HMS Group 6m 2012 resultsgrouphms.com/upload/grouphms/pdf/6m_HMS_2013.pdfSource: Frost & Sullivan...

HMS Group Investor Presentation

October 2013

WHO WE ARE

2

13,4 14,0 14,8

23,1

27,5

33,7

1,4 1,6 1,9 3,5

5,5 6,2

10,6% 11,7%

12,8% 15,3%

20,0%

18,5%

2007 2008 2009 2010 2011 2012

Revenue, Rub bn EBITDA, Rub bn EBITDA margin

HMS at a Glance

3

HMS Group is the leading pump manufacturer and provider of flow control solutions and related services to oil and gas (~80% of revenue), nuclear and thermal power generation and water utility sectors in Russia and the CIS

18 operating facilities in Russia and the CIS with 5 research & development centres, one of the largest pump testing facilities

Growing markets driven by strong investments in oil & gas, power generation and water supply sectors

Unique integrated management, sales and R&D team

The story of resilient financial growth on the back of moderate debt position

Key financials for 2007-2012 Overview

Source: Company data

EPC Oil & gas equipment Industrial pumps

Pump station of the Baltic pipeline

system, Transneft

Example of Oil Pumping Station Oil Pump Station “Tayezhnaya”, Transneft

Design, engineering,

manufacturing, delivery and

installation of pumps and pump

related products

Manufacturing and installation of oil & gas equipment, including modular (pump stations, metering equipment, oil, gas and water processing and preparation units, tanks & vessels, etc.)

Project & design, construction, turn-key projects

Compressors

Twin modular compressor unit

since July 2012

Design, engineering,

manufacturing, delivery and

installation of compressors,

compressor packages and

compressor stations

50% Revenue 59% EBITDA


15% Revenue -2% EBITDA


Way of the market consolidator – from pumps to integrated solutions based on excellent R&D base

Significant demand on the key market Leading installed base in Russia Exposure to key growth markets

CAPEX of Russian oil majors 2012-2020F more than $50 bn Revenue breakdown by segments, 2012 Installed pumps and units

upstream

7%

9%

11%

9%

2% 2% 2%

-1%

1%2%

1%0% 0% 0%

1% 1%

0% 0% 0% 0%

0

100

200

300

400

500

600

2000 2002 2004 2006 2008 2010 2012F 2014F 2016F 2018F 2020F

mn

to

nn

es

Greenfield, 2009-2020F

Traditional oil regions, 2009-2020F

Total production, 2000-2008

Production growth, % YoY

2009–2012

Pump-based Integrated Solutions

2007–2008

Construction

2004–2006

Modular Equipment Design

&

Manufacturing

2003

Pump Design

&

Manufacturing

1993–2002

Pump Trading

Unique Business Model

4

Water Thermal energy midstream

Nuclear energy

Source: Company data Source: Company data Source: REnergyCo, Rosstat

2012 Revenue

Rub 33.7 bn

Pump- and Compressor-based Integrated Solutions

2012–Today

Oil industry

INVESTMENT HIGHLIGHTS

5

33 68 109 165 173

291 87 90

151

121 214

380

92

86

158

117

126

200

76

69

97

93

114

195

2008 2012 2017E

Tanks & Vessels Tubular Furnaces & Line Heaters Oil, Gas, Water Processing Units Oil & Gas Metering Units Associated Gas Processing & Transport Units AGMUs Pump Stations Other Equipment

970 1662

3771

166

259

482

224

269

462

2008 2012 2017E

Refrigeration

General Service (Air)

Gas Processing

Oil & Gas Production and Transportation

473 494 938

485 455

976

110 193

315

889 1 101

1 665

180

484

499

2008 2012 2017E

Oil & Gas (surface)

Oil & Gas (submersible)

Power Generation

Municipal Water

Other

Modernization of basic industries, backed by state development programs

leads to expenditure on equipment, including specialized pumps

Pumps for water injection, oil refineries and municipal water are expected

to demonstrate the highest growth rate

Modest growth in surface pumps for oil and gas industry is largely explained

by diminished growth in the segment of pumps for oil transportation due to

the completion of major pipeline project (ESPO), after an explosive

expansion over 2008-2012

Oil and gas equipment is expected to grow with double-digit pace driven by

modernization of the current and development of new oilfields, increase of

associated gas utilization ratio, installation of modern metering units

Compressors are expected to grow with CAGR of 17.8% thanks to a number

of new pipelines development programs, increase of associated gas

utilization ratio

6,686

1,847

Supportive Industry Fundamentals

6

4,393

2,727

Pump market revenues in Russia, US mn

Source: Frost & Sullivan research

1

2,137

1,655

784

O&G equipment market revenues, US mn

Comments

CAGR 2008-12 2012-17E

O&G surface includes:

Water injection -4.2% 13.6%

Oil transportation 59.5% -12.6%

Oil downstream 12.4% 15.6%

Municipal water -1.6% 16.5%

Power generation 15.0% 10.3%

Total 6.3% 10.0%

940

CAGR 2008-12 2012-17E

Pump stations 1.2% 11.0%

AGMUs 1.0% 11.2%

Associated gas processing & transport units

15.3% 12.7%

Total 4.6% 12.0%

2,950

CAGR 2008-12 2012-17E

Oil & gas production and transportation

13.6% 19.1%

Gas processing 12.0% 1303%

General service 5.3% 11.7%

Refrigeration 20.2% 16.3%

Total 12.4% 17.8%

Compressor market revenues, US mn

2,7 2,8 2,7

1,3 1,8 2,0

4,0

4,6 4,7

2010 2011 2012

Other players revenue, Rub bn

HMS Group revenue, Rub bn

7,4 12,6 14,5

10,1

13,9 15,4 17,5

26,5

29,9

2010 2011 2012



1,6 2,1 2,2

0,9

1,0 1,3

2,4

3,1 3,5

2010 2011 2012



Pumps and Oil & gas equipment

Oil and gas industry

The Leading Provider of Flow Control Solutions

Leading market share in key markets

HMS Group has leading positions in almost every core target market, and managed to expand its market share in 2012

The Group’s market share in the pumps and equipment for the oil & gas industry remained flat, with overall growth on par with the market

In the pumps for water utilities and power generation applications segment, HMS outperformed market growth thanks to strong demand for water utilities pumps and higher revenue from pumps for nuclear application (contracts signed in previous years)

