HMS Group (HMSG)
HMS Group: 3M 2019 IFRS Results
18-Jun-2019 / 19:21 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.
HMS Group Reports 3 months 2019 Loss of Rub 495 million
Moscow, Russia - June 18, 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 the three months ended March
31, 2019.
Financial highlights 3 months 2019:
- Revenue: Rub 8.9 bn (+1% yoy)
- EBITDA[1]: Rub 501 mn (-54% yoy), EBITDA margin 5.7%
- Operating loss: Rub (238) mn
- Net loss (loss for the period): Rub (495) mn
- Total debt: Rub 18.8 bn (+10% yoy)
- Net debt: Rub 14.6 bn (-1% yoy)
- Net debt-to-EBITDA LTM ratio: 2.42x
Operational highlights 3 months 2019:
- Backlog: Rub 45.3 bn (+11% yoy)
- Order intake: Rub 11.5 bn (+10% yoy)
GROUP PERFORMANCE
Results
in millions of 3m 2019 3m 2018 Change 1Q 2019 4Q 2018 Change
Rub yoy qoq
Orders 11,487 10,408 10% 11,487 25,176 -54%
Backlog 45,347 40,865 11% 45,347 42,634 6%
Revenue 8,854 8,726 1% 8,854 20,757 -57%
EBITDA 501 1,080 -54% 501 2,302 -78%
EBITDA margin 5.7% 12.4% 5.7% 11.1%
(Loss)/Profit (495) 19 na (495) 772 na
for the period
Free cash flow (1,228) (2,906) na (1,228) 1,854 na
ROCE 10.8% 15.3% 10.8% 13.6%
Order intake grew by 10% based on a larger order intake in the pumps
business segment.
Backlog for HMS Group grew to Rub 45.3 billion by 11% compared with Rub 40.9
billion last year. Pumps and, for the most part, compressors made
contribution to this growth. The growth was based on the recurring business,
as backlog of large integrated contracts was 6% yoy lower.
Revenue was Rub 8.9 billion, up by 1%, compared with Rub 8.7 billion for 3m
2018. Compressors and pumps contributed to this growth. EBITDA was down by
54% yoy to Rub 501 million because of a decline in oil & gas equipment.
Revenue from recurring business was up by 70% yoy. Large projects' revenue
decreased by 48% yoy. EBITDA from recurring business declined 58% yoy and
large contracts was down by 52% yoy.
Higher revenue and lower EBITDA led to EBITDA margin decrease to 5.7% from
12.4% last year.
Depreciation and amortization was Rub 548 million, up 28% yoy, compared with
Rub 428 million for 3m 2018.
Loss for the period was Rub (495) million, compared with profit for the
period of Rub 19 million for 3m 2018.
An increase in free cash outflow to Rub (1.2) billion from Rub (2.9) billion
for 3m 2018 was mainly due to a positive change in working capital.
ROCE decreased because of lower operating profit for the last twelve months
and higher average capital employed.
Expenses and Operating profit
in millions of 3m 3m 2018 Change Share of Share of
Rub 2019 yoy 3m 2019 3m 2018
revenue revenue
Cost of sales 7,265 6,548 11% 82.1% 75.0%
Materials and 4,770 4,008 19% 53.9% 45.9%
components
Labour costs 1,796 1,819 -1% 20.3% 20.8%
incl. Social
taxes
Construction and 381 322 18% 4.3% 3.7%
design and
engineering
services of
subcontractors
Depreciation and 464 365 27% 5.2% 4.2%
amortization
Others (147) 34 -527% -1.7% 0.4%
Cost of sales was Rub 7.3 billion, up 11% yoy, compared with Rub 6.5 billion
for 3m 2018. Materials and components (+19% yoy) almost fully attributed to
this growth.
Gross profit was down 27% yoy to Rub 1.6 billion, compared with Rub 2.2
billion for 3m 2018.
in millions of 3m 3m 2018 Change Share of Share of
Rub 2019 yoy 3m 2019 3m 2018
revenue revenue
Distribution and 436 460 -5% 4.9% 5.3%
transportation
General and 1,302 1,227 6% 14.7% 14.1%
administrative
SG&A expenses 1,738 1,687 3% 19.6% 19.3%
Other operating 89 61 46% 1.0% 0.7%
expenses
Operating 1,827 1,748 5% 20.6% 20.0%
expenses ex. Cost
of sales
Operating (238) 430 na -2.7% 4.9%
loss/profit
Finance costs 416 380 10% 4.7% 4.4%
Distribution and transportation expenses was Rub 436 million, down 5% yoy,
compared with Rub 460 million for 3m 2018, mainly due to a decrease in
transportation expenses (-8% yoy). As a share of revenue, distribution and
transportation expenses also was down to 4.9% compared with 5.3% last year.
