25 Apr 2019 18:06
HMS Group (HMSG) HMS Group: 2018 FY IFRS Results - Correction 25-Apr-2019 / 20:05 MSK Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. The issuer advises that the following replaces the HMS HYDRAULIC MACHINES & SYSTEMS GROUP PLC "HMS Group: 2018 FY IFRS Results" announcement released at 15:34 GMT on April 25, 2019.There were misprints in "Share buy-backs" section, and it has now been correcter:In 2019, the company repurchased 61,295 GDRs (prev. 61,162 GDRs). As of today, HMS has purchased 1,204,282 GDRs (prev. 1,204,149 GDRs) or 5.14 percent of its issued share capital. We expect to continue our buy-back program to 6 percent of HMS' issued share capital.All other details remain unchanged.The full corrected version is shown belowHMS Group Reports 2018 FY Net Income of Rub 1.9 Billion
Moscow, Russia - April 25, 2019 - HMS Group Plc (the "Group") (LSE: HMSG), the leading pump, oil & gas equipment and compressor manufacturer and provider of flow control solutions and related services in Russia and the CIS, today announces its financial results for twelve months ended December 31, 2018.
Financial highlights FY 2018: ▪ Revenue: Rub 52.6 bn (+18% yoy) ▪ EBITDA[1]: Rub 6.6 bn (-3% yoy), EBITDA margin 12.6% ▪ Operating profit: Rub 4.2 bn (-8% yoy), operating margin down to 8.0% ▪ Net income (profit for the year): Rub 1.9 bn (-6% yoy), net income margin 3.7%
▪ Total debt: Rub 19.4 bn (+21% yoy) ▪ Net debt: Rub 13.1 bn (+14% yoy) ▪ Net debt-to-EBITDA LTM ratio: 1.97x
Operational highlights FY 2018: ▪ Backlog: Rub 42.6 bn (+9% yoy) ▪ Order intake: Rub 55.9 bn (-6% yoy)
Artem Molchanov, CEO of HMS Group, commented: "We again delivered what we promised. We managed to increase revenue by 18 percent to Rub 52.6 billon, and prevent Net income to decline significantly, keeping it at the level of Rub 1.9 billion."
GROUP PERFORMANCE Results
Order intake was lower in all business segments except Compressors compared to 2017. The decline was attributable to less amount of large contracts signed in the reporting period. Backlog for HMS Group grew to Rub 42.6 billion by 9% vs. Rub 39.1 billion last year. Pumps and, for the most part, Compressors made contribution to this growth. Unlike 2017, the growth was based on the recurring business, as backlog of large integrated contracts was 4% yoy lower. Revenue for the full year was Rub 52.6 billion, compared with Rub 44.4 billion in 2017. Almost all segments contributed to this growth except Oil and gas equipment and projects (OGEP) business segment (-2% yoy). EBITDA was down by 3% yoy to Rub 6.6 billion because of a decline in Pumps. Revenue from recurring business was down by 2% yoy. Large projects' revenue jumped 75% yoy. EBITDA from recurring business declined 45% yoy and large contracts advanced 41% yoy. Higher revenue and lower EBITDA led to EBITDA margin decrease to 12.6% from 15.4% last year. For the 4th quarter, revenue was Rub 20.8 billion, compared with Rub 13.0 billion in 2017. EBITDA was up to Rub 2.3 billion from Rub 1.9 billion last year. Depreciation and amortization for the full year was Rub 1.8 billion, up 19% yoy, compared with Rub 1.5 billion in 2017. Profit for the year (net income) was Rub 1.9 billion, down 6% yoy, compared with Rub 2.1 billion last year. For the 4th quarter, net income was Rub 772 million compared with Rub 419 million in 2017. In 2018, decrease in free cash flow to Rub 139 million from Rub 3.1 billion in 2017 was due mainly to negative change in working capital. ROCE decreased because of lower operating profit and higher average capital employed. Expenses and Operating profit
Cost of sales was Rub 40.6 billion, up 25% yoy, compared with Rub 32.5 billion in 2017. This was almost fully attributable to materials and components (+25% yoy) and labour costs incl. social taxes (+11% yoy). Despite the outpacing growth of cost of sales, gross profit was up 1% yoy to Rub 12.0 billion, compared with Rub 11.9 billion in 2017.
Distribution and transportation expenses was Rub 1.9 billion, up 7% yoy, compared with Rub 1.8 billion in 2017. Growth of labor costs incl. social taxes (+14% yoy) was the main drivers. As a share of revenue, distribution and transportation expenses was down to 3.6%, compared with 4.0% last year. General and administrative expenses was Rub 5.6 billion, up 13% yoy, compared with Rub 5.0 billion last year, due to 11% yoy higher labour costs incl. social taxes. As a share of revenue, general and administrative expenses was down to 10.7% from 11.3% in 2017. For the full year, SG&A expenses[2] was Rub 7.6 billion, that was 11% yoy higher than last year. In contrast, as a share of revenue they decreased to 14.4% from 15.3%. Operating profit was Rub 4.2 billion, down 8% yoy, compared with Rub 4.6 billion in 2017. Operating margin decreased to 8.0% from 10.3%.
