of large contracts, which are more profitable, but also because of growth of the average margin of standard pumps production.
Oil & Gas equipment Business Segment
The oil & gas equipment business segment manufactures, installs and commissions modular pumping stations, automated metering equipment, oil, gas and water processing and preparation units and other equipment and systems for use primarily in oil extraction and transportation. The segment’s core products are equipment packages and systems installed inside a self-contained, free-standing structure which can be transported on trailers and delivered to and installed on the customer’s site as a modular but fully integrated part of the customer’s technological process.
| Oil & Gas equipment, Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Revenue | 15,218 | 10,291 | 48% | ||||
| EBITDA | 3,246 | 1,908 | 70% | ||||
| EBITDA margin | 21.3% | 18.5% |
The oil & gas equipment business segment continued to deliver outstanding results due to signed contracts for delivery of integrated solutions both in terms of revenue and EBITDA. Revenue increased by 48% yoy to Rub 15,218 million, EBITDA was up 70% yoy and reached Rub 3,246 million with EBITDA margin growing to 21.3% from 18.5% last year.
Compressors Business Segment
The compressors business segment designs, engineers, manufactures and supplies a diverse range of compressors and compressor-based solutions, including compressor units and compressor stations, to customers in the oil and gas, metals and mining and other basic industries in Russia. The business segment’s main products include standard compressors, customized compressors and compressor-based integrated solutions.
| Compressors, Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Revenue | 4,183 | 2,661 | 57% | ||||
| EBITDA | 315 | -255 | n/a | ||||
| EBITDA margin | 7.5% | -9.6% |
Revenue grew by 57% yoy to Rub 4,183 million. EBITDA turned positive Rub 315 million in comparison to negative Rub 255 million last year. The improving results of the compressors business segment are explained by increased number and value of contracts for standard equipment combined with execution of a large contract in the oil & gas equipment business segment. In addition, the most shipments and revenue recognition was completed in the 4th quarter of 2015. EBITDA margin reached 7.5% versus negative 9.6% last year.
Engineering, Procurement and Construction (EPC) Business Segment
The engineering, procurement and construction (EPC) business segment provides design and engineering services, project management and construction works for projects for customers in the oil & gas upstream and midstream.
| EPC, Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Revenue EPC | 2,617 | 3,356 | -22% | ||||
| Project and design | 1,593 | 2,266 | -30% | ||||
| Construction | 1,024 | 1,089 | -6% | ||||
| EBITDA EPC | 180 | 490 | -63% | ||||
| Project and design | 132 | 279 | -53% | ||||
| Construction | 48 | 211 | -77% | ||||
| EBITDA margin EPC | 6.9% | 14.6% | |||||
| Project and design | 8.3% | 12.3% | |||||
| Construction | 4.7% | 19.3% |
The EPC business segment’s results continued to weaken compared to FY 2014 with revenue down to Rub 2,617 million (-22% yoy) and EBITDA decreasing by 63% yoy to Rub 180 million.
In general, the EPC segment is experiencing tougher competition and stiffer pricing in the oil & gas engineering and construction market, which influenced the segment’s financial results. As a result, the EPC margin went down to 6.9% from 14.6% in the period of comparison.
FINANCIAL REVIEW
Cash flow performance
| Cash flow performance, Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Net cash (used in)/from operating activities | 1,881 | 960 | 96% | ||||
| Net cash used in investing activities | -1,431 | -1,112 | 29% | ||||
| Free cash flow (FCF) | 451 | -153 | n/a | ||||
| Net cash (used in)/from financing activities | -1,594 | 3,031 | -153% | ||||
| Cash & cash equivalents | 3,496 | 4,535 | -23% |
Working capital8 grew by 29% yoy to Rub 8,813 million from Rub 6,834 million last year, primarily due to realization of large contracts. As a share of revenue, working capital increased to 24% compared to 21% last year, still within a normal range of working capital requirements when executing large and technically sophisticated projects.
Capital expenditures for the FY 2015 grew by 19% yoy to Rub 1,457 million from Rub 1,223 million for the FY 2014. HMS Group is close to completion of the 1st stage of its ambitious project, a so-called “The Localization Project”, to develop manufacture competences for high-capacity oil refining and transport pumps and nuclear pumps in Livny, the Orel region. The largest share of current capital expenditures (c.44%) was channelled to this investment project. Excluding this localization capex, the general maintenance capex decreased by c. 28% yoy compared to the last year.
In December 2015, the company signed a loan agreement with the Fund of Industrial Development (the Ministry of Industry and Trade of the Russian Federation). The Fund provided HMS Group with a 5-year special-purpose loan worth Rub 500 million at an interest rate of 5% to invest in The Localization Project.
Investing cash outflow increased by 29% yoy to Rub 1,431 million because of the growing capital expenditures. Despite this fact, free cash flow turned positive Rub 451 million versus outflow of Rub 153 million last year because of higher margins in 2015.
