Hms Hydraulic S Regulatory News (HMSG)

2 Mar 2016 07:21

IR RELEASE

Moscow, March 2, 2016

HMS Hydraulic Machines & Systems Group plc

(the “Company”, and together with its subsidiaries, the “HMS Group”)

HMS GROUP GUIDANCE FOR 2015 AND 2016

Moscow, Russia – HMS Group (LSE: HMSG), the leading pump and compressor manufacturer as well as a 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, today releases the statement regarding its guidance for FY 2015 and FY 2016.

2015 & 2016 GUIDANCE:

In 2016F, revenue is expected to grow by 14% yoy, on average, from Rub 37-37.5 bn to Rub 40-45 bn, due to both large contracts and standard equipment.

EBITDA is expected to decrease from 2015F Rub 7.2-7.5 bn to 2016F Rub 5.2-5.6 bn by 27% yoy on average, and, as a result, EBITDA margin to decline from 20 percent to 13 percent, primarily due to two factors – clients’ capex reduction and the performance of HMS’ compressors business segment.

First factor: HMS’ clients are assumed to reduce their investment capex because of current economic downturn in Russia and low oil & gas prices. This would result in a more aggressive price policy of HMS Group aiming to win contracts, and, therefore, lower profitability of large contracts.

Second factor: In 2015F, HMS’ order intake in the compressors business segment (Kazankompressormash) grew by 276% yoy to Rub 8.1 bn, and its share in the total order intake portfolio increased from 6% in 2014A to 23% in 2015A.

The market share of Kazankompressormash (KKM) in the compressor market is smaller than the share of HMS in the pumps and oil & gas equipment markets, and, as a result, the competition in the compressor market is higher. Therefore, currently compressors contracts have lower profitability in comparison with contracts in other segments where HMS Group operates.

Thus, growth of KKM’s contracts portfolio along with their lower profitability has influenced the lower forecasted EBITDA margin for 2016F.

Kirill Molchanov, CFO and Co-founder of HMS Group, commented, that

“As a whole, 2016 year will not likely be easy for us. However, based on current pipeline of large contracts which are on different preliminary stages as well as on the company’s internal strength, we are more optimistic in the mid-term.”

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The management of HMS Group will hold a conference call on Thursday March 3, 2016, at 11:00 am (Moscow time) to discuss the guidance.

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WEBCAST TO DISCUSS 2015 & 2016 GUIDANCE

THURSDAY, 3 March 2016

11.00 AM (MOSCOW)

To participate in the conference call, please dial in:

Russia Local: 7 495 705 9451

UK Local: 44 (0)20 3427 1901

UK Toll Free: 0800 279 5004

US Local: 1 646 254 3364

US Toll Free: 1 877 280 2296

Conference ID: 8123406

Title: HMS Group Budget 2016 discussion

Webcast meeting:

To access the live event, click on the link:

http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=3397

Please, dial in 5-10 minutes prior to the scheduled start time. Pre-registration is available.

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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.

For more information, please, contact:

Inna Kelekhsaeva, Deputy Head of Capital markets

Phone: +7 (495) 730-6601 x 1318, Email: kelekhsaeva@hms.ru

Anna Obotnina, Head of Marketing communications

Phone: +7 (495) 730-6601 x (600)3304, Email: obotnina@hms.ru

Disclaimer

The information contained herein has been prepared using information available to HMS Hydraulic Machines & Systems Group Plc (“HMS Group” or “HMS” or “Group” or “Company”) at the time of preparation of the press release. External or other factors may have impacted on the business of HMS Group and the content of this press release, since its preparation. In addition all relevant information about HMS Group may not be included in this press release. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or reliability of the information. Any forward looking information herein has been prepared on the basis of a number of assumptions which may prove to be incorrect. Forward looking statements, by the nature, involve risk and uncertainty and HMS Group cautions that actual results may differ materially from those expressed or implied in such statements. Reference should be made to the most recent Annual Report for a description of the major risk factors. This press release should not be relied upon as a recommendation or forecast by HMS Group, which does not undertake an obligation to release any revision to these statements. This press release does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any securities in HMS Group, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision.

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