Summary

2


Water utilities Power generation

Industrial pumps only Industrial pumps only

7

CAGR 2010-2012 Market 31%

HMS 24%


HMS 24%


HMS 23%

Source: Frost & Sullivan report 2009, Transneft website (www.transneft.ru)

Novorossiysk

Moscow

Unecha

Primorsk

Kozmino

Skovorodino

Verkhnechonskoye

Tengiz

Timano-Pechora basin

Caspian Pipeline Consortium expansion (35 MMt, 1,510 km)

Baltic Pipeline System-II (50 MMt, 1,000 km)

ESPO-I and ESPO-I capacity expansion (50 MMt, 2,694 km)

Russia

ESPO-II and ESPO-II capacity expansion (47 MMt, 2,046 km)

Talakanskoye

Purpe-Samotlor (25 MMt, 430 km)

Vankor

Salymskoye

Samotlor

Nizhnevartovsk

Priobskoye

Purpe

Tyamkinskoye

Russkoye

Taishet

Zapolyarnoye-Purpe (45 MMt, 536 km)

Syzran

Tikhoretsk-Tuapse 2 (12 MMt, 295 km)

Haryaga Yuzhny

Khylchuyu

Haryaga-Yuzhny Khylchuyu (8 MMt, 160 km)

Yurubcheno-Tokhomskoe

Yurubcheno-Tokhomskoe-Taishet (18 MMt, 600 km)

Tuapse

Tikhoretsk

Komsomolsky NPZ -port De-Kastry (9 MMt, 313 km)

Oil pipeline projects

Mature oil producing regions

Underdeveloped oil producing regions

Developing oil fields

HMS participation confirmed

Oil products pipeline projects

Komsomolsky NPZ

De-Kastri

“Yug” (South) (9 MMt, 1,465 km)

Komsomolsky NPZ -De-Kastry (n.d., 300 km)

Milestone Projects in the Oil&Gas

Zapolyarnoye

> 3 bn tons of oil reserves to be

developed in the next several

years

Oil production development

> 10,000 km of pipelines to be constructed or

replaced

> 140 of pump stations to be constructed or

reconstructed

> 550 reservoirs with total capacity of almost 10

mln m3 to be reconstructed

Transneft investment program 2010-2017

Iraq

Significant installed base of HMS pumps from Soviet and post Soviet periods

Currently undertaking projects for Oil Ministry and BP

Export markets

26 oil refineries to be

reconstructed & modernized

Oil refining development

8

Trebs & Titov (140 MMt, 2,151 km)

Prirazlomnoye

Taas-Yuryakh

Verkhne-Shapshinskoe

Oil & gas production and oil transportation

http://www.transneft.ru/

5% 6% 25% 34% 24% 12%

95% 94% 75% 66% 76% 88%

2008 2009 2010 2011 2012 2013 6m

Revenue from integrated solutions Revenue from other equpment

Share of integrated solutions in revenue

Focus on Value-added Integrated Solutions


Advanced R&D is the basis for value-added integrated solutions

9

Standard equipment Integrated solutions & customized pumps

Size Numerous small-size contracts Single large-scale project

Impact of R&D Medium Critical

Technical entry-barriers Medium High

Competition type Price R&D and references

Competition level High Limited

Revenue growth potential Limited High

Revenue downside potential Limited Visibility for at least 1.5 years

Repeat business Very significant Possible

Aftermarket demand Average High

EBITDA margin 10-15% 25-30%

3

Super-blocks X-9001, X-9004 for Vankor oilfield, Rosneft ESPO-1 oil transportation station, Transneft

Examples of successful integrated solutions

25%

30%

1. Project & design works 2. Project management 3. Production of key elements (pump units,

auxiliary equipment) 4. Assembling 5. Testing 6. Disassembling, transportation and

assembling on customer site 7. Supervision, start-up and comissioning 8. Aftermarket services

Industry HMS IGSS Eurasia Drilling

Weir Flowserve Dresser

Rand Sulzer KSB Grundfos Technip Shlumberger

Baker Hughes

Gea Grasso

Above ground

Pumps

Power generation

Oil and Gas

Water

Oil & gas equipment

Equipment

Repair

EPC Project & design

Construction

Compressors

Oil up- & midstream

Natural gas

Metals & mining

Under ground

Service

Seismic research

Well service

Drilling

Oil product increase

Operations on Protected Markets in Russia


4

10

Where we compete…

Russian International

Limited R&D

Small scale of operations

Pump manufacturing is a non-core business for many players (Votkinsk Plant, Uralhydromash, Katasky Plant)

Products are often not in direct competition with HMS product line

Not well-positioned in terms of operational efficiency due to limited scale of operations

No single competitor in all key segments

Global players Lack of local engineering expertise (Weir, KSB, Sulzer, Grundfos, Flowserve)

Lack of references with Russian clients

Not well-positioned in terms of price of products

Chinese players Lack of relevant technologies to produce customized pumps

Lack of references

Inapplicable for mission-critical applications

No brand names

No established relationships with Russian clients

Customized Equipment Standard Equipment

Russian players

Apollo Goessnitz (acquired in 2012) is a center of innovative technologies complying with API standards in off-shore and oil refinery

3. Foreign innovative centers

2. Project and design institutes

Leading project & design facility Giprotyumenneftegaz (GTNG) including acquired in 1H 2013 Noyabrskneftegazproekt (NNGP) – OIL & GAS

Leading project & design institute NIITurbokompressor (NIITK) - COMPRESSORS

One of the leading Russian institute for water utilities Rostov Vodokanalproekt - WATER

11

1. Research & development and engineering centres

Leading pump R&D centers in Russia and CIS:

Design office in Livny: advanced R&D works focused on pumps

Research Institute VNIIAEN in Sumy: focus on high-speed centrifugal pumps

Specialized R&D center in Moscow focused on design of demanding complex solutions for energy efficient pump systems

Neftemash (Tyumen): oil and gas equipment and complex solutions for oil and gas processing

Kazankompressormash (Kazan): compressors and gas processing units with improved efficiency for natural and associated gas

Tender, pricing and

contract negotiation

1–3 months

Design and production

1–24 months

Delivery and installation

1 month

After-market services

HMS ability to participate in pre-tender preparation stage creates unique competitive advantage