Finance costs were Rub 1.6 billion, down by 9% yoy, compared with Rub 1.8 billion in 2017. The main factor was decrease of interest expenses (-7% yoy) due to lower interest rates as a result of debt portfolio refinancing. Average rates decreased to 8.7% p.a. from 9.8% p.a. within a one-year period.
BUSINESS SEGMENTS PERFORMANCE Industrial pumps[i]
Lower order intake of Rub 19.6 billion was due to no large contracts signed in the reporting period, though recurring business grew by 17% yoy. Backlog grew by 19% yoy to Rub 17.2 billion because of a slower pace of revenue recognition of several contracts signed in 2017, that have execution period more than one year. Revenue was Rub 17.8 billion, up 2% yoy, compared with Rub 17.5 billion in 2017. EBITDA declined to Rub 2.4 billion, by 24% yoy, from Rub 3.1 billion, mainly due to increase of wages and a high base effect in 2017, when several untypical modular equipment projects were executed, that had higher than average profitability. EBITDA margin was down to 13.4% due to higher revenue and lower EBITDA in 2018.
Oil and Gas equipment & projects (OGEP)[ii]
For the full year, order intake decreased sharply to Rub 12.0 billion from Rub 27.4 billion, because there were no large contracts signed in 2018. Backlog also went down to Rub 6.7 billion from Rub 15.1 billion, due to less contracts signed than revenue recognized in the reporting period. Both recurring business and large contracts declined. Revenue was down 3% yoy to Rub 20.9 billion, compared with Rub 21.5 billion in 2017. EBITDA and EBITDA margin rose on large contracts.
Compressors[iii]
Order intake grew to Rub 23.9 billion, compared with Rub 7.2 billion in 2017, due to a substantially higher volume from large contracts signed in 4Q 2018. Backlog was lifted by order intake to Rub 16.7 billion, compared with Rub 5.2 billion last year. Revenue and EBITDA grew to Rub 14.7 billion and Rub 1.8 billion respectively, led by large contracts. EBITDA margin decline to 12.0% due to a mix of more profitable projects executed in 2017.
Construction[iv]
For the full year, orders portfolio and backlog declined substantially. Revenue was Rub 1.8 billion, up 72% yoy, from Rub 1.0 billion in 2017, due to revenue recognition from large integrated contracts under execution. Though 4Q 2018 was profitable in terms of EBITDA, the full year EBITDA was still negative.
Working capital and Capital expenditures
For the full year, working capital was Rub 9.1 billion, up by 17% yoy in line with growth of revenue. As a share of revenue, working capital declined to 17% from 18% in 2017. Capital expenditures were Rub 2.3 billion, up 8% yoy, compared with Rub 2.2 billion in 2017.
DEBT POSITION
Total debt was Rub 19.4 billion, compared with Rub 16.0 billion in 2017. Net debt also increased, to Rub 13.1 billion vs. Rub 11.4 billion at 2017-end. 2018 FY Net debt to EBITDA LTM ratio increased to 1.97x compared with 1.67x in 2017. For the 4th quarter, total debt increased by minor 1% qoq, compared with Rub 19.2 billion in 3Q 2018. Net debt, in contrast, was down 12% qoq, compared with 14.8 billion in 3Q 2018.
Dividends The Board of Directors of HMS Group recommended total dividends for 2018 of Rub 9.81 per ordinary share (Rub 49.05 per GDR), of which Rub 3.84 per share (Rub 19.20 per GDR) have been already distributed as interim dividends in January 2019. If approved at the Annual General Meeting of Shareholders, final dividends of Rub 5.97 per ordinary share (Rub 29.85 per GDR) will be distributed on the 1st of July, 2019.
Share buy-backs HMS Group repurchased 66,100 global depositary receipts during 4Q 2018. For the full year, the company repurchased 109,100 GDRs. In 2019, the company repurchased 61,295 GDRs. As of today, HMS has purchased 1,204,282 GDRs or 5.14 percent of its issued share capital. We expect to continue our buy-back program to 6 percent of HMS' issued share capital.