Debt and Liquidity position
| Debt & Liquidity, Rub mn | 2015 FY | 2014 FY | Change yoy | ||||
| Total debt | 15,884 | 16,967 | -6% | ||||
| Long-term debt | 11,218 | 13,235 | -15% | ||||
| Short-term debt | 4,667 | 3,732 | 25% | ||||
| Cash & cash equivalents | 3,496 | 4,535 | -23% | ||||
| Net debt | 12,388 | 12,432 | 0% | ||||
| Net debt / EBITDA LTM | 1.66 | 2.36 |
Total debt of HMS Group declined by 6% yoy to Rub 15,884 million, and Net debt was almost flat at Rub 12,388 million with a slight decrease in absolute figures. Reduction in total debt was attributable to payments received under both contracts under execution and newly signed contracts at the end of 2015.
Because of EBITDA’s growth along with the constant level of net debt, Net debt-to-EBITDA LTM ratio decreased to 1.66x from 2.36x.
On January 1, 2016, the weighted average interest rate was 11.4% vs. 10.0% on January 1, 2015, for all loans, including FX-denominated, owing to new credit lines obtained at higher rates, though lower than average prevailing interest rates. The weighted average interest rate for Rub-denominated loans only increased to 12.5% from 10.9% as of January 1, 2015.
DIVIDENDS AND HMS GDRS
On December 7, 2015, the Board of Directors approved the payment of an interim dividend in respect to the profit for the nine months ended September 30, 2015, of Rub 3.25 per ordinary share, amounted to a total dividend of Rub 374 million, as a compensation for lack of dividends for 2014 due to the strong and better than expected financial results for 9 months 2015 and expectations for the full year. The dividends were paid on December 30, 2015.
On June 19, 2015, the Board of Directors approved a buyback program of the company with respect to global depositary receipts. The buyback period was set for 1 year from June 19, 2015, until June 19, 2016. According to the program, the company can repurchase from the market maximum 5% of the subscribed capital of HMS Group, including previously acquired and held at present GDRs (Treasury shares).
| as of June 19, 2015 | Number of shares/underlying shares | % share in the capital | Number of securities after GDRs’ ratio change | ||||
| Subscribed capital of HMS Group (ordinary shares) | 117,163,427 | 100.00 | - | ||||
| Maximum number of shares/GDRs to be purchased | 5,858,171 | 5.00 | 1,171,634 | ||||
| Treasury shares/GDRs | 1,819,444 | 1.55 | 363,889 | ||||
| Number of shares/GDRs, HMS can purchase under the Buyback program | 4,038,727 | 3.45 | 807,745 |
Securities should be repurchased at the prevailing market price at the date of such purchase and may not exceed 5% of the average market price for all market trades within 5 days prior to the acquisition. All purchases are carried out by the Company with the assistance of Renaissance Capital. The Buyback program will end as soon as the total amount of acquired securities has reached the maximum amount specified or, if earlier, on June 19, 2016.
As of today, HMS Group repurchased 553,332 GDRs (2.36% of HMS’ subscribed capital) and there are 618,302 GDRs left the company can buy under the program.
| as of April 28, 2016 | Number of shares/underlying shares | % share in the capital | Number of GDRs | ||||
| Subscribed capital of HMS Group (ordinary shares) | 117,163,427 | 100 | - | ||||
| Maximum number of shares/GDRs to be purchased | 5,858,171 | 5.00 | 1,171,634 | ||||
| Treasury shares/GDRs | 2,766,660 | 2.36 | 553,332 | ||||
| Number of shares/GDRs, HMS can purchase under the Buyback program | 3,091,511 | 2.64 | 618,302 |
SIGNIFICANT EVENTS AFTER THE REPORTING DATE & FINANCIAL MANAGEMENT
Financial management
On February 2, 2016, HMS Group completed an early full redemption of its Ruble 3bn bonds series 03 with a 10.10% coupon rate with maturity in February 2018. Currently, HMS Group doesn’t have any Ruble corporate bonds outstanding.
Within the full year of 2015, HMS Group refinanced Rub 5.9 billion. In general, throughout the year, HMS Group signed loan agreements to refinance its credit portfolio and to finance its capital needs worth Rub 13.7 billion.
At the beginning of this year, HMS Group increased its uncommitted revolving credit line with VTB Bank from Rub 4.5 billion to Rub 10.0 billion.
Depositary program
In February 2016, the ratio of HMS’ depositary receipts program was changed from 1:1 to 1:5. According to the “new” ratio, 1 depositary receipt became equal to 5 ordinary shares, and on February 8, 2016, HMS Group’s shareholders received 1 “new” GDR for every 5 “old” GDRs. Only whole depositary receipts were distributed and, in effecting this, “old” receipts were rounded down, fractional receipts were sold on the market and the cash proceeds were distributed to the depositary receipts’ holders. The issued number of ordinary shares and their nominal value stayed unchanged.
Also, under a new deposit agreement with BNY Mellon, the annual depositary fee became equal to US$ 0.01 per “new” GDR instead of US$ 0.03 per “old” GDR, implying a 15-fold decrease in such fees.