Pre-tender project

preparation

up to 24 months

Advanced R&D Capabilities 5

6m 2012 Revenue

Rub 15.0 bn

Well-diversified client base of 4,000-6,000 names, stable

growth of revenue coming from small-to-mid clients with

annual purchases below Rub 200 mn

Strong and stable base of “Blue-chip” clients, which includes

the largest oil & gas and energy companies in Russia

HMS Group may have different Top-3 customers for each

period, depending on the particular project mix

Prevailing installed base in the key segments ensures

recurring business growth

Source: Company data 12

Well-established Top-tier Customer Base 6

Revenue contribution by Top-7 clients, 6m 2012 vs. 6m 2013 Comments

In 1H 2013, HMS Group sold products and services to

almost 3,000 unique clients, including VOIC, trade

companies, dealers and individual entrepreneurs

6m 2013 Revenue

Rub 15.5 bn

Others 39%

Gazprom 7%

Stroygazkonsulting 5%

Gazprom neft 6%

TNK-BP 8%

Taas-Yuryakh 8%

Transneft 10%

Rosneft 18%

Others 45%

TNK-BP 5% Gazprom neft 3%

Surgutneftegaz 6%

Lukoil 7%

Transneft 11%

Rosneft 17%

Gazprom 5%

Vladimir Lukyanenko Non-executive Director

Shareholder In company since 2005

Artem Molchanov Managing Director (CEO)


Shareholders Run the Business

The Board is comprised of professionals with significant

experience in flow control and oil and gas industries

It includes founders, who has led HMS since its

inception

HMS is the core business of the largest shareholders

Dividend policy: pay out not less than 25% of profit for

the year

Source: Company data as of 30 September, 2013

7

Board of Directors Comments

Shareholders Structure

Kirill Molchanov First Deputy CEO (CFO)


German Tsoy Chairman of the Board


Yury Skrynnik Head of Compressors Business

segment Shareholder

In company since 2005

Nikolay Yamburenko Head of Industrial Pumps


Philippe Delpal Independent

Chairman Audit Committee

Andreas Petrou Non-executive

Gary Yamamoto Independent

Chairman Remuneration Committee

13

Treasury shares 1.5%

Free-float 26.9%

Vladimir Lukyanenko 27.4%

German Tsoy 19.8%

Managers 24.4%

Hold thru HMS Technologies (71.5%)

Key Investment Highlights

14

Supportive Industry Fundamentals 1

The Leading Provide of Flow Control Solutions 2

Operating on Protected Markets in Russia 4

Advanced Research & Development Capabilities 5

Shareholders Run the Business 7

Well-established Top-tier Customer Base 6

Focus on Value-added Integrated Solutions 3

FINANCIAL PERFORMANCE

15

Source: Company data * Hereinafter, read EBITDA as EBITDA adjusted, Net income as Profit for the period / year, EBITDA margin as EBITDA adjusted margin ** Operating profit and Profit for the period (Net income) include Excess of fair value, i.e. gain occurring when the price paid for the company acquired is less than the Group’s share in the fair value of net assets acquired. This gain is recognized immediately in profit or loss as a bargain purchase gain 1 Net debt = Total debt – Cash & cash equivalents 2 ROCE = EBIT LTM / average capital employed 3 ROE = total equity period average / profit for the year

6m’13 6m’12 chg, qoq 2Q’13 2Q’12 chg, yoy

Revenue 15,455 14,939 +3.5% 8,170 7,632 +7.1%

Gross profit 4,022 4,236 -5.1% 2,348 2,198 +6.8%

EBITDA * 2,172 2,472 -12.1% 1,319 1,105 +19.4%

Operating profit ** 1,847 1,679 +10.0% 1,460 845 +72.7%

Net income ** 914 966 -5.4% 888 481 +84.6%

Total debt 17,319 11,921 +45.3% 17,319 11,921 +45.3%

Net debt 1 14,900 10,668 +39.7% 14,900 10,668 +39.7%

EBITDA LTM 5,932 4,848 +22.4% 6,445 5,069 +27.1%

Net debt to EBITDA LTM 2.51 2.20 2.31 2.10

Gross margin 26.0% 28.4% -233 bps 28.7% 28.8% -6 bps

EBITDA margin * 14.1% 16.5% -249 bps 16.1% 14.5% +166 bps

Operating margin 12.0% 11.2% +71 bps 17.9% 11.1% +679 bps

Net income margin 5.9% 6.5% -55 bps 10.9% 6.3% +457 bps

ROCE 2 14.4% 18.1% -365 bps

ROE 3 7.5% 9.1% -160 bps

Financial Highlights

16

Financial highlights, Rub mn

Last 12 month (LTM) comparison represents sustainability and trends of HMS’ business performance better than quarterly one

26 286 27 778 27 473 27 496 27 751 28 577

30 498

33 656 33 633 34 172

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13

Revenue LTM, Rub mn Линейная ( Revenue LTM, Rub mn)

4 721

5 512 5 666 5 509 5 287 4 848

5 132

6 231 5 718 5 932

18,0%

19,8% 20,6% 20,0%

19,1%

17,0% 16,8%

18,5% 17,0% 17,4%

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13

EBITDA LTM, Rub mn EBITDA margin

Financial Highlights: LTM vs. Quarterly

17 Source: Company data

7 051 6 806 6 703 6 935 7 307 7 632

8 624 10 093

7 285 8 170

1 588 1 545 1 265 1 111 1 367 1 105 1 550 2 210 854 1 319

22,5% 22,7%

18,9%

16,0%

18,7%

14,5%

18,0%

21,9%

11,7%

16,1%

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13

Revenue, Rub mn EBITDA, Rub mn EBITDA margin

EBITDA LTM performance, 2010 – 6m 2013 Revenue LTM performance, 2010 – 6m 2013

Revenue and EBITDA performance quarterly, 2011 – 6m 2013



Note: LTM calculation is based on periodic not quarterly one, i.e. 2q13 = 6m13+FY12-6m12, and 3q12 = 9m12+FY11-9m11, etc. both for Revenue LTM and EBITDA LTM

4 249

2 297

322 (34)

