Presentation for Investor Conference Call Wednesday 30 th September 2015

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Presentation for Investor Conference Call

Wednesday 30

th

_{September 2015}

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Facts & Figures



1897

Borets began business in Russia



#1

ESP global leader by number of units sold



#3

ESP global market position in

2014

sales



9 000

employees worldwide



3 500+

dedicated field personnel



500+

Clients served internationally



10 Manufacturing Facilities in

5 countries



12 000+

ESP manufactured annually



43 000

ESPs installed base



3 500+

Permanent Magnet Motor driven ESPs in

operation worldwide



24 Service & repair bases in

10 countries



Over 20 000

serviced wells

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Borets Company Position in ESP Global Market 2013



Borets Company had 15% of the global ESP market in 2014



Borets Company leads in the Russian ESP market with over 40%

Global ESP Market in 2014

Broken Down by Competitors, %

28% 26% 15% 10% 6% 4% 3% 8% BHI Centrilift SLB Reda Borets GE Novomet Al-Khoraef Alnas Others

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Borets Technologies and Solutions

Borets is the world’s only vertically integrated ESP provider, supplying complete ESP

systems

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Borets Manufacturing Facilities Worldwide

10 Manufacturing Facilities: Russia: Lebedyan, Lysva, Kurgan, Yuryev-Polsky, Stary Oskol;

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Service Capabilities



Borets is the world’s largest provider of ESP services



More than 20 000 serviced wells



24 Service Centers in 10 countries



Borets services and repairs all ESP manufacturers’

equipment (including competitors)



Capable of providing turnkey ESP solutions to clients



Maintained stock of equipment & components for repair

and equipment maintenance



Knowledgeable, fully-trained professionals to meet the

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24 Service Centers: Russia: Nizhnevartovsk, Muravlenko, Nefteyugansk, Neftekumsk, Krasnodar, Usinsk, Buzuluk; USA: Midland (Texas), Breckenridge (Texas), Oklahoma City (Oklahoma), Norman (Oklahoma), Kilgore (Texas); Canada: Medicine Hat, Estevan, Nisku; Egypt: Alexandria; Venezuela: Maracaibo; Brazil:

Carmopolis, Catu; Colombia: Bogota, Villavicencio, Neiva, Serbia: Zrenjanin; Congo: Pointe-Noire;

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ESP System Design and Configuration

VFD

Cable

MLE

Pump

Intake

Motor Seal

Motor

Downhole

Sensor

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Revenue breakdown

Revenues, $mm

Russia:

 Revenue decreased in US$ terms due to Ruble devaluation

 However strong performance is maintained in Ruble terms with increase of 18,5% in 1H 2015 compared to 1H 2014

International

 Revenue decrease in international segment was primarily due to decline of revenues in the USA and Venezuela

353.8 268,5 261,2 190,3 92,6 78,2 0 50 100 150 200 250 300 350 400 1H 2014 1H 2015

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Total real and nominal revenue, $mm

Real Revenue keeps on growing while nominal being

effected by exchange rate

268.5 353.8 436.7 150 200 250 300 350 400 450 500 1H 2014 1H 2015

Actual, actual rate Actual, rate 34,95 RUR/USD*

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Russia revenue breakdown

Russia revenue composition, RURbn

3.3 3.7 5.8 7.1 0 2 4 6 8 10 12 1H 2014 1H 2015 Service+rental Manufacturing 18.5% 9,1 10,8

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International Revenue analysis

International revenues, $mm

92.6 78.2 0 20 40 60 80 100 1H 2014 1H 2015 -15.6% Year

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International Sales Suffer due to US and Venezuela

14 International Revenues breakdown with i/g, $mm

34.4 _28.2 15.3 16.0 9.7 11.0 14.6 6.7 8.1 6.1 12.7 14.7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1H 2014 1H 2015

USA Colombia Egypt Venezuela Canada Other

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EBITDA and EBITDA margin

Consolidated EBITDA ($mm) and EBITDA margin (%)

85.0 69.9 24% 26% 0% 5% 10% 15% 20% 25% 30% 0 20 40 60 80 100 120 1H 2014 1H 2015

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Net debt to EBITDA ratio

Covenant test 1H 2015

Consolidated Net Leverage Ratio

mUSD

1H 2015

Net Debt

352,52

Total Debt

415,90

Cash

63,39

EBITDA

129,14

Ratio

2,73

Headroom

9,0%

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Net Assets and EBITDA of the Guarantors, $mm

