REG-HMS Group HMS Group: 3m 2020 IFRS results
08/06/2020 16:25
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HMS Group (HMSG)
HMS Group: 3m 2020 IFRS results
08-Jun-2020 / 18:21 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.
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HMS Group Reports 3m 2020 EBITDA of Rub 1.1 billion
Moscow, Russia - June 08, 2020 - 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, 2020.
Financial highlights 3m 2020:
• Revenue: Rub 9.1 bn (+3% yoy)
• EBITDA 1 1 : Rub 1.1 bn (+115% yoy), EBITDA margin at 11.8%
• Operating profit: Rub 265 mn
• Loss for the period: Rub (153) mn
• Total debt: Rub 21.5 bn (+14% yoy)
• Net debt: Rub 12.2 bn (-17% yoy)
• Net debt-to-EBITDA LTM ratio: 2.26x
Operational highlights 3m 2020:
• Backlog: Rub 58.7 bn (+29% yoy)
• Order intake: Rub 23.1 bn (+101% yoy)
GROUP PERFORMANCE
3 months 2020 financial Results
in millions of Rub 3m 2020 3m 2019 Change yoy 1Q 2020 4Q 2019 Change
qoq
Orders 23,142 11,487 101% 23,142 15,970 45%
Backlog 58,720 45,347 29% 58,720 44,693 31%
Revenue 9,115 8,854 3% 9,115 14,732 -38%
EBITDA 1,077 501 115% 1,077 1,432 -25%
EBITDA margin 11.8% 5.7% 11.8% 9.7%
Loss for the period (153) (498) na (153) (45) na
Depreciation & 609 551 11% 609 594 3%
amortization
Free cash flow 2,091 (1,229) na 2,091 2,646 -21%
Order intake demonstrated the twofold increase to Rub 23.1 billion,
compared with Rub 11.5 billion for 3 months 2019, due to a large Rub 11.2
billion compressor contract signed in the reporting period.
Backlog also grew, to Rub 58.7 billion by 29% yoy, compared with Rub 45.3
billion last year, where all main business segments demonstrated growth,
especially the compressors. In terms of contracts type, the large
contracts were the main contributor to this growth.
Revenue increased to Rub 9.1 billion, up by 3%, compared with Rub 8.9
billion for 3 months 2019, due to the recovery of the oil & gas equipment
business segment and better financial results of the pumps.
EBITDA was up to Rub 1.1 billion, compared with Rub 501 million (+115%
yoy) mainly because of the oil & gas equipment and projects and partly
because of the pumps.
Revenue from recurring business increased by 12% yoy, and revenue from
large projects declined by 18% yoy. EBITDA from recurring business
increased almost fourfold, and from large projects was up by 21% yoy.
EBITDA margin was up to 11.8%, compared with 5.7% for 3 months 2019.
Loss for 3 months 2020 was Rub (153) million, compared with loss at Rub
(498) million for 3 months 2019.
Depreciation & amortization was up 11% yoy to Rub 609 million, compared
with Rub 551 million for 3 months 2019 because of assets acquired in 4Q
2018 and 1Q 2019.
Free cash flow turned positive and reached Rub 2.1 billion, compared with
Rub (1.2) billion outflow for 3 months 2019, due a number of factors,
including lower working capital, lower capex and absence of acquisitions
in the reporting period.
Expenses and Operating profit
Share of 3m Share of 3m
in millions of Rub 3m 2020 3m 2019 Change yoy 2020 revenue 2019
revenue
Cost of sales 7,127 7,268 -2% 78.2% 82.1%
Materials and 4,246 4,770 -11% 46.6% 53.9%
components
Labour costs incl 1,832 1,796 2% 20.1% 20.3%
Social taxes
Depreciation and 526 467 13% 5.8% 5.3%
amortization
Construction and
design and engineering 734 381 93% 8.1% 4.3%
services of
subcontractors
Others (211) (147) 44% -2.3% -1.7%
Cost of sales was down to Rub 7.1 billion by 2% yoy, compared with Rub 7.3
billion for 3 months 2019, due to lower Materials and components (-11%
yoy) that was directly connected with a less share of large contracts
under execution in the reporting period.
Gross profit grew 25% yoy to Rub 2.0 billion, compared with Rub 1.6
billion for 3 months 2019.
in millions of Rub 3m 2020 3m 2019 Change yoy Share of 3m Share of 3m
2020 revenue 2019 revenue
Gross profit 1,988 1,586 25% 21.8% 17.9%
Distribution and 493 436 13% 5.4% 4.9%
transportation
General and 1,217 1,302 -7% 13.3% 14.7%
administrative
SG&A expenses 1,709 1,738 -2% 18.8% 19.6%
Other operating 14 90 -85% 0.2% 1.0%
expenses
Operating expenses 1,723 1,828 -6% 18.9% 20.6%
ex. Cost of sales
Operating profit/loss 265 (242) na 2.9% -2.7%
Finance costs 481 416 16% 5.3% 4.7%
Distribution and transportation expenses grew by 13% yoy, due to a higher
transportation expenses (+53% yoy) that was because of increased
deliveries of equipment produced under large compressor contracts to the
remote regions of Russia. As a share of revenue, distribution and
transportation expenses was up to 5.4% compared with 4.9% last year.
