HMS Group Annual Results 2010

HMS Group FY2010 IFRS Results

April 2011

169.196.203

170.70.67

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69.114.167

65.152.175

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227.24.52

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137.165.78

Speakers 169.196.203

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147.193.150

69.114.167

65.152.175

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227.24.52

207.213.225

137.165.78

Financial and Operational highlights Revenue, 2009 vs 2010 (mln RUB)

Artem Molchanov

Managing Director & CEO

2

Kirill Molchanov

First Deputy General Director & CFO

Alexander Rybin

Head of Capital markets and IR

169.196.203

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147.193.150

69.114.167

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137.165.78

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.

3

Disclaimer

Agenda 169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.25.55

207.213.225

137.165.78

4

HMS At-a-glance 5

HMS Group highlights for the FY 2010 6

Outstanding performance for the FY 2010 7

EBITDA development 8

Revenue and EBITDA contribution by segments 9

Key contracts and backlog 10

Cost of sales optimization 11

CAPEX & working capital 12

Debt & liquidity position 13

1Q update & IR calendar 14

IR contacts 15

Appendix I 16

Appendix II: Calculations 39

Who we are Key investment highlights

Attractive industry fundamentals: impressive end-

markets mix prospects

The leading provider of flow control solutions in Russia

and the CIS

Advanced R&D capabilities: basis for high margin &

sustainable performance and growth

Diversified and well-established customer base

Operational and product quality excellence

History of resilient financial growth and strong backlog

Strong management team: company founders and top

professionals

The leading Russian pump and pump-based integrated

solutions provider

Our core markets: oil and gas, nuclear and thermal power

and water sectors in Russia and the CIS

Produce high capacity pump systems up to 12 Mvt

Blue-chip customer base includes Rosneft, Transneft,

Rosatom, etc and more than 4,000 other clients

169.196.203

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Source: Frost & Sulliv an report 2009, Company data

Industrial pumps

Revenue RUB 10,712 mln

EBITDA adj. RUB 2.367 mln

Modular equipment


EBITDA adj. RUB 599 mln

EPC


EBITDA adj. RUB 550 mln

The leading Russian high capacity pump and pump-based integrated solutions

provider

HMS At-a-glance

5

Revenue RUB 23,070 mln EBITDA adj. RUB 3,519 mln

New photo

Pump station of Baltic pipeline system, Transneft Oilf ield Pump Station 2, Vankor oilf ield, Rosneft Oil Pump Station “Tayezhnaya”, Transneft

HMS Group Highlights for the FY 2010 169.196.203

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Revenue, 2009 vs 2010 (mln RUB)

Business Highlights: Growth through innovations

6

Completed large-scale projects, including the delivery of “superblock” modular equipment to Rosneft for the

1st stage of the development of Vankor oil field and full-cycle project for construction of water-lifting pump

station for the Republic of Turkmenistan

Engaged in number of new significant contracts during 2010, including the delivery of integrated pump-based

systems for 14 pumping stations of East Siberia-Pacific Ocean trunk pipelines and projects for development

and design of new oilfields and pipelines

Acquired a 51% stake in Giprotyumenneftegaz (GTNG) for a total cash consideration of RUB 2,467 mln

Designed new types of pumping equipment for trunk pipelines, nuclear plants, power plants and water works

Enjoyed robust backlog increase reflecting overall market growth

Operations’ efficiency focus through introduction of IT systems and quality management system

Note: 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.

For this purpose, EBITDA is defined as operating profit/loss adjusted for other income/expenses, depreciation and amortisation, provision for obsolete inventory, provision for impairment of accounts receivable, unused

vacation allowance, excess of fair value of net assets acquired over the cost of acquisition. This measurement basis excludes the effects on non-recurring expenditure from the operating segments, such as restructuring costs, legal expenses and goodwill impairments, when the impairment is a result of an isolated, non-recurring event.

Key financial figures change yoy 2010 RUB mln 2009 RUB mln

Revenue 56% 23,070 14,772

EBITDA adj. 86% 3,519 1,890

EBIT 133% 3,027 1,298

Profit for the year 2,156% 1,581 70

Net debt -6% 4,297 4,573

EBITDA adj. margin 246 bps 15.3% 12.8%

ROCE 1,825 bps 36.2% 18.0%

1,298

3,027

2009 2010

18.0%

36.2%

2009 2010

14,772 23,070

1,8903,519

12.8% 15.3%

2009 2010

Revenue, RUB mln EBITDA adj., RUB mln

EBITDA adj. margin

Outstanding Performance for the FY 2010 169.196.203

170.70.67

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69.114.167

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Financial and Operational highlights Revenue, 2009 vs 2010 (mln RUB)

+56%

+1,825 bps +133%

Source: Company data Source: Company data

Source: Company data

Total revenue up 56% yoy to RUB 23.1 bn

The growth reflects:

Significant increase in size of orders for

pump-based integrated solutions

Completion of key projects

Consolidation of GTNG

Stable growth of revenue from ordinary

contracts

Organic revenue growth of 47% yoy, excluding

impact from GTNG

+86%

7

Comments Key financials, 2009 vs 2010

ROCE, 2009 vs 2010 EBIT, 2009 vs 2010 (RUB mln)

EBITDA Development 169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

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75.3% 2.5% 9.1%

0.5% 12.6% 1.9% 0.7%

15.3%

Revenue Cost of sales Distribution and transport

expenses

SG&A Other expenses Operating profit EBITDA*

75.6% 3.3% 12.4%

1.5% 7.3% 2.3% 3.1% 12.8%

Revenue Cost of sales Distribution and transport expenses

SG&A Other expenses Operating profit Depreciation & amortisation

Others EBITDA adj.

