UNITEd POwER TEchNOLOGy Generating Growth ANNUAL REPORT 2011

united power technology Generating Growth ANNUAL REPORT 2011

Key Financials 2010 ( as if ) 3) 2011 (consolidated AG-level) +/ % Revenues EUR million 84.59 100.28 +18.55 Gross profit EUR million 20.54 22.14 +7.79 Gross profit margin % 24.28 22.08 2.20PP EBIT EUR million 15.86 11.89 25.03 Adjusted EBIT 1) EUR million 16.88 16.60 1.66 Adjusted EBIT margin 1) % 19.96 16.55 3.41PP Profit for the period EUR million 13.50 9.55 29.26 Adjusted profit for the period 1) EUR million 14.52 14.26 1.79 Adjusted profit for the period margin 1) % 17.17 14.22 2.95PP Earnings per share 1) EUR 1.35 0.85 37.04 Adjusted Earnings per share 1) 2) EUR 1.45 1.26 13.10 1) Adjusted for non-recurring IPO expenses. 2) EPS for 12 months 2010 is based on 10m shares, for 12 months 2011 it is based on the weighted average of shares (11.28m shares). 3) For further explanation of the as if 12 months 2010 figures please see section 6 of the notes to consolidated financial statements. REVENUE BY REGION* (in EUR million) REVENUE BY SEGMENT (in EUR million) 100 100.3 80 84.7 OEM 10.6 60 55.6 Retailers 14.1 Specialised dealers 37.8 40 41.3 38.2 20 0 9.5 22.5 15.5 29.5 16.6 17.3 10.7 5.9 19.2 14.4 Wholesalers 37.8 China Europe North America Other regions Total 2009 2010 2011 as at 31 December 2011 * Revenue split by end consumer 2011 (not audited)

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 equip ment and components such as engines. Our major products comprise residential as well as commercial generators, which are currently delivered to more than 50 countries in the world. Content 03 Letter to Shareholders 05 Report of the Supervisory Board 10 Growth Strategy 20 The Share 22 Corporate Governance Report 28 Group Management Report 48 Consolidated Financial Statements 93 Responsibility Statement 94 Independent Auditor s Opinion 96 Further Information

2 Company Profile Management Board ANNUAL Report 2011 united power technology MEMBERS of the MANAGEMENT BOARD Mr Xu WU Chairman, Co-CEO Co-founder and major indirect shareholder Mr Zhong Dong HUANG Deputy Chairman, Co-CEO Co-founder and major indirect shareholder Mr Oliver KUAN CFO Responsible for government and key domestic accounts relationships as well as Group strategy Responsible for strategy and general management of the Group Responsible for overall finance function of the Group

united power technology ANNUAL Report 2011 Company Profile 3 Letter to Shareholders Dear Fellow Shareholders, 2011 was an exiting year in our Company s history. Despite a challenging economic environment, we made significant progress toward achieving our long-term strategic objectives. We succeeded in strengthening the Company s competitiveness, increased our capacity and at the same time maintained our high standards of quality and efficiency. After our successful market flotation in June last year, I am proud to present our first annual report, which should give you a detailed insight into your company. Group revenues for 2011 increased by 18.6 per cent compared to the previous year to EUR 100.3 million. Thus we achieved the EUR 100 million mark in line with our guidance for 2011. Gross profit improved by 7.8 per cent to EUR 22.1 million. Our EBIT adjusted for IPO expenses amounted to EUR 16.6 million, representing an adjusted EBIT-margin of 16.6 per cent. Our adjusted net profit amounted to EUR 14.3 million. In 2011 United Power propelled its three-pronged strategy, which comprises further geographic expansion and penetration, broadening the range of engine-powered products and scaling up the size of our products in order to further expand the commercial and industrial usage of our products. With the aim to further diversify our customer base and increase our own international presence we expanded our sales network and marketing activities. We thus gained 50 new customers in our target markets. Additionally, new supplier contracts for residential and commercial generators which were signed included others retailers in the UK, France and the US, a specialized dealer in Nepal, a major Australian wholesaler, which supplies to Woolworth and Lowes, and a German wholesaler, which supplies to the discounter Norma. For the fiscal year 2011, United Power generated total revenues of more than EUR 5 million from new customers. Many of the new customers in diverse geographical regions including Australia, Canada, Columbia, France, Germany, Ireland, Italy, Nepal, Nigeria Russia, the UK, the US, and of course our home market China will be supplied with our Company s own branded products. We used the net proceeds from the capital increase to finance the further production capacity expansion. Overall, United Power increased the number of production lines from 13 to 25. New production lines were installed for both existing as well as new products and to upgrade and improve the production lines for existing products. Therefore we now have the capacity to produce more than 1.1 million units per year. We will particularly focus our investment on new production lines for larger generator products. This will include commercial generators and industrial generator products in line with our strategy.

4 Company Profile Letter to Shareholders ANNUAL Report 2011 united power technology Further, we invested the IPO proceeds in R&D activities for new technologies and products. In the past year, we continued 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. United Power extended its product range within the target markets. We developed new product innovations within all three product segments such as the new V-Twin highly efficient aluminum engine or our new inverter generator with the latest inverter technology, which allows the end customers to use the most sensitive electrical products such as laptop and LCD TV anywhere. In December 2011 we acquired the remaining 43 per cent of our subsidiary Sealand Machinery Co, which as a result became a wholly-owned subsidiary of the United Power Group. This acquisition provides us the opportunity to fully integrate the parts business and to further increase the Company s degree of vertical integration. In 2012 we are still facing an uncertain global economic environment. Despite the adverse conditions in Europe and China (which are our two largest market by end customer), we do however aim to grow faster than our industry (which is estimated to grow on average by about 7.5 per cent annually until 2015) as a whole over the next two years and continue to gain market share globally. Assuming a stable EUR:RMB exchange rate and generally improved trading conditions in the later part of this year, our current expectation for revenue growth is about 10 per cent for 2012. Our EBIT margin for 2012 and 2013 is expected to be somewhat lower compared to the adjusted EBIT margin of 2011 due to the effect of the RMB appreciation over the last year, our strategy to further strengthen our R&D and sales and distribution capabilities and also due to the increased administrative costs of being a listed company. We aim to gradually refine our guidance throughout the year. On this note, I would like to thank you, our shareholders and business partners, for your valued cooperation over the recent financial year and we look forward to our continued future partnership. Kind regards, Xu Wu Chaiman of the Management Board

united power technology ANNUAL Report 2011 Company Profile 5 Report of the Supervisory Board Report of the Supervisory Board In the reporting year 2011, the Supervisory Board fulfilled the tasks incumbent upon it pursuant to law and the Company articles and continuously advised and supervised the Management Board in the management of the Company. After thorough examination and discussion, the Supervisory Board resolved measures subject to its approval, in particular in connection with the IPO of the Company in June 2011. The Management Board furthermore frequently informed the Supervisory Board about the business development and the economic situation of the Company. The Supervisory Board discussed the information and valuations decisive for its decisions with the Management Board. As regards the reports and proposals for resolutions of the Management Board, the Supervisory Board passed the respective resolutions, insofar as it was required pursuant to law or the Company articles. Cooperation between Supervisory Board and Management Board In the financial year 2011, all members of the Management Board attended the Supervisory Board s balance sheet meeting during which they intensely discussed the Company s situation, business development, the financial situation as well as fundamental questions regarding the corporate strategy. The members of the Supervisory Board prepared for upcoming resolutions subject to approval by means of documents which they had previously been provided with by the Management Board. They discussed with the Management Board the measures and business proceedings to be decided upon. There was an intensive exchange with the Management Board regarding occurrences of special interest between the meetings as well. Supervisory Board meetings/resolutions in the financial year 2011 During the first Supervisory Board meeting in the financial year 2011, which took place in February 2011 and in which the two members of the Management Board Xu Wu and Zhong Dong Huang participated, the preliminary figures for the financial year 2011 were dealt with. The Management- Board reported on the positive business development, especially on the figures related to revenue and cash-flow which were above the figures initially forecast. Furthermore, the appointment of the Manage ment Board candidate Mr. Oliver Kuan was discussed. In April 2011, the Supervisory Board appointed Mr. Oliver Kuan as member of the Management Board. Mr. Kuan is Chief Financial Officer. In its meeting held in May 2011, the Supervisory Board dealt with the Company s annual financial statement and the consolidated financial statement, which the auditor provided with an unqualified auditor s opinion, as well as with the respective Supervisory Board reports for the financial year 2010. To prepare for this meeting, the Supervisory Board members had been provided with the annual

6 Company Profile Report of the Supervisory Board ANNUAL Report 2011 united power technology financial statement, the consolidated financial statement as well as the draft version of the Supervisory Board report. The Supervisory Board dealt with these documents in detail and intensely discussed them in the presence of the auditor who reported on the results of his audit and was available to answer questions and provide supplementary information. Based on the final outcome of the Supervisory Board s own review of the annual financial statements and the consolidated financial statements, the Supervisory Board agreed to the auditor s results, declared that no objections needed to be raised and approved the Management Board s statements. The Company s annual financial statement 2010 was thus adopted. During this meeting, the Supervisory Board furthermore adopted the Supervisory Board report and its proposals for decision regarding the agenda of the annual general meeting 2011. In another meeting held in May 2011, the Supervisory Board re-elected Mr. Wei Song as chairman of the Supervisory Board and Mr. Hubertus Krossa as deputy chairman of the Supervisory Board. In preparation of the Company s IPO, the Supervisory Board furthermore dealt with the draft version of an underwriting agreement regarding the new shares to be created in the course of the IPO that shall be underwritten and placed by a banking consortium as well as with the price range of the new shares. The Supervisory Board agreed with the conclusion of the Underwriting Agreement and with a price range from EUR 9.00 to EUR 11.50 for new shares. In its meeting held in June 2011, the Supervisory Board agreed with a cash capital increase with which new shares were created for the Company s IPO: The Supervisory Board agreed with the Management Board s resolution on a capital increase, so that the Company s nominal capital is increased by EUR 2,300,000.00 by issuing 2,300,000 new shares in total. The Supervisory Board furthermore decided an adaption of the articles of association to this nominal capital increase. In the final meeting for the year held in December 2011, the Supervisory Board discussed the preparation of the Corporate Governance compliance declaration. Furthermore, a discussion regarding the strengthening of the sales and distribution function as well as of the management incentive system were part of the agenda. During the past financial year, all members of the Supervisory Board attended all meetings and/or participated in the passing of all resolutions of the Supervisory Board.

united power technology ANNUAL Report 2011 Company Profile 7 Report of the Supervisory Board Corporate Governance In the financial year 2011, the Supervisory Board dealt with the standards of good corporate governance. Apart from expertise, the members diversity, appropriate to the size of the board, in relation to nationality, gender, ethnic origin and experience is an important guarantor of an efficient cooperation between the Supervisory Board members. When dealing with proposals for the election of candidates to the Supervisory Board, the Supervisory Board pays attention to internationality and diversity. Considering the current members of the board, i.e. Mr. Wei Song, Mr. Hubertus Krossa and Ms. Ning Cong, the Supervisory Board considers this diversity as ensured, especially in relation to nationality, gender, ethnic origin and experience. The members of the Supervisory Board are obliged to disclose to the entire board any potential conflicts of interest and not to contribute to dealing with and/or taking part in the resolution of topics which could lead to a conflict of interest. In the financial year 2011, there were no indications of potential conflicts of interest. The Supervisory Board dealt with the ICS and the risk management system of the Company as well as compliance. They were informed about these systems by the Management Board and were given an overview of risk management review work performed by Grant Thornton. They were also provided with an introduction of the work done by the internal audit and risk management team by the head of the team. Composition of the Supervisory Board The previous Supervisory Board members terms of office ended with the conclusion of the annual general meeting held on 24 May 2011. At the suggestion of the Supervisory Board, Mr. Wei Song and Mr. Hubertus Krossa were re-elected to the Supervisory Board. Mrs. Ning Cong was delegated to the Supervisory Board by the shareholder Orchid Asia IV L. P. Change of the Management Board As stated above, the Supervisory Board appointed Mr. Oliver Kuan as member of the Management Board in April 2011. He succeeded the former member Mr. Liwei Wang with immediate effect and for a period of five years. Mr. Kuan is Chief Financial Officer.

8 Company Profile Report of the Supervisory Board ANNUAL Report 2011 united power technology Audit of the annual financial statements 2011 The Company s annual financial statement, the consolidated financial statement and the management report 2011, which covers both the Company and the Group, have been duly audited by the audit firm Deloitte & Touch GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt, Germany, and provided with an unqualified auditor s opinion. In the framework of a meeting in March 2012 and in the presence of a representative of the auditor, the preliminary key figures of the annual and the consolidated financial statements 2011 as well as the appropriation of profits to the general shareholder s meeting 2012 have been intensely discussed. The auditor s representative reported on the results of the audit, answered questions and provided information. During another meeting which took place in early April 2012, the Supervisory Board dealt with the Company s annual financial and consolidated financial statements, which the auditor each provided with an unqualified auditor s opinion, the consolidated management report for the Company and the Group, the Supervisory Board report and the remuneration report. The Supervisory Board members were provided with extensive documents to prepare for this meeting, such as the financial statements and the consolidated financial statements, the consolidated management report for the Company and the Group as well as the remuneration report, the annual financial statement of the Com pany, the auditor s reports of Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt, Germany, on the Company s annual financial and consolidated financial statements as well as the draft version of the Supervisory Board report. The Supervisory Board dealt with these documents in detail and intensely discussed them in the presence of the auditor who answered questions and provided information. Based on the final outcome of the Supervisory Board s own review of the annual financial statements and the consolidated financial statements, the Supervisory Board agreed to the auditor s results, declared that no objections needed to be raised and approved the Management Board s statements and the consolidated management report. The Company s annual financial statement 2011 was thus adopted. The Supervisory Board furthermore agreed to adopt the Supervisory Board report and the remuneration report. Acknowledgements The Supervisory Board would like to thank all employees of the Group s companies and the Company s Management Board for their commitment and achievements throughout the past financial year. Fuzhou, April 2012 On behalf of the Supervisory Board Wei Song Chairman of the Supervisory Board

united power technology ANNUAL Report 2011 Company Profile 9 Supervisory Board Members of the Supervisory Board Mr Wei SONG Chairman of the Supervisory Board Co-founder and major indirect shareholder Mr Hubertus KROSSA Deputy Chairman of the Supervisory Board Chairman of the Supervisory Board of Eckelmann AG, since 2001 Ms Ning CONG Member of the Supervisory Board Formerly member of the management of the Group Current Non-Executive Director of the Board of Balfour Beatty Plc Managing Director of Orchid Asia Group Management, a private equity fund management company, managing two of UP s shareholders Orchid Asia IV L.P. and Orchid Asia IV Co-Investment

10 Company Profile Company Strategy ANNUAL Report 2011 united power technology Growth Strategy Scaling up the size of products 10 kw We are increasingly focusing on generators with higher output and selling in categories with larger engine sizes. Along with this shift we expect also to increase our margins. We will particularly focus our investment on new production lines for larger generator products including commercial generators and possibly industrial generator products in line with our previously stated strategy. Our new heavy duty power generator with a V-Twin highly efficient aluminum engine is a good example for this product category. It delivers a heavy duty maximum power of 10 kw. To meet the demands of a product used by professionals, a newly shaped structure had been designed. Broadening the range of engine-powered products 84 products In order to meet the demands of end consumers looking for power sources featuring low noise, easy maintenance and stable tension, United Power designs new inverter generators with the latest inverter technology. We produce specially designed generators exclusively for customers with individual requirements due to technical, environmental and quality standards. In 2011, 16 new products were developed by our R&D department. At the end of the year 2011 our customers could choose out of 84 different generators from a 0.5kW residential generators to a 10kW heavy duty commercial generator. Further geographic expansion and penetration 50 new customers in 2011 We further plan to penetrate our important growth markets like China, Europe and North America and diversify our international customer base. We intend to establish our own or licensed brands in new markets and enhance their position in markets that have already been penetrated with various distribution channels. As a major long-term strategy, we seek to further strengthen our reputation of reliability and to improve brand awareness, especially outside of China. We are going to further expand our customer base especially in the developing countries. In 2011 new supplier contracts were signed with retailers in the UK, France and the US. Furthermore with a specialized dealer in Nepal, a major Australian wholesaler, which supplies to Woolworth, and a German wholesaler, which supplies to the discounter Norma.

united power technology ANNUAL Report 2011 GG7300 Residential generators and inverter generators for outdoor activities and back-up power at home GG4500 Commercial generators for the construction sector and reliable back-up power in emergency situation Our main sales regions are China, Europe and North America but we also focusing on other regions such as Latin America, Asia-Pacific and Latin America Company Profile Company Strategy GG10000 Outdoor power equipment for e. G. water pumps or high pressure washers for residential and industrial usage 11

12 China Under construction Real estate spurs growth In line with the growing real estate sector, the construction industry in Asia has developed dynamically in the recent years. This was driven by continuous government investments in infrastructure development as well as private investments. Demand for our high power generators was propelled by this growth. In 2011 our revenues in China generated by end consumers grew by 43.5 per cent to EUR 22.3 million compared to 2010.

China 13 products GG 10000 New heavy duty power generator with a V-Twin efficient aluminum engine and unique air cooling design for professional usage. GG 7150 Generator combines high efficiency, mobility and large tank capacity for long duty cycle. REVENUE CHINA (in EUR million) 45 30 15 9.5 15.5 22.5 0 2009 2010 2011

14 europe Flexibility first Electricity anywhere at anytime In Europe our sales are to a large degree driven by the desire for high flexibility. Despite a reliable electricity network our customers wish to be able to use electricity anywhere and at anytime. Our residential generators and inverter generators are indispensible tools for do-it-yourself enthusiasts. Furthermore on outdoor activities our products ensure our customers to maintain their access to reliable electricity. Compared to the previous year our revenues in Europe grew by 7.7 per cent to EUR 41.1 million in 2011. Hence Europe accounts for the largest share of our revenues. products IG 3600 Inverter generator powered by a reliable engine that offers low noise, easy maintenance and stable tension for residential usage. IG 2400 Inverter technology for a constant sine wave power and reliable power supply with low noise and economic fuel consumption. REVENUE EUROPE (in EUR million) 45 38.1 41.4 30 29.5 15 0 2009 2010 2011

europe 15

16 North america Always on Back-up power offers safety The US market combines several factors which makes the region attractive for a generator producer like us: aging electricity grids, above ground lines susceptible by disruptions of natural disasters and a high dependency on electricity. In the residential segment we offer generators for reliable back-up power that keeps the light at home always on also in case of an emergency. Beyond that we offer smaller residential generators and inverter generators for outdoor activities. In 2011 we generated EUR 17.1 million from end customers in North America. This represents an increase of 31.7 per cent compared to 2010.

North america 17 products GG 4600 Universally applicable generator with a unique design and lighter weight for long duty cycle. GG 3250 Compact 4-stroke generator with new design front panel for easy and consumer friendly handling. REVENUE NORTH AMERICA (in EUR million) 45 30 15 10.7 16.6 17.3 0 2009 2010 2011

18 other regions south america Let it rain Strong development in new markets Apart from our main sales regions China, North America and Europe we are selling our products to new markets such as Latin America, Asia-Pacific or Africa. In Regions like South America for example, where reliable power supply to operate water pumps for the cultivation are highly needed. In 2011 we sold products with a corresponding value of around EUR 19.0 million to these markets. Compared to the same period last year this means an increase of 31.7 per cent..

south america other regions 19 products DP 100 Powerful 4-stroke diesel engine for high discharge capacity and reliable long run abilities. GP 80 Water pump with full frame but light and compact design and a high flow rate. REVENUE OTHER REGIONS (in EUR million) 45 30 15 14.4 19.2 0 5.9 2009 2010 2011

20 Company Profile The Share ANNUAL Report 2011 united power technology The Share Successful start to trading On 10 June 2011 the shares of United Power Technology AG were successfully listed on the Frankfurt Stock Exchange. The shares are traded in the Prime Standard, the segment with the highest transparency level. The first trading price was EUR 9.10, slightly above the issue price of EUR 9. Placing 2.3 million non-par-value ordinary bearer shares, the Company raised 20.7 million net issuing proceeds. The proceeds are mainly used to expand production capacities, e.g. optimise, upgrade and add production lines for existing products as well as to install production lines for new products. Furthermore, we are investing in Research and Development for new technologies and products as well as in the expansion of our distribution channels. Tense market environment The positive capital market sentiment of 2010 and early 2011 was dwindling in the second half of 2011. The American economy did not recover as quickly as expected, which resulted in higher unemployment rates. Meanwhile, irregularities of Chinese companies listed in North America manipulating their balance sheet figures were uncovered. This in turn had, an in our view, an unjustified negative effect on the sentiment towards Chinese companies listed in Europe. In August the on-going unresolved financial situation of the Greek economy as well as increasing concern regarding the cre dibility of other southern European countries resulted in a steep drop of all relevant indices. Due to deep uncertainty on the capital markets the small cap index SDAX dropped by more than 20% within two weeks down to 4,500 points. The market remained highly volatile for the rest of the year until a recovery began in December 2011 which has been sustained during the early months of 2012. Development of the share After the IPO, United Power s shares faced a downward pressure before the share price stabilised to some extent at the beginning of July at a level of approximately EUR 8. During the beginning of August our share followed the general sudden decrease of the stock markets, due the general economic condition. On August 12, the United Power share reached its year s low of EUR 3.80. Afterwards it recovered quicker than its benchmark, the SDAX. Within one month the share price surpassed the mark of EUR 6 but remained at this low level due to the difficult market environment. On the last day of trading in 2011, the share closed at a price of EUR 4.41. The average trading volume per day in 2011 amounted to 4,391 units. Since the beginning of the year 2012 the share price has continuously lost its volatile tendency and settled between in the price range of EUR 4.60 to 5.00. Dividend policy As mentioned in our IPO prospectus, United Power will not propose a dividend for the fiscal years 2011. We intend to pay a dividend to our shareholders in the financial year 2013. The amount of the payout will be based on our 2012 results and taking account of the general economic conditions. Designated sponsor and research coverage As at December 2011, United Power has designated sponsorship and regular research coverage from the investment bank Kepler Capital Markets, which was also the lead manager of the Companyʼs IPO in 2011. Additionally, United Power is covered by Erste Group and Silvia Quandt & Cie.

united power technology ANNUAL Report 2011 Company Profile 21 The Share Transparent investor relations During the IPO process, the Company conducted numerous discussions with potential investors at international roadshows. After the listing in Frankfurt the primary task of the Company was to make the Company better known and build up confidence among investors and shareholders. Therefore, the Company is determined to provide a comprehensive and transparent communication vis-à-vis its shareholder. SHARE PERFORMANCE (June 2011 March 2012) 120 100 80 60 Within this context, United Power attended several investor conferences, e.g. DVFA Small Cap Conference (SCC) and the Equity Forum of the Deutsche Börse in November 2011. Additionally, the Company invites its shareholders periodically to investor presentations and meets up with investors at roadshows all over Europe. In March 2012 United Power welcomed several European investors at its plants in Fuzhou, China during a reverse investor roadshow organised by one of the European investment banks. 40 June 11 November 11 March 12 UNITED POWER TECHNOLOGY AG Key facts SDAX First trading day 10 June 2011 Market segment / Stock exchange Regulated Market (Prime Standard)/ Frankfurt Stock Exchange Shares issued 12,300,000 In the future, United Power will strive for transparent investor relations activities, seek to further institutionalise its investor relations work and provide a continuous flow of information. We will regularly stage roadshows, conduct individual talks, telephone conferences and attend analysts as well as investors conferences in order to satisfy investors information needs. United Power presents an extensive range of information about the Company and the share on its investor relations website www.unitedpower.de.com/en. All of these activities are geared towards an objective and fair assessment of the Company. ISIN WKN Ticker Reuters as at 31 December 2011 SHAREHOLDER STRUCTURE (in %) Freefloat IV L.P. 17.89% Orchid Asia IV Co-Investment Limited 0.21% Jade Sky 2.11% Orchid Asia IV L.P. 10.47% DE000A1EMAK2 A1EMAK UP7 UP7G.DE Fortune Sunrise BVI (Mr. Xu Wu) 24.26% Share key figures Market capitalisation (million EUR) 54.24 Share price high (EUR) 9.00 Share price low (EUR) 3.80 Share closing price (EUR) 4.41 Adjusted earings per share (EUR) 1.26 as at 31 December 2011 High Advance BVI (Mr. Zhong Dong Huang) 22.18% as at 31 December 2011 Fortune Great BVI (Mr. Wei Song) 22.88%

22 Company Profile Corporate Governance Report ANNUAL Report 2011 united power technology Corporate Governance Report Corporate governance declaration Since its inception in 2002, the German Corporate Governance Codex ( the Codex ) has been used as a benchmark for good corporate governance. The cornerstones of United Power Technology AG s management philosophy, such as responsibility, transparency and sustainability, are both in line with the Codex and help underpin the Company s business success. The Management Board and Supervisory Board are committed to following and supporting the goals and the spirit of the Codex. Declaration of compliance The Management Board and the Supervisory Board dealt with issues of corporate governance and in particular the provisions of the German Corporate Governance Code. On 6 February 2012 they jointly issued a corporate governance declaration for the fiscal year 2011 pursuant to section 161 of the German Stock Corporation Act (AktG). The declarations of compliance are made public on United Power Technology AG s webside under www.unitedpower.de.com/ en. Except for the following exceptions, the Company complied with all the recommendations of the Code as amended on 26 May 2010 in the fiscal year 2011 and will comply with it in future: In the D&O insurance for the Supervisory Board, a deductible up to a certain amount has been partially agreed (deviation from no. 3.8 s. 5 of the Code). Based on economic considerations and due to the comparatively low remuneration of the Supervisory Board, the Company has decided to introduce a fixed deductible in certain cases. A general Management Board remuneration system has not yet been resolved (deviation from no. 4.4.2 of the Code). However, the Supervisory Board has taken the standards of a uniform remuneration system as basis for stipulating the respective remuneration of the current Management Board members; in particular regarding the division in fixed and variable remuneration elements. Furthermore, in order to comply with the requirements of the Code, a remuneration system shall explicitly be resolved in due course. At the time when this Declaration of Compliance is made, there has not yet been agreed upon a variable remuneration for one Management Board member for the period of time since the IPO (deviation from no. 4.2.3 s. 3, 4, 5, 7, 8, 9 and 10 of the Code). Consequently, there is also a partial deviation from no. 4.2.3 s. 5 concerning the positive as well as negative developments with regard to the variable remuneration of this Management Board member. Furthermore, the contract of this Management Board member does not contain any regulations when it comes to a positive development regarding the fixed income (deviation from no. 4.2.3 s. 5 of the Code). The governing bodies of the Company, however, intend to implement variable remuneration systems in the course of 2012. Besides, the contract of this Management Board member includes regulations to the effect that the details of a variable remuneration, particularly regarding the targets and the implementation of a stock option plan, shall be stipulated by the respective governing bodies of the Company at short notice. Concerning the other two Management Board members, the following is not yet intended for the variable remuneration elements of the remuneration of Management Board members: subsequent amendments to the targets of success or the comparison parameters (deviation from no. 4.2.3 s. 9 of the Code). Considering the relatively low performance remuneration for Management Board members, the Supervisory Board is of the opinion that such an exclusion is not necessary. The Supervisory Board and the Management Board members have not stipulated how to proceed in the event of a premature termination of the Management Board contract without good reason (deviation from no. 4.2.3 s. 11 and s. 12 of the Code). Therefore the provisions of law apply in this case. The Company is of the opinion that the provisions of

united power technology ANNUAL Report 2011 Company Profile 23 Corporate Governance Report law are sufficient regarding the respective interests when it comes to the resignation of a Management Board member and is thus an appropriate basis. So far, abstract provisions requiring the approval of the Supervisory Board with regard to transactions of fundamental importance have not been specified (deviation from no. 4.3.4 s. 3 of the Code). However, an array of transactions of fundamental importance that are subject to prior approval are listed in the Management Board by-laws. The Company is of the opinion that it is easier for the Management Board to adhere to a specific catalogue than to abstract regulations. Furthermore, the Company is a holding company without operative business. There is no general age limit for Management Board members (deviation from no. 5.1.2 s. 7 of the Code) and for Supervisory Board members (deviation from no. 5.4.1 s. 2 of the Code). However, the Management Board contracts contain an individual regulation stipulating that employment ends automatically without notice at the end of the month in which the Management Board member turns 65 or if he is born in 1947 or later as soon as the regulation for pension annuity of the statutory pension insurance applying to him has become effective (section 25 SGB (German Social Security Code) VI). The Supervisory Board does not consider strict age limits as an appropriate rule. In the opinion of the Company, it is not plausible that qualified persons with comprehensive experience in career and life should not be eligible for the Management Board solely on account the Supervisory Board only because of their age. The Supervisory Board has not established any committees (deviation from no. 5.3 of the Code). Due to the fact that the Supervisory Board only consists of three members and thus has a small size, the Company does not consider the establishment of committees necessary and, beyond this, is of the opinion that all items falling within the scope of responsibilities of the Supervisory Board should be discussed and decided by the full Supervisory Board. The Supervisory Board has not explicitly stipulated specific targets for its structure (deviation from no. 5.4.1 sentence 2 to 5 of the Code). As recommended in no. 5.4.1 sentence 2 and sentence 3 of the Code, the Supervisory Board certainly takes the Company s situation, its international business activity and possible conflicts of interest into consideration when it comes to its current and future structure. Moreover, as the current structure of the Supervisory Board shows, the Company has an open mind about female Supervisory Board members. At the moment and considering the small size of the Supervisory Board with only three members, the Company is of the opinion, however, that it is more appropriate to select candidates for the Supervisory Board according to the targets mentioned above but on a case-bycase basis instead of stipulating explicit regulations for the structure of the Supervisory Board in written form. The Company is of the opinion that the implementation of such regulations and continuous compliance with them would mean an inappropriately high effort at this point. The members of the Supervisory Board receive a fixed salary without performance-related components (deviation from no. 5.4.6 sentence 4 of the Code). In particular with respect to the supervisory function of the Supervisory Board, the Management Board and the Supervisory Board do not consider it to be expedient to pay a performancerelated remuneration to the members of the Supervisory Board. A performance-related remuneration could negatively influence the independence of the Supervisory Board s decisions from any financial interests of its members and could, in particular, induce them to approve transactions that are too risky. Apart from regularly assessing the efficiency, the Supervisory Board does not carry out any other additional efficiency assessments on a regular basis (deviation from no. 5.6 of the Code) as the Company is convinced of its efficiency considering the size of the Supervisory Board and the size of the Company.

24 Company Profile Corporate Governance Report ANNUAL Report 2011 united power technology Last year, the Company had not met the deadline of 90 days after the end of the financial year for the publication of its consolidated financial statements and the deadline of 45 days after the end of the reporting period for the publication of its interim reports (deviation from no. 7.1.2 sentence 4 of the Code) and will probably not met these deadlines within this year as well. As a young and international company, the Company places emphasis on applying utmost care in preparing its first financial statements as a listed company. Additionally the required translations from Chinese make the preparations of the financial statements time-consuming. Nevertheless, The Company strives to comply with the recommendations for the publication deadlines in the future. Information on the practice of corporate governance: Principles of corporate governance and economic management The management and governing bodies of United Power Technology AG are committed to the principles of good and responsible corporate governance. The Company s aim is to gain and maintain the trust of its shareholders, customers and employees by managing the Company in a transparent and responsible manner and through close and constructive co-operation between the Supervisory Board and Management Board. Our company serves a dual purpose of both generating substantial profits and growth and thus shareholder value and also playing a key role in the field of mobile generators. The Company s system of internal control is designed to ensure the achievement of business objectives in operations, financial reporting integrity and compliance with applicable laws and regulations. The system of internal control is designed to manage, rather than completely eliminate, risks impacting the Company s ability to achieve its business objectives. Accordingly, the system can only provide reasonable but not absolute assurance that the financial statements do not contain a material misstatement or loss. The Company assists the Board with respect to its duty to identify, evaluate, and manage the significant risks faced by the Company. The Company implements the Board s policies and procedures to mitigate such risks by (i) identifying and assessing the risks the Company faces and (ii) designing, operating and monitoring a system of internal controls to mitigate and control such risks. Our employee policies are described within the management report of the annual report. As a listed company, our accounts are audited by a reputable international auditor and we disclose significantly more information to our shareholders than required. Furthermore, we are using third-party experts to additionally advise and audit other parts of the business. We are consistently working on improve all aspects of our operations, including occupational health and safety, sales and distribution and our conduct as a corporate citizen Shareholders and Annual General Meeting The shareholders exercise their rights at the Annual General Meeting where they exercise their voting rights. The Annual General Meeting takes place within the first eight months of each fiscal year in accordance with the Company s bylaws. All shares are pari passu equal to one vote at the Annual General Meeting. Shares with multiple voting rights or preference shares as well as maximum-voting rights do not exist. Shareholders have the option of exercising their voting rights at the Annual General Meeting in person, through a representative of their choice or through the Company s proxy representative. In the invitation to the Annual General Meeting, there are particular explanations about the conditions of participation, voting rules (also for assignees) and shareholder rights. The applicable reports and documents, including the annual report and agenda, which are legally required for the Annual General Meeting, are published under www.unitedpower.de.com/en. Subsequent to the Annual General Meeting, the attendance and voting results are published there as well.

united power technology ANNUAL Report 2011 Company Profile 25 Corporate Governance Report Management Board and Supervisory Board Management Board In accordance with the laws for German stock corporations, United Power Technology AG has a dual board structure consisting of the Management Board and the Supervisory Board, each possessing its own competences. The system is characterised by a personnel separation between Management and Supervisory bodies. The Management Board is in charge of self-responsibly managing the Company, whereas the Supervisory Board is responsible for supervising and advising the Management Board. A member of the Management Board cannot be a Supervisory Board member at the same time and vice versa. The two boards work closely together in the best interest of the Company. The Management Board of United Power Technology AG currently comprises three members, Mr. Xu Wu, Mr. Zhong Dong Huang and Mr. Oliver Kuan, who are responsible for the management of certain areas of the Company such as the Company s strategy, negotiating key agreements, coordinating the daily operations as well as financial reporting, fund raising, investor relations and financial reporting to the Supervisory Board. In 2011 there was a change in the Management Board of United Power Technology AG. On 28 April 2011, the Company s Chief Financial Officer, Mr. Li Wei Wang was replaced by Mr. Oliver Kuan. The Company s key activities and financial performance are regularly circulated to the management team and the Supervisory Board. In addition, the General Management meets on a regular basis to discuss and make fundamental decisions. At these meetings, Mrs Fang Yu Wang, Financial Controller and Financial Manager, Mr. Jia Yang Zhong, are present as well. The working relationship between the Management Board and the Supervisory Board is described in the report of the Supervisory Board within the annual report. In accordance with the Codex, United Power Technology AG presents the remuneration of the members of the Management Board individually in the remuneration report which is part of the management report. Supervisory Board The Supervisory Board of United Power Technology AG comprises three members, Mr. Wei Song, Mr. Hubertus Krosa and Ms. Ning Cong. The Supervisory Board is responsible for supervising and advising the Management Board as well as for the election of the members of the Management Board, the determination of their remuneration as well as the review and approval of the annual financial statements of the Company. The Chairman of the Supervisory Board maintains frequent contact with the members of the Management Board to discuss issues of particular importance. In particular, the Chairman of the Supervisory Board looked into the financial reporting process, the effectiveness of the internal risk management system (RMS) and internal control systems (ICS), the effectiveness of internal audit systems and the auditing process and conducted interviews with key personnel in the finance department. The close and confident working relationship between the Management Board and the Supervisory Board is described in detail in the report of the Supervisory Board within the annual report. Directors Dealings Pursuant to section 15a of the German Securities Trading Act (WpHG), members of the Management Board and the Supervisory Board, other key employees as well as related people, must immediately declare any purchase or disposal of shares in United Power Technology AG to the Federal Financial Supervisory Authority (BaFin) as long as the total consideration is larger than EUR 5,000 within one calendar year. In the following, the notifications transferred to the authority are listed:

26 Company Profile Corporate Governance Report ANNUAL Report 2011 united power technology On 5 July BaFin was notified that on 30 June 2011, Supervisory Board member Hubertus Krossa purchased 4,086 shares at a price of in total EUR 27,376.20 (EUR 6.70 per share) via the stock exchange (XETRA). Due to lending in the framework of a feeless securities lending contract, High Advance Investments Limited lent 1,833,765 shares, Fortune Sunrise Investments Limited lent 2,005,689 shares, both subject to notification via governing bodies, and Fortune Great Investments Limited lent 1,891,046 shares, subject to notification via a supervisory body, outside of the stock market on 26 May 2011. Due to a lending within the framework of a feeless securities lending contract, High Advance Investments Limited lent 10,000 shares, Fortune Sunrise Investments Limited lent 10,000 shares, both subject to notification via governing bodies, and Fortune Great Investments Limited lent 10,000 shares, subject to notification via a supervisory body, outside of the stock market on 10 June 2011. All the notifications due to the aforementioned feeless transfers arising from securities lendings were made on 21/22 July 2011. Owing to the minimum limit of EUR 5,000.00, the obligation to notify only occurred in the framework of the occurrence of the obligation to notify of the following transactions which are subject to fees: Due to the exercise of the seller s put option, High Advance Investments Limited purchased 28,889 shares at the price of EUR 260,341.53 (notification was made on 22/25 July 2011), Fortune Sunrise Investments Limited purchased 31,597 shares at the price of EUR 248,748.55 (notification was made on 21 July 2011), both subject to notification via governing bodies, and Fortune Great Investments Limited purchased 29,792 shares at the price of EUR 268,477.20 (notification was made on 21 July 2011), subject ot notification via a supervisory body, outside of the stock market on 14 July 2011. Due to the exercise of the seller s put option, High Advance Investments Limited purchased 2,374 shares at the price of EUR 12,257.07, Fortune Sunrise Investments Limited purchased 2,596 shares at the price of EUR 13,403.27, both subject to notification via governing bodies, and Fortune Great Investments Limited purchased 2,448 shares at the price of EUR 12,639.14, subject to notification via a super visory body, outside of the stock market on 24 January 2012 pursuant to the notification as at 30 January 2012. As at the date of preparation of this report the members of the Management Board directly or indirectly hold 46.49% and taking into consideration the imputation regulations pursuant to WpHG in total 69.38% of the shares and voting rights in United Power Technology AG. At this date, the members of the Supervisory Board directly or indirectly hold in total 22.93% and taking into consideration the imputation regulations pursuant to WpHG in total 69.42% of the shares in United Power Technology AG. Accounting and Auditing The annual consolidated financial statements of United Power Technology AG are prepared pursuant to the International Financial Reporting Standards (IFRS) and the individual financial statements of United Power Technology AG are prepared according to the German accounting rules and the German Commercial Code (HGB). Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft was appointed by the general shareholders meeting as auditor and has audited the consolidated and individual financial statements. The auditors attended the Supervisory Board s meeting, when the individual and consolidated financial statements were approved, and reported on the main results of their audit.

united power technology ANNUAL Report 2011 Company Profile 27 Corporate Governance Report Corporate Compliance Compliance with the relevant statutory provisions for its operations and internal company policies (hereinafter also referred to as Corporate Compliance ) is an essential part of United Power Technology AG s corporate governance and it is one of the key duties of all business areas to ensure the compliance with the prevailing policies in the individual areas of responsibility. The Company has adopted a code of business conduct and ethics (the Code of Conduct ) which provides guidance about doing business with integrity and professionalism. The Code of Conduct addresses issues that include fraud, conflicts of interest, corporate opportunities, protection of intellectual property, transactions in the Company s securities, use of the Company s assets, and relationships with customers and third parties. Any violation of the Code of Conduct is reported to the management team, which will subsequently report such violation to the Audit Committee. Also, the Company has formal written code of conduct and employee manuals/policies, which are communicated to all employees. All employees are required to sign an agreement on compliance with the Group s code of conduct and ethics when they joined the Group. Departures from the Group s approved policies and procedures are prohibited and sanction will be imposed for non-compliance. All business activities in China are carried out in strict compliance with Chinese laws and international conventions. Risk Management United Power Technology AG s risk management policies are described in detail in the chapter Risk Management Report. They are designed in accordance with statutory provisions to detect significant risks early, so that appropriate measures can be taken in order to minimise, diversify, transfer or avoid risks thus ensuring the continuity of the group. The Risk Management process is supported through the controlling and auditing functions. Avoiding conflicts of interest In the year under review, conflicts of interest of Executive Board members and Supervisory Board members were not reported to Supervisory Board, which is responsible in this case. Transparency Shareholders and other interested parties can obtain information about United Power Technology AG s standing and business development through financial reports (business and interim reports), press conferences on financial statements, analyst and press interviews, press releases and/or ad hoc announcements and through attending the Annual General Meeting. Current information is permanently available and may obtained from the Company s webpage under www.unitedpower.de.com/en, providing all relevant information both in German and English. Apart from extensive information about the United Power Technology AG Group and regarding the United Power Technology AG share, the webpage contains the Company calendar providing an overview about all important events. Eschborn, 20 March 2012 United Power Technology AG Supervisory Board Management Board

28 detailled index Group Management Report 100 million In line with the forecast, United Power Technology achieved the mark of EUR 100 million in revenues for the financial year 2011.

detailled index 29 Management Report 30 Group profile 31 Economic and business environment 33 Revenues and earnings position 35 Segment information 36 Assets and liabilities position 37 Cash flows 38 Human resources 39 Research and development 40 Statement and report pursuant to section 315 paragraph 4 HGB (German Commercial Code) 42 Remuneration report 43 Corporate governance declaration 43 Risk and opportunity management 44 Accounting-related internal control system 45 Risk report 46 Report on post-balance sheet events 46 Outlook

30 Financial Report Management Report ANNUAL Report 2011 united power technology 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 50 countries around the world. Our main markets are the domestic market (China) and overseas markets, in particular North America and Europe. In selected markets such as China, Canada, Africa (Nigeria, South Africa), Malaysia, Europe (Italy, Spain) or Russia we sell our own branded 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), wholesalers and retailers such as Metro, Einhell, B&Q and Hornbach. United Power Technology AG is a public limited company under German law. The Company is registered with the Commercial Register of Frankfurt/Main, Germany under HRB 88245. The Company has been 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. up group structure United Power Technology AG Germany (founded in 04/2010) 100% HK United Power Equipment Co., Ltd. Hong Kong (founded in 06/2010) 100% Shanghai Genmaster International Trading Co., Ltd. PRC Shanghai (founded in 10/2010) 100% United Power Equipment Co., Ltd. PRC Fuzhou (founded in 01/2007) 100% United Power France SASU France Lille (founded in 10/2011) 51% 100% 100% Fujian Di Sheng Wan Kai Machinery Co., Ltd. PRC Fuzhou (founded in 06/2010) Fujian United Power Equipment Co., Ltd. PRC Fuzhou (founded in 05/2003) Sealand Machinery Co., Ltd. PRC Fuzhou (founded in 07/2005)

united power technology ANNUAL Report 2011 Financial Report 31 Management Report Economic and 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 for our products. Due to European financial turmoil and weaker growth prospects in emerging nations (Brazil, India, to a lesser extent Russia, South Africa and Turkey) the World Bank has lowered its global economic growth forecast. Overall, growth of real GDP at an annual rate of 2.5% for 2012 and 3.1% for 2013 is now expected. Europe in particular appears to have entered recession as a result of contractionary effects of fiscal austerity programmes. The outcome is an expected GDP growth of 1.6% in 2011. For 2012 a growth of GDP at an annual rate of 0.3 for 2012 and 1.1% for 2013 is expected. After a phase of weak and volatile macroeconomic performance throughout the first nine months of 2011 the United States economic growth accelerated in Q4 2011 and the outlook for 2012 received a boost from several positive data releases. Aggregate demand benefits from the mild improvement in labour market and the progress achieved in household deleveraging. 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. Reasons for the slowdown are the restrictive monetary politics of the Chinese government to control the inflation rate as well as measures to cool the property market. As a result the inflation rate was reduced to 4%. Another reason for the slowdown was a decreasing trade surplus which can be attributed to the real appreciation of our local currency RMB particularly against a weakening Euro in the second half last year. While nominal appreciation against the USD has been limited by pegging the RMB to the USD, inflation was a significant contributing factor causing the real appreciation. Now, with declining inflation real appreciation is expected to slow down. That should help China to regain exports as a driver of economic growth. For 2012, an economic growth of 8.4% is expected by the World Bank and the Chinese Government has recently lowered its growth target for this year to 7.5% (historically, however, China s actual growth has exceeded the government targets). While overall economic sentiment and recent growth figures have deteriorated particularly in the developed markets and especially in the eurozone, we remain confident about our long-term 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 stabilisation 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% until 2015 based on a market study by US market research firm Global Industry Analysts of July 2010.

32 Financial Report Management Report ANNUAL Report 2011 united power technology 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 uncertainties and disruptions due to ageing 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 ageing 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 a substitute for utility power. In developed markets such as the United States, generators are primarily sold for emergency standby purposes such as electrical generation, transmission and distribution in these markets is generally more mature. In addition, in many international markets diesel generators represent a more significant percentage of the market than they do 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 backup 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 ageing 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 nonresidential 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). In 2011 we had unit sales of more than 860,000 (2010: about 800,000). In addition the average value of our projects increased in line with our strategy to sell increasingly larger generators. The order book at the end of 2011 has been slightly below the order book at the end of 2010 reflecting the difficult economic environment and consequently expected weaker first quarter of 2012.

united power technology ANNUAL Report 2011 Financial Report 33 Management Report Revenues and earnings position The table below shows the consolidated income statement for the full year 2011 compared to the as if income statement for the 12 months of 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 31 December 2010. See section 6 of the notes to the financial statements for further explanation of the as if figures. in EUR million United Power AG 2010 ( as if ) United Power AG 2011 (consolidated) +/ % Revenue 84.59 100.28 18.55 Cost of sales 64.06-78.14 21.98 Gross profit 20.54 22.14 7.79 Other operating income 0.56 1.06 89.29 Distribution and selling expenses 1.15-1.20 4.35 Administrative expenses 2.22-3.23 45.50 Research and development expenses 0.33-1.03 212.12 Other expenses 1.54-5.85 279.87 including expenses as a result of the IPO ** 1.02 4.71 361.76 Profit from operations (EBIT) 15.86 11.89 25.03 Interest income 0.00 0.00 n.a. Interest expense 0.19-0.10 47.37 Profit before tax 15.67 11.79 24.76 Income taxes 2.17-2.24 3.23 Profit for the period 13.50 9.55 29.26 Earnings per share* 1.35 0.85 37.04 Adjusted 1) EBIT 16.88 16.60 1.66 Adjusted 1) net income for the period 14.52 14.26 1.79 Adjusted 1) Earnings per share (EUR)* 1.45 1.26 13.10 Revenue Revenue increased from EUR 84.59 million for the 12 months of 2010 by 18.55% to EUR 100.28 million for the full year 2011 just exceeding the EUR 100 million mark we set for ourselves as a target for the financial year 2011. Measured in RMB, revenues increased by 19.83% for 2011. We saw particularly strong growth in our domestic market China and in other new markets (e.g. Russia, Latin America, Asia-Pacific). By invoicing customer the revenues in Chinese market increased by 24% and according to an internal analysis of the management revenues by end customer revenues in China increased by more than 40% compared to the same period last year. Our residential and commercial generator segments grew by approximately 18% and 23% growth respectively compared to last year the faster growth of our commercial generator segment is in line with our strategy to expand sales of increasingly larger generators. Cost of