7,6%

-1,5%

6 months 2012 6 months 2013

Revenue EPC, Rub mn EBITDA EPC, Rub mn

EBITDA margin EPC, %

1 604

114

7,1%


Revenue Compressors, Rub mn EBITDA Compressors, Rub mn

EBITDA margin Compressors, %

4 490

3 829

1 150

381

25,6%

9,9%


Revenue OG equipment, Rub mn EBITDA OG equipment, Rub mn

EBITDA margin OG equipment, %

6 199

7 724

823 1 274

13,3% 16,5%


Revenue Pumps, Rub mn EBITDA Pumps, Rub mn

EBITDA margin Pumps, %

Oil & gas equipment Pumps

Segments Overview: Half-year Results

18

Revenue +25% EBITDA +55%

Revenue -15% EBITDA -67%

Revenue -46% EBITDA -111%

EPC Compressors

Strong inflow of regular orders resulted in 25% yoy revenue and 55% yoy EBITDA growth

Also, additional profit was recognized due to release of provisions for the ESPO contract due to initial conservative project budgeting

Upon the completion of the large-scale and high-margin Vankor project in 2012, it was substituted in 1H 2013 by regular projects with lower profitability, and that led to revenue and EBITDA decline by 15% yoy and 67% yoy respectively

As a result, EBITDA margin fell significantly to 9.9%

Compressors business segment was established in 2H 2012 after KKM’s acquisition, and IFRS was applied since 3Q 2012, therefore there is no relevant yoy comparison

HMS assumed significant growth of revenues compared to previous period, and financial results were fully in line with budget expectations (growth at around 30%)

The Group looks forward for margins growth due to NIITK’s acquisition and provision of integrated solutions

EPC sub-segments demonstrated differently directed financial performance, resulted in generally poor revenue and negative margin: – Project & Design generated stable revenue and EBITDA and returned to its

normal level of EBITDA margin (14.7%), reflecting management focus at operating efficiency

– Construction showed declined revenues and negative EBITDA due to intensifying competition and deteriorating terms of payments from customers Source: Company data

6m 2012 6m 2013 chg, yoy

Cost of sales 10,703 11,433 +7%

% of revenue 71.6% 74.0%

Supplies and raw materials 5,159 5,061 -2%

% of revenue 34.5% 32.7%

Labour costs 2,809 2,988 +6%

% of revenue 18.8% 19.3%

Cost of goods sold 981 1,327 +35%

% of revenue 6.6% 8.6%

Other expenses 1,753 2,058 +17%

% of revenue 11.8% 13.3%

Cost Analysis

19

Cost of sales Comments

6m 2012 6m 2013 chg, yoy

Distribution & transportation expenses 634 640 +1%


Transportation expenses 227 214 -5%


Labour costs 244 252 +3%


Lease expenses 10 27 +172%


Other expenses 153 146 -4%


Distribution & transportation expenses

6m 2012 6m 2013 chg, yoy

General & administrative expenses 1,818 1,926 +6%

% of revenue 12.2% 12.5%

Labour costs 1,225 1,308 +7%


Depreciation & amortization 82 96 +18%


Taxes and duties 58 87 +49%


Other expenses 453 434 -4%


General & administrative expenses

General & administrative costs grew by 6% yoy mainly due to Growth in labor costs and taxes and duties, directly related to the payroll

budget HMS has introduced a cost cutting program aimed at stronger control over G&A expenses

Cost of sales grew by 7% yoy, driven by consolidation of acquired companies Supplies and raw materials declined by 2% yoy, due to changes in project

mix and lower share of integrated solutions Labour costs grew by 6% yoy, driven by consolidation of KKM and Apollo Cost of goods sold grew by 35% yoy, mainly because of Industrial pumps

segment Other expenses grew by 17% yoy, as a result of higher utilities tariffs and

increased depreciation & amortization because of KKM and Apollo, amid contraction of all other expenses

Cost of sales grew from 71.6% to 74.0% of revenue due to a minor share of integrated solutions

Distribution and transportation costs stayed in line with a slight increase by 1% yoy, and declined as a percentage of revenue from 4.2% to 4.1% Transportation expenses contracted by 5% yoy due to lower share of

remotely located projects under execution Labour costs grew by just 3%, driven by consolidation of KKM and Apollo


5 157

+1,316 +138 +92

+1,950

8 654

WC 6m 2012 Inventories change

Receivables change & other adj.

Deposits change

Payables & other adj.

WC 6m 2013

858 632 410 613

2,1x

1,0x


Organic capex, Rub mn Depreciation & amortization, Rub mn Capex to D&A ratio, x

1 346

1 912 (2 342)

(872) (1 344)

(1 051)

3 463

2 418

Cash as of Jan 1, 2013

Operating cash flow

before WC changes

WC changes & others

Income tax & interest

paid

Net cash used in

operating activities

Net cash used in

investing activities

Net cash from

financing activities & some adj.

Cash as of Jul 1, 2013

Comments Working capital

Cash flow performance for 6m 2013, Rub mn Capital expenditures2 for 6m 2013 vs. 6m 2012

Working capital1 grew because of: – Increase in inventories (Rub 1.3 bn) mainly due to acquired KKM

and Apollo – Decrease in payables (Rub 2.0 bn) thanks to a received large

advance payment in 1Q 2012 for the ESPO contract and further execution of the project

and amounted to 25.3% of revenue LTM, compared to 18.0% last period

Net working capital increase led to cash outflow from operating activities of Rub 1.3 bn vs. net cash inflow of Rub 2.3 bn for 6 months 2012

Organic capex2 decreased to Rub 632 mn from Rub 858 mn last year, and as a result Capex-to-Depreciation-and-Amortization ratio decreased substantially, to 1.0x from 2.1x

CAPEX & Working Capital



20

6%

28%

9M 2010 9M 2011

Working capital to Revenue LTM

25.3%


+ +

=

Organic capex (632) Rub mn

6%

28%

9M 2010 9M 2011


18.0%

6%

28%

9M 2010 9M 2011


Working capital to revenue LTM

Change in WC (2,431) Rub mn

2 574 3 413 4 551 4 288 4 809 12 064 14 900 10 668 14 900

1,81

2,08

2,41

1,22

0,87

1,94

2,51

2,20

2,51

2007 2008 2009 2010 2011 2012 6m 2013 6m 2012 6m 2013

Net Debt, Rub mn Net Debt to EBITDA LTM ratio

247 4 250 4 237 4 398 286 2 116 286 2 565

2013E 2014E 2015E 2016E 2017E 2018E 2019E

Debt to be repaid, Rub mn Undrawn credit lines, Rub mn

Short-term debt 16.1%

Comments

Comfortable repayment schedule

Cash 1,405

S&P corporate credit rating : B+ Outlook: Stable Reaffirmed in July 2013

21 Source: Company data as of 01 September, 2013

Financial Position

Source: Company data Source: Company data as of 24 September, 2013

Maturity payment of 3 Rub bn bonds 03

Available liquidity 4.0 Rub bn

Maturity payment of 3 Rub bn bonds 02

Net debt to EBITDA LTM ratio

Fixed rate 99.8%

Floating rate 0.2%

Long-term debt 83.9%

Credits in Rub 85.7%

Euro 8.6%

Others 5.7%

Net debt 40% yoy expansion occurred due to bank loans, attracted for acquisitions of Apollo and NIITK, and growing needs in working capital financing