General and administrative expenses was Rub 1.3 billion, up 6% yoy, compared
with Rub 1.2 billion last year, mainly due to 8% yoy higher labour costs
incl. social taxes. As a share of revenue, general and administrative
expenses was up to 14.7% from 14.1% for 3m 2018.
SG&A expenses[2] was Rub 1.7 billion, that was 3% yoy higher than last year.
As a share of revenue, they increased to 19.6% from 19.3%.
Operating loss was Rub (238) million compared with operating profit of Rub
430 million last year.
in millions of Rub 3m 2019 3m 2018 Change yoy
Finance costs 416 380 10%
Interest expenses 412 374 10%
Interest rate, average 8.8% 9.0%
Interest rate Rub, average 8.9% 9.1%
Finance costs were Rub 416 million, up by 10% yoy, compared with Rub 380
million for 3m 2018. The main factor was an increase of interest expenses
(+10% yoy) due to a higher total debt level. Average rates decreased to 8.8%
p.a. from 9.0% p.a. within a one-year period.
BUSINESS SEGMENTS PERFORMANCE
Industrial pumps[i]
in 3m 2019 3m 2018 Change yoy 1Q 2019 4Q 2018 Change qoq
millions
of Rub
Orders 5,561 4,229 31% 5,561 6,141 -9%
Backlog 19,303 15,699 23% 19,303 17,152 13%
Revenue 3,241 2,997 8% 3,241 6,613 -51%
EBITDA 275 353 -22% 275 1,191 -77%
EBITDA 8.5% 11.8% 8.5% 18.0%
margin
Larger order intake of Rub 5.6 billion was fully attributable to recurring
business.
Backlog grew by 23% yoy to Rub 19.3 billion because of more recurring orders
received.
Revenue was Rub 3.2 billion, up 8% yoy, compared with Rub 3.0 billion for 3m
2018. EBITDA declined to Rub 275 million, by 22% yoy, from Rub 353 million,
mainly due to a larger share of recurring business in the reporting period
that had lower margins than large projects. EBITDA margin was down to 8.5%
due to higher revenue and lower EBITDA.
Oil and Gas equipment & projects (OGEP)[ii]
in 3m 2019 3m 2018 Change yoy 1Q 2019 4Q 2018 Change qoq
millions
of Rub
Orders 3,008 3,436 -12% 3,008 3,203 -6%
Backlog 7,265 13,655 -47% 7,265 6,658 9%
Revenue 2,406 5,111 -53% 2,406 4,346 -45%
EBITDA (130) 828 na (130) 166 na
EBITDA -5.4% 16.2% -5.4% 3.8%
margin
Order intake decreased to Rub 3.0 billion from Rub 3.4 billion, due to less
contracts signed in the reporting period.
Backlog went down to Rub 7.3 billion from Rub 13.7 billion, because in the
reporting period there were less contracts signed than revenue recognized.
Both recurring business and large contracts declined.
Revenue was down 53% yoy to Rub 2.4 billion, compared with Rub 5.1 billion
for 3m 2018. EBITDA and EBITDA margin turned negative due to the lack of
large contracts under execution combined with a mix of recurring contracts,
which had margins lower than usual.
Compressors[iii]
in 3m 2019 3m 2018 Change yoy 1Q 2019 4Q 2018 Change qoq
millions
of Rub
Orders 2,900 2,995 -3% 2,900 15,811 -82%
Backlog 16,880 7,777 117% 16,880 16,688 1%
Revenue 2,932 1,880 56% 2,932 9,371 -69%
EBITDA 377 99 279% 377 1,320 -71%
EBITDA 12.9% 5.3% 12.9% 14.1%
margin
Order intake declined by minor 3% yoy to Rub 2.9 billion, compared with Rub
3.0 billion, due to a couple of large contracts signed for 3m 2018.
Backlog gained 117% yoy to Rub 16.9 billion compared with Rub 7.8 billion
last year due to both recurring business and large contracts.
Revenue was up to Rub 2.9 billion and EBITDA grew to Rub 377 million, based
both on recurring business and large contracts. EBITDA margin increased to
12.9% compared with 5.3% for 3m 2018.
Construction[iv]
in 3m 2019 3m 2018 Change yoy 1Q 2019 4Q 2018 Change qoq
millions
of Rub
Orders 18 (253) na 18 20 -9%
Backlog 1,899 3,736 -49% 1,899 2,137 -11%
Revenue 336 382 -12% 336 537 -37%
EBITDA 11 (122) na 11 23 -51%
EBITDA 3.3% -31.8% 3.3% 4.2%
margin
Order intake equaled Rub 18 million. Backlog declined to Rub 1.9 billion,
compared with Rub 3.7 billion last year, due to execution of two large
contracts signed in 2017-2018.
