control the flows ⁄ ⁄ ⁄ ⁄ ⁄ ⁄ ⁄ ⁄ ⁄ ⁄ annual report 2019 2019 52,196 52,196 2018 55,891 7% yoy 2017 59,679 2016 40,624 Order intake ––> Rub mn 2015 32,979 2019 44,693 44,693 2018 42,634 5% yoy 2017 39,067 2016 24,035 2015 about HMS Backlog ––> Rub mn 24,409 # 1 producer of pumps and oil gas equipment as well one of the leading compressor producers in Russia 2019 14,369 and the CIS 14,369 2018 13,163 2017 11,422 Business platform and core expertise are established 9% yoy /// contents and provide a strong base for future growth 2016 13,347 2015 Net debt ––> Rub mn 12,388 4 Overview Key industries: oil & gas, nuclear and thermal power 6 Who We Are generation, petrochemistry and wastewater industry 10 Chairman Statement 11 Ceo Statement 12 Investment Thesis 2019 24,321 14 Our History 24,321 2018 19,458 16 Our Strategy 18 HMS Business Model 25% yoy 2017 16,042 2016 16,336 21 HMS Markets & Macroeconomics 22 Macroeconomic Environment in 2019 2015 Total debt ––> Rub mn 15,884 24 Market Trends 28 HMS Performance In 2019 30 Financial & Operational Overview 38 2019 Calendar of Events 2019 4,824 42 HMS Key Projects, Development & Innovations 4,824 2018 6,621 48 Modernization 50 Corporate Social Responsibility 27% yoy 2017 6,839 2016 6,369 54 Corporate Governance 56 Board of Directors EBITDA ––> Rub mn 2015 7,446 60 Risk Management & Internal Control 66 HMS Global Depository Receipts 70 Information for Shareholders and Disclaimer 2019 51,413 72 Appendices 74 Vocabulary, Calculations and Formulas 51,413 2018 52,619 You can find more information on our website: 2017 44,422 2% yoy grouphms.com/shareholders_and_investors/ 2016 41,582 See our Online Report ar2019.grouphms.com 2015 Revenue ––> Rub mn 37,296 overview 6 Who We Are 10 Chairman Statement 11 Ceo Statement 12 Investment Thesis 14 Our History 16 Our Strategy 18 HMS Business Model – –> overview markets performance governance appendices 23.7% a 11.7% a n 9.8% a 6.8% n 2.6% Slan 2.2% Surguna who we are 2.0% KMPO 41.2% Others Revenue structure HMS Group is one of the largest privately-owned by client ––> % machine-building companies in Russia and the CIS. The company was established as a small The company specializes in production of industrial trading company in 1993. Today, HMS machinery based around pumps, compressors as well is the company with a sustainable place as oil & gas equipment, including state-of-the-art and in the market and loyal high-profile highly sophisticated solutions. HMS Group is the only customers, such as Gazprom, Rosneft, machine-building company from Russia listed on the NOVATEK, Transneft, Gazprom Neft, London Stock Exchange. Rosatom, LUKoil, BP, ENI, and others. A well-diversified HMS is a dynamic engineering company with successful 40% an a an client base includes practice in the design, installation, construction and 16% a tanan ~6,000 “blue-chip” clients, commissioning of complex oil and gas production and a supply 12% i.e. the largest oil & gas well-diversified client water facilities. It is a vertically integrated holding company 12 12% nries companies in Russia base with a modern corporate management system wherein the The company produces both manufacturing facilities 9% nan and the CIS. Our clients functions of the manufacturing companies’ shareholders and serial and/or standard models in Russia, CIS countries 8% Peta operate through that of its business administration are traditionally separated. (recurring business) and and Germany 4% tanan numerous contracts customized configurations in different subsidiaries, The parent holding company is HMS HYDRAULIC (large integrated projects). which take independent MACHINES & SYSTEMS GROUP PLC (the Republic of The execution of large projects purchasing decisions. ~14,000 Cyprus). It issued securities in the form of Global Depositary includes implementation of 6 Revenue structure A significant portion employees Receipts at the London Stock Exchange in February 2011. the crucial project’s work as Research & Development by industries ––> % of HMS’ revenue is well as large-scale projects’ centres, including one of generated by the oil The Group consists of 12 manufacturing facilities in Russia, turnkey execution, from project & gas industry, from CIS countries and Germany, plus 6 Research & Development the largest pump-testing and design to commissioning downstream to upstream. centres, including one of the largest pump-testing facilities and launching. Revenue from facilities in Europe in Europe, and employs 14 thousand people. recurring business contributes c. 75-80% on average. n HMS GROUP Industrial pumps 7% 5 6 36 3 n n Oil & gas equipment n a and projects na projects Compressors Construction –––>report 2019 annual 17 16 Headoffice & trade 1 2 company 11 73 75 74% 6% 7 8 10 2015 2016 2017 2018 2019 9 7 14 15 12 6 13 18 19 5 Revenue structure 4 by contract’s type ––> % 3 6/ 7 – –> overview markets performance governance appendices HMS Group, Russian and CIS pump market leader offers /// who we are convenient products solutions and services for clients from oil & gas, energy, water supply and