Net Debt to EBITDA LTM ratio increased to 2.51x from 2.20x

6 months 2013 Interest coverage ratio1 equals 2.6x

Available liquidity of Rub 4.0 bn fully covers 2013E repayments

Average interest rate was 9.3% on 24 September 2013 for all loans, including FX-denominated

Low currency and maturity risks

In Aug – Sep 2013, HMS Group signed agreements for refinancing of Rub 4.58 bn As a result, the company has more comfortable and smooth debt repayment schedule (see Figure “Comfortable repayment schedule)

STRATEGY & OUTLOOK

22

602 1 362 676

1 734

1 254 1 726

2 796 1 492

4 039

2 254 91 173

1 510

1 984

1 611 1 676

2 991

3 009

2 187

4 581

6 011

6 854 12 092

4 011

5 622

1 067

19 396

13 728

22 787

17 569

6 months 2010 6 months 2011 6 months 2012 6 months 2013

ESPO pumps 12 092 4 011 5 622 1 067

Pumps excl ESPO 2 187 4 581 6 011 6 854

Oil & Gas equipment 1 611 1 676 2 991 3 009

Compressors 91 173 1 510 1 984

EPC: Construction 2 796 1 492 4 039 2 254

EPC: Project & Design 17 1 734 1 254 1 726

Others 602 62 1 362 676

Total 19 396 13 728 22 787 17 569

Total without ESPO 7 304 9 717 17 166 16 503

ESPO pumps: old 12 092 4 011 1 101

ESPO pumps: new 4 521 1 067

147 818 545 1 258

713 1 673 520

2 476 1 848

574

2 067

2 504

4 251

4 179

3 439

4 914

4 759

4 626

7 871

18 372

15 072

6 months 2011 6 months 2012 6 months 2013

ESPO pumps 0 4 626 0

Pumps excl ESPO 3 439 4 914 4 759

Oil & Gas equipment 2 504 4 251 4 179

Compressors 3 574 2 067

EPC: Construction 520 2 476 1 848

EPC: Project & Design 1 258 713 1 673

Others 147 818 545

Total 7 871 18 372 15 072

Total without ESPO 7 871 13 746 15 072

ESPO pumps: old

ESPO pumps: new 4 626

Backlog & Order intake

Source: Company data, Management accounts

23

n/a -100%

+43% -3%

+70% -2%

+16,400% +260%

+376% -25%

-43% +135%

+456% -33%

+133% -18%

+75% +10%

n/a n/a

n/a -100%

Backlog in 1H of 2010-2013 Order intake in 1H of 2011-2013

In July 2013, HMS concluded Rub 1.5 bn agreement for production and delivery of 2 pumps stations for the Zapolyarye – Purpe oil pipeline In August 2013, the company signed Rub 0.9 bn contract for manufacturing and delivery of a compressor unit for a petrochemical complex in

the South of Russia

-67% 40% -81%

109% 31% 14%

4% 78% 1%

91% 771% 31%

-47% 171% -44%

9858% -28% 38%

-90% 2105% -50%

-29% 66% -23%

33% 77% -4%

-67% -73% -100%

n/a n/a -76%

4 657

3 586

5 131

1 313

3 200

1 313

(60)

42 376

(181)

310

(181)

-1,3% 1,2%

7,3%

-13,8%

9,7%

-13,8%

2010 2011 2012 6m 2013 6m 2012 6m 2013

Revenue, Rub mn EBITDA, Rub mn EBITDA margin, %

Construction sub-segment performance, 2010 – 6m 2013 Comments

Construction Sub-segment Overview and Prospects


24

Construction backlog performance, 2010 – 6m 2013


2 653

3 469

3 293

1 895

-42%

31%

-5%

-42%

2010 2011 2012 6m 2013

Backlog, Rub mn Backlog change yoy, %

The Group acquired construction assets in 2007-2008, targeting large-scale integrated EPC projects with a high proportion of HMS’ made components. However, in Russia’s upstream practice, most projects are done under “EP” (engineering & procurement) and “C” (construction) terms separately. And in current practice, availability of construction assets is not required for execution of such EP projects as ESPO and Vankor

Construction business requires an expertise different from the one, essential for flow control research & development and manufacturing

HMS’ core machinery business units generate the Group’s bulk of revenue and EBITDA

Construction assets demonstrate relatively low EBITDA margin, thus lowering the company’s total EBITDA margin

Construction contracts, besides execution risks, are more exposed to project cancellation risks than machine-building are

High risk of further accelerated deterioration of construction market conditions such as competition and delays in payment

Poor performance of construction sub-segment, so much different from sound performance of the company’s core businesses (flow control machine-building and engineering), made HMS Group to consider several options of construction business development strategy, including its disposal

NIITurbokompressor is the largest applied center for compressor technology in Russia: 35 testing units, 300 patents, 310 specialists where 3 with doctor degree and 10 with PhD

In 1H 2013, HMS Group acquired 95.03% of the shares (95.38% of the voting shares) for Rub 321 mn, where Rub 279 mn was paid in cash and Rub 42 mn was recognized in accounts payable

Acquisition of NIITK is a part of the Group’s strategy aimed at enhancing competencies in compressor business (see below a Figure “Main factors of revenue and profitability growth in compressors segment”)

A gain of Rub 521 mn, representing the amount of HMS’ share in the fair value of net assets acquired in excess of the acquisition cost*, has been recorded in the comprehensive income statement. This excess amount resulted from:

– The close association with KKM, as the R&D center holds 14.98 (15.77% of the voting shares) of KKM

– 80% of KKM’s innovative production is based on design documentation prepared by the institute, i.e. KKM is the largest client of NIITK

– The Group’s strong negotiating position as there were a lot of small selling shareholders (more than 200 individuals)

From legal point of view, acquisitions of KKM and NIITK didn’t have any connections, but both deals are core for HMS’ compressor solutions development strategy

