Company Presentation United Power Technology AG · 2. Financial Performance 2015 Growth especially in the domestic market in China and in other regions Source: Company information

Company Presentation United Power Technology AG

28 April 2016

1. United Power Profile

2. Financial Performance in 2015

Agenda

3. Update Strategy & Outlook

1. United Power Profile Leading Manufacturer of Engine-Driven Power Equipment in China

!  Core competence in engine technology

!  Wide product spectrum of 80 different generators and 27 different types of outdoor power equipment (0.5 KW to 15 KW)

!  Production facilities all based in Fuzhou, China

!  Highly vertically integrated, efficient and low cost operating model

!  High quality standards combined with very competitive pricing

!  Multi-channel distribution strategy and globally diversified customer base

!  ODM for international brands and retailers

!  Own brand in selected markets

!  Overseas markets accounting for approx. 70% of Group revenues, with Europe being the largest export market1

3

At a glance

1 Regional revenue split by end customer (not audited) as of December 31, 2015

Components

Output range 0.5 – 15 KW

Revenue Share1 <1%

Residential generators


Revenue Share1 43%

Commercial generators

Output range 5 – 15 KW

Revenue Share1 54%

Outdoor power equipment


Revenue Share1 3%

United Power product portfolio

1. United Power Profile Focus on residential and commercial generators

4 Source: Company information 1 Revenue split by product for 2015, based on consolidated segment information

Agenda


2. Financial Performance 2015


Commercial Generators 54%

Residential Generators 43%

Outdoor power equipments 3% Components

<1%


Increased revenues mainly due to currency effects

6

!  Revenue increase mainly attributable to strong currency effects

!  In terms of RMB, the Group’s revenue increased year-on-year by 1 per cent

!  In 2015 United Power recorded somewhat increased revenue in some of the new emerging markets and in the domestic market in China as well as in North America

€49.30 m (€42.66 m)

€3.50 m (€3.10 m)

€0.10 m (€0.50 m)

€60.90 m (€49.33 m)

Revenue by segment (€m) 2015 (2014)

€113.77 million (€95,59 million)

95.6 113.8

2014 2015

Revenue (€m)

+ 19.0%

Source: Company information Source: Company information Note: All figures are not including inter-company sales


Growth especially in the domestic market in China and in other regions

7 Source: Company information 1 Regional revenue split by end consumer 2015 and 2014 (not audited)

EUROPE

CHINA

OTHER REGIONS

NORTH AMERICA 16.0% 15.6%

2014 2015

34.2% 28.1%

2014 2015

25.7% 29.5%

2014 2015

24.1% 26.7%

2014 2015

Regional revenue split1

!  In 2015 we acquired 16 new customers, bringing our total number of customers to about 300 in more than 70 countries around the world


Profitability influenced mainly by RMB price adjustments

8

9.1 10.8

9.5% 9.5%

0,0%

10,0%

20,0%

30,0%

0,0

5,0

10,0

15,0

20,0

2014 2015

EBIT EBIT margin

EBIT (€m)

5.4 7.1

5.7% 6.2%

0,0%

10,0%

20,0%

30,0%

40,0%

0,0

5,0

10,0

15,0

2014 2015

Net profit Net profit margin

Net profit (€m)

+18.8%

+29.6%

Gross profit (€m)

16.4 17.1

17.1% 15.0%

0,0 5,0

10,0 15,0 20,0 25,0

2014 2015

Gross profit Gross profit margin

4.5%

Source: Company information

By branding (€m)


Balanced mix of all important distribution channels due to good access

9 Source: Company information Note: All figures are not including inter-company sales

By distribution channel (€m)

9.5 8.8

11.5 12.5

34.0 39.0

40.6

53.5

2014 2015

Wholesaler Special Dealer Retailer OEM

62.3 74.5

33.3

39.3

2014 2015

UP ODM

95.6

113.8

95.6

113.8

10 Source: Company information

Balance sheet (€m)

As of 31 December 2015

in € m! 31. Dec. 2015!

31. Dec. 2014!

Non-current assets 118.9 89.3

Current assets 46.0 72.1

Total Assets 164.9 161.3

Total equity 136.8 123.4

Non-current liabilites 1.8 1.8

Current liabilities 26.3 36.1

Total equity and liabilities 164.9 161.3

Strong equity ratio of around 83% 2. Financial Performance 2015

Net working capital (€m) % of revenues

7.7

9.6

2014 2015

24.7% 8.1%

8.4%

Capital expenditure (€m)1 % of revenues

11 Source: Company information 1 Includes prepaid lease payments

Cash flow development in 2015


Strong cash position utilized to finance lease prepayments for further land expansion

in € m! 2015! 2014!