Revenue was Rub 336 million, down 12% yoy, from Rub 382 million for 3m 2018.
EBITDA was positive Rub 11 million, compared with negative EBITDA of Rub
(122) million last year.
Working capital and Capital expenditures
in 3m 2019 3m 2018 Change yoy 1Q 2019 4Q 2018 Change qoq
millions
of Rub
Working 8,843 11,535 -23% 8,843 9,130 -3%
capital
Working 17% 27% 17% 17%
capital /
Revenue
LTM
Capital 506 334 52% 506 893 -43%
expenditur
es
Working capital was Rub 8.8 billion, down by 23% yoy, due to completion of a
number of large contracts, which required a substantial level of working
capital. As a share of revenue, working capital declined to 17% from 27% in
the comparing period.
Capital expenditures were Rub 506 million, up 52% yoy, compared with Rub 334
million last year.
DEBT POSITION
in 3m 2019 3m 2018 Change yoy 1Q 2019 4Q 2018 Change qoq
millions
of Rub
Total debt 18,845 17,140 10% 18,845 19,360 -3%
Long-term 17,899 16,140 11% 17,899 18,198 -2%
debt
Short-term 945 1,000 -5% 945 1,162 -19%
debt
Net debt 14,650 14,842 -1% 14,650 13,065 12%
Net debt / 2.42x 2.16x 2.42x 1.97x
EBITDA LTM
Total debt was Rub 18.8 billion compared with Rub 17.1 billion for 3m 2018.
Net debt was Rub 14.6 billion, down by 1% yoy, compared with Rub 14.8
billion for 3m 2018.
Net debt to EBITDA LTM ratio increased to 2.42x compared with 2.16x last
year.
If compared with the end of 2018, total debt declined by 3% qoq. Net debt,
in contrast, was up 12% qoq.
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 on the 21st of
June, 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 61,162 global depositary receipts during the three
months of 2019.
After the reporting date, the company repurchased 133 GDRs. In total, HMS
has purchased 1,204,282 GDRs on the open market. In May 2019, a part of the
repurchased GDRs was awarded to HMS executive directors and PDMRs under the
Long Term Incentive Plan.
MANAGEMENT PURCHASES
During the first three months of 2019, HMS managers purchased 14,500 of the
company's GDRs using their own funds.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE & FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT
As of the 1st June, 2019, average interest rate increased to 8.8% p.a.
compared to 8.7% p.a. at the beginning of 2019. According to management
accounts, total debt increased to Rub 19.6 billion, and net debt was up to
Rub 15.6 billion due to working capital, required for execution of large
projects.
LONG-TERM INCENTIVE PLAN
In May 2019, HMS Executive Directors and PDMRs acquired an interest over the
Company's Global depositary receipts following the grant of awards under the
Company's Long Term Incentive Plan ("LTIP") for the 2016 award year.
The awards were a part of a grant of GDRs to seventeen Company's managers as
a Motivational Package for the 2016 Award year under the LTIP. The total
amount paid to the LTIP participants was 414,118 GDRs, which is equal to
1.77 percent of the Company's issued share capital.
Further details of the transactions above are available here:
Press release on HMS management increase of its share in the charter capital
[1]
***
WEBCAST TO DISCUSS 3 MONTHS 2019 IFRS FINANCIAL RESULTS
Date: Wednesday, June 19, 2019
Time: 10.30 AM (MOSCOW) / 8.30 AM (London) / 9.30 AM (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: 72741694#
Title: HMS Group 3 months 2019 IFRS results
Webcast meeting:
To access the live event, click on the link:
https://webcasts.eqs.com/hmsgroup20190619 [2]
Please, dial in 5-10 minutes prior to the scheduled start time.
Pre-registration is available.
We will share materials on HMS' investor website [3] ahead of the webcast.
Contacts:
Investor Relations, ir@hms.ru [4]
***
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
=---------------------------------------------------------------------------
[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: QRF
TIDM: HMSG
LEI Code: 254900DDFETNLASV8M53
OAM Categories: 1.3. Payments to governments
2.2. Inside information
3.1. Additional regulated information required to be
disclosed under the laws of a Member State
Sequence No.: 10550
EQS News ID: 826915
End of Announcement EQS News Service
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=1639cb8346243d2f3703535e1d15401e&application_id=826915&site_id=vwd&application_name=news
2: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=2e25491bcb779bde7ef7809d955f4ed7&application_id=826915&site_id=vwd&application_name=news
3: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=fb222c7071d1e168f09764035d7663e7&application_id=826915&site_id=vwd&application_name=news
4: mailto:ir@hms.ru'subject=Re%20conf%20call
(END) Dow Jones Newswires
June 18, 2019 12:21 ET (16:21 GMT)