General and administrative expenses were down by 7% yoy to Rub 1.2
billion, compared with Rub 1.3 billion last year, due to the 8% yoy
totaling decrease in labor costs and social taxes. As a share of revenue,
general and administrative expenses were down to 13.3% from 14.7% for 3
months 2019.
SG&A expenses 2 2 declined by 2% yoy, and as a share of revenue were
18.8%, compared with 19.6% for 3 months 2019.
Operating profit was up to Rub 265 million, compared with operating loss
of Rub (242) million last year.
in millions of Rub 3m 2020 3m 2019 Change yoy
Finance costs 481 416 16%
Interest expenses 476 412 16%
Interest rate, average 8.23% 8.76%
Interest rate Rub, average 8.37% 8.91%
Finance costs were up to Rub 481 million, compared with Rub 416 million
for 3 months 2019, due to the increase of interest expenses (+16% yoy)
because of a higher level of total debt (+14% yoy). Average rates
decreased to 8.23% p.a. compared with 8.76% p.a. last year.
BUSINESS SEGMENTS PERFORMANCE
Industrial pumps 3 i
in millions of Rub 3m 2020 3m 2019 Change yoy 1Q 2020 4Q 2019 Change qoq
Orders 4,515 5,561 -19% 4,515 6,369 -29%
Backlog 20,961 19,303 9% 20,961 19,572 7%
Revenue 3,693 3,241 14% 3,693 5,866 -37%
EBITDA 474 275 72% 474 728 -35%
EBITDA margin 12.8% 8.5% 12.8% 12.4%
Order intake of industrial pumps declined by 19% yoy because of less
orders for recurring business signed in the reporting period.
Backlog, in contrast, grew by 9% yoy to Rub 21.0 billion due to both
recurring business and large contracts, mainly in the sphere of pumps for
nuclear power plants.
Revenue was Rub 3.7 billion, up 14% yoy, compared with Rub 3.2 billion for
3 months 2019. The growth was based on large contracts.
EBITDA increased to Rub 474 million, by 72% yoy, compared with Rub 275
million for 3 months 2019, due to both recurring business and large
contracts.
EBITDA margin was 12.8%, compared with 8.5% for 3 months 2019, because of
a larger share of EBITDA generated by large contracts, compared with 3
months 2019.
Oil and Gas equipment & projects (OGEP) 4 ii
in millions of Rub 3m 2020 3m 2019 Change yoy 1Q 2020 4Q 2019 Change qoq
Orders 4,934 3,008 64% 4,934 791 524%
Backlog 8,517 7,265 17% 8,517 7,426 15%
Revenue 3,076 2,406 28% 3,076 4,562 -33%
EBITDA 354 (130) na 354 601 -41%
EBITDA margin 11.5% -5.4% 11.5% 13.2%
Order intake demonstrated 64% yoy growth to Rub 4.9 billion, compared with
Rub 3.0 billion for 3 months 2019, which grew due to both recurring
business and large contracts.
Backlog was up by 17% yoy to Rub 8.5 billion, compared with Rub 7.3
billion for 3 months 2019, based on large contracts.
Revenue grew by 28% yoy to Rub 3.1 billion, compared with Rub 2.4 billion
for 3 months 2019. EBITDA was up to Rub 354 million, compared with Rub
(130) million, and EBITDA margin was 11.5% vs. -5.4% for 3 months 2019.
The upward trend was fully due to the recovery of the business segment.
Compressors 5 iii
in millions of Rub 3m 2020 3m 2019 Change yoy 1Q 2020 4Q 2019 Change qoq
Orders 13,490 2,900 365% 13,490 8,785 54%
Backlog 28,409 16,880 68% 28,409 16,067 77%
Revenue 2,194 2,932 -25% 2,194 4,558 -52%
EBITDA 221 377 -41% 221 280 -21%
EBITDA margin 10.1% 12.9% 10.1% 6.1%
Order intake was up 365% yoy to Rub 13.5 billion, compared with Rub 2.9
billion, because of a large Rub 10.2 billion compressor contract signed in
the reported period.
Backlog increased by 68% yoy to Rub 28.4 billion, compared with Rub 16.9
billion last year, also because of large contracts.
Revenue was down by 25% yoy to Rub 2.2 billion, compared with Rub 2.9
billion, and EBITDA declined by 41% yoy to Rub 221 million, compared with
Rub 377 million, due to revenue and EBITDA going down from both recurring
business and large contracts. EBITDA margin was down to 10.1% compared
with 12.9% for 3 months 2019.
Construction 6 iv
in millions of Rub 3m 2020 3m 2019 Change yoy 1Q 2020 4Q 2019 Change qoq
Orders 203 18 1003% 203 25 701%
Backlog 834 1,899 -56% 834 1,628 -49%
Revenue 237 336 -29% 237 295 -20%
EBITDA 23 11 103% 23 (78) -129%
EBITDA margin 9.5% 3.3% 9.5% -26.4%
Order intake equaled Rub 203 million. Backlog was down to Rub 834 million.
Revenue was down to Rub 237 million, compared with Rub 336 million for 3
months 2019. EBITDA was Rub 23 million, compared with Rub 11 million last
year.
Working capital and Capital expenditures
in millions of Rub 3m 2020 3m 2019 Change yoy 1Q 2020 4Q 2019 Change qoq
Working capital 7,019 8,843 -21% 7,019 8,846 -21%
Working capital / 13.6% 16.8% 13.6% 17.2%
Revenue LTM
Capex 334 506 -34% 334 367 -9%
Acquisition 0 670 - -
Working capital declined to Rub 7.0 billion, down by 21% yoy, compared
with Rub 8.8 billion for 3 months 2019. As a share of revenue, working
capital was 13.6%, compared with 16.8% for 3 months 2019.
Capital expenditures were Rub 334 million, down by 34% yoy, compared with
Rub 506 million last year, as the result of the implemented austerity
measures.
DEBT POSITION
in millions of Rub 3m 2020 3m 2019 Change yoy 1Q 2020 4Q 2019 Change qoq
Total debt 21,501 18,845 14% 21,501 24,321 -12%
Net debt 12,228 14,650 -17% 12,228 14,369 -15%
Net debt / EBITDA 2.26 2.42 2.26 2.98
LTM
Total debt increased to Rub 21.5 billion, up by 14% yoy, compared with Rub
18.8 billion for 3 months 2019. Net debt, in contrast, went down to Rub
12.2 billion, by 17% yoy, compared with Rub 14.7 billion for 3 months
2019.
Net debt to EBITDA LTM ratio decreased to 2.26x compared with 2.42x for 3
months 2019 and 2.98x at the end of 2019.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE & FINANCIAL MANAGEMENT
FY2020 FORECASTS
Based on 3 months 2020 results and current pipeline of contracts, HMS
expects revenue to be in the range of Rub 50-55 billion, and EBITDA -
around Rub 5.5 billion.
LONG-TERM INCENTIVE PLAN (LTIP)
In May and June 2020, HMS' managers acquired 344,667 depositary receipts
of the company, which is equal to 1.47% of share capital, following the
grant of awards under HMS' LTIP for the 2017 award year.
LARGE CONTRACTS
After the reporting date, HMS announced the signature of a Rub 1.4 billion
oil & gas equipment contract, to deliver skids, vessels and a refrigerant
compressor at the client's facility.
Also, in May 2020, HMS signed a Rub 5.7 billion framework contract to
conduct design and exploration works at an oil & gas field, located in
Russia.
DIVIDENDS
On June 2, 2020, the Board of Directors recommended the payment of the
final dividends in respect of FY2019 in the amount of Rub 3.41 per one
ordinary share (i.e. Rub 17.05 per one depositary receipt), subject to the
approval of the company's shareholders at the Annual General meeting to be
held on June 29, 2020.
Subject to such approval, the dividends may be paid on June 30, 2020, to
shareholders on HMS' register at close of business (UK time) on June 19,
2020.
COVID-19 and fall in oil prices
Starting from early 2020, a new coronavirus disease (COVID-19) has begun
rapidly spreading all over the world resulting in announcement of the
pandemic status by the World Health Organization in March 2020. Responses
put in place by many countries to contain the spread of COVID-19 are
resulting in significant operational disruption for many companies and
have significant impact on global financial markets. As the situation is
rapidly evolving it may have a significant effect on business of many
companies across a wide range of sectors, including, but not limited to
such impacts as disruption of business operations as a result of
interruption of production or closure of facilities, supply chain
disruptions, quarantines of personnel, reduced demand and difficulties in
raising financing. In addition, the Group may face the increasingly broad
effects of COVID-19 as a result of its negative impact on the global
economy and major financial markets. The significance of the effect of
COVID-19 on the Group's business largely depends on the duration and the
incidence of the pandemic effects on the world and Russian economy.
In addition to that, in March-April 2020, oil prices dropped
significantly, which resulted in immediate weakening of Russian Rouble
against major currencies.
***
DUE TO THE SITUATION WITH COVID-19, HMS GROUP WILL NOT HOLD THE WEBCAST
Contacts:
Investor Relations, 7 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
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8 1 EBITDA is defined as operating profit/(loss) 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 acquisition, defined benefits scheme
expense and provisions (including provision for obsolete inventory, ECL
allowance and provision for impairment of trade and other receivables and
other financial assets, 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.
9 2 SG&A expenses - Selling, General and Administrative Expenses,
compiled of distribution & transportation expenses plus general &
administrative ones
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10 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.
11 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.
12 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.
13 iv The construction provides construction works for projects for
customers in the oil upstream and midstream, gas upstream.
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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.: 68511
EQS News ID: 1065439
End of Announcement EQS News Service
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