Hms Hydraulic S Regulatory News (HMSG)

30 Oct 2012 10:00

HMS Hydraulic Machines & Systems Group plc

(the "Company", and together with its subsidiaries, the "HMS Group")

HMS GROUP Q3 2012 ORDER INTAKE

Moscow, Russia - HMS Group (LSE: HMSG), the leading pump manufacturer, provider of flow control solutions and engineering works for oil and gas fields, power generation and water utilities in Russia and the CIS, today issues the following statement regarding orders received during Q3 2012.

HIGHLIGHTS:

In Q3 2012, order intake under management accounts more than doubled, up 149% YoY and amounted to Rub 10.9 bn (USD 356 mn1) versus Rub 4.4 bn (USD 139 mn) in Q3 2011 driven by orders across all business segments, including newly established compressors business segment In the industrial pumps business segment, HMS signed a flagship contract of Rub USD 85 mn to provide a reconstruction of 3 water-pumping stations located in Turkmenistan In the newly established compressors business segment order flow grew 6.8 times driven by a turn-key contract worth Rub 0.9 bn for delivery of compressor station In 9M 2012, total order inflow amounted to Rub 29,294 mn (USD 931 mn) versus Rub 12,231 mn (USD 386 mn), up 2.4 times as compared to the same period of the previous year.

Order Intake (millions of Rub)		Q3 2012		Q3 2011		?
Business segments
Industrial pumps		4,411		1,358		+225%
Oil and Gas equipment		1,758		771		+128%
EPC, including		2,657		1,478		+80%
Construction		1,972		1,182		+67%
Project and design		685		296		+131%
Compressors		1,432		209		+585%
Others		598		545		+10%
Total		10,856		4,361		+149%

Overview by business segments

Industrial pumps

The industrial pumps business segment designs, engineers, manufactures and supplies a diverse range of pumps and pump-based integrated solutions to customers in the oil and gas, power generation and water utilities sectors in Russia, the CIS and internationally. The business segment's principal products include bare shaft pumps built to standard specifications, customized pumps and integrated solutions.

In Q3 2012, the order intake in the industrial pumps business segment grew by 225% YoY from Rub 1,358 mn to Rub 4,411 driven by orders across all types of pumps and pump-based solutions. Orders for pumps for water industry, oil transportation and oil refineries were among key drivers of growth. In Q3, HMS has signed a flagship Rub USD 85 mn contract to provide a reconstruction of 3 water-pumping stations located in Turkmenistan, a large number of contracts for oil transportation pumps. The rest part of the order flow was packed with a large number of mid-to-small size contracts.

Oil & gas equipment

The oil and gas equipment business segment manufactures, installs and commissions modular pumping stations, automated metering equipment, oil, gas and water processing and preparation units, tanks and vessels and other equipment and systems for use primarily in oil extraction and transportation. The segment's products are equipment packages and systems installed inside a self-contained, free-standing structure which can be transported on trailers and delivered to and installed on the customer's site as a modular but fully integrated part of the customer's technological process.

In Q3 2012, the order intake in the oil and gas equipment segment grew by 128% and amounted to Rub 1,758 mn versus Rub 771 mn in Q3 2011. Continued strong demand for modular equipment, automated group metering units, tanks and vessels were among the main drivers of the solid growth of the order flow. New orders were largely represented by the contracts with expected revenue less than Rub 150 mn per contract.

EPC (Engineering, procurement and construction)

The engineering, procurement and construction (EPC) business segment provides project, design and construction works as well as overall project management, including on a turn-key basis, for customers in the oil and gas upstream, oil and gas transportation and water utilities.

In Q3 2012, the order intake in the EPC business segment rose by 80% from Rub 2,657 mn to Rub 1,477 mn mainly driven by orders for both construction and project & design works. The orders for construction works grew by 67% to Rub 1,972 mn versus Rub 1,182 mn in Q3 2011, mainly driven by mid-size contracts with the expected revenue less than Rub 500 mn each. The inflow of orders for project and design works grew by 132% from Rub 296 mn in Q3 2011 to Rub 685 mn in Q3 2012.

