15.02.2014

Statement by Mr. Artem Molchanov, CEO of HMS Hydraulic Machines & Systems Plc

On 12 February 2014, HMS Hydraulic Machines & Systems Plc (the “Company”) received in Cyprus an Order of the District Court of Nicosia (the “Order”). The Order was obtained on an ex parte basis by Konstantin Grigorishin, and certain other plaintiffs, against Vladimir Matveevich Lukyanenko, his son Vladimir Vladimirovich Lukyanenko, and twelve other defendants, including the Company, certain of its shareholders and directors, and BNY (Nominees) Limited.

Among other things, on its face the Order freezes property of Vladimir Matveevich Lukyanenko, Vladimir Vladimirovich Lukyanenko, and nine other defendants, including the Company, certain of its shareholders and directors, but excluding BNY (Nominees) Limited and two other defendants, for an amount up to EUR 400 million.

In this regard, I would like to make the following statement:

  • The Company’s management believes the Company is being dragged into an ongoing corporate conflict between the co-owners of Ukraine’s Sumy Frunze NPO – Mr Grigorishin and his long-time business partner Igor Kuida, on the one hand, and Vladimir Vladimirovich Lukyanenko (who is also a non-executive member of the board of directors of the Company and one of its major shareholders), on the other hand.
  • Recent reports in the Ukrainian, Cypriot and Russian media have contained misleading information in this regard. This PR campaign misleadingly suggests that there is a legal basis for certain claims and allegations against the Company by Mr. Grigorishin and his business partner Mr Kuida, when there is no such basis whatsoever.
  • The Company and its management have no involvement in the conflict between Mr. Grigorishin and Mr. Vladimir Vladimirovich Lukyanenko, and any suggestion to the contrary is simply false.
  • The Company’s management suspects that the real reason for the attempt to involve the Company in this “information war” and drag it into court proceedings was Mr. Grigorishin’s failure to obtain control over Kazankompressormash (“KKM”), a manufacturer of centrifugal and screw compressors in Russia. The Company won the bid for KKM fairly and squarely against the Energy Standard Group, which is controlled by Mr. Grigorishin.
  • The Company’s management is acting in compliance with law in the best interests of the Company and its shareholders. Mr. Vladimir Vladimirovich Lukyanenko is not the controlling shareholder of the Company. The continued nature of the above negative PR campaign and recently emerged court proceedings appears to the Company to represent, at best, unfair competition on the part of Mr. Grigorishin to discredit the Company and its management and damage the Company’s shareholder value.
  • The Company is prepared to take action to mitigate the adverse impact caused by what the Company believes to be an unscrupulous attempt by a competitor to undermine the Company’s shareholder value. The Company intends to contest the Order vigorously.
  • The Company is currently seeking advice from counsel on the precise implications of this Order and will make an appropriate announcement promptly as soon as these implications are clear.

***

HMS Group is the leading pump and compressor manufacturer, as well as 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. 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. HMS Group’s global depositary receipts (“GDRs”) are listed under the symbol “HMSG” on the London Stock Exchange.

For further information, please contact:

Vera Timoshenko
Head of Investor Relations
Tel: +7 (495) 730-66-01 x 1302
ir@hms.ru

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

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.