After the reverse split, issued number of GDRs equals 9,600,800, where 8,728,000 depositary receipts are outstanding and 872,800 - “green-shoe’ ones.
Large contracts
In February 2016, HMS signed a Rub 2.8 billion contract to produce a boosting compressor station, based on 3 centrifugal-type compressor units with gas-turbine engines and intended for compression of low-pressure associated gas. The station will be manufactured by Kazancompressormash and installed at an oil & gas condensate field in West Siberia, by the end of 2016.
In March 2016, HMS Neftemash signed a number of contracts for delivery and installation of technologically integrated solutions for two Siberian gas fields, worth Rub 3.1 billion. These solutions will be intended for pumping of natural gas liquids and pumping of oil, wash-down water and rust preventive chemical. These contracts are a follow-up to another project, recently completed successfully.
Incentive program
On March 23, 2016, the Board of Directors decided to establish a long-term incentive program for the key executives to align the objectives of the shareholders and the executives, to retain and motivate the key executives in the form of a stock ownership program with GDRs’ vesting linked to HMS’ performance. GDRs for this program will come from GDRs owned and bought by the company, so this program will not dilute ownership of existing shareholders. As the basic scenario, the program’s fund would be equal to 5% of HMS’ share capital in the form of GDRs, subject to 100% of the KPIs (Profit for the year attributable to the shareholders of the company and EBITDA).
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General notes:
* Differences in calculations can occur due to the rounding-off rule
WEBCAST TO DISCUSS FY 2015 IFRS FINANCIAL RESULTS
FRIDAY, 29 April 2016
11.30 AM (MOSCOW) / 9.30 AM (GMT) / 10.30 AM (CET) / 4.30 AM (EST)
Speakers:
Kirill Molchanov – First Deputy General Director and Co-Founder
Alexander Rybin – Head of Capital Markets
To participate in the conference call, please dial in:
Russia Local: 7 495 213 0979
UK Local: 44 (0)20 3427 1906
UK Toll Free: 0800 279 4841
US Local: 1 212 444 0412
US Toll Free: 1 877 280 2296
Conference ID: 4541571
Title: HMS Group FY 2015 IFRS results
Webcast meeting:
To access the live event, click on the link:
http://audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=3519
Please, dial in 5-10 minutes prior to the scheduled start time. Pre-registration is available.
For more information, please contact:
Investor Relations at ir@hms.ru
***
HMS Group is the leading pump and compressor manufacturer, as well as provider of flow control solutions and related services to the oil and gas, nuclear and thermal power generation and water utilities sectors in Russia and the CIS. HMS Group’s products are mission-critical elements of projects across a diverse range of industries. It has participated in a number of large-scale infrastructure projects in Russia, including providing pumps and modular equipment to the Vankor oil field and pumping stations on recent trunk pipelines projects linking Russia’s core oil producing areas to export ports on the Pacific Ocean and Baltic Sea. HMS Group’s global depositary receipts (“GDRs”) are listed under the symbol “HMSG” on the London Stock Exchange.
The forward-looking statements contained herein are based upon various assumptions, many of which are based, in turn, upon further assumptions, which may include without limitation, HMS Group’s examination of historical operating trends, data contained in HMS Group’s records and other data available from third parties. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. HMS Group does not intend to provide any representation or warranty and does not assume any obligation to update any forward-looking statement contained herein.
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.
2 Backlog is calculated under management accounts as the preceding backlog plus new or additional customer orders booked during the reporting period, less amounts of contract value booked as revenue under ‘‘Russian GAAP’’ on an unconsolidated basis under the relevant contracts, including adjustments in compliance with IFRS. The Group’s backlog estimates are not an indication of potential revenues. Actual revenues and other measures of financial performance under IFRS may differ materially from any estimate of backlog, and changes in backlog between periods may have limited or no correlation to changes in revenue or any other measure of financial performance under IFRS Note: Backlog for 2014 was adjusted for Rub 733 mn, and order intake for 2015 was adjusted by Rub 2.9 bn
3 Under management accounts, signed contracts during the reporting period
4 SG&A expenses = Distribution and transportation expenses + General and administrative expenses
5 Total operating expenses = Distribution and transportation expenses + General and administrative expenses + Other operating expenses (net)
6 Total debt average FY 2015 is derived as (Total debt 31.12.2014 + Total debt 31.12.2015)/2, and total debt average FY 2014 is derived as (Total debt 31.12.2013 + Total debt 31.12.2014)/2.
7 Herein, average interest rate for 2015 is derived as (weighted average interest rate on 01.01.2015 + weighted average interest rate on 01.01.2016)/2, and average interest rate for 2014 is derived as (weighted average interest rate on 01.01.2014 + weighted average interest rate on 01.01.2015)/2.
8 Working capital = Inventories + Trade and other receivables (excluding Short-term loans issued, Bank deposits and Promissory notes receivable) + Current income tax receivable - Trade and other payables - Short-term provisions for liabilities and charges - Current income tax payable - Other taxes payable
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