Operating cash flow before working capital changes 17.7 16.0

Cash generated from operations before interest and taxes 13.3 20.8

Cash generated from operating activities 8.6 16.9

Cash flow from investing activities –32.3 –17.3

Cash flow from financing activities –10.6 8.5

Net Increase in cash and cash equivalents –34.2 8.1

Cash at beginning of year 50.2 38.8

Effect of exchange rate changes 3.8 3.3

Cash and bank balances at end of the period 19.8 50.2

18.0

33.1

2014 2015

18.8%

29.1%

5% 10%

6%

15% 64%

Management: 28

R&D: 57

Sales&Marketing: 38

Administration: 87

Production: 379


Stable number of employees despite the on-going consolidation process in the industry


Total employees 2014: 589

in % / number of employees

Split of employees by function

As of 31 December 2015

Total employees 2015: 586

Management: 27

R&D: 57

Sales&Marketing: 38

Adminitration: 85

Production: 379 65%

5% 10%

6%

15%

Agenda




!  Larger generators (including initial R&D into industrial generators)

!  Wider range of outdoor power equipment with larger engine sizes

!  New generation of inverter generators

!  R&D department worked on 13 new products in 2015 of which most have already completed the model phase and some have entered mass production

14

3. Growth Strategy & Outlook

Pursue Three-pronged Strategy as well as arising M&A opportunities

!  Focus on generators with higher output and larger engine sizes

!  Focus investment on new production lines for higher margin products including commercial and industrial generators

!  Continued penetration of important key markets

!  Build own or licensed brands in new markets and enhance their position in markets

!  Strengthen reputation of own brand

!  2015: !  16 new customers !  3 new countries added

to portfolio (Mongolia, Korea and Bolivia)

2. Broadening the range of engine-powered

products

3. Further geographic expansion and

penetration 4. Utilize M&A opportunities

1. Scaling up the size of products

!  Utilize M&A opportunities to arise from the on-going consolidation process in the industry to:

!  strengthen the brands

!  expand sales and distribution in key geographies

!  enhance technical capabilities

15

3. Growth Strategy & Outlook

New product innovations to support further growth

!  New 3 KW inverter generator aimed at the mid and high end market

!  The newly designed, user friendly high-end SX7150 generator with improved performance stability

!  12 KW diesel generator: one of our pioneering models for the market of larger generators

!  A new 10 KW ultra silent 2 cylinder diesel generator

!  The low cost VENSH type generator mainly aimed at the Russian market

!  New T Generator with Automatic Voltage Regulator (AVR) technology mainly aimed at the US market

!  A specially designed 2 inch Gasoline Chemical Pump mainly aimed at North American market.

!  A new 1 INCH CLEAN WATER PUMP mainly aimed at the North American market


3. Growth Strategy & Outlook Investments in land expansion to exploit future growth opportunities

Further land expansion in 2015

!  2015 UP invested in further land expansion of 80k sqm to take advantage of an opportunity to secure land for future Company growth

!  The rational behind this is that with the ongoing development of urbanization in China, the area where the current factory is located is developing rapidly from an industrial zone to an residential and commercial hub

Land located in a rapidly developing area in Fuzhou High-tech Industry Development Zone

Land expansion (80k sqm)

Location of the production plant

!  2015 UP has completed the phase three buildings and obtained official title deeds in 2015 which was the most important step towards future growth

!  Nevertheless we decided to postpone the purchase and installment of production lines for industrial generators in consideration of the deteriorated market environment

!  But our preparation for expansion will continue and our effort on new product research and development will not stop

17

Business Development 2016

!  China’s growth rate in 2016 is expected to be 6.5%. A decline of 0.4 percentage points compared to 2015

!  The Chinese generator market will undergo a continued consolidation process with periods of price competition. We believe that we will emerge as a stronger player with a reputation of quality and reliability as weaker players drop out

!  Other emerging economies as a group are expected to grow by 4.1% in 2016 (2015: 4.0%)

!  In the United States growth is expected to be 2.4% in 2016, representing a stable development compared to the prior year

!  Growth in the Eurozone is expected to be 1.5% and therefore a slight decline compared to 2015


3. Growth Strategy & Outlook Outlook

•  Is it possible to provide some business intelligence here? E.g. on the competition

18

United Power Guidance 2016

!  Generate higher revenues from our commercial generator segment, residential generator segment as well as outdoor power equipment segment compared to 2015

!  Exploit M&A opportunities that strengthen our brands, sales and distribution as well as our technical capabilities

Financial Figure prospects

!  The Company’s revenue is expected to grow by a low single-digit percentage in EUR terms

!  The gross profit margin is expected to slightly decrease between 1 and 2 percentage points

!  The EBIT margin is expected to remain stable compared to the previous fiscal year

!  Intention to resume and gradually increase dividend payments as soon as the Management and Supervisory Boards are of the view that the exceptionally challenging industry circumstances impacting on the company have subsided and the company has resumed on a path of profitable growth


3. Growth Strategy & Outlook Outlook

Company Presentation United Power Technology AG

28 April 2016

Documents

Company Presentation United Power Technology AG · 2. Financial Performance 2015 Growth especially in the domestic market in China and in other regions Source: Company information