HMS Group Investor Newsletter                                                  August 5, 2011HMS Group to Acquire Beloruss...
HMS Group Investor Newsletter                                                                                             ...
HMS Group Investor Newsletter                                                           August 5, 2011DisclaimerThe inform...
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HMS Group Investor Newsletter Bobruisk plant M&A


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HMS Group Investor Newsletter about Bobruisk Machine Building Plant acquisition
5 August 2011

Published in: Investor Relations, Business
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HMS Group Investor Newsletter Bobruisk plant M&A

  1. 1. HMS Group Investor Newsletter August 5, 2011HMS Group to Acquire Belorussian Pump ManufacturerHMS Group to purchase 57% of Bobruisk Machine BuildingPlant for USD 9.6 millionLocation & 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 pumpProducts 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 pulpDeal 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 1
  2. 2. HMS Group Investor Newsletter August 5, 2011Key dataBobruisk 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 yearsHMS 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: Bloomberg1 month change +7%1 month max price, US$ 6.501 month min price, US$ 7.501 month ave volume, US$ mn 1.47HMS Group Key Details Credit RatingReuters: HMSGq.L Bloomberg: HMSG LI Standard & Poor’s BB- (Outlook stable) as ofGDR price as of August 4, 2011 US$ 6.80 16 June, 201152-Week Range US$ 6.30-8.45Market capitalization, mn US$ 797 ContactsStock Exchange LSE Inna Kelekhsaeva, Deputy Head of Investor RelationsISIN US40425X2099 Email: or ir@hms.ruGDR : Share Ratio 1:1 Telephone: +7 (495) twitter HMSGroup 2
  3. 3. HMS Group Investor Newsletter August 5, 2011DisclaimerThe information contained herein has been prepared using information available to HMS HydraulicMachines & Systems Group Plc (“HMS Group” or “HMS” or “Group” or “Company”) at the timeof preparation of the presentation. External or other factors may have impacted on the businessof HMS Group and the content of this presentation, since its preparation. In addition all relevantinformation about HMS Group may not be included in this presentation. No representation orwarranty, expressed or implied, is made as to the accuracy, completeness or reliability of theinformation.Any forward looking information herein has been prepared on the basis of a number ofassumptions which may prove to be incorrect. Forward looking statements, by the nature, involverisk and uncertainty and HMS Group cautions that actual results may differ materially from thoseexpressed or implied in such statements. Reference should be made to the most recent AnnualReport for a description of the major risk factors. This presentation should not be relied upon as arecommendation or forecast by HMS Group, which does not undertake an obligation to releaseany revision to these statements.This presentation does not constitute or form part of any advertisement of securities, any offer orinvitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares inHMS Group, nor shall it or any part of it nor the fact of its presentation or distribution form thebasis of, or be relied on in connection with, any contract or investment decision. 3