 According to the bond issuance documentation after the publication of the annual or interim financial statements the Guarantors undergo Guarantors Test, which implies compliance with the following:  (i)aggregate consolidated net assets after intragroup eliminations of the Guarantors comprises 80 per

cent. or more of the consolidated net assets of the Group

Guarantors Test 2014 1H 2015 NA EBITDA NA EBITDA Borets Company 178,0 126,7 201,4 118,5 Lemaz 17,7 0,8 17,7 1,5 SK Borets 17,8 4,3 17,4 -0,3 Borets US 76,9 -8,8 72,7 -14,9 Borets Canada 13,1 -2,1 11,9 -4,0 ZTS-Kabel sro 12,4 1,4 11,1 1,9

Borets Int. Ltd. including Colombian branch 143,8 -3,0 147,4 1,6

Total Guarantors 459,7 119,3 _479,6 _104,3 Total Consolidated 132,7 144,2 _150,3 _129,1 % of Consolidated Accounts _346% _83% _319% _81%

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18 1H 2014,

$mm

1H 2015,

$mm

Product sales

$mm

228,6

177,0

Contribution

65%

66%

Sale of services

$mm

125,2

91,6

Contribution

35%

34%

Total sales

$mm

353,8

268,6

1H 2014 $353,8 mm - 24,1%

Income Statement (1/5)

$268,6 mm 1H 2015

1. Sales Revenues

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2. Gross Profit

1H 2014 1H 2015 $76,8 mm - 27,2% Margin: 29,8% Margin: 28,6% Gross Profit

Income Statement (2/5)

$105,5 mm

1H 2015

$mm

Δ1H 2014

%

COGS

191,7

(22,8)%

Gross Profit

76,8

(27,2)%

Gross Profit margin

_28,6%

_(4,1)%

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3. Operating Profit

1H 2015

$mm

Δ1H 2014

%

SG&A and other

operating expenses

_53,8

_(12,7)%

Operating Profit

_23,0

_(47,5)%

1H 2014 1H 2015 $23,0 mm Margin: 12,4% Margin: 8,6% Operating Profit -47,5%

Income Statement (3/5)

$43,9 mm

20

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4. Profit before income tax



Profit before income tax declined

by 29,9% compaired to 1H 2014



PBT Margin fell from 9,7% to

8,9%

5. Net Profit



Net Profit decreased by 34,0%



Net Profit Margin fell from 7,4% to

6,4%

$17,3 mm -34,0% Net Profit

Income Statement (4/5)

$26,2 mm 1H 2014 1H 2015 $23,9 mm -29,9% Profit before tax

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$ mm

1H 2014

1H 2015

Purchase of PPE

10,6

8,6

Rental Capex

34,5

7,5

R&D

3,9

3,0

Net Capex

49,0

19,1

Divestments

0,4

0,7

Total Capex

49,4

19,8

22

Income Statement (5/5)

Capex calculation, $mm

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1.EBITDA 1H 2014 vs. 1H 2015



EBITDA $69,9mm



Down 17,8%



EBITDA margin increased from

24% to 26%

1H 2014 1H 2015 $ 85,0 mm $69,9 mm -17,8%

EBITDA (1/2)

Margin

24.0%

26.1%

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2. EBITDA Reconciliation

1H 2014

1H 2015

Net Profit

_26,2

_17,3

Adjustments for:

• Income Tax

_8,0

_6,6

• Interest Expense (net)

_16,8

_15,8

• Service Agreement

_7,5

_7,7

• D&A

_26,5

_22,5

EBITDA

_85,0

_69,9

EBITDA (2/2)

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1. Cash



Cash up 3,1% compared to 1H 2014



Cash Balance Ratio*

1H 2014: 245 days

1H 2015: 272 days

Δ 10,8% up

1H 2014 1H 2015 $63,4 mm 3,1%

Balance Sheet (1/6)

$61,5 mm

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Balance Sheet (2/6)

26 Cash breakdown by region*

Region Currency Amount in currency Exchange rate to US$ 1H 2015 mm$ Russia RUR'm 1 076,0 55,52 19,4 Russia USD'm 20,3 1,00 20,3 Russia EUR'm 0,5 0,90 0,5 Russia KZT'm 5,2 187,12 0,0 Total 40,2 International+Corporate USD'm 10,3 1,00 10,3 International+Corporate CAD'm 0,8 1,23 0,6 International+Corporate BSF'm 80,7 6,30 12,8 International+Corporate BRL'm 3,0 3,10 1,0 International+Corporate RMB'm 1,1 5,54 0,2 International+Corporate RSD'm 67,7 105,76 0,6 International+Corporate EGP'm 4,7 7,62 0,6 International+Corporate COP'm 723,3 2 585,1 0,3 International+Corporate GBP'm 0,1 0,64 0,2 Total 26,7 Grand Total 66,9

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Balance Sheet (3/6)

Cash breakdown by banks and by segments (mm$)*

12.8 18.5 5.2 16.0 3.4 6.1 1.2 3.1 Banac Mercantil AlefBank deposit AlefBank Nordea deposit HSBC BMG JPMorgan deposit Hypo Alfe-Adria-Bank Other 40.2 26.7 Russia International+Corporate