The overall cost of the compressor business unit’s establishment consists of acquisitions’ costs of KKM and NIITK. Therefore, excess of fair value** from NIITK’s purchase, from managerial account perspective, offsets the cost of KKM’s acquisition,

HMS Group completed two acquisitions in 1H 2013: NIITurbokompressor named after V.B.Shnepp (NIITK) for Rub 321 mn Noyabrskneftegazproekt (NNGP), the project institute, which renders design & engineering services in Yamal for oil & gas companies. The

purchase for Rub 9.5 mn improved HMS’ position on the oil & gas market and strengthened relationship with one of its key clients (as part of a strategic agreement)

M&A Deals in 1H 2013

25

Rationale and accounting of NIITK’s acquisition

1. Capability to secure large contracts for compressor-based integrated solutions Current status: HMS has a strong track record with Russian

majors Several relatively large contracts signed since

the acquisition of KKM

2. Competences in project & design of compressor-based integrated solutions

– Technical solutions, more profitable for a producer – Strong negotiation power towards suppliers

Current status:

NIITK, the compressor design center, acquired in 1H 2013

3. Competences in large flow control project management Current status: ESPO, Vankor, Turkmenistan

All 3 factors, brought together, should lead to revenue and EBITDA growth even in 2014

Main factors of revenue and profitability growth in compressors segment

* A gain occurring when the price paid for the company acquired is less than the Group’s share in the fair value of net assets acquired. This gain is recognized immediately in profit or loss as a bargain purchase gain ** The assessment was not completed at the time of finalizing 6 months 2013 financial information, and can be revised by 2013-end

Project Brief description

Rosneft

Komsomolskiy refinery Oil product pipeline from the refinery to De-Kastri harbor. Delivery of pumps and pump units

Yurubcheno-Tokhomsk oilfield Start of oil production in 2016. Oil reserves & resources 513mt. Delivery of pumps and oil&gas equipment

TNK-BP

Russkoe, Tagulskoe and Suzunskoe oilfields Oilfields in Yamal region with specific oil. Assets of TNK-BP. Can be developed using Vankor’s infrastructure. Production start is planned in 2015-2016

Lodochnoe oil-gas condensate field Discovered in Eastern Siberia in 1985. Recoverable oil reserves C1 10.5mt, C2 32.6mt. Next to Vankor. Production engineering in 2013

Uvat 22 oilfields in Tyumen region , including Protozanovskoe and Tyamkinskoe fields. Production 7mtpa in 2012. Planned production 7.5mtpa in 2015

East- and Novo- Urengoy gas & condensate fields

Rospan International project. Total reserves of 2 deposits 890bcm of gas and 133mt of gas condensate. Total development investments US$ 6bn. Current production 3.5bcm. Planned production 8.6bcm in 2015, and 16bcm in 2017

Bashneft

Trebs and Titov fields JV with Lukoil. Project development stage. Reserves C1 142mt. Oil production in 2013 Transneft

ESPO Capacity expansion of ESPO-1 and ESPO-2

Zapolyarye – Purpe pipeline Oil transportation from YANAO and Northern Krasnoyarsk region to ESPO pipeline. Total investments Rub 199 bn, investments since 2014 Rub 95 bn

Modernization of the current pipelines Ongoing inflow of contracts

Yurubcheno-Takhomskoe-Taishet pipeline Oil transportation from Yurubcheno-Tokhomsk and Kuyumbinsk oilfields to ESPO-1. Length ~703 km. Capacity ~15mtpa

Gazprom

Kovyktinskoe gas field Total reserves of gas 1.5trncm and gas condensate 77mt. Currently in exploration program development stage. By 2016 Gazprom plans to shoot 1,300m2 and drill 10 exploration wells

Chayandinskoe oil-gas condensate field Base for creation of Yakutsk gas production center. Reserves of gas 1.2trncm and oil & gas condensate 79mt. Next to Kovyktinskoe field. Commencement planned in 2014 for oil and 2017 for gas. Field infrastructure development 2014-2017

Urengoy oil-gas condensate field The 3rd world largest with gas reserves over 10trncm, located in Tyumen region. Development of oil rims. Production plans in 2015

Mylzhinskoe OGF – Kazan OGCF – Kuybyshev trunk oil product pipeline

Pipeline construction in 2013-2014

South Stream (KMPO) Gas pipeline, which is planned to be laid on the seafloor of the Black sea from Russia to Italy and Austria thru Bulgaria, Balkan Peninsula, and other countries. Construction started in Dec 2012, completion in 2015. Total investments €16bn

Gazprom neft

Novoport (Novy port) field Recoverable reserves C1+C2 230mt of oil and 270bcm of gas. First oil in 2012. Start of year-round production in 2014 at 400-500ktpa. Planned production 6-9mtpa in 2020.

Etypurovskoe field Further development of the field

Iraq

Rumania brownfield Consortium headed by BP

Projects with South Oil Company of Iraq International oil majors

Water utilities

Central Asia Irrigation stations for Uzbekistan and Turkmenia

Russia & the CIS Modernization of outdated equipment

Nuclear

Rosatom Pumps and other equipment for new nuclear power plants and modernization of the old ones

Selected End-market Projects for Mid-term

Our current priorities for 2013 (filled pink)

26 Sources: Public information, Company’s data Prioritized projects

signed

Contacts and HMS Group Key Details

27

Company address:

7 Chayanova Str.

Moscow 125047

Russia

Investor Relations

Phone +7 (495) 730-66-01

[email protected]

http://grouphms.com/shareholders_and_investors/

Twitter HMSGroup and HMSGroup_Rus

Vera Timoshenko, Head of Investor Relations

[email protected]

HMS Hydraulic Machines & Systems Group Plc is listed on the London Stock Exchange (Main market, IOB):

Identifier Number Number of shares outstanding

ISIN US40425X2099 117,163,427

Ticker HMSG

Bloomberg HMSG LI

Reuters HMSGq.L

mailto:[email protected]











APPENDIX

28

Consolidated statement of financial position 6 months 2013

29

Consolidated statement of income 6 months 2013

30

Consolidated statement of cash flows 6 months 2013

31

New Projects

32

33

Russia

China

Kazakhstan

Belarus

Ukraine

India

UAE

Uzbekistan

Turkmenistan

Iraq

Vietnam

Kyrgyzstan

Tajikistan

Export Markets

Central Asia

Recently undertook turnkey construction of pumping station on Amu Darya river in Turkmenistan and construction of pumping station on water-storage basin Arnasai in Uzbekistan