0

50,000

2009 2010

EBITDA adj. increased by 86% yoy to RUB 3,519 mln

due to:

Strong revenue growth in all business units

Focus on innovative high-margin contracts

Effective cost control

Consolidation of GTNG

EBITDA adj. margin increased to 15.3%

SG&A and commercial expenses grew less than

revenue due to economy of scale and cost

optimization strategy


Comments EBITDA and EBITDA margin, 2009 vs 2010 (mln RUB)


8

operating expenses

20.2bn v s 13.7bn in 2009 |+47.2% y oy

rev enue in 2010 +56.2% y oy

Comments Revenue & Operating costs, 2009 vs 2010

Key EBITDA adj. drivers, 2009 vs 2010 (% of revenue)

14,772 23,0701,084

2,915701,581

2009 2010

Revenue Operating profit Profit for the year

16.0%22.1%

18.9%10.3%

0.8% 9.0%

2009 2010

Industrial Pumps Modular equipment EPC

1,012

2,367786

599

33

550

2009 2010

Industrial pumps Modular equipment EPC

6,30810,712

4,166

5,8054,189

6,135

2009 2010

Industrial pumps Modular equipment EPC

Industrial pumps:

– Sales up 70% yoy to RUB 10,712 mln, enjoying strong demand for integrated pumping solutions

primarily in oil transportation and upstream

– EBITDA adj. grew by 134% yoy, and EBITDA adj. margin rose to 22.1%, primarily attributable to

increasing share of contracts for pump-based integration solutions

Modular equipment

– Sales up 39% yoy, driven by demand from the major oil companies to equip new oil fields and

modernize existing installed base of modular equipment

– EBITDA adj. decreased 24% yoy and EBITDA adj.

margin also down to 10.3% due to execution of low-margin contracts concluded in 2009

EPC

– Revenue growth of +46% yoy is primarily

attributable to an impact of GTNG acquisition and

entering the market of projects and design

– Revenue growth, excluding an effect of acquisition,

was c. 14% yoy

– EBITDA adj. increased significantly to RUB 550

mln, and EBITDA adj. margin rose to 9.0%

– Newly acquired GTNG added to EPC’s EBITDA RUB 271 mln

– Such a significant EBITDA is primarily attributable to a low EBITDA base in 2009, caused by

significant price pressure connected to investment

cutbacks by oil companies

Revenue and EBITDA Contribution by Segments 169.196.203

170.70.67

147.193.150

69.114.167

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+70%

+39%

+46%

+1,548%

-24%

+134%

+606 bps

-856 bps

+816 bps

Source: Company data 9

Highlights by core segments, 2009 vs 2010 Comments

Revenue, RUB mln

EBITDA adj., RUB mln

EBITDA adj. margin, %

402

10,078

1,123

1,506

7,975

8,254

2010 2011

Oil transportation pumps Nuclear pumps Other

Key Contracts Execution and Backlog Analysis 169.196.203

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69.114.167

65.152.175

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137.165.78

Order backlog doubled yoy to RUB 19.8 bn,

including RUB 1.3 bn backlog from acquired GTNG

Organic backlog growth excluding impact from

GTNG was up 95% yoy

General backlog increase reflecting market growth

Robust backlog growth of high-margin pump-based

integrated solutions for large infrastructure projects

Signed contracts for oil transportation pumps

scheduled:

Recognized revenue of RUB 3.7 bn in 2010:

current backlog RUB 10.1 bn, the most part of

revenue to be recognized in 2011

ESPO contracts execution scheduled,

recognized revenue of RUB 3.5 bn

Signed contract for nuclear pumps scheduled:

Recognized revenue RUB 0.1 bn, current

backlog RUB 1.5 bn, the most part of revenue

recognition in 2011

Signed contracts for project design scheduled:

Significant increase of backlog due to GTNG

acquisition – plus RUB 1.3 bn

Backlog doesn’t include contracts with production

period less than 3 months, e.g. for standard pumps.

These short-term contracts generate revenue of

about RUB 3 bn per year

10

+3%

+34%

+2,418%

9,500

19,837


Highlights Backlog, 2010 vs 2011 (RUB mln)

Backlog structure for 2011 (RUB bn)

Other0.7

Water injection pumps

0.2

Project & design1.3

Modular equipment

1.4

Nuclear pumps1.5

Other pumps2.1

Construction2.7

Oil transportation

pumps10.1


Cost of Sales Optimization 169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

expenses

Operating costs grew 47% yoy in 2010 vs revenue growth

by 56% yoy

Cost of sales increased by 56% yoy in 2010, reflecting the

consolidation of GTNG and also due to the increase in

supplies, raw materials and labor costs.

About 60% of HMS Group’s cost of sales is for raw

materials and supplies, where ferrous metals account for

most of the cost

Dual-supplier policy:

– HMS Group doesn’t have monopolistic or exclusive

suppliers

– HMS Group doesn’t have even one supplier with

share more than 5%

Fixing suppliers’ prices and making advance payments for

long-term contracts and passing on price increases to

clients for short-term contracts helps to hedge commodity

prices and currency risks

Cost of sales breakdown, 2009 vs 2010 (RUB mln)

11,164 17,367

500

550

600

650

700

750

800

Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10

World hot rolled coil price index performance, $/tonne

+22%

Source: Bloomberg


11

Comments Cost of sales structure, 2009 vs 2010 (%)

World HRC price performance in 2010

55.4% 59.7%

16.1%15.5%

15.4%13.2%

3.9% 3.3%2.3% 2.0%1.5% 1.3%5.4% 5.1%

2009 2010

Materials Labour Cost of goods sold Subcontractors D&A Utilities Other

571 2,918

2009 2010

M&A capital expenditures M&A quantity

CAPEX & Working Capital 169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

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227.24.52

207.213.225

137.165.78

1

1


Source: Company data Source: Company data


12

SIBNA

(248)