utilities, chemical processing, industrial applications, etc. Our manufacturing, R&D, EPC and servicing capacities allow developing and delivering customer-oriented reliable and affordable products and services. industrial pumps This is the oldest business segment, responsible for the project and oil & gas design, engineering, manufacturing and supply of a diverse range of equipment pumps and pump-based integrated construction solutions to customers in the oil and projects and gas, power generation and compressors The fourth operating segment water utilities sectors in Russia, The oil & gas equipment business consists of only one facility, the CIS countries and across the segment manufactures, installs and The division is responsible for project Tomskgazstroy. It focuses on the globe. It also provides aftermarket commissions modular pumping and design, engineering, manufacture, main and infield pipelines and oil maintenance, repair services and stations, automated metering and supply of a diverse range of and gas-condensate fields, facilities other support for its products. equipment, and oil, gas and water compressors and compressor-based construction and overhaul. processing and preparation units, as solutions to customers in the oil and well as other equipment and systems, gas, metals and mining and other core that are primarily used for the industries in Russia. сore products and services extraction and transportation of oil. сore products and services ‒ Oil refineries ‒ Construction, reconstruction and ‒ Nuclear and Thermal power сore products and services overhaul of the linear objects, e.g. ‒ Water utilities сore products and services namely oil pipelines, gas pipelines, ‒ Water injection ‒ Oil & gas production product pipelines, water pipelines, ‒ Trunk pipelines ‒ Oil pumping stations and pump ‒ Oil & gas transportation condensate pipelines and power ‒ General industrial pumps stations for water injection ‒ Gas processing transmission lines ‒ Oil & gas and water processing ‒ Oil refineries units ‒ Oil & gas chemistry ‒ High-precision and automated ‒ Refrigeration applications 13% metering units for various industries 3% HMS GROUP ‒ Tanks, reservoirs and vessels ‒ Oil development equipment contribution in EBITDA margin 38% -1% consolidated revenue contribution in 35% –––>report 2019 annual consolidated revenue contribution in contribution in EBITDA 54% 3% 9% consolidated revenue -2% EBITDA margin EBITDA margin contribution in EBITDA EBITDA margin 25% contribution in 32% consolidated revenue 9% contribution in EBITDA contribution in EBITDA 8/ 9 – –> overview markets performance governance appendices chairman CEO statement statement The 2019 year was challenging for the company, facing The Memorandum on Strategic Partnership, signed with HMS Group is one of the leading producers of pumps, As a part of the import substitution program, the influence of several factors which affected its financial PAO NOVATEK in 2019, set the general principles of mutual compressors and oil & gas equipment in Russia and the CIS, HMS Group produced and delivered results. One of them was weak results of the oil & gas cooperation in the area of development of domestic and we intend to maintain our market share in the future. compressor units for the Yamal LNG project equipment business segment that were the main reason technological basis for LNG projects of PAO NOVATEK that (PAO NOVATEK). These units were developed of HMS’ revenue and EBITDA downswing. We believe will allow to equip LNG plants under construction with high- In 2019, HMS Group became one of the suppliers of gas by Kazankompressormash in sci-manufacturing that implemented business optimization and cost tech equipment made in Russia. transportation units for GAZPROM. Also, we started to tandem with NIITurbokompressor involving the use reduction demonstrated their effectiveness, given actively engage in LNG projects of PAO NOVATEK as one of the domestic technology of natural gas liquefaction that the oil & gas equipment business segment The fruitful cooperation of HMS Group and PAO NOVATEK of the suppliers of compressor-based equipment. We named Arctic Cascade and patented by NOVATEK. The had shifted from the losses towards a good in the field of LNG equipment production resulted in signing commercialized a new product line of double-entry pumps scientific novelty of the technology is the use of the level of profitability. a contract to manufacture 6 main compression units for a for water industry, and today we are involved in development ambient temperature in the Arctic climate for natural gas natural gas liquefaction for the Obsky LNG in March 2020. of a new product line of water overhang pumps. The liquefaction process. The experimental industrial line will We consider HMS’ entry into the domestic The contract requires the supply of three types of gas company continues to build a sizeable portfolio of orders for be implemented at the Yamal LNG project, and its capacity market of LNG equipment to be one of the compression units, developed by HMS’ specialists, and nuclear pumps.