Rapidly growing sales of modular equipment to oil and gas sector in Kazakhstan

Presence in water markets of Tajikistan and Kyrgyzstan

Offices in Ashkhabad (Turkmenistan) and Tashkent (Uzbekistan)

Europe

Office in Milan

Iraq

Significant installed base of HMS pumps, particularly in oil and gas, from Soviet and post Soviet periods

Office in Baghdad diversifies customer base, currently undertakes projects for Oil Ministry and BP

The UAE

Office in Dubai

Nuclear Exports

Long history of HMS involvement in Rosatom’s foreign as well as domestic projects

International agreements in place for the construction of 19 reactors in China, India, Belarus, Turkey, Ukraine, Armenia, Slovakia, Bulgaria and Vietnam using Russian technology

― Current tenders for development of 16 other reactors worldwide

Source: Company data, media sources

HMS office

Italy Bulgaria

Turkey

TGC-13 (Enisei) Investments 2010-2015: RUB 10 bn

TGC-9 Investments 2010-2015: RUB 28 bn


TGC-7 (Volga) Investments 2010-2015: RUB 11 bn



TGC-3 (Mosenergo) Investments 2010-2015: RUB 39 bn


TGC-12 (Kuzbas) Investments 2010-2015: RUB 21 bn


TGC-10 (Fortum) Investments 2010-2015: RUB 47 bn




Source: Frost & Sullivan report 2009

Nuclear Power Plants HMS participation confirmed Projects under construction Planned projects

Leningradskaya-II

Kalininskaya

Rostovskaya

Novovoronezhskaya-II

Beloyarskaya

Kurskaya Smolenskaya

Kolskaya

New Milestone Projects

Rostovskaya

Summary of total investments in power generating capacity

Selected nuclear power plant projects abroad using Russian technology

Number of power units to be

constructed or reconstructed

Additional generation

capacity, MW

Investments 2010-

2015 (RUB bn)

TGC n/a 13,627 359

OGC n/a 11,962 467

Nuclear plants

(Russia) 41 21,500 808

Nuclear plants

(Foreign) 17 17,880 1,940

Name Country No of power units /

Unit capacity (MW)

Investments 2010-

2015 (RUB bn)

Tianwan NPP China 2 / 1,000 86

Kudankulam

NPP India 2 / 1,000 65

Mokhovtse NPP Slovakia 2 / 440 53

Akkuyu NPP Turkey 4 / 1,200 27

Other projects

Ukraine 2 / 1,200

1,581 Belarus 2 / 1,200

Armenia 1 / 1,200

Vietnam 1 / 1,200

34

Baltic

Berezovskaya SDPP

Thermal and nuclear power utilities

Zapolyarnoe-Pur-pe pipeline

Projected Zapolyarnoe–Pur-pe pipeline

Inlet pipelines from main perspective oilfields (with production level over 2mln tons in 2020)

New OPS

Maximum level of pumping capacity by 2020, mtpa

Main OPS – main oil-pumping station of the future Zapolyarnoe-Pur-per pipeline

OPS – oil-pumping station

Legend

Inlet pipelines

Inlet point Oilfield License holder Max capacity in

2020, mt

Main OPS 1 Vostochno-Messoyakhinskoe Slavneft * 10.9

Main OPS 1 Zapadno-Messoyakhinskoe Slvaneft 2.4

Total Main OPS 1 13.3

OPS 2 Russkoe TNK-BP 6.8

OPS 2 Zapolyarnoe Gazprom 2.3

OPS 2 Tazovskoe Gazprom 1.0

OPS 2 Northern Urengoyskoe Gazprom n/a

OPS 2 Salekaptskoe Lukoil 0.3

Total OPS 2 10.9

OPS 3 Urengoyskoe Gazprom 7.4

OPS 3 Pestsovoe Gazprom n/a

OPS 3 En-Yakhinskoe Gazprom n/a

OPS 3 Samburgskoe SeverEnergiya ** 0.2

OPS 3 Yaro-Yakhinskoe SeverEnergiya 0.5

OPS 3 License plot of Western Urengoyskoe TNK-BP 1.1

Total OPS 3 9.7

Total capacity to Pur-pe 34.0-45.0

* TNK-BP and Gazprom Neft have per 50% share ** Gazprom holds 51%; this shareholding should be sold to Novatek

Source: Public sources, Transneft site

Capacity, mtpa up to 45

Total length, km 488

Projected cost, RUB bn 120

Total length of inlet pipelines, km 1,200

Project figures Construction period 2012-2016

1st stage 2014

2nd stage 2015

3rd stage 2016

Implementation

1st stage

2nd stage

3rd stage

35

Kuyumba - Taishet pipeline

Main OPS: Kuyumba

36

OPS 3

OPS 4

OPS 2

Main OPS: Taishet

Capacity, mtpa 15

Total length, km 703

Projected cost, RUB bn 97

Start of project implementation 2012

Completion 2016

Project figures

Krasnoyarsk region

1 2

3 4

ESPO

8

10

5

6

7

11

9

12 13 14

4

3

2

Verkhnechonskoe oil field

Danilovskoe oil field

Dulisminskoe oil field

Talakanskoe oil field

Srednebotuobinskoe oil field

Taas-Yuryakhskoe oil field

Kuyumbinskoe oil field

Yurubcheno-Tokhomskoe oil field 1

Kuyumba - Taishet

Number of new pumping stations for increasing capacity 21

New stations contracted by HMS 3

New station contracted by Turbonasos 1

New stations to be contracted 16

Number of contracted pumping stations 20

Pumping stations under construction by HMS 12

Pumping stations constructed by Sulzer 7

Pumping stations under construction by Turbonasos 2

East Siberia – Pacific Ocean pipeline

Source: Company data, Transneft

Krasnoyarsk region

1 2

3 4 5

6 7

8

9

10

11

12 13 14 15

16 17

18

19

20

23 24

25

26 27

28 29 30

31 32 33

34

35

36

37

38

39

40

41

Buryat region

Chita region

RUSSIA

MONGOLIA

Irkutsk Chita

Ust’-Kut

Yakutsk

Skovorodino

Blagoveschensk

Vladivostok

Taishet

Irkutsk region

Khabarovsk region

Sea of Okhotsk

CHINA

Total number of pumping stations: 41

22 21

37

M&A Policy

38

Main rationale of M&As M&A approach

M&A Strategy

39 Source: Company data (RAS accounts)

Sectors: pumps, compressors, oil & gas equipment, project & design

Region: Russia and the CIS

Target revenue within US$ 20-100 mn

Strong business model

Friendly management

TRADING COMPANY

Broadening of HMS Group’s product portfolio with complementary equipment

Potential growth of revenues and EBITDA margin of acquired companies:

Sales power and R&D capability of HMS Group

Well-known brands and/or technical equipment base of acquired companies

Potential growth of revenues and EBITDA margin of the whole Group through integrated solutions

Yea

r o

f ac

qu

isit

ion

O&G EQUIPMENT PRODUCERS

Note: Trading Company, established in 2002, is a profit center that represents the Group in a number of large-scale contracts, which are executed by production facilities afterwards

• Proven track record of a market consolidator with 21 completed acquisition in Russia, CIS and abroad

• HMS Group expands to adjacent segments seeking complimentary technologies and R&D facilities

• High-growth sectors where HMS has limited presence are the Groups’ focus area

• M&A experience converts to synergies - strong and sustainable double digit annual EBITDA growth after acquisition

CAGR since the acquisition year to 2012A: Selected companies

How we expand acquired businesses

41%

15%

18%

16%

25%

11%

31%

30%

23%

21%

14%

18%

31%

9%

23%

30%

HMS Neftemash

Sibneftemash

Sibna

HMS Pumps

Nasosenegomash

Livnynasos

DGHM

HMS Trading Company

200

4 20

11

2

009

200

3 20

05

200

6 2

007

200

2

Revenue CAGR EBITDA CAGR

PUMP PRODUCERS

Production Assets

40

Livny

Russia Ukraine

Tomsk

Nizhnevartovsk

Tyumen

Dimitrovgrad

Nizhnevartovskremservice (NRS)

Services: Maintenance and repair of pump equipment, drilling and other oil and gas field equipment

HMS Neftemash

Products: Modular equipment for oil and gas and water industries

Sibneftavtomatika (SibNA)

Products: High-precision measuring equipment for oil, gas and water flow rates

Tomskgazstroy (TGS)

Services: Trunk oil and gas pipeline and auxiliary facilities construction

Sibkomplektmontazhnaladka (SKMN)

Services: Design, construction and commissioning of oil and gas field projects

Rostov Vodokanalproekt (RVKP)

Services: Project design for water utilities

Rostov

Sumy

41

HMS Household pumps

Products: Household vibration pumps

Promburvod (PBV)

Products: Water well submersible pumps

Livnynasos (LN)

Products: Water well submersible pumps

Nasosenergomash (NEM)

Products: Pumps for thermal and nuclear power generation and oil & gas industry

VNIIAEN, associate 47%

Description: R&D center for pumps used in nuclear, thermal power generation, oil and gas industry

Dimitrovgradhimmash (DGHM)

Products: Equipment for oil and chemical industries and pumps for oil refining

HMS Pumps

Products: Industrial pumps for oil and gas, power generation

Giprotyumenneftegaz (GTNG)

Services: Project and construction design of oil and gas facilities

Belarus

Minsk

Moscow Bavleny

Industrial pumps Modular equipment EPC (Construction and Project & design) Compressors


HMS’ Production Assets

Bobruisk Machine Building Plant (BMBP)

Products: Pumps for oil refining and metals & mining

Bobruisk

Sibneftemash

Products: Tanks and vessels for oil and oilfield service companies

Products: Compressors

Kazan

Kazankompressormash (KKM)

Apollo Goessnitz GmbH

Products: Centrifugal pumps and systems for oil refining

Germany Goessnitz (Thuringia)

Description: R&D center for centrifugal, rotary and screw compressors

NIITK (Turbokompressor)

HMS Group

Headquarters

Calculations and formulas

42

All figures in millions of Russian Rubles, unless otherwise stated

Management of the Group assesses the performance of operating segments based on a measure of adjusted EBITDA, which is derived from the consolidated financial statements prepared in accordance with IFRS

EBITDA is defined as operating profit/loss adjusted for other operating income/expenses, depreciation and amortization, impairment of assets, provision for obsolete inventory, provision for impairment of accounts receivable, unused vacation allowance, defined benefits scheme expense, warranty provision, provision for legal claims, provision for VAT and other taxes receivable, other provisions, excess of fair value of net assets acquired over the cost of acquisition. This measurement basis excludes the effects of non-recurring income and expenses on the results of the operating segments

EBIT is calculated as Gross margin minus Distribution & transportation expenses minus General & administrative expenses minus Other operating expenses

Total debt is calculated as Long-term borrowings plus Short-term borrowings

Net debt is calculated as Total debt minus Cash & cash equivalents at the end of the period

Working capital is calculated as Inventories plus Trade and other receivables, excluding Short-term loans issued, Bank deposits and Promissory notes receivable, plus Current income tax receivable minus Trade and other payables minus Short-term provisions for liabilities and charges minus Current income tax payable minus Other taxes payable. In 2011, Working capital was adjusted for working capital of acquired DGHM (Rub 309 mn)

ROCE is calculated as EBIT LTM divided by Average Capital Employed (Total debt + Total equity)

Backlog is calculated as the preceding backlog plus new or additional customer orders booked during the reporting period, less amounts of contract value booked as revenue under ‘‘Russian GAAP’’ on an unconsolidated basis under the relevant contracts, plus or minus adjustments made in the judgment of the Group’s management. The Group may also make certain adjustments to bookings to reflect amendment, expiry or termination of contracts, cancellation of orders, changes in price terms under contracts or orders, or other factors affecting the amount of potential revenue which the Group believes may be recognized under such contracts. The Group’s backlog estimates are not an indication of potential revenues. Actual revenues and other measures of financial performance under IFRS may differ materially from any estimate of backlog, and changes in backlog between periods may have limited or no correlation to changes in revenue or any other measure of financial performance under IFRS

Notes to the presentation and formulas used for some figures’ calculations

The information contained herein has been prepared using information available to HMS Group (“HMS” or

“Group” or “Company”) at the time of preparation of the presentation. External or other factors may have

impacted on the business of HMS Group and the content of this presentation, since its preparation. In addition all

relevant information about HMS Group may not be included in this presentation. 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 presentation

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 presentation 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 shares 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.

Disclaimer

43

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