GTNG

(2,467)

Capital expenditures, 2009 vs 2010 (RUB mln) M&A expenditures, 2009 vs 2010 (RUB mln)

Working capital position update Working capital ratios, 2007-2010

2010 2009

Working capital, RUB bn 2.4 2.7

chg, % -10% 22%

Working capital/ Total assets, x 0.11 0.23

Working capital/ Revenue, % 10.6% 18.3%

Current ratio, x 1.05 1.20

Quick ratio, x 0.83 0.64

Inventories, days 63 92

Receivables, days 105 73

Payables, days 148 106

192 950344 450

0.6x

2.1x

2009 2010

Organic capex Depreciation Capex/ Depreciation ratio

1,973 2,222 2,702 2,441

0.20 0.20

0.23

0.11

0.150.16

0.18

2007 2008 2009 2010

Working capital, RUB mln Working capital / Total assets, x

Working capital / Revenue, x

Debt & Liquidity Position 169.196.203

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-13%

-54%



2.4x

1.2x

HMS’ internal covenant for

Net debt/ EBITDA is 2.5x

Total debt decreased by 13% yoy from RUB 5,331 mln to

RUB 4,648 mln

Significant operating cash flow growth from RUB -0.2 bn

to RUB 3.6 bln

Free cash flow stood at RUB 283 mln despite GTNG

acquisition

During 2010 interest rates on long-term borrowings were

revised and decreased for 4-7%. As a result effective

interest rate amounted to around 9.9% per annum

13

2010 2009

Net cash flow from operations 3,575 -211

Net cash flow from investing activities -3,292 -509

Net cash flow from financing activities -690 815

Free cash flow 283 -720

Cash 351 758

Total debt 4,648 5,331

Total debt/ Equity ratio 1.04 2.35

Total debt/ EBITDA 1.32 2.82

Comments Debt position, 2009 vs 2010

Highlights, 2009 vs 2010 (RUB mln) Debt & net debt/EBITDA position, 2009 vs 2010

3,438 3,8641,893 784

2009 2010

Long-term debt, RUB mln Short-term debt, RUB mln

5,331

4,648

758

351

15.8%

9.9%

2009 2010

Total debt, RUB mln Cash, RUB mln

Effective interest rate, year-end

HMS Group is in line with its growth strategy and continues to deliver on

promises to its shareholders and investors

1Q2011 Key

Events

Traditional flow of usual contracts including oil transportation and nuclear pumps

for clients’ current facilities

IPO proceeds were used for RUB 3.3 bn debt repayment

Average interest rate for a number of large long-term borrowings was decreased

to c. 8.9%

M&A Activity

Active discussions with several targets

1 deal in a stage of finalizing

In addition to current 40% of DKHM, 11% to be bought at the beginning of 2012

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IR Calendar

Mid-May: Annual results roadshow

31 May –2 June: VTB Capital Russia Calling in London

June-beginning: 1Q results announcement

09 June: Credit Suisse Oil & Gas Conference in London

28 June: Renaissance Capital Investor Conference in Moscow

June: HMS site visit – to be considered

14

1Q Trading Update & IR Calendar

2011E Outlook* HMS Group can expect to report a strong increase in revenues and adjusted

EBITDA

• Actual results and dev elopments may be materially dif f erent from any f orecast, forward-looking statement, opinion or expectation expressed in this presentation.

• We emphasize that we base all our f inancial f orecasts on the researches perf ormed by the independent market analy sts. Theref ore, we indemnif y HMS Group f rom any responsibility in relation

to any inv estor or group of inv estors acting in reliance upon such f orecasts

Alexander Rybin

Head of Capital Markets and IR

Tel: +7 (495) 730-66-12

[email protected]

Vyacheslav Tsoy

Deputy Head of Capital Markets and IR

Tel: +7 (495) 730-66-01

[email protected]

Inna Kelekhsaeva

IR Officer

Tel: +7 (495) 730-66-01

[email protected]

15

IR Contacts

mailto:[email protected]



Appendix I

16


Income Statement

RUB‟000 2010 RUB „000 2009 RUB „000

Revenue 23,070,014 14,772,269

Cost of sales (17,367,404) (11,164,202)

Gross profit 5,702,610 3,608,067

Distribution & transportation expenses (573,198) (482,576)

General & administrativ e expenses (2,102,642) (1,827,189)

Other operating expenses (112,149) (97,679)

Impairment of goodwill - (116,998)

Operating profit 2,914,621 1,083,625

Finance income 57,089 46,806

Finance costs (823,391) (865,141)

Share of results of associates 15,108 17,193

Profit before income tax 2,163,427 282,483

Income tax expense (582,299) (212,386)

Profit for the year 1,581,128 70,097

Profit/(loss) attributable to:

Shareholders of the Company 1,469,116 (31,821)

Non-controlling interest 112,012 101,918

Profit for the year 1,581,128 70,097

Currency translation dif f erences (85,899) (70,502)

Currency translation dif f erences of associates 1,540 1,283

Other comprehensive loss for the year (84,359) (69,219)

Total comprehensive income for the year 1,496,769 878

Total comprehensiv e income/(loss) attributable to:

Shareholders of the Company 1,402,382 (76,930)

Non-controlling interest 94,387 77,808

Total comprehensive income for the year 1,496,769 878

Basic and diluted earnings per ordinary share for profit/(loss) attributable to the ordinary shareholders

14.32

(0.03)


Balance Sheet

RUB‟000 31 December 2010 31 December 2009

ASSETS

Non-current assets:

Property , plant and equipment 5,948,674 3,954,807

Other intangible assets 310,156 47,109

Goodwill 1,783,915 306,992

Inv estments in associates 507,141 507,293

Def erred income tax assets 130,779 53,992

Other long-term receiv ables 27,123 61,362

Total non-current assets 8,707,788 4,931,555

Current assets:

Inv entories 2,840,745 3,179,644

Trade and other receiv ables and other f inancial assets 10,399,853 2,778,048

Current income tax receiv able 38,086 58,016

Prepaid expenses 39,361 36,213

Cash and cash equiv alents 351,086 758,127

Restricted cash 4,978 905

13,674,109 6,810,953

Non-current assets held f or sale 96,095 -

Total current assets 13,770,204 6,810,953

TOTAL ASSETS 22,477,992 11,742,508

EQUITY AND LIABILITIES EQUITY

Share capital 42,510 36,154

Share premium 210,862 210,862

Share capital to be issued - 6,356

Currency translation reserv e (234,785) (168,051)

Retained earnings 2,897,296 1,480,712

Other reserv es 38,987 37,035

Equity attributable to the shareholders of the Company 2,954,870 1,603,068

Non-controlling interest 1,508,263 669,631

TOTAL EQUITY 4,463,133 2,272,699

LIABILITIES

Non-current liabilities:

Long-term borrowings 3,864,176 3,429,475

Finance lease liability 9 8,479

Def erred income tax liability 745,762 197,307

Pension liability 262,525 125,407

Prov isions f or liabilities and charges 35,691 11,550

Total non-current liabilities 4,908,163 3,772,218


Balance Sheet (cont’d)


Current liabilities:

Trade and other pay ables 10,799,358 3,255,533

Short-term borrowings 775,242 1,879,914

Prov isions f or liabilities and charges 312,213 209,760

Finance lease liability 8,446 13,094

Pension liability 24,736 20,922

Current income tax pay able 115,340 25,069

Other taxes pay able 1,071,361 293,299

Total current liabilities 13,106,696 5,697,591

TOTAL LIABILITIES 18,014,859 9,469,809

TOTAL EQUITY AND LIABILITIES 22,477,992 11,742,508


Cash Flow Statement


Cash flows from operating activities

Prof it bef ore income tax 2,163,427 282,483

Adjustments f or:

Depreciation and amortisation 449,776 343,987

Loss f rom disposal of property , plant and equipment and intangible assets 938 2,305

Finance income (57,089) (42,790)

Finance costs 818,773 865,141

Pension expenses/(income) 33,808 17,673

Warranty prov ision 51,109 18,150

Write-of f of receivables 23,931 -

Interest expense related to construction contracts 17,408 14,953

Prov ision f or impairment of accounts receiv able (13,023) 69,559

Impairment of taxes receiv able 10,052 -

Inv estments impairment prov ision (1,338) 6,099

Prov ision f or obsolete inv entories (107,634) 95,949

Foreign exchange translation dif f erences 4,618 (4,016)

Prov ision f or VAT receiv able (10,887) 29,918

Prov isions f or legal claims 34,073 13,655

Share of results of associates (15,108) (17,193)

Impairment of goodwill - 116,998

Impairment of property , plant and equipment and intangible assets 19,288 13,848

Loss on disposal of subsidiaries 4,360 -

Other non-cash items (646) (18,861)

Operating cash flows before working capital changes 3,425,836 1,807,858

Decrease/(increase) in inv entories 452,945 (810,442)

(Increase)/decrease in trade and other receiv ables (6,921,060) 34,526

Increase/(decrease) in taxes pay able 674,369 (9,530)

Increase/(decrease) in accounts pay able and accrued liabilities 7,063,530 (71,350)

Restricted cash (4,073) (285)

Cash generated from operations 4,691,547 950,777

Income tax paid (277,738) (286,395)

Interest paid (838,533) (875,750)

Net cash from/(used in) operating activities 3,575,276 (211,368)

Cash flows from investing activities

Repay ment of loans adv anced 3,139 122,476

Loans adv anced (5,498) (108,139)

Proceeds f rom sale of property , plant and equipment and intangible assets 24,585 1,775

Interest receiv ed 56 39,352

Div idends receiv ed 16,800 10,313

Purchase of property , plant and equipment (950,275) (192,365)

Acquisition of associates - (122,756)

Acquisitions of subsidiaries, net of cash acquired (2,339,457) (239,806)

Proceeds f rom disposal of subsidiaries, net of cash disposed 7,475 -

Acquisition of intangible assets (48,681) (19,741)

Net cash used in investing activities (3,291,856) (508,891)


Cash Flow Statement (cont’d)


Cash flows from financing activities

Repay ments of borrowings (9,034,047) (5,571,316)

Proceeds f rom borrowings 8,800,148 6,775,593

Pay ment f or f inance lease (12,663) (19,971)

Acquisition of non-controlling interest in subsidiaries (578,844) (208,799)

Expenses related to share issue (58,049) -

Cash receiv ed f rom capital contribution 85,817 -

Cash receiv ed f rom additional share issue of subsidiary 428,420 -

Div idends paid to non-controlling shareholders of subsidiaries (320,458) (160,009)

Net cash (used in)/from financing activities (689,676) 815,498

Net (decrease)/increase in cash and cash equivalents (406,256) 95,239

Effect of exchange rate changes on cash and cash equivalents (785) (6,594)

Cash and cash equivalents at the beginning of the year 758,127 669,482

Cash and cash equivalents at the end of the year 351,086 758,127

Cash flows from investing activities

Repay ment of loans adv anced 3,139 122,476

Loans adv anced (5,498) (108,139)

Proceeds f rom sale of property , plant and equipment and intangible assets 24,585 1,775

Interest receiv ed 56 39,352

Div idends receiv ed 16,800 10,313

Purchase of property , plant and equipment (950,275) (192,365)

Acquisition of associates - (122,756)

Acquisitions of subsidiaries, net of cash acquired (2,339,457) (239,806)

Proceeds f rom disposal of subsidiaries, net of cash disposed 7,475 -

Acquisition of intangible assets (48,681) (19,741)

Net cash used in investing activities (3,291,856) (508,891)

Cash flows from financing activities

Repay ments of borrowings (9,034,047) (5,571,316)

Proceeds f rom borrowings 8,800,148 6,775,593

Pay ment f or f inance lease (12,663) (19,971)

Acquisition of non-controlling interest in subsidiaries (578,844) (208,799)

Expenses related to share issue (58,049) -

Cash receiv ed f rom capital contribution 85,817 -

Cash receiv ed f rom additional share issue of subsidiary 428,420 -

Div idends paid to non-controlling shareholders of subsidiaries (320,458) (160,009)

Net cash (used in)/from financing activities (689,676) 815,498

Net (decrease)/increase in cash and cash equivalents (406,256) 95,239

Effect of exchange rate changes on cash and cash equivalents (785) (6,594)

Cash and cash equivalents at the beginning of the year 758,127 669,482

Cash and cash equivalents at the end of the year 351,086 758,127

Focus on integrated

solutions and other

highly-engineered

products

Higher margin than stand-alone products and services

HMS Group’s largest customers more often prefer to work with manufacturers that

can offer integrated and customized solutions

Creates strong ties with customers, pull-through demand for aftermarket services

Strengthen position

in core markets

including

aftermarket and

export

Take advantage of positive market trends in existing core markets

Organic expansion into attractive market segments

Increase of aftermarket services component to generate higher-margin and

regular cash flows

Core export opportunities: water projects in FSU, Rosatom nuclear contracts,

O&G in Kazakhstan and Iraq

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

Expand research

and development

capabilities

Leverage leading R&D capabilities in order to develop next-generation customized

pumps, technological upgrades and integrated pump systems

Work closely with customers to develop technical policies and standards

Improve operational

efficiency

Commitment to integration and optimization of current production assets and

commitment to increase synergies between acquired businesses

Standardization and continuous improvement of operations and business

processes (e.g. ERP, budgeting and reporting methodology and software

development, etc.)

Pursue selective &

value enhancing

acquisitions

Our targets are technology and R&D facilities

Pursue acquisition opportunities in high-growth sectors where HMS has limited

presence

Search for cost and revenue synergies

22

Business Strategy

Target Industries Development 169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

169.196.203

65.152.175

11,164


23

In February 2011, Russian Ministry of Energy is reported to have submitted new proposal for tax reform to the Ministry of Fin ance

The proposal includes a reduction of crude oil export duty to 60% and equalization of oil products export duties at 66% of the duty for crude oil

The proposed reforms also envisage the promotion of new greenfield development through the elimination of MET and the introducti on of an

excess profit tax for new fields

If enacted, the proposed reforms would significantly benefit the economics of E&P activities in Russia

Source: Publicly av ailable inf ormation

Project Brief description Date of announcement Key metrics

Caspian Pipeline Consortium

pipeline capacity expansion

The project w ill involve construction of 10 new pumping

stations and is scheduled to be completed by 2014 December 2010 Capex: US$ 5.4 bn

Development of the Trebs and Titov

f ields

A JV of Bashneft and Lukoil for joint development of the

f ields April 2011

Total reserves: 140.1 mln

tons

Development of the Russian Arctic

continental shelf

Unprecedented strategic alliance betw een Rosneft and

BP for one of the largest development projects to date January 2011 Area: 125,000 km2

Rosneft / Lukoil alliance A long-term cooperation betw een Rosneft and Lukoil for

joint exploration of the Arctic shelf and Nenets areas April 2011 n/a

Development of oil and gas

resources in the Black Sea

Agreement betw een Rosneft and ExxonMobil for joint

development focusing on the Tuapse Trough January 2011 n/a

Despite ongoing pressure on electricity tariff growth, investment programmes in thermal power generation remain unchanged with the Russian Government providing guaranteed return on

investments to newly-constructed power plants through so-called capacity agreements (DPM)

Moreover, Russian Ministry of Energy is actively discussing the opportunities for tax breaks and holidays for capacity renovation projects, which should significantly intensify efforts in the

modernization field

HMS exposure to thermal power remains robust with power

block modernization programmes emerging as the new market opportunity

Russian State Parliament developed the draft legislation on adoption of rate-of-return regulation (RAB) in water utilities – cornerstone to bringing financial independence to companies of

the sector

RAB regulation will be used as a pre-condition for significantly

stepping up investment efforts in the sector with the average depreciation level of assets of 72%

Over the course of the next 5-7 years we expect investment

programmes in water utilities to grow significantly (similar tariff adoption in electricity grids led to 5-fold growth of capex

plans), allowing HMS to significantly extend its order book in the sector

Increased development of greenfield and brownfield projects

Proposed taxation reform favorable to the oil and gas sector

Thermal power generation sector development Water utilities development

7,443 8,772

7,329

14,298

2009 2010

Others Large clients

170.70.67

147.193.150

69.114.167

200.193.188

227.24.52

207.213.225

137.165.78


* Large client - a client that brings rev enue more than RUB 200 mln a y ear

Stable growth of revenue generated by Other clients

received from replacement and modernization works

Sharp increase in contracts’ quantity from Transneft,

Rosneft and Gazprom Neft played its role in a

substantial revenue growth

New types of contracts include:

– Integrated pump-based solutions (i.e. pumping

stations for Transneft)

– Full-cycle projects (i.e. pumping stations in

Turkmenia)

– Project and design contracts for design of new

oilfields and pipelines

24

Blue-chip Customer Base

FY2010 Total revenue

RUB 23,070 mln

FY2009 Total revenue

RUB 14,772 mln

Revenue structure by clients, RUB mln

NK Dulisma1%

Salym Petroleum

2%

Surgutneftegaz3%

Lukoil1%

Orion Stroy4%

TNK-BP8%

Gazprom Neft4%

Transneft6%

Rosneft21%

Others50%

NK Dulisma1%

Salym Petroleum

1%Hors

Group1%

Surgutneftegaz1%

Lukoil2%

Orion Stroy5%

TNK-BP5%

Gazprom Neft8%

Transneft16%

Rosneft22%

Others38%

Comments Revenue by Clients*, 2009 vs 2010

Selected clients

Turkmenistan

+95%

+18%

http://www.lukoil.com/

511

231

2009 2015E

1,586

743303

489

1,011

311

1,103

3,340

2009 2015E

Water utilities

Thermal power generation

Nuclear power generation

Russian energy & utilities infrastructure investments (RUB bn)

Significant increase in capital spending in core end markets drives growth of all HMS‟ businesses

Comments

Infrastructure modernization and expansion

– Large portion of Russian infrastructure is outdated

and at or near end of useful life

– Economic growth driving demand for new

infrastructure

– Very large expected spending by public and

private sectors in energy generation, public utilities

and oil and gas industries

State development programs

– Large on-going projects in the public utilities and

electricity generation with ongoing impact until

2020-30

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

CAGR

’09-’15

21.7%

21.7%

16.1%

810

6161,226

285230

540

2,576

1,131

2009 2015E

Oil refining and

petrochemicals

Oil pipelines

Oil exploration

and extraction

CAGR

’09-’15

15.3%

19.0%

12.2%

Russian oil sector investments (RUB bn)

EPC market history and forecast3- HMS core segments (RUR bn)

79

224

2009 2015E

22

10

2009 2015E

Source: Frost & Sulliv an report 1 Includes pumps f or water injection, oil ref ining and petrochemicals, oil pipelines, energy generation (thermal and nuclear (excluding MCP)), water utilities pumps, household v ibration

pumps, as well as integrated solutions and af termarket 2 Includes pump stations, automated group metering units, associated gas processing and transport units 3 Includes oil f ield inf rastructure construction, oil and gas transportation, construction and engineering, research and design serv ices f or oil and gas industry (upstream)

Industry Fundamentals and Growth Potential

25

Source: Frost & Sulliv an report 2009 Source: Frost & Sulliv an report 2009

Russian pumps market history and forecast1 (RUB bn)

Russian modular equipment market history and forecast2 - HMS core segments (RUB bn)

CAGR 18.8% CAGR 14.0% CAGR 14.1%

26

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

North


► ► ► ►

►

► ► ► ►

►

►

► ►

Oil product storage

Oil refinery Main oil pipeline

Oil field

Filling station

► ►

Oil and gas sector

Filling station

Source: Frost & Sulliv an report, Transnef t website (www.transnef t.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

Prirazlomnoye

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 f ields

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)

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

New Milestone Projects Oil & Gas Production and Oil Transportation

Zapolyarnoye

27

South

> 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

Central Asia

Rapidly growing sales of modular equipment to oil

and gas sector in Kazakhstan

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 are to be

reconstructed

Oil refining development

http://www.transneft.ru/

28

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

North


Nuclear power generation

Reactor hall

Turbine hall

Feed pumps

Condensate pumps

Pumps for security systems

Pumps for lubrication systems

Pumps for auxiliary systems

TGC-13 (Enisei) Investment 2010-2015:

RUR 10 bn

TGC-9 Investment 2010-2015:

RUR 28 bn


RUR 18 bn

TGC-7 (Volga) Investment 2010-2015:

RUR 11 bn


RUR 16 bn


RUR 14 bn

TGC-3 (Mosenergo) Investment 2010-2015:

RUR 39 bn


RUR 8 bn TGC-12 (Kuzbas) Investment 2010-2015:

RUR 21 bn


RUR 26 bn

TGC-10 (Fortum) Investment 2010-2015:

RUR 47 bn


RUR 21 bn


RUR 28 bn


RUR 73 bn

Source: Frost & Sulliv an

Nuclear Power Plants HMS participation confirmed Projects under construction Planned projects

Leningradskaya-II

Kalininskaya

Rostovskaya

Novovoronezhskaya-II

Beloyarskaya

Kurskaya Smolenskaya

Kolskaya

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

New Milestone Projects Thermal and Nuclear Power Utilities

29

South

Rostovskaya

Number of power units to be

constructed or reconstructed

Additional generation

capacity, MW

Investments

2010-2015 (RUR 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

Summary of total investments in power generating capacity

Name Country No of power units /

Unit capacity (MW)

Investments

2010-2015 (RUR bn)

Belene NPP Bulgaria 1 / 1,000 128

Tianw an 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

Selected nuclear power plant projects abroad using Russian technology

30

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

North


Reuse of treated wastewater

Sewage treatment

Borehole water intake

Surface water intake

Water treatment

Water conditioning

Irrigation

Release of wastewater

►

►

► ► ►

► ► ► ► ►

► Water industry

Water supply to industrial enterprises

Urban water supply

►

Water industry

Kirov

Perm

Barnaul

Petrozavodsk

Vladimir

Rostov-on-Don

Azov

Kaluga

Tver

Orenburg

Omsk

Tyumen Krasnodar

393471

606724

844

1,011

311372295

2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E

Source: Frost & Sulliv an report, media sources 1 Figures hav e been taken f rom v arious media sources; they are not f inal and may change in the

f uture

2 The “Clean Water” program is a nationwide large inv estment plan aimed at improv ing drinking water quality .

Capex in water projects, RUR bn (2007–2015)

Source: Frost & Sulliv an report

Large-scale State Programmes Total Capex 2010-

2015 (RUR bn) Capex period

Federal Programme "Zhilische" (public

housing)

620 2011-2015

Regional programmes "Clean Water“2

(unconf irmed budget)

520 2011-2017

Water Strategy of Russian Federation until

2020 (excl. "Clean Water")

351 2009-2020

Reconstruction of Grozny utilities 105 2010-2011

St. Petersburg Water Utilities Dev elopment

Programme

103 2010-2025

JSC RKS JSC Evraziysky JSC Rosvodokanal

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

New Milestone Projects Water Utilities

31

Central Asia

Recently undertook turnkey construction of

pumping stations in Turkmenistan and Uzbekistan

Presence in water markets of Tajikistan and

Kyrgyzstan

Offices in Ashkhabad (Turkmenistan) and Tashkent

(Uzbekistan)

South

Moscow

Kaliningrad

St. Petersburg

Volgograd Kazan

N.Novgorod

Yaroslavl

Ekaterinburg

Sochi

Samara

FIFA World Cup 2018 Investment 2010-2018: RUR 1.6 trn1

Olympic Games in Sochi in 2014 Investment 2010-2014: RUR 930 bn1

Asia-Pacific Economic Cooperation

Summit in Vladivostok in 2012 Investment 2010-2012: RUR 660 bn1

Vladivostok

Export markets

Leading integrated water utilities

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

Significant upside from aftermarket

32


HMS supplies 87%

Other 13%

Total number of pumps: 4,500

Oil trunk pipeline pumps1

HMS supplies 98%

Other 2%

Total number of pumps: 1,044

Note: In red are highlighted the pump’s components that

suf f er the greatest degree of deterioration during operation

of the pump and which can be replaced in order to extend

the pump’s operation lif e

Source: Company data, Frost & Sulliv an

Installed base Key drivers for aftermarket services growth

Very large installed base requires repair and maintenance services

Large portion of installed base is outdated,

creating opportunity for upgrades as well as replacement

Energy represents 80% of operating cost for a typical pump

Trend for modernization of equipment to increase

energy efficiency

Most repair and maintenance historically largely in-house

HMS has contracts with companies including

– TNK-BP (full outsourcing of maintenance of

water injection pumps at the Samotlor field)

– Transneft

Exceptional installed

base

Energy efficiency

Outsourcing trend

Example of pump servicing

Source: Frost & Sulliv an, Company data 1 In Transnef t’s pipeline sy stem

The leading provider of flow control solutions in Russia

Comments

Source: Frost & Sulliv an report (f or 2009) Source: Frost & Sulliv an report (f or 2009)

HMS Other

Leading player in core business segments:

– Almost half of market share in core pump market segments

with no close local or international competitors

– Strong position in modular equipment

– Leading independent player in oil and gas field project

design

Leading market positions in core segments

Source: Frost & Sulliv an report (f or 2009) 1 HMS’ subsidiary GTNG – a leading independent Russian oil and gas R&D center

… and modular equipment Leading market share in pumps …

Leading independent player in oil and gas field project design

65%

59%

54%

41%

41%

35%

41%

46%

59%

59%

71%

73%

80%

41%

20%

27%

29%

59%

1.1

1.9

0.8

1.1

1.0

9.0

1.0

1.1

1.0

Total HM S' core segments

Submersible water well pumps


Oil pipeline pumps

Water utilities pumps

Thermal power generation pumps

Nuclear power generation pumps

Oil refining and petrochemical pumps

Household vibration pumps

56%

30%

7%

44%

70%

93%

35% 65%

3.2

2.2

4.6

10.0Total HM S' core

segments

Pump stations

Automated group

metering units

Associated gas

processing and

transport units

Market size

RUR bn HMS Other

Total market size:

RUR 19.1 bn

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

33

Market size

RUR bn

HMS1, 10%

Other, 31%

SurgutNIPIneft, 21%

Rosneft-NTC, 12%

UfaNIPIneft, 7% TomskNIPIneft, 7%

Giprovostokneft, 7%

NizhnevartovskNIPIneft, 5%

Advanced R&D Capabilities

Very strong in-house R&D and significant experience in

pump development

– 5 in-house R&D facilities in Russia and the CIS,

centralized research coordination

Unique testing facility (one of the largest in the former

Soviet Union and globally) for all types of large specialized

pumps for nuclear power plants and oil transportation

– Current facility allows to test pumps up to 8MW in

power; new facility for pumps up to 14MW under

construction

Deep integration with clients’ R&D

– HMS’ R&D works closely with clients’ R&D divisions in

developing pre-tender documentation and helps clients

adopt new design solutions and technical regulations

– Increases the likelihood of the use of HMS equipment

in projects

Recently acquired Giprotyumenneftegaz ( GTNG), leading

Russian R&D centre specializing in design of on-surface

(as opposed to sub-surface) facilities for oil and gas fields

– Designed over 200 oil and gas condensate fields in

Russia including many of the largest (e.g. Samotlor,

Mamontovskoye, Priobskoye)

Significant R&D resources for design of water utilities

projects (RVKP)

34

Pumps Project design

Selected Oil & Gas clients

Pre-tender project preparation

(up to 24 months)

Tender, pricing and contract negotiation

(1–3 months)

Design and production

(1–24 months)

Delivery and installation (1 month)