MANAGEMENT PURCHASES In 2018, HMS managers purchased 19,225 of the company's GDRs using their own funds.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE & FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT As of April 1, 2019, average interest rate decreased to 8.8% compared to 9.8% at the beginning of 2018. According to management accounts, total debt decreased by 3% to Rub 18.8 billion, and net debt, in contrast, was up 13% to Rub 14.8 billion due to working capital, required for execution of large projects. CONTRACTS In April 2019, the company announced signing of two contract worth Rub 4.0 billion for delivery of gas transportation units, that will be executed by the end of 2019. RESTRUCTUING OF THE CORE SHAREHOLDERS' SHAREHOLDING On March 6, 2019 its major shareholder H.M.S. Technologies Limited ("HMST"), registered at Cyprus transferred its entire shareholding in the Company to JSC HMS Holding ("HMS Holding"), registered at Russia, the subsidiary undertaking of HMST, via the following transactions: HMST transferred 67,159,421 ordinary shares in the Company (comprising 57.32% of the Company's issued share capital) to HMS Holding in the form of the shareholder's asset contribution for nil consideration; HMST transferred 2,924,207 global depositary receipts issued under the Company's depositary receipts program ("GDRs") (representing 14,621,035 shares in the Company and comprising 12.28% of the Company's issued share capital) to HMS Holding in exchange for additionally issued shares in HMS Holding.As a result of this restructuring: HMS Holding became a direct holder of 69,159,421 ordinary shares in the Company and 2,924,207 GDRs comprising in aggregate 71.51% of the Company's issued share capital; and HMST remains the sole voting shareholder of HMS Holding retaining control over the majority shareholding in the Company,and consequently none of the transactions made as a part of the restructuring triggers an obligation of the Company, HMST or HMS Holding to make any mandatory offer to the GDR holders. This restructuring of the core shareholders' shareholding in the Company does not lead to any change in corporate governance or corporate control of the Company. All applicable regulatory approvals have been obtained in connection with this restructuring. Further details of the transactions above are available here: GDRs MAR notification by HMST GDRs MAR notification by HMS Holding Ordinary shares MAR notification by HMST Ordinary shares MAR notification by HMS Holding Major holdings notification (for Cypriot regulatory purposes) by HMST Major holdings notification (for Cypriot regulatory purposes) by HMS Holding TR-1 notification (for UK regulatory purposes) by HMST
*** WEBCAST TO DISCUSS 2018 FY IFRS FINANCIAL RESULTS
Date: Friday, April 26, 2019 Time: 1.00 PM (MOSCOW) / 11.00 AM (London) / 12.00 PM (CET)
Speaker: Inna Kelekhsaeva - Deputy Head of Capital markets Q&A session: 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: +7 495 646 9315
UK Local: +44 207 194 3759 UK Toll Free: 0800 376 6183
US Local: +1 646 722 4916 US Toll Free: +1 844 286 0643
Conference ID: 62266395# Title: HMS Group 2018 FY IFRS results
Webcast meeting: To access the live event, click on the link: https://webcasts.eqs.com/hmsgroup20190426
Please, dial in 5-10 minutes prior to the scheduled start time. Pre-registration is available. We will share materials on HMS' investor website ahead of the webcast.
Contacts: Investor Relations, 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.
Press Release Information Accuracy Disclaimer Information published in press releases was accurate at the time of publication but may be superseded by subsequent releases or other information.
LEI: 254900DDFETNLASV8M53
HMS Hydraulic Machines & Systems Group plc Consolidated Statement of Financial Position at 31 December 2018 (in thousands of Russian Roubles, unless otherwise stated)
HMS Hydraulic Machines & Systems Group plc Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2018 (in thousands of Russian Roubles, unless otherwise stated)
HMS Hydraulic Machines & Systems Group plc Consolidated Statement of Cash Flows for the year ended 31 December 2018 (in thousands of Russian Roubles, unless otherwise stated)
[1] EBITDA is defined as operating profit/loss from continuing operations adjusted for other operating income/expenses, depreciation and amortisation, amortisation of government grants, impairment of assets, excess of fair value of net assets acquired over the cost of the 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] SG&A expenses = Selling, General and Administrative Expenses = Distribution and transportation + General and administrative [i] 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 solutions as well as pumps built to standard specifications; it also provides aftermarket maintenance and repair services and other support for its products. [ii] The oil and gas equipment and projects 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. [iii] 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 principal products include customized compressors, series-produced compressors built to standard specifications, and compressor-based integrated solutions. [iv] The construction provides construction works for projects for customers in the oil upstream and midstream, gas upstream. |
ISIN: | US40425X4079 |
Category Code: | FR |
TIDM: | HMSG |
LEI Code: | 254900DDFETNLASV8M53 |
OAM Categories: | 1.1. Annual financial and audit reports |
2.2. Inside information | |
3.1. Additional regulated information required to be disclosed under the laws of a Member State | |
Sequence No.: | 8367 |
EQS News ID: | 803671 |
End of Announcement | EQS News Service |
UK Regulatory announcement transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement.