Interim report 9-months 2011 | United Power Technology AG | 1 · develops and produces its products...

Interim report 9-months 2011 | United Power Technology AG | 1

Interim report 9-months 2011 | United Power Technology AG | 2

United Power Technology AG KEY FINANCIALS

9 months

2010 (“as if”)2

9 months 2011

(Consolidated AG-level)

+/- %

Revenues Mio. € 62.47 77.00 23.3 Gross profit Mio. € 15.5 17.71 14.3 Gross profit margin % 24.8% 23.0% -1.8PP EBIT Mio. € 12.55 11.38 -9.3

Adjusted EBIT* Mio. € 13.11 13.73 4.7 Adjusted EBIT margin* % 21.0% 17.8% -2.2PP

Profit for the period Mio. € 10.73 9.43 -12.2 Adjusted profit for the period* Mio. € 11.29 11.77 4.3 Adjusted profit for the period margin* % 18.1% 15.3% -2.8PP

Earnings per share1 € 1.07 0.86 -19.8 Adjusted Earnings per share1* € 1.13 1.08 -4.4

*adjusted for non-recurring IPO expenses 1 EPS for 9 months 2010 is based on 10M shares, for 9 months 2011 it is based on the weighted average of shares (10.94M shares) 2 The “as if” 9 months 2010 figures are substantially identical with the United Power Hong Kong consolidated financial statement as United Technology AG was only formed in April 2010 and during 9 months 2010 incurred negligible expenses (EUR 5,264)

Interim report 9 months 2011 | United Power Technology AG | 3

Content

4 Letter to Shareholder 5 The Share

6 Product Portfolio 8 Interim Group Management Report

22 Interim Consolidated Financial Statements 41 Further information

COMPANY PROFILE

United Power Technology Group is a leading manufacturer of engine-driven power equipment in China. We design, develop, manufacture and sell an extensive range of generators, outdoor power equipment and components such as engines. Our major products comprise residential as well as commercial generators, which are currently delivered to more than 45 countries in the world.


DEAR FELLOW SHAREHOLDERS

After a successful first half 2011, United Power Technology continued its growth in the third quarter of this year. Over the first 9 months 2011 we achieved revenues of EUR 77.0 million, an increase of 23.3% compared to the corresponding period last year. Our adjusted EBIT increased by 4.7% to EUR 13.7 million. Our performance is the result of continous efforts and investments in our growth strategy. We are pleased to have reached our goal to increase production capacity to one million units per year in October, which was earlier than expected. This strategic milestone is important for our future growth and represents an increase in production capacity by more than 50% since the beginning of 2011. Altogether we currently have 22 production lines in operation. This makes us optimistic that we will continue to capture market share and growth within our industry, especially in the segment of commercial generators. This is in line with our strategy to move up into larger generators. United Power Technology is constantly widening its international customer base. In August we announced successful negotiations with new suppliers for residential and commercial generators. We signed contracts with retailers in the UK, France and the US, a specialized dealer in Nepal, wholesalers in Australia and Germany. The high quality of our generators in combination with an affordable price was the basis of our successful marketing and client wins. We will further strengthen our market presence especially in our important domestic home markets and new markets. Our European sales hub in Lille, France, which will play an important role in further strengthening our European sales, has been in operation since 1 September 2011 and is now officially registered as our French subsidiary. After 9 months we are on track for further profitable growth. The situation in our key commodity markets is easing and this should have a positive effect on our business. On the other hand, we are still facing an unstable global economic environment particularly in Europe which is our largest export market and currency appreciation as well as inflation in our domestic markets. The continued uncertain economic environment also affects our business. However, we continue to aim to clear the EUR100 million revenue level for the full financial year 2011 assuming that the EUR/RMB exchange rate does not materially change for the rest of the year. We also reaffirm an EBIT margin of about 15% for the full year 2011 (which is about 17% adjusted for non-recurring IPO costs) although given the uncertain environment the downside risk has increased somewhat. I want to thank our investors for their trust in our stock. We will proceed with our efforts for continuous and transparent Investor Relations to increase your shareholder value.

Frankfurt, November 17, 2011

Xu WU Chaiman of the Management Board


The Share Development of the finanicial markets In the third quarter 2011 the financial markets still faced a high pressure due to the continuing debt crisis in Europe. Especially the dramatic development in connection with Greece but also the unstable situation in the Italian economy worried the markets. In the international context the weak economic data in the US increased downward pressure on the stock markets. The SDAX lost 1,156 points in the third quarter and closed at 4,311 as of September 30, 2011.

Development of United Power shares United Power Technology AG’s share price experienced downward pressure in July and the beginning of August. The share price dropped from EUR 7.88 to a low of EUR 3.80. During the second half of August and September the share price recovered and closed at EUR 4.99 as of September 30, 2011. Since the end of the reporting period the share price increased to a new high of EUR 5.45 as of October 31, 2011. SHARE KEY FIGURES as of September 30, 2011 Market Capitalisation (million €) 61.38 Share price high (€) 8.50 Share price low (€) 3.80 Share closing price (€) 4.99 Ajusted Earings per share (€) 1.08 SHARE PERFORMANCE Q3 2011 | in Percent

Transparent Investor Relations The Company puts great efforts into continuously and transparently communicating to its shareholders and build trust in the United Power Technology share. United Power is committed to active investor communications and maintaining accessibility to its shareholders and interested potential investors. The company will be a regular participant in investor conferences e.g. DVFA Small Cap Conference (SCC), Frankfurt or Deutsche Börse German Equity Forum, Frankfurt, and regularly carry out investor road shows. In the context of the Deutsche Börse German Equity Forum at the end of November, United Power Technology will meet with investors. KEY FACTS OF THE SHARE as of September 30, 2011 First trading day 10 June 2011 Market segment / Stock exchange

Regulated Market (Prime Standard)/ Frankfurt

Stock Exchange Shares issued 12,300,000 ISIN DE000A1EMAK2 WKN A1EMAK Ticker UP7 Reuters UP7G.DE

SHAREHOLDER STRUCTURE As of September 30, 2011


PRODUCT PORTFOLIOWe are focusing on generators for diverse requirements in commercial and consumer applications. Our products offer a compact, handy and environmentally friendly design and meet the EPA and CARB emission standards

Commercial GeneratorsPower output of 5 to 15 KW

Residential GeneratorsPower output between 0.5 to <5KW

Outdoor Power EquipmentIncludes a broad range of water pumps for a variety of applications like de-watering or construction, as well as two pressure washers

ComponentsA variety of components such as engines, parts like fuel tanks or rotators and others complete our product offering

Industrial EquipmentLandscaping Machinery EnginesParts

The new 10KW high power gasoline generator

GG10000

The DG3600 Diesel Generator

The new 3.2KW digital inverter generator

The GG3400 Gasoline Generator

GTP100A Gasoline Water Pump

GPW2700 Gasoline Pressure Washer

UP2V78 V-twin Gasoline Engine


Interim Management Report 9 months 2011


Interim Management Report GROUP PROFILE

United Power Technology Group designs, develops, manufactures and sells an extensive range of engine-driven power equipment, including generators, outdoor power equipment and components such as engines. Our major products comprise residential as well as commercial generators, which are currently delivered to our customers in more than 45 countries around the world. Our main markets are the domestic market (China) and overseas markets, in particular North America and Europe. In specific markets such as China, Canada, Africa (Nigeria, South Africa), Malaysia, Europe (Italy, Spain) or Russia we sell our own brand products. In the other markets our products are usually developed and manufactured by United Power and branded by third parties. United Power is a leading Original Design Manufacturer (ODM) which develops and produces its products for leading Original Equipment Manufacturers (OEMs), wholesellers and retailers such as Metro, Einhell, B&Q and Hornbach. United Power Technology AG is a stock corporation under German law. The company is registered with the Commercial Register of Frankfurt/Main, Germany under HRB 88245. The company is listed on the Prime Standard of the Frankfurt Stock Exchange since 10 June 2011. United Power Technology AG is the ultimate holding company of United Power Technology Group. The intermediate holding company United Power Equipment Co., Ltd. (“UP HK-Holding”) is located in Hong Kong. The operating companies, United Power Equipment Co., Ltd. (“UPEC”), Fujian United Power Equipment Co., Ltd. (“FUPEC”), Sealand Machinery Co., Ltd. (“SMC”), Fujian Di Sheng Wan Kai Machinery Co., Ltd. (“DWC”), Shanghai Genmaster International Trading Co., Ltd. (“Genmaster Shanghai”) and United Power France SASU are located in Fuzhou, Shanghai and Lille, France. All companies are subsidiaries and are included in the consolidated financial statements of the Group.


ECONOMIC & BUSINESS ENVIRONMENT

ECONOMIC ENVIRONMENT

Currently, our main markets are Europe, China and North America. However, we have potential customers all around the world and are continuously seeking to evaluate and penetrate new markets, particularly other emerging markets. Therefore, the global economic outlook is relevant for the demand of our products. Global economic expansion continues to be unbalanced with robust but declining growth and inflationary tendencies in emerging and developing economies but generally weaker growth in the advanced economies. Overall, growth of real GDP at an annual rate of 3.3% for 2011 and 3.6% for 2012 is expected by World Bank. However there has been recent increased signs of weakness in both Europe as well as the US economy with less than expected growth. Also, the continuing debt and fiscal challenges in both the US and the EU have meant greater overall economic uncertainty which on the one hand translates into weakness of commodity prices and on the other hand impacts on consumer confidence. Due to the tightening policy of the European Central Bank earlier this year and contractionary effects of fiscal austerity programs economic growth slowed down in the major European economies and in smaller periphery ecomomies. The United States economy is still weak and the recovery is generally expected to be slow and volatile. In China, growth has slowed down in the third quarter amidst the global turbulence and GDP grew by 9.1% – a decelerating trend from 9.7% in the Q1 2011 and 9.5% in Q2 2011. In September 2011 China recorded a monthly trade surplus of USD 14.5 billion. Import growth slowed to 20.9% and export growth slowed to 17.1%. After being relatively stable in 2009 and for most part of 2010, our local currency the RMB has been steady appreciating against the USD throughout the year and has remained volatile against the EURO. While overall economic sentiment and recent growth figures have deteriorated particularly in the developed markets, we remain confident about our growth and earnings prospects for the following reasons:

- We are growing from a relatively low base and continue to be able to capture market share both in our existing as well as new markets

- We continue to capture growth opportunities in our domestic market China and in other developing and emerging markets

- The recent concerns about global economic growth have also led to a softening of commodity prices, which should alleviate pressure on our cost side

INDUSTRY ENVIRONMENT

Global demand for our products is expected to grow at an average annual rate of 7.5% over the next 5 years based on a market study by US market research firm “Global Industry Analysts” of July 2010. The demand for our products is driven by a number of factors including general economic growth, changing consumer lifestyles and the accompanying demand for mobile and reliable sources of electricity and the general increasing affordability and visibility of generators as they are increasingly sold directly to consumers through retail outlets. In addition, there are increasing supply uncertainities and disruptions due to aging grids (particularly in North America), failing grids due to natural disasters and underdeveloped grids particularly in emerging markets. In addition, we expect that with the recent discussions surrounding nuclear power the supply uncertainties are likely to increase both in developed as well as developing markets. Many developed countries such as North America and Europe have an aging grid system. According to the North American Electrical Reliability Council, or NERC, 30% to 50% of the transmission and distribution network in the United States is 40 to 50 years old. Thus there is an increasing demand for generators for backup power in residential, commercial and industrial applications.


In emerging markets such as Brazil, Russia, India and China, the power infrastructure is generally not as developed as in developed markets, and the majority of generators sold in these markets is designed for use in extended power outages or as substitute of utility power. In developed markets such as the United States, generators are primarily sold for emergency standby purposes as electrical generation, transmission and distribution in these markets is generally more mature. In addition, diesel generators represent a more significant percentage of the market in many international markets than in the United States, providing an opportunity for increased revenue of gaseous and Bi-Fuel™ generators for certain applications in areas with existing natural gas infrastructure. Our performance is driven by the demand for reliable back-up power solutions by our customer base. This demand is influenced by several important trends affecting our industry and our company’s positioning. These factors include:

- Cost leadership and increasing penetration opportunities We are a cost leader in the industry and we believe that by expanding our distribution network, continuing to develop our product line, and targeting our marketing efforts, we can continue to build awareness and increase penetration for our standby generators.

- Effect of large scale power disruptions. Power disruptions are an important driver of consumer awareness and have historically influenced demand for generators. Disruptions of the power grid due to aging and/or natural disasters increase product awareness drive consumer demand for standby generator.

- Impact of residential investment cycle. The market for residential generators is affected by the residential investment cycle and overall consumer sentiment. When homeowners are confident of their household income or net worth, they are more likely to invest in their home. These trends can have a material impact on demand for residential generators.

- Impact of business capital investment cycle. The market for commercial and industrial generators is affected by the capital investment cycle and overall non-residential construction and durable goods spending. These trends can have a material impact on demand for industrial and commercial generators. However, the capital investment cycle may differ for the various industrial and commercial end markets (industrial, telecommunications, distribution, retail, health care facilities and municipal infrastructure, among others).


REVENUES AND EARNINGS POSITION

The table below shows the consolidated income statement for 9 months 2011 compared to the “as if” income statement for 9 months 2010. As United Power Technology AG was formed in April 2010 and the United Power’s operating business injected in October 2010, the “as if” income statement combines the United Power Hong Kong consolidated income statement with the income statement of United Technology AG for the period from its formation to 30 September 2010. The “as if” 9 months 2010 figures are substantially identical with the United Power Hong Kong consolidated financial statement as United Technology AG was only formed in April 2010 and during 9 months 2010 incurred negligible expenses (EUR 5,264).

United Power AG 9 months 2010

(“as if”)


(Consolidated)

+/- %

In EUR million

Revenue 62.47 77.00 23.3

Cost of sales 46.97 59.29 26.2

Gross profit 15.50 17.71 14.3

Other operating income 0.43 0.68 58.1

Distribution and selling expenses 0.83 0.90 8.5

Administrative expenses 1.50 2.20 46.8

Research and development expenses 0.21 0.76 263

Other expenses 0.83 3.07 270

thereof as a result of the IPO ** 0.56 2.34 318

Profit from operations (EBIT) 12.55 11.38 -9.3

Finance costs 0.18 0.15 -15.1

Profit before tax 12.38 11.23 -9.2

Income tax expense 1.64 1.81 9.8

Profit for the period 10.73 9.43 -12.2

Earnings per share* 1.07 0.86 -19.8

Adjusted1 EBIT 13.11 13.73 4.7

Adjusted1 profit for the period 11.29 11.77 4.3

Adjusted1 Earnings per share* 1.13 1.08 -4.4

* EPS for 9 months 2010 is based on 10M shares, for 9 months 2011 it is based on the weighted average of shares (10.94M shares) 1) adjusted for non-recurring IPO expenses ** compared to the 2011 interim report all non-recurring IPO cost (including thise previously included in administrative expenses) have been reclassified into other expense


Revenue Revenue increased from EUR 62.47 million in the 9 months of 2010 by 23.3% to EUR 77 million in the comparable period of 2011. Measured in RMB, revenues increased by 27% in the 9 months of 2011. We saw particularly strong growth in our domestic market China (more than 70% growth compared to the same period last year), in other new markets (e.g. Russia, Latin America, Asia-Pacific) and also in our commercial generator segment (approximately 90% growth compared to the same period last year), which is in line with our strategy to expand sales of increasingly larger generators.

Cost of Sales Cost of sales increased from EUR 46.97 million in 9 months of 2010 by 26.2 % to EUR 59.29 million in the comparable period of 2011. Measured in RMB, cost of sales increased by 30% in this period. Cost of sales consists of costs associated with sourcing of copper, aluminium, steel and other components and parts, labour costs for personnel employed in production, depreciation of fixed assets used for production purposes, certain VAT surcharges and others local government levies.

Gross Profit Gross profit increased from EUR 15.50 million in 9 months of 2010 by 14.3% to EUR 17.7 million in the first 9 months 2011. Measured in RMB, gross profit increased by 17.7 % in this period. The gross margin amounted to 23% for the first 9 months 2011 compared to 24.8% for the comparable previous period. The gross margin while being in line with the average gross margins over the last two years, decreased mainly due to accelerating appreciation of the RMB against the USD and the time lag until, and extent to which, such currency movements can be passed on to customers.

Other Operating Income Other operating income mainly consists of a government grant of EUR 0.497 million in respect of our achievement in new product development.

Distribution and Sell ing Expenses Distribution and selling expenses increased from EUR 0.83 million in 9 months of 2010 by 8.5% to EUR 0.90 million in the comparable period of 2011. Measured in RMB, distribution and selling expenses increased by 11.8% in this period. As percentage of revenues distribution and selling expenses have decreased slightly from 1.34% to 1.18% from 9 months of 2010 to the 9 months of 2011.

Administrative Expenses Administrative expenses increased from EUR 1.5 million in 9 months of 2010 by 46.8% to EUR 2.2 million in the comparable period of 2011. Measured in RMB, administrative expenses increased by 51.2% in this period, mainly due to the costs of being a listed company. As percentage of revenues administrative expenses have changed from 2.4% in the 9 months of 2010 to 2.86% for the same period in 2011.

Research and Development Expenses Research and Development expenses increased from EUR 0.21 million in 9 months of 2010 by 263% to EUR 0.76 million in the comparable period of 2011. Measured in RMB, Research and Development expenses increased by 273.9% in this period. As percentage of revenues, Research and Development expenses have increased from 0.34% to 1% from first 9 months 2010 to 9 months 2011. The increased Research and Development expenses are in line with our strategy to further strengthen our R&D capabilities through the hiring of qualified staff, accelerated new product development and outside Research and Development consulting support.

Other Expenses Other expenses increased from EUR 0.83 million in 9 months 2010 by 269.9% to EUR 3.07 million in the comparable period of 2011. Measured in RMB, other expenses increased by 280.7% in this period. As percentage of revenues, other expenses have increased from 1.33% to 3.99% from the first 9 months 2010 to the first 9 months 2011. The increased other expenses are to a large part non-recurring one-off expenses of EUR 2.34 million in relation to our company’s Initial Public Offering this year.

Profit from Operations (EBIT) EBIT in 9 months 2011 decreased by 9.3% to EUR 11.38 million year on year. Measured in RMB, EBIT decreased by 6.6% in this period. As percentage of revenues, EBIT decreased from 20% to 14.8% from 9 months 2010 to first 9 months 2011. Adjusted EBIT (adjusted for non-recurring one-off IPO expenses) increased from EUR 13.11 million in 9 months 2010 by 4.7% to EUR 13.73 million in the comparable period of 2011. Measured in RMB, adjusted EBIT increased by 7.8% in this period. The adjusted EBIT margin decreased from 20.9% in the first 9 months of 2010 to to 17.8% in the comparable period in 2011.


Finance Expenses Finance expenses decreased from EUR 0.18 million in 9 months 2010 by 15.1% to EUR 0.15 million in the comparable period of 2011. Measured in RMB, finance expenses decreased by 12.5% in this period. As percentage of revenues finance expenses have decreased slightly from 0.29% to 0.20% from first 9 months 2010 to first 9 months 2011.

Income Tax Expense Income tax increased from EUR 1.64 million in 9 months 2010 by 9.8% to EUR 1.81 million in the comparable period of 2011. On group level, this represents a tax rate of 16.1%. Measured in RMB, income tax expenses increased by 13.1% in this period. Our main PRC operating company UPEC (which accounts for approximately 90% of group revenues) continues to enjoy a favourable corporate tax rate of 12.5% this year and in 2012. As we have been certified as a high technology company in China, we expect to enjoy a continued favourable corporate tax rate of 15% from 2013 onwards.

Profit for the period and EPS Profit for the period decreased from EUR 10.73 million in 9 months 2010 by 12.2% to EUR 9.43 million in the comparable period of 2011. Measured in RMB, profit for the period decreased by 9.5% in this period. As percentage of revenues, profit for the period decreased from 17.2% to 12.2% from first 9 months 2010 to first 9 months 2011. The EPS in the first 9 months 2011 was EUR 0.86, a decrease of 19.8% year on year. Adjusted profit for the period (adjusted for non-recurring one-off IPO expenses amounting to EUR 2.34 million) increased from EUR 11.29 million in 9 months 2010 by 4.3% to EUR 11.77 million in the comparable period of 2011. Measured in RMB, adjusted profit for the period increased by 7.8% in this period. The adjusted profit for the period margin decreased from 18.1% to 15.3% from first 9 months 2010 to first 9 months 2011. The adjusted EPS in the first 9 months 2011 was EUR 1.08.

SEGMENT INFORMATION

Residential generators Revenue for residential generators has been relatively stable with a slight decrease comparing the results year-on-year for the first 9 months of 2010 to the first 9 months of 2011. Revenue for first 9 months 2011 was EUR 35.1 million compared to the comparable period last year of EUR 36.5 million, resulting in a decrease of 4.07%. The decrease is mainly due to a non-recurring promotion order in 9 months 2010 from a large US customer, which resulted in higher-than-usual orders from the US.

Commercial generators Commercial generators segment showed the strongest increase and performance for the group by almost doubling the revenues in 9 months 2010 of EUR 18.98 million compared to this year’s first 9 months of EUR 35.13 million, showing an increase in revenue of EUR 16.14 million. This is in line with company’s strategy of increasingly focusing on generators with higher output and sell in categories with larger engine sizes. From representing 30.4% of the company’s total revenue in first 9 months 2010, commercial generators have increased their revenue share to 45.6% in 9 months 2011.

Outdoor power equipments The outdoor power equipment segment showed a stable development in 9 months 2011. Total segment revenue for the first 9 months of 2011 was EUR 4.06 million compared to last year’s comparable period of EUR 4.27 million.

Components The components segment is currently not a strategic sector for the company but rather taking advantage of opportuities in the market place. This segment represents less than 5% of the company’s total revenue.


ASSETS AND LIABILITIES POSITION

The following table shows the consolidated balance sheet for 9 months 2011 compared to the consolidated balance sheet as of 31 December 2010.

United Power AG

Dec 31, 2010 (Consolidated)

United Power AG Sep 30, 2011

(Consolidated) In million € Current assets 49.11 56.25 Non-current assets 23.15 46.70 Total assets 72.26 102.95 Current Liabilities 16.96 18.92 Non-current liabilities 0.24 0.19 Total l iabil it ies 17.21 19.01 Total equity 55.06 83.83 Total l iabil it ies and equity 72.26 102.95

Current Assets Inventories Inventories include raw materials, work in progress and finished goods. Inventories increased by 127% from EUR 4.5 million as of 31 December 2010 to EUR 10.2 million as of 30 September 2011. The increase is mainly due to the overall increase in company revenue and due to increased production in the lead up to the Chinese October National holiday period.

Trade and other receivables Trade and other receivables increased from EUR 17.2 million in year end 2010 to EUR 20.8 million for 9 months 2011. Trade receivable days decreased from 59 days (for the first nine months 2010) to 55 days for the same period this year.

Amounts due from related parties Amounts due from related parties decreased by 88% from EUR 0.65 million as of 31 December 2010 to EUR 0.07 million as of 30 September 2011.

Cash and cash equivalents Cash and cash equivalents amounted to EUR 25.04 million (including EUR 0.628 million pledged bank deposit) as of 30 September 2011 which represented a decrease of 6.4% from EUR 26.74 million (including EUR 0.94 million pledged bank deposit) as of 31 December 2010. The decrease in cash was mainly due to our continued investment in our production capacity. For a description of the changes in cash in the first nine months of 2011, see the section “Cash Flow Statement”.


Non-current assets

Property, plant and equipment Property, plant and equipment increased by 56.7% from EUR 20.99 million as of 31 December 2010 to EUR 32.88 million as of 30 September 2011. The increase is mainly associated with our ongoing production capacity expansion. In particular, United Power has completed the installation of nine new production lines. As a result, production capacity increased by more than 50% to more than 1,000,000 units per year. United Power has therefore achieved its announced 2011 year-end target capacity of 1,000,000 units per year ahead of time. Two of the new production lines are for residential generators, one for inverter generators, one for commercial generators, one for water pumps, one for high pressure washers and three new engine lines (including a new in-house developed vertical engine line). They are part of the second phase of production expansion at the production site in Gaoqi Industrial Park, Fuzhou. A deposit of EUR 11.18 million was made in respect of an order for the expansion of the company’s production capacity.

Liabil it ies Trade and other Payables Trade and other payables had an increase by 4.4% from EUR 12.74 million in 31 December 2010 to EUR 13.3 million as of 30 September 2011 due to the increased orders from the suppliers as the company ramps up its production capacity. Account payable days increased from 31 (for the first 9 months 2010) to 42 days.

Borrowings and amount due to shareholders Borrowings for the first 9 months of 2011 increased to EUR 4.43 million from EUR 3.03 million as of 31 December 2010 representing an increase of EUR 1.4 million. The additional borrowing was used to fund working capital and comprised an additional loan extended by a domestic commercial bank.

Equity to total assets ratio The total equity increased from EUR 55.1 million by 52.3% to EUR 83.83 million mainly due to the capital increase of EUR 17.4 million and increased retained earnings. The equity to total assets ratio slightly increased from 76.19% as of 31 December 2010 to 81.43% as of 30 September 2011.


CASH FLOWS

Overall cash decreased to EUR 24.42 million on 30 September 2011 year-on-year compared to the figure from 30 September 2010 of EUR 32.86 million. The IPO proceeds of 10 June 2011 contributed to the increase in the cash position but large investment activity associated with capacity expansion in line with the company’s strategy, increased working capital needs due to higher revenue and a EUR 1.395 million loss due to currency translation for the period ended 30 September 2011 lowered the overall cash balance.


(“as if”)


(Consolidated) In million € Operating cash flow before working capital changes 12.77 12.29 Cash generated from operations 11.29 1.90 Net cash generated from operating activities 9.96 -0.01 Cash flow from investing activities -5.76 -22.33 Cash flow from financing activities 17.71 19.55 Net Increase in cash and cash equivalents 21.91 -2.79 Cash at beginning of year 10.37 25.80 Effect of exchange rate changes 0.57 1.40 Cash and bank balances at end of the period 32.86 24.41 As United Power Technology AG was formed in April 2010 and the United Power’s operating business injected in October 2010, the “as if” cashflow statement combines the United Power Hong Kong consolidated cashflow statement with the cashflow statement of United Technology AG for the period from its formation to 30 September 2010. The “as if” 9 months 2010 figures are substantially identical with the United Power Hong Kong consolidated financial statement as United Technology AG was only formed in April 2010 and during 9 months 2010 incurred negligible expenses (EUR 5,264).

Cash generated from operations Cash generated from operations decreased by EUR 9.39 million to EUR 1.90 million at period ended 30 September 2011. This was mainly due to the increased working capital requirement and the non-recurring IPO related expenses.

Cash flow from investing activities The investment of the company in property, plant and equipment for capacity and production expansion is reflected in the cashflow from investing activities. For the first 9 months of 2011, the company invested over EUR 10.85 million in property, plant and equipment and had deposits for acquisition of property, plant and equipment of EUR 11.18 million resulting in a negative cash from investing activity of EUR 22.33 million.

Cash flow from financing activities Cash from financing activities increased to EUR 19.55 million at 30 September 2011 with the increase mainly attributable to the IPO proceeds and a lower repayment of borrowings. This figure was an increase of EUR 1.8 million from the same period last year or an increase of 10.37%.

Cash at end of period Overall cash decreased to EUR 24.41 million compared to EUR 32.86 million in 9 months last year representing a decrease of 25.71%.


HUMAN RESOURCES

United Power’s total number of employees increased slightly from the end of the first half of 2011, after finishing H1 2011 with 833 employees, United Power averaged 840 employees over the course of Q3 2011. At end of September 2011, United Power Technology-Group had 868 employees in total.

HY 2011 Q3 2011

Management 15 16

R&D 51 52

Sales & Marketing 28 32

Administration 176 176

Production 563 592

Total 833 868

Split of Employees in Percent as of 30 September 2011

United Power continues to strengthen its management and sales & marketing through further hires of qualified mostly university educated staff. United Power has continuously spent substantial efforts to maintain and enhance its engineering department (“R&D”) capacity with the aim to further expand its product range to include products with higher performance and a better design. As of 30 September 2011, the R&D team had 52 members. The increase in the overall work force has been significantly smaller in proportion to the overall increase in production capacity due to further automation and management improvements.


RESEARCH AND DEVELOPMENT

United Power aims to become a leading engine and generator developer in the world. We continue to devote significant effort to improve and enhance our existing products as well as develop new products to meet the diverse requirements of the global market place. We have a strong in-house research and development team currently consisting of 52 members dedicated to quality improvements and innovation. In addition we are closely cooperating with the Fuzhou Institute of Technology and have also been cooperating with a UK design firm. We have summarized below the status of our various product development activities:

Inverter generators IG3600 (3.2kw) is on the market and several units have already been sold into the European market. The ASP is more than two times higher than a comparable generator without inverter technology. IG2400S has now entered into the pilot production stage and has meanwhile received most of the requisite international certificates (e.g. CE/GS/Noise/EMC etc). IG1200S and IEG1200S are in the final testing stages. The inverter generator will mainly be sold to the European and North American markets which have the highest quality requirements and our domestic market.

High Power generators The 10kw high power gasoline generator has already been sold to several customers in most of our customer geographies and United Power received a positive market response. The 10kw high power diesel generator is in the final testing stages.

Vertical High Pressure washers We have also developed a new high pressure washer product which is easier to operate, safer and of smaller size compared to the previous model and is mainly designed for the European, North American and domestic markets.

Natural Gas generators The development of our natural gas generator is also proceeding according to plans and we expect to complete the testing phase at the end of this year.

Industrial generators R&D started the conceptual phase for the development of the industrial generators, especially for marketing research and research on core components such as engines and alternators. The industrial generators are expected to be launched in 2H 2012.

Existing products improvement United Power has made further improvements (design, efficiency and/or environmental) to existing products such as the GG1200 (to be launched as GG1256 with more powerful and environmentally friendly engine). Also, United Power has developed a new combustion technology for its engines which is a more efficient technology and also significantly reduces the cost for meeting the EPA standards Finally, a new exterior design and appearance has been developed for the 2 – 5KW residential generators which has a number of advantages including increased user-friendliness and safety as well as higher fuel efficiency due to enhanced cooling properties.


OPPORTUNITIES AND RISKS

The company’s overall risk profile remains largely the same as that described in the company’s IPO Prospectus. The company is closely monitoring all perceived risks and is active in addressing them. In addition and in compliance with the German Companies Act requirement for public companies to take appropriate actions in monitoring and mitigating risks associated with their ongoing operations, United Power has appointed Grant Thornton, an international accountancy firm, to strengthen the internal risk management system. Grant Thornton will assist in designing, developing and implementing relevant measures to further mitigate the Group’s exposure to financial risks, compliance risks and operation risks. Grant Thornton’s scope of risk management reviews extend to the Group’s overall governance in management structure, human resource policy, operations and financial reporting, as well as IT systems and IT security functions. Grant Thornton’s approach to risk management is based on the internationally accepted COSO Enterprise Risk Management (ERM) framework. United Power endeavors to assume a proper and systematic risk management system in order to ensure it can achieve optimal trading results and meet expectations from investors and regulators.

REPORT ON POST-BALANCE SHEET EVENTS

There were no transactions or other events of special significance after the balance sheet date of 30 September 2011.


OUTLOOK

United Power Technology-Group’s continued growth is driven by the pursuit of a three-pronged strategy, which comprises further geographic expansion and penetration, broadening the range of engine-powered products and scaling up the size of its products in order to further expand the commercial and industrial usage of its products. The investment plan is concentrated on capacity expansion. Total investment in the three year period from 2011 to 2013 remains to be in excess of RMB 500 million (EUR 55 million), based on a currency rate of EUR/RMB of 1:9. This year we expect to add another one to three product production lines. Our investment over the next three years will focus on investment in PPE in the second phase of production expansion of Gaoqi Industrial Park, which is our third factory. We will particularly focus our investment on new production lines for our new residential inverter generator and commercial generator products in line with our strategy. United Power aims to gain further market share in its principal markets Europe, North America and China and to leverage its standing and quality recognition in established developed markets to penetrate and expand into emerging markets. United Power intends to build up its own overseas (outside China) sales channels through the establishment of sales offices in target markets within the next three years. In addition to providing better service, quicker response time to customer inquiries and more sales coverage for potential customers, the Group’s direct sales strategy is expected to result in lower sales costs and higher margins. Our Lille sales hub for the European markets is now fully operational and has been officially registered. United Power has successfully continued to widen its international customer base in the first 9 months 2011 acquiring more than 30 new customers around the world. New supplier contracts for residential generators and commercial generators were signed with 3 retailers in UK, France, US and two sizeable wholesalers in German and Australia, respectively, a specialized dealer in Nepal. Among others, United Power signed supplier contracts with a major Australian wholesaler, which supplies to Woolworth and Lowes, and with a German wholesaler, which supplies to the discounter Norma. United Power also continues expanding its Chinese distribution agents network. We recently completed the set-up of our South East China, Sichuan and Inner Mongolia agent networks and are currently expanding our distribution network particularly in Northern China. United Power intends to establish its own or licensed brands in new markets and enhance them in markets that have already been penetrated with various distribution channels to make its brands known. As a major long-term strategy, we seek to further strengthen our reputation of reliability and to enhance brand awareness, especially outside China. The strengthening of the Group’s brands is intended to be achieved through enhancing marketing efforts such as participating in industrial trade fairs or exhibitions in local markets, media, internet and outdoor advertisement campaigns as well as through promotional campaigns, which can be launched together with local partners. Meanwhile, the Group seeks to establish regional sales subsidiaries/ branches to directly explore the local market for United Power branded products and reinforce the customer relationship. After 9 months we are on track for further profitable growth. The situation in our key commodity markets is easing and this will have a positive effect on our business. On the other hand, we are still facing an unstable global economic environment particularly in Europe which is our largest export market and currency appreciation as well as inflation in our domestic markets. The continued uncertain economic environment also has effects on our business. However, we continue to aim to clear the EUR 100 million revenue level for the full financial year 2011 assuming that the EUR/RMB exchange rate does not materially change for the rest of the year. We reaffirm an EBIT margin of about 15% for the full year 2011 (which is about 17% adjusted for non-recurring IPO costs). Nevertheless, due to the uncertain environment the downside risk has increased somewhat. Frankfurt, November 17, 2011


Condensed Interim Consolidated Financial Statements 9 months 2011


Financial Statements United Power Technology AG CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period from January 1 to September 30, 2011

9 months 2010

“as if”1

9 months 2011

3rd quarter 2010

“as if”

3rd quarter

2011 In EUR thousand Revenue 62,473 77,001 21,290 26,366 Cost of sales 46,973 59,292 16,041 20,539 Gross profit 15,500 17,709 5,249 5,827 Other operating income 432 616 172 206 Distribution and selling expenses 834 904 337 358 Administrative expenses 1,502 2,203 432 885 Research and development expenses 210 764 95 342 Other expenses 832 3,070 562 1,118 thereof as a result of the IPO 558 2,344 432 565 Profit from operations (EBIT) 12,554 11,384 3,995 3,330 Interest expense 178 151 21 47 Financial result 178 151 21 47 Profit before taxes 12,376 11,233 3,974 3,283 Income taxes 1,645 1,806 511 678 Profit for the period 10,731 9,427 3,463 2,605 Earnings per share in € (diluted – basic) 1.07 0.86 0.35 0.21 Adjusted EBIT 13,112 13,728 4,427 3,895 Adjusted Net income for the period 11,289 11,771 3,895 3,170 Adjusted Earnings per share €2 1.13 1.08 0.39 0.26

1 For further explanation please see section 3 ”as if” combined financial information for the preceding period” in the notes to the financial statements. 2 EPS for 9 months 2010 is based on 10M shares, for 9 months 2011 it is based on the weighted average of shares (10.94M shares) and for 3rd quarter of 2011 it is also based on the weighted average of shares (12.3M shares).


OTHER COMPREHENSIVE INCOME (EXPENSES)


9 months 2010

“as if”3

9 months 2011

3rd quarter 2010

3rd quarter 2011

In EUR thousand Exchange differences arising on translation 700 1,699 -4,843 5,070 Net (loss) gain arising on revaluation 4 -2 2 -1 Other comprehensive income (expense) for the period 704 1,697 -4,841 5,069 Total comprehensive income for the period 11,436 11,124 -1,378 7,674

Profit for the period attributable to:

Owners of the Company 10,727 9,435 3,457 2,610

Non-controlling interests 5 -8 6 -5

Total comprehensive income (expense) attributable to:

Owners of the Company 11.481 11,110 -1,313 7,569

Non-controlling interests -46 14 -65 105

3 For further explanation please see section 3 ”as if” combined financial information for the preceding period in the notes to the financial statements 3 For simplifiction only the 9 months 2011 values are adjusted by expenses for IPO


CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As of December 31, 2010 and September 30, 2011

Dec 31, 2010 Sep 30, 2011

In EUR thousand

Non-current assets

Property, plant and equipment 20,988 32,884

Intangible assets 1,149 1,121

Available-for-sale investments 17 15

Deferred tax assets 98 -

Other non-current assets 898 12,678

23,150 46,698

Current assets

Inventories 4,509 10,237

Trade and other receivables 17,209 20,884

Amounts due from related parties 649 73

Other current financial assets 943 628

Other current assets 0 20

Cash and cash equivalents 25,800 24,407

49,110 56,249

Total assets 72,260 102,947

CAPITAL AND RESERVES

Share capital 10,000 12,300

Additional paid-in capital 39,552 54,345

Revaluation Reserve -1 -3

Foreign currency translation reserve 1,907 3,584

Retained earnings 2,763 12,198

Equity attributable to owners of the parent 54,221 82,424

Non-controlling interests 834 1,409

Total equity 55,055 83,833


LIABILITIES

Non-current l iabil it ies

Deferred tax liabilities 38 -

Other liabilities 206 191

244 191

Current l iabil it ies

Trade and other payables 12,737 13,302

Tax liabilities 602 600

Borrowings 3,031 4,435

Amounts due to related parties 546 529

Amounts due to Controlling Shareholders 45 57

16,961 18,923

Total l iabil it ies 17,205 19,114

Total l iabil it ies and equity 72,260 102,947


CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Shar

e ca

pita

l UP

AG

Capi

tal r

eser

ves

Reva

luatio

n re

serv

e

Fore

ign

curre

ncy

tran

slatio

n re

serv

e

Reta

ined

earn

ings

Attr

ibut

able

to

owne

rs o

f the

co

mpa

ny

Non-

cont

rollin

g int

eres

ts

Tota

l equ

ity

In EUR thousand Balance as at 27 Apr 2010 -

-

-

-

-

-

-

-

Capital injection 50 - - - - 50 - 50 Effects on contribution in kind with UP-HK Holding 9,950 39,552 - - - 49,502 804 50,306

Profit for the period - - - - 2,763 2,763 2 2,765 Other comprehensive income (expense) for the year -

-

-1

1,907

-

1,906

28

1,934 Total comprehensive income (expense) for the year -

-

-1

1,907

2,763

4,669

30

4,669 Balance as at 31 Dec 2010 10,000

39,552

-1

1,907

2,763

54,221

834

55,055

Capital injection 2,300 14,793 -2 - - 17,091 - 17,091 Contribution by non-controlling shareholders - - - - - - 561 561

Profit for the period - - - - 9,435 9,435 -8 9,427 Other comprehensive income (expense) for the year - - - 1,677 - 1,677 22 1,699 Total comprehensive income (expense) for the year - - - 1,677 9,435 11,112 14 11,126 Balance as at 30 Sep 2011 12,300 54,346 -3 3,584 12,198 82,424 1,409 83,833


CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ending September 30, 2011

30 Sep 2010 9 months 2010

“as if”4

9 months 2011

In thousand € Profit before tax -5 12,376 11,233 Adjustments for: Allowance for doubtful debts - -112 - Depreciation on intangible assets and property, plants and equipment - 345 923 Interest (income) expense, net - 107 66 Other financial result - -1 -1 Other non-cash (income) expense - 53 73 (Increase)/decrease in current assets -2 -5,220 -10,956 Increase/(decrease) in current liabilities - 3,740 559 Cash generated from operations --7 11,288 1,897 Interest paid - -222 -151 Income taxes paid - -1,109 -1,756 Net cash generated from operating activities --7 9,957 -10 Payments for acquisition of Intangibles - -1,033 -384 Property, plant and equipment - -4,457 -22,028 Proceeds on disposal of Property, plant and equipment - 2 - Government grants received - 210 - Advance to a related party - -550 - Interest income - 71 85 Dividend income - 1 1 Cash flow from investing activities 00 -5,756 -22,326 Repayment of borrowings - -9,985 -6,733 New borrowings raised - 8,643 7,996 Proceeds from new shares and capital contributions 50 18,228 17,724 Capital contributions by non-controlling shareholders - 782 561 Advances from controlling shareholders - 45 - Cash flow from financing activities 550 17,713 19,548 Net increase (decrease) in cash and bank balances 443 21,914 -2,788 Cash and bank balances at begining of year 00 10,369 25,800 Effect of exchange rate changes 0 572 1,395 Cash and bank balances at end of period 443 32,855 24,407

4 For further explanation please see section 3 ”as if” combined financial information for the preceding period in the notes to the financial statements.


NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the period from 1 January to 30 September 2011 1. General Information United Power Technology AG, Eschborn, Germany, ("United Power" or “the Company”) is registered under the firm United Power Technology AG with the commercial register of the local court of Frankfurt am Main (HRB 88245). The address of the company’s registered office is: Mergenthalerallee 10-12, 65760 Eschborn, Germany. The Company and its subsidiaries (collectively “the Group”) produce and sell generators and related equipment globally. The shares of the company have been admitted to trading on the regulated market of the Frankfurt Stock Exchange. On June 10, 2011 the Company issued 2,300,000 shares of nominal EUR 1,00 per share for an initial share price of EUR 9,00 per share. The condensed interim consolidated financial statements of the Group as of 30 September 2011 have been prepared in accordance with the requirements of IAS 34 in condensed form and with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board, London, as adopted by the European Union (EU) and applicable at the reporting date, as well as with the additional requirements as set forth in section 315a paragraph 1 of the German Commercial Code (HGB). The condensed consolidated interim financial statements do not include all disclosures and explanations that are required in a complete set of financial statements and should be therefore be read together with the consolidated financial statements as of 31 December 2010. The condensed interim consolidated financial statements of the Company for the period from 1 January 2011 through 30 September 2011 were authorised for issue by the management board on 17 November 2011. The condensed consolidated financial statements are presented in Euros. Amounts are stated in thousands of Euros (kEUR) except where otherwise indicated.

2. Basis of Preparation The condensed interim consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values, as explained below in the note no. 12 (available-for-sale investments). Historical cost is generally based on the fair value of the consideration given in exchange for goods. The condensed interim consolidated financial statements incorporate the financial statements of the company and all entities controlled by the Company. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. The accounting policies and methods of computation applied by the Group in these interim financial statements are principally the same as those applied in the Group consolidated financial statements as at and for the year ended 31 December 2010. For further information regarding the Group’s accounting principles and policies we refer to these consolidated financial statements at 31 December 2010. Preparation of interim financial statements requires management to make estimates and judgments related to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenue and expenses for the reporting period. Actual amounts could differ from those estimates. There have been no changes in the Group's ownership interests in subsidiaries in the first nine months of 2011. The interim financial statements include, besides United Power Technology AG, 6 foreign subsidiaries that are all located in Hong Kong or the People’s Republic of China. IFRS accounting standards and interpretations to be applied in the financial year 2011 for the first time are of no relevance to the condensed interim consolidated financial statements of the Group.


3. “As if” combined financial information for the preceding period The Company acquired in October 2010 100% of the shares in United Power Equipment Company Limited, Mongkok, Hong Kong (“UP HK-Holding”) by a contribution in kind which increased its capital. IFRS 3, Business Combinations (Revised 2008) was not applicable for the business combination because United Power Technolgy AG and UP HK-Holding were under common control. The acquisition of the sub-group UP HK-Holding was accounted for by the Company under a common control transaction according to the book value method (also predecessor accounting method called) under IDW RS HFA 2 (Standard RS HFA 2 of the German Institute of Certified Public Accountants “Institut der Wirtschaftsprüfer”). The Company incorporated the acquired sub-groups’ results only from the date on which the business combination between the entities under common control occurred. Consequently, the comparative financial information for the preceding period 2010 included in the condensed interim consolidated financial statements does not reflect the results of the acquired sub-group for the period before the transaction occurred. For management commentary and fluctuation analysis purposes as included in the Group interim management report we disclose the following “as if” financial information. The “as if” financial information combines the 2010 profit and loss accounts of United Power Technology AG and UP HK-Holding as though the acquisition date for the business combination had been the beginning of 2010 (1 January 2010). The “as if” financial information for the consolidated statement of comprehensive income and the consolidated statement of cash flows for the period from 1 January 2010 through 30 September 2010 has been calculated as follows:


“As if” Consolidated Statement of Comprehensive Income

Historic financial information Total (=Total)

Group P&L UP HK-Holding

9 months 2010

P&L UP AG

27 Apr–30 Sep 2010

9 months 2010

“as if” adaptations

9 months 2010

“as if” P&L

thousand €

thousand €

thousand €

thousand €

thousand €

1 2 3(1+2) 4 5(3+4) Revenue 62,473 - 62,473 - 62,473 Cost of sales 46,973 - 46,973 - 46,973 Gross Profit 15,500 - 15,500 - 15,500 Other operating income 432 - 432 - 432 Distribution and selling expenses 834 - 834 - 834 Administrative expenses 1,502 - 1,502 - 1,502 Research and development expenses 210 - 210 - 210 Other expenses 827 5 832 - 832 Operating result 12,559 -5 12,554 - 12,554 Interest expense 178 - 178 - 178 Financial result 178 - 178 - 178 Income before taxes 12,381 -5 12,376 - 12,376 Income taxes 11,645 - 1,645 - 1,645 Profit for the period 10,736 -5 10,731 - 10,731 Net income attributable to: Owners of the parent 10,731 -5 10,726 - 10,726 Non-controlling interests 5 - 5 - 5 Net income 10,736 -5 10,731 - 10,731 Exchange differences arising from translating foreign operations 700 - 700 - 700 Net gains/loss arising on revaluation of available for-sale-investments during the quarter 4 - 4 - 4 Other comprehensive income/loss 704 - 704 - 704 Total comprehensive income 11,440 -5 11,435 - 11,435 Total comprehensive income attributable to: Owners of the company 11,486 -5 11,481 - 11,481 Non-controlling interests -46 0 -46 - -46


“As if” Consolidated Statement of Cash Flows

Historic financial information Total (=Total)

Group P&L UP HK-Holding

9 months 2010

P&L United Power

Techhnology AG

27 Apr – 30 Sep 2010

9 months 2010

“as if” adaptation

s

9 months

2010 “as if” P&L

thousand €

thousand €

thousand €

thousand

€ thousand

€

1 2 3(1+2) 4 5(3+4) Profit before tax 12,381 -5 12,376 - 12,376 Adjustments for Allowance for doubtful debt -112 - -112 - -112 Depreciation on intangible assets and property, plants and equipment 345 - 345 - 345 Interest (income) expense, net 107 - 107 - 107 Other financial result -1 - -1 - -1 Other non-cash (income) expense 53 - 53 - 53 (Increase)/decrease in current assets -5,218 -2 -5,220 - -5,220 Increase/(decrease) in current liabilities 3,740 - 3,740 - 3,740 Cash generated from operations 11,295 -7 11,288 - 11,288 Interest paid -222 - -222 - -222 Income taxes paid -1,109 - -1,109 - -1,109 Net cash generated from operating activities 9,964 -7 9,957 - 9,957 Payments for acquisition of Intangibles -1,033 - -1,033 - -1,033 Property, plant and equipment -4,457 - -4,457 - -4,457 Proceeds on disposal of Property, plant and equipment 2 - 2 - 2 Government grants received 210 - 210 - 210 Advance to a related party -550 - -550 - -550 Interest income 71 - 71 - 71 Dividend income 1 - 1 - 1 Cash flow from investing activities -5,756 - -5,756 - -5,756


4. Seasonality of interim operations In general, the turnover is decreasing in the third quarter of the year compared with the second quarter of the year.

5. Segment Information The Company has adopted IFRS 8 to report segment information. The segment information was analysed on the basis of the types of the sold goods. These are prepared by the operative business unit on the basis of internal information, which are regularly reviewed by the management. The information is also used for internal assessment of performance. The revenue and results by segments are as follows:

Segment revenue 27.04–

30.09.2010

9 months 2010

(“as if”) 9 months

2011 thousand € thousand € thousand €

Portable generators Residential use unit 0 36,542 35,054 Commercial use unit 0 18,989 35,130 Outdoor power equipments Industrial equipments 0 3,896 3,905 Landscaping machines 0 379 154 Components Engines 0 2,228 1,752 Parts 0 1,459 3,832 Other 0 335 325 Total segment revenue 0 63,828 80,152 Inter-segment revenue elimination 0 -1,459 -3,151 Other adjustments 1) 0 104 - 0 62,473 77,001

1) Other adjustments are related to freight expenses included in the revenue.

Repayment of borrowings -9,985 - -9,985 - -9,985 New borrowings raised 8,643 - 8,643 - 8,643 Proceeds from new shares and capital contributions 18,178 50 18,228 - 18,228 Capital contributions by non-controlling shareholders 782 - 782 - 782 Advances from controlling shareholders 45 - 45 - 45 Cash flow from financing activities 17,663 50 17,713 - 17,713 Net increase in cash and bank balances 21,871 43 21,914 - 21,914 Cash and bank balances at beginning of year 10,369 - 10,369 - 10,369 Effect of exchange rate changes 572 - 572 - 572 Cash and bank balances at end of period 32,812 43 32,855 - 32,855


Segment result 27.04–

30.09.2010

9 months 2010


2011 thousand € thousand € thousand € Portable generators Residential use unit 0 8,573 6,331 Commercial use unit 0 5,067 9,704 Outdoor power equipment Industrial equipment 0 889 820 Landscaping machines 0 99 30 Components Engines 0 668 534 Parts 0 70 207 Other 0 30 83 Total segment result 0 15,396 17,709 Other adjustments1) 0 104 - Consolidated gross profit 0 15,500 17,709 Unallocated items: Other operating income 0 432 616 Distribution and selling expenses 0 -834 -904 Administrative expenses 0 -1,501 -2203 Research and development expenses 0 -210 -764 Other expenses -5 -833 -3,070 Finance costs 0 -178 -151 Consolidated profit before tax -5 12,376 11,233 1) Other adjustments are related to freight expenses included in the revenue.

The management accounting policies of the operating segments are based on the accounting requirements applicable to the PRC entities of the Group (“PRC GAAP”). Segment profit represents the gross profit earned by each segment prepared under PRC GAAP. Since information about assets and liabilities of different operating divisions is not regularly provided to the chief operating decision maker for the purpose of assessing performance and resource allocation, segment assets and segment liabilities are not presented. The basis of segmentation and the basis of measurement of segment results have not been changed in the first nine months of 2011.

6. Other Operating Income Other operating income is mainly related to Government grants.

27.04–

30.09.2010

9 months 2010


2011 thousand € thousand € thousand € Government grants 0 327 85 Dividends received from available-for-sale-investments 0 1 497 Others 0 104 34 0 432 616


Government grants represent the incentive subsidies by the government of the People’s Republic of China as incentives for certain purposes. For grants relating to research and development activities, the grant income is recognised as related research and development expenses have been charged to profit or loss. For other grants relating to capital expenditures, the grant income is recognised on a systematic basis, which matches the depreciation of the related assets. The grants are non-recurring and do not have to be repaid.

7. Other expenses Other expenses are mainly related to the portion of the professional service fees for preparing the listing of the shares, which cannot be capitalized.

8. Income tax expense The effective tax can be reconciled as follows:

27.04–

30.09.2010

9 months 2010


2011 thousand € thousand € thousand € Profit before tax -5 12,376 11,233 Income tax at local tax rates (China) 25% - 3,095 2,808 Income tax at local tax rates (Germany) - - - Effect of tax benefit granted to a subsidiary - -1,570 -1,762 Effect of tax losses not recognized - - - Tax effect of expenses that are not deductible - 120 760 1645 1,806

9. Profit for the Year Profit for the year has been arrived at after charging / (crediting):

27.04–

30.09.2010

9 months 2010


2011 thousand € thousand € thousand € Cost of inventories recognised as an expense - 46,973 - (Reversal of) allowance for doubtful debt - -112 - Depreciation of property, plant and equipment - 345 923 Foreign exchange (gains) and losses - -206 -396 Amortisation of intangible assets (included in administrative expenses) - 43 75 Amortisation of prepaid lease payments (included in administrative expenses) - 14 17

10. Property, Plant and Equipment In order to expand the production capacity, the Group has invested approximately 4,457 kEUR in property, plant and equipment in the nine months 2011 in the People’s Republic of China.