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2. Trade & Other Receivables

1H 2014

$mm

1H 2015

$mm

Trade Receivables

_160,2

_142,1

Days Receivable*

₈₃

₉₇

Δ Days Receivable (%)

_{16,8 (%)}

1H 2014 1H 2015 $142,1mm - 11,3%

Balance Sheet (4/6)

*Total Receivables ÷ (Sales Revenues/365/2)

28

$160,2mm

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3. Inventories

1H 2014

$mm

1H 2015

$mm

Inventories:

Total (net)

180,5

150,0

Days Inventory*:

147

143 Δ Days Inventory (%)

(2,7)%

1H 2014 1H 2015 $150,0mm $180,5mm - 16,9%

Balance Sheet (5/6)

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Working capital analysis

Consolidated working capital, $mm

180.5 150.0 160.2 142.1 103.1 88.9 237.6 203.1 123 138 0 20 40 60 80 100 120 140 0 50 100 150 200 250 300 1H 2014 1H 2015

Inventory Accounts receivables Accounts payables Net working capital Days working capital

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237,7

174,2

31/12/13 Additions Disposals Translation Depreciation _{& other} 31/12/14

5. Property, Plant & Equipment

($mm)

95,1 10,7 111,5 36,4 Non-current Assets 2014 316,2 $mm 315,0 $mm

Balance Sheet (6/6)

178,8 30/06/15 Additions Disposals Translation Depreciation

& other 2,1 1,9 28,0 1H 2015 36,6

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Four largest balances of accounts

receivable of the major counterparties :

1H 2015

$mm

1H 2015

% of total

AR

Days Sales

Outstanding*

Rosneft Group

_45,0

_32%

₉₀

Petrόleos de Venezuela S.A. Group

14,5

10%

394 Lukoil

7,4

5%

60 ECOPETROL S.A.

5,3

4%

63 Total

72,2

51%

Risk Management (1/3)

32

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2. Currency Exchange Risk Analysis

Contractual currency analysis of monetary assets and liabilities is as follows:

If the USD strengthened against the RUR, Euro and other currencies by 10% then this would have the following impact:

If the USD weakened against the RUR, Euro and other currencies by 10% then this would have the equal but opposite effect on the amounts shown above being the other variables remain constant.

Monetary assets (30 June 2015 $mm) USD RUR EUR Other Total

Trade and other receivables 49,3 86,9 0,1 5,8 142,1

Cash and cash equivalents 26,9 19,4 0,6 16,5 63,4

Total monetary assets 76,2 106,3 0,6 22,3 205,4

Monetary liabilities (30 June 2015 $mm) USD RUR EUR Other Total

Loans and borrowings (415,9) – – – (415,9)

Trade and other payables (27,1) (57,8) (1,6) (2,5) (88,9) Total monetary liabilities (443,0) (57,8) (1,6) (2,5) (504,8)

Net position (366,8) 48,5 (0,9) 19,8 (299,4) Foreign currency 1H 2015 ($mm) RUR _(4,9) EUR (0,1) Other (2,0)

Risk Management (2/3)

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3. Interest Rate Risk Analysis

At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:

Fixed rate instruments

2014

($mm)

1H 2015

($mm)

Term deposits

24,6

18,8

Loans received

(416,9)

(415,9)

Total

(392,3)

(397,1)

Variable rate instruments

Loans received

-

-Total

-

-34

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Cash Flow analysis (1/2)

Consolidated Cash Flows, $mm

Funds from operations (FFO) = Operating Cash Flow before adjustment to changes in working capital (FFO = OCF + WC)

Operating Cash Flow = Cash Flow from operating activities with rental capex reclassified from WC to capex (OCF = CFO + Rental Capex) Free Cash Flow (FCF) = Operating Cash Flow minus Investing Cash Flow (FCF = OCF– ICF)

55.7 49.0 -9,3 0.0 -23.0 -10.8 -30 -20 -10 0 10 20 30 40 50 60 1H 2014 1H 2015 USD'm

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Cash Flow analysis (2/2)

Cash generation

$mm 1H 2014 1H 2015 FFO _55,7 _49,0 WC _-65,0 _-49,0 Operating CF _-9,2 _0,0

Investing cash flow _-13,7 _-10,8

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Liquidity Risk Analysis

$ mm 1H 2014 1H 2015 Sources _143,1 _124,5 Beginning cash _87,4 _75,5 FFO _55,7 _49,0 Uses _-81,0 _-62,0 Net Capex _-13,7 _-10,8 WC _-65,0 _-49,0 Debt repayment _-2,3 _-2,2 Sources/Uses Ratio _1,8 _2,0