After market services

Pre-tender preparation/aftermarket support are crucial for establishing/maintaining

strong relationships with clients

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

http://www.lukoil.com/

Operational and Product Quality Excellence

Plants are certified in accordance with

ISO:9001:2008

Products are compliant with API 610 standard

Modern software systems for R&D and project

management

– SolidWorks, ANSYS CFX, Bentley,

Primavera

Equipment from well-established foreign producers

for critical manufacturing processes

– Skoda, Schiess, Doosan, Demag, Schenk,

Sodik, Ibarmia and other

HMS’ products include high-precision, safety-

critical equipment for hazardous facilities (nuclear

plants, refineries, pipelines)

HMS has a strong focus on operational excellence and manufactures top quality products

Submersible water well pumps HMS Grundfos

Model 3ЭЦВ6-10-110 SP17-11

Flow rate, m3/h 10 10

Head, m 110 110

Efficiency ratio, % 57.0-59.2 53.9-58.3

Model 3ЭЦВ6-25-100 SP30-12


Head, m 100 100

Efficiency ratio, % 59.8-62.1 57.4-61.7

Comparative analysis examples

Water utilities pumps HMS KSB

Model 1Д315-75 Omega 100-250A


Head, m 75 75

Efficiency ratio, % 83.0 82.6

Weight, kg 190 210

Source: The Russian Association of Pump Manufacturers

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

Skoda Ibarmia Schiess Demag

35

Strong Management Team

Key senior managers

HMS’ founders remain shareholders and continue to be actively involved in managing the business

Founders / Shareholders

The management team…

…is comprised of professionals with significant experience in

pump and oil and gas industries

…includes founders, who have led HMS since its inception

…has a strong commitment to the business

Anatoliy Nazarov

Head of Modular

Equipment

Industry experience:

More than 35 y ears

Years with HMS:

4 y ears

Kirill Molchanov

First Deputy CEO


17 y ears

Years with HMS:

17 y ears

Andrey Nasledy shev

Deputy CEO


11 y ears

Years with HMS:

6 y ears

Nikolay Yamburenko

Head of Industrial Pumps


32 y ears

Years with HMS:

7 y ears

Igor Tv erdokhleb

Head of R&D


24 y ears

Years with HMS:

6 y ears

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

Artem Molchanov

CEO


17 y ears

Years with HMS:

17 y ears

HMS Group shareholder structure


Free-float37.25%

V. Lukianenko24.00%

Other managers

21.42%

G. Tsoy17.33%

36

Number of new pumping stations for increasing capacity 21

To supply Komsomolsk and Khabarovsk refineries 9

To supply Primorsk refinery 4

No information at the present time 8

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

37 Source: Company data, Transneft

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

North

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 Okhotks

CHINA

Total number of pumping stations 41

22 21

A pumping station for ESPO-I pipeline

Case Study: ESPO-I Expansion and ESPO-II Contracts

Segment Products / Services Design and

manufacturing

Pumps Design, production and testing of

pumps

HMS and other

suppliers including

Siemens

EPC

Design of integrated pumping

solution

Overall project management

Procurement for supply of

engines, cooling sleeves, valves

and other equipment

Turn-key commissioning

HMS

Key contract highlights

HMS is supplying pump systems (pumps, motors, cooling

sleeves, valves and etc.) to Transneft for ESPO-I and

ESPO-II pipelines

HMS designed unique type of pumps for the project,

constructed a special pump testing facility

HMS prepared target specification for design of hardware

(engines, cooling sleeves, valves and etc.) for European

producers (Siemens, Voit and etc.) as well as coordinated

full cycle procurement

Key features of the project include:

– New approach for oil pumping: Variable motor

revolution, which saves energy

– Integrated approach for project management: HMS

coordinated procurement from multiple suppliers,

R&D process for supplementary equipment and

performed turnkey commissioning

– Construction of a special testing facility

– New approach to modeling: 3D design in ANSYS

CFX was used to model operation of an entire

pumping system

1. Trunk pump

2. Motor

3. Coupling

4. Oil coolers

9. Friction oil pipelines

10. Air cooling unit

11. Antifreeze feed pipes for oil coolers

12. Antifreeze feed pipes for motor coolers

13. Antifreeze air cooling unit

5. Adsorptive dryers

6. Air collectors

7. Compressors

8. Joints

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78


38

South

Zapolyarie – Pur-pe pipeline

39 Source: Company data, Transnef t

169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

North

Total length of pipeline to be constructed 488 km

Project figures

Capacity, mln tonnes per annum up to 45

Total length, km 488

Projected cost, RUB bn 120

Total length of inlet pipelines, km 1200

Implementation:

1st stage

2nd stage

3rd stage

Dec 2013

Dec 2014

Dec 2015

3rd stage

2nd stage

1st stage

Zapolyarie – Pur-pe pipeline

Zapolyarie

Pur-pe

Appendix II

40

Calculations 169.196.203

170.70.67

147.193.150

69.114.167

65.152.175

200.193.188

227.24.52

207.213.225

137.165.78

169.196.203

65.152.175

11,164


41

EBITDA is calculated as Operating profit/loss adjusted for Other income/expenses, Depreciation &

amortization, Provision for obsolete inventory, Provision for impairment of accounts receivable,

Unused vacation allowance, Excess of fair value of net assets acquired over the cost of acquisition

EBIT is calculated as Gross margin minus D&T and SG&A expenses

Total debt is calculated as Long-term borrowings plus Long-term financial lease liabilities plus Short-

term borrowings plus Short-term financial lease liabilities

Net debt is calculated as Long-term borrowings plus Long-term financial lease liabilities plus Short-

term borrowings plus Short-term financial lease liabilities minus Cash & cash equivalents

ROCE is calculated as EBIT divided average Debt plus Equity

Notes to the presentation about formulas used for some figures‟ calculations

Economy & Finance

HMS Group Annual Results 2010