11. Other Assets Other assets are as follows: 31.12.2010 30.09.2011 thousand € thousand € Deposits (for acquisition of property, plant and equipment

0

11,179

Prepaid lease payments 898 1,499 Deposits total 8898 112,678 The Group has capitalized prepaid lease payments. The prepaid lease payments have been pledged to secure borrowings. The deposits as of 30 September 2011 are for payments for ordered property, plant and equipment and buildings under construction.

12. Available-for-sale Investments Available-for-sale investments are stated at fair value at the end of each reporting period and relate to investment shares listed on the Shanghai Stock Exchange in the People’s Republic of China. 13. Trade and other Receivables 31.12.2010 30.09.2011

thousand € thousand € Trade receivables 15,428 16,918 Allowance for doubtful debts - - Deposits 502 1,307 Value-added tax receivable 51 881 Advance payments to suppliers 373 620 Advance lease payments 19 - Other receivables 836 1,158 17,209 20,884 The credit period on sales of goods generally ranges from 30 to 90 days. No interest is charged on trade receivables for the overdue balance. Allowances for doubtful debts are recognised based on historical experience. The following analysis presents the overdue but not impaired receivables. 31.12.2010 30.09.2011

thousand € thousand € Current trade receivables 15,428 16,918 Overdue Past due 1 - 30 days 3,228 3,511 Past due 31 – 60 days 346 612 Past due 61 – 180 days 939 963 4,513 5,086 As at the end of the reporting period no impairments were necessary.


14. Cash and cash equivalents 31.12.2010 30.09.2011 thousand € thousand € Cash and bank balances 25,800 24,407 Pledged bank deposits 943 628 26,743 25,035

15. Equity Share Capital Number of shares Share capital (€) 1 January 2011 10,000,000 10,000,000 Issuance of new shares 2,300,000 2,300,000 30 September 2011 12,300,000 12,300,000 On June 10 the company has issued 2,300,000 new shares with a nominal value of EUR 1,00 per share on the Frankfurt Stock Exchange by an initial share price of EUR 9.00 per share. In total a gross proceeds of EUR 20.7 million was received. EUR 2.3 million have been accounted as addition to the share capital. EUR 15.1 million have been accounted as ccapital reserve after deduction of expenses that are directly attributable to the issuance of new shares. The profit for the period allocated to the owners of the parent (EUR 9,435 thousand) is recognised in rretained earnings.

16. Borrowings The borrowings are related to secured bank borrowings. The average effective interest rates are approximately 7.2% per year. 31.12.2010 30.09.2011

thousand € thousand € Secured bank borrowings 3,031 4,435 Bank borrowings guaranteed by the Controlling Shareholders

0 0

3,031 4,435 17. Trade and other Payables 31.12.2010 30.09.2011

thousand € thousand € Trade payables 9,170 9,187 Notes payable 1,952 748 Advance payments 624 832 Others 991 2,535 12,737 13,302


The maturity of trade payables is as follows: 31.12.2010 30.09.2011

thousand € thousand € Short-term 8,401 8,525 Overdue (0 to 60 days) 769 662 9,170 9,187

Other payables are due within one year. 18. Other Disclosures to Related Parties Balances and transactions between the Company and its subsidiaries, which are related parties, are eliminated in the consolidation and are not explained in this note. Information on transactions between the Group and other related parties are discussed in the following paragraphs. All transactions with related parties were executed at arm’s length. Related parties: The Group has the following receivables due from non-consolidated other related parties:

331.12.2010 30.09.2011 thousand € thousand €

United Generating Power Nigeria Ltd., Trade receivables

119 0 Fuzhou Wankai Machinery Co., Ltd. Prepayments

530 0

649 0 The companies are controlled by controlling shareholders. The receivables are unsecured and noninterest-bearing. The Group had the following liabilities due to the following non-consolidated other related parties:

331.12.2010 30.09.2011 thousand € thousand € Fuzhou Rongli Power Fittings Co., Ltd. 546 528

The liability refers to a company which is controlled by a member of the management board. The transactions between the group companies and related parties are as follows: Purchase of goods for kEUR 528 from Fuzhou Rongli Power Co., Ltd.


Related persons: Management board The following persons are members of the management board: • Mr. Xu Wu, Businessman, Chairman, Fuzhou/China • Mr. Zhong Dong Huang, Vice Chairman, Businessman, Fuzhou/China • Mr. Li Wei Wang, Chief Financial Officer, Fuzhou/China until 27 April 2011 • Mr. Oliver Kuan, Chief Financial Officer, Fuzhou/China from 27 April 2011 The management board has received salaries of kEUR 534 and retirement benefit plan contributions of kEUR 2. There are no receivables with the management board. Furthermore members of the management board hold indirectly shares in the Company as follows: • Mr Wu Xu (29.53%) • Mr. Zhong Dong Huang (27.00%) Supervisory board Members of the supervisory board include the following persons: • Mr. Wei Song, Chairman, Businessman, Fuzhou/China • Mr. Hubertus Krossa, Businessman Vice Chairman, Wiesbaden/Germany • Mrs. Ning Cong, General Manager of Orchid Asia Group Management Ltd., Hongkong Island/Hongkong The members of the supervisory board have received remunerations of kEUR 9 (2010: kEUR 0). The Group had the following liabilities due to the supervisory board: 31.12.2010 30.09.2011

thousand € thousand € Remuneration of supervisory board 35 36 Shareholders The liabilities due to majority shareholders amount to 0 (as of 31 December 2010: EUR 0.05 million).

19. Capital Commitments Capital commitments in respect of the acquisition of property, plant and equipment and intangible assets contracted but not provided for in the condensed interim consolidated financial statements total kEUR 8,979 (as of 31 December 2010: kEUR 4,046). 20. Contingent Liabil it ies and Contingent Assets There have been no significant changes in contingent liabilities and contingent assets in comparison with the Group annual financial statements 2010. They can be classified as immaterial overall.

21. Events after the Reporting Period No material events between the end of the reporting period and the date of the approval and authorization for issuance of the financial statements have occurred.

22. Auditor’s review The condensed interim consolidated financial statements and the interim management report were neither reviewed nor audited by an public auditor (Section 37w Para. 5 of the German Securities Trading Act).

23. Approval of the Condensed Interim Consolidated Financial Statements The financial statements were approved and authorized for issuance by the Board of Directors on November 17, 2011. Frankfurt, November 17, 2011 The Management Board


Responsibil ity statement statement pursuant to § 37y of the German Securities Trading Act (WpHG) in conjunction with § 37w Para. 2 No. 3 WpHG To the best of our knowledge, and in accordance with the applicable reporting principles for interim reporting, the condensed interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group, and the Group interim management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the fiscal year.

Frankfurt, November 17, 2011

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENT

This document contains forward-looking statements, which are based on the current estimates and assumptions by the corporate management of United Power Technology AG. Forward-looking statements are characterized by the use of words such as expect, intend, plan, predict, assume, believe, estimate, anticipate and similar formulations. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and the results actually achieved by United Power Technology AG and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from the forward-looking statements. Many of these factors are outside United Power Technology AG’s control and cannot be accurately estimated in advance, such as the future economic environment or the actions of competitors and others involved in the marketplace. United Power Technology AG neither undertakes nor plans to update any forward-looking statements.


Financial Calendar Publication of Interim report 9 months 2011 18 November 2011

German Equity Forum 2011 21–23 November 2011 Imprint

Published by United Power Technology AG Mergenthalerallee 10-12 65760 Eschborn, Germany Phone: +49 6196 400804 Telefax: +49 6196 400910 Email:[email protected]

Concept and design: Kirchhoff Consult AG, Hamburg

Photographs: United Power Technology AG

Date of publication: 18 November 2011

Investor Relations Phone: +49-40 60 91 86 50 Fax: +49-40 60 91 86 16 E-mail: [email protected] Internet: http://www.unitedpower.de.com/Investor.php?typeid=83&nav_id=1


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