1. HMS Group Investor Newsletter August 5, 2011
HMS Group to Acquire Belorussian Pump Manufacturer
HMS Group to purchase 57% of Bobruisk Machine Building
Plant for USD 9.6 million
Location & Facilities description
Located in Bobruisk, the Republic of Belarus
1 production site with 78,000 m2 floor space
Significant park of machines and foundry equipment, complete
production cycle from foundry to machining and assembling
950 employees
Oil refining pump
Products portfolio
Pumps for oil refineries, including oil, petrochemicals and
liquefied petroleum gas transportation pumps
Pumps for pulp and paper industry, including those for transfer
of paper grade pulp and cellulose-fiber semi-products
Wastewater and cleanwater pumps
Pumps for slurries in metallurgy and mining processes
Spare parts
Pump for wood and paper pulp
Deal specifics
HMS Group to acquire 100% of newly issued shares equal to
57% of the Plant’s share capital for total cash consideration of
USD 9.6 million
Transaction is fully financed with available debt capacity
Invested funds will be used for the development of new
products line and purchase of relevant new equipment
Annualized 2011 EV/Sales multiple equals to 0.7x pre-money,
and annualized 2011 EV/EBITDA ratio equals to 5.6x pre- Pump for abrasive slurries
money (NAS data used)
Acquisition rationale
The plant has significant production capacities, allowing
substantial increase in its revenue
Broadening of HMS product portfolio with recognizable brands
and new types of products
HMS Group will enter the attractive “hot cycle” oil refining
pumps market segment and increase its market share in pumps Pump for pure water
for metallurgy and mining applications segment
Opportunity to create a production center of refining pumps,
including under API, and pumps for metallurgy and mining
applications
Potential growth of revenue and EBITDA margin of the
acquired company
The acquisition has attractive multiples and deal structure Pump for sewage and waste water
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2. HMS Group Investor Newsletter August 5, 2011
Key data
Bobruisk Machine Building Plant, Financial & Industrial highlights
2008 2009 2010 1H2011
Revenue, US$ mn 21.03 9.50 13.01 7.83
EBITDA, US$ mn 2.01 0.07 -0.03 1.05
EBITDA margin 10% 1% - 13%
Total debt, US$ mn - - 5.20 4.60
Cash and cash equivalents. US$ mn - - 0.25 0.19
Production site, m2 78,000
Source: Company data according to Belorussian National Accounting Standards
Note: Exchange rate BYR/USD used: 2010 ave = 2,981; 1H2011 ave = 3,439; 2010 end = 3,001; 1H2011 end = 4,946 (Source: Bloomberg)
HMS Group targets Bobruisk Machine Building Plant’s EBITDA margin to go up to 16-18%
and revenue to increase more than twofold, within few years
HMS Group shares performance in July 2011
7.60 9.00
7.40 8.00
7.00
7.20
6.00
7.00
5.00
6.80
4.00
6.60
3.00
volume, US$ mn
6.40
2.00
price, US$
6.20 1.00
6.00 0.00
1-Jul-11 7-Jul-11 13-Jul-11 19-Jul-11 25-Jul-11 29-Jul-11
HMS Group GDR trading volume, US$ mn HMS Group GDR price, US$
MICEX index rebased to 7 FTSE 100 index rebased to 7
Source: Bloomberg
1 month change +7%
1 month max price, US$ 6.50
1 month min price, US$ 7.50
1 month ave volume, US$ mn 1.47
HMS Group Key Details Credit Rating
Reuters: HMSGq.L Bloomberg: HMSG LI Standard & Poor’s BB- (Outlook stable) as of
GDR price as of August 4, 2011 US$ 6.80 16 June, 2011
52-Week Range US$ 6.30-8.45
Market capitalization, mn US$ 797 Contacts
Stock Exchange LSE Inna Kelekhsaeva, Deputy Head of Investor Relations
ISIN US40425X2099 Email: kelekhsaeva@hms.ru or ir@hms.ru
GDR : Share Ratio 1:1 Telephone: +7 (495) 730-6601
grouphms.com twitter HMSGroup
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3. HMS Group Investor Newsletter August 5, 2011
Disclaimer
The information contained herein has been prepared using information available to HMS Hydraulic
Machines & Systems Group Plc (“HMS Group” or “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.
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