Compressors

The compressors business segment designs, engineers, manufactures and supplies a diverse range of compressors and compressor-based solutions, including compressor units and compressor stations, to customers in the oil and gas, metals and mining and other basic industries in Russia. The business segment's principal products include customized compressors, series-produced compressors built to standard specifications, compressor-based integrated solutions.

The compressors business segment was established on July 01, 2012 due to consolidation of the acquired KazanKomrepressorMash (KKM) plant. In Q3 2012, the order intake in the compressors business segment amounted to Rub 1,432 bn mainly driven by a "turn-key" contract for delivery and installation of a compressor station worth Rub 0.9 bn. In Q3 2011, the Group signed several contracts for delivery of compressors, which were reflected in "Oil and gas equipment" business segment and amounted to 209 mn. Thus, In Q3 2012, as a result of KKM consolidation, growth of orders for compressors and compressor-based solutions grew 6.8 times YoY.

Other

Other orders for a wide range of services and non-core products and equipment were up 10% YoY from Rub 545 mn in Q3 2011 to Rub 598 mn in Q3 2012.

***

HMS Group is the leading pump manufacturer and provider of flow control solutions and related services to the oil and gas, nuclear and thermal power generation and water utilities sectors in Russia and the CIS. The HMS Group's products are mission-critical elements of projects across a diverse range of industries. It has participated in a number of large-scale infrastructure projects in Russia, including providing pumps and modular equipment to the Vankor oil field and pumping stations on recent trunk pipelines projects linking Russia's core oil producing areas to export ports on the Pacific Ocean and Baltic Sea. The Group reported revenues of RUB 14.9 billion, adjusted EBITDA of RUB 2.5 billion and profit of RUB 969 million for the 6 months ended June 30, 2012. The HMS Group's global depositary receipts ("GDRs") are listed under the symbol "HMSG" on the London Stock Exchange.

For further information, please contact:

Sergey Klinkov Head of IR Tel: +7 (495) 730-66-01, ext. 1302 klinkov@hms.ru

Nozima Karimova Head of Press Service Tel: +7 (495) 730-66-10 karimova@hms.ru

DISCLAIMER

THIS COMMUNICATION DOES NOT CONSTITUTE AN OFFER OF, OR THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR, GDRs OR OTHER SECURITIES TO ANY PERSON IN ANY JURISDICTION TO WHOM OR IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL AND, IN PARTICULAR, IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE RUSSIAN FEDERATION.

THIS ANNOUNCEMENT IS NOT AN OFFER FOR SALE OF ANY SECURITIES IN THE UNITED STATES. SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HMS GROUP HAS NOT REGISTERED AND DOES NOT INTEND TO REGISTER ANY PORTION OF ANY OFFERING IN THE UNITED STATES OR TO CONDUCT A PUBLIC OFFERING OF ANY SECURITIES IN THE UNITED STATES.

THIS COMMUNICATION IS ONLY BEING DISTRIBUTED TO AND IS DIRECTED ONLY AT (I) PERSONS WHO ARE OUTSIDE THE UNITED KINGDOM OR (II) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER") AND (III) HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHOM IT MAY LAWFULLY BE COMMUNICATED, FALLING WITHIN ARTICLE 49(2) OF THE ORDER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT ARE ONLY AVAILABLE TO, AND ANY INVITATION, OFFER OR AGREEMENT TO SUBSCRIBE, PURCHASE OR OTHERWISE ACQUIRE SUCH SECURITIES WILL BE ENGAGED IN ONLY WITH, RELEVANT PERSONS. ANY PERSON WHO IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS DOCUMENT OR ANY OF ITS CONTENTS.

1 Hereafter - 1USD = 31,4780 RUB (CBR rate as of October 29, 2012).

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