HMS Networks: Interim report 2016, January - June

Last twelve months

• Net sales for the first six months increased with 25 % reaching SEK 433 m (347), corresponding to a 25 % increase in local currencies
• Operating profit for the first six months reached SEK 55 m (56), equal to a 13 % (16) operating margin
• Order intake for the first half year increased with 30 % to SEK 447 m (345)
• Cash flow from operating activities amounted to SEK 51 m (37)
• Profit after taxes totaled SEK 38 m (37) and result per share amounted to SEK 3.28 (3.26)
• During the period the acquired eWON SA contributed to net sales with SEK 71 m. Contribution to the  operating result, including amortization and acquisition cost, was SEK 17 m
• The first half year result was affected by SEK 5 m in acquisition expenses
• Net sales for the last twelve months amounted to SEK 788 m (655) corresponding to a 20 % increase. Operating result amounted to SEK 101 m (111) corresponding to a 13 % (17) operating margin

Second quarter

• Net sales for the second quarter increased with 32 % reaching SEK 232 m (177)
• Operating result reached SEK 35 m (24) corresponding to an operating margin of 15 % (14)
• Order intake during the second quarter was SEK 247 m (170)
• Intesis SL, acquired late in the second quarter, had no impact on the net sales and the operating result of the Group
• Costs related to the acquisition had a SEK 2.5 m negative impact on the operating profit during the first quarter

Comment from the CEO
During the second quarter of 2016 we reach a new record of SEK 232 m corresponding to a 32 % increase in net sales. The increase is partly organic with 7 % due to improving market conditions and partly the result of getting the full effect of the acquisition of eWON.

During the second quarter we can also report a positive change in the product mix improving our gross margins. This in combination with a cautious approach to new investments in resources resulted in higher operating result during the second quarter of 2016.

The Netbiter product group, which in the future will be a part of the eWON brand name, shows a sales increase of 57 % during the first six months - still from low volumes. With additional market leading products from eWON we strongly believe that this area of the HMS product offer now will be able to develop even better going forward.

At the end of the second quarter HMS acquired the Spanish company Intesis Software S.L. Intesis' know how in the area of building automation, and their well-established solutions in this market segment will become an important addition to HMS growth strategy. Intesis strong market position in solutions for system integration and building automation will become a good addition to HMS 'existing product offer. Through the acquisition of Intesis HMS will gain a strong position with good opportunities to growth in the market segment of building automation. Intesis is a well-established company with good reputation which, as well as the newly acquired eWON, will further strengthen HMS' unique value proposition towards manufacturers of industrial products and machines as well as system integrators and installation providers globally.

During the first six months of 2016 we have initiated the integration of sales and marketing resources in eWON with the existing organization of HMS for our brand names Anybus®, IXXAT® and eWON®. On a long term perspective we also see good opportunities to coordinate technology and development projects in the acquired operations. This is expected to give a positive effect on future generations of products provided by HMS.

Our focus is now on achieving the full effect of the possibilities we see in the newly acquired operations as well as the investments we have made during previous years.

Despite the increase in order intake we still see some of the uncertainty in the market development we have previously reported. We still see a good inflow of new design-wins for our products which in the long term will strengthen HMS' position on the market.

The German and Japanese markets continue to show a good development. On the US market we still have a mixed picture and a cautious market. But during the last quarter we have received a couple of larger customer project which gives us good hopes for the future.

An increase in amortization of intangible assets, acquisition costs and investments in more resources mainly in the area of sales and marketing has a negative impact on the first six months result.

Our focus is to continue to drive growth within our three product brands. We continue to balance our long term growth strategy with a cautious approach to costs. In the long term, we believe that the market for industrial communication and remote monitoring will be an interesting growth area, and we continue to focus on our motto "HMS - Connecting Devices".

Staffan Dahlström
Chief Executive Officer

Further information can be obtained from: CEO Staffan Dahlström, telephone [phone] or CFO Gunnar Högberg, telephone [phone]. www.hms-networks-com/ir

This information is such that HMS Networks AB (publ) is required to disclose in accordance with the Swedish Financial Instruments Trading Act and/or the Swedish Securities Market Act. The information was submitted for publication at 07.50 CET on July 19, 2016.

HMS Networks AB (publ) is the leading independent supplier of products for industrial communication and remote management. Reported sales reached SEK 701 m in 2015. Development and manufacturing take place at the headquarter in Halmstad, Sweden, in Nivelles Belgium and in Weingarten, Germany. Local sales and support are handled by branch offices in China, Denmark, France, Belgium, Germany, Spain, India, Italy, Japan, UK, and USA. HMS employs over 460 people and develops and manufactures solutions for connecting automation devices and systems to industrial networks under the Anybus® and IXXAT® brand and products for remote management and control under the eWON® and Netbiter® brands. HMS is listed on the NASDAQ OMX in Stockholm, category Mid Cap, Information Technology.

Q2 Report 2016

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Source: HMS Networks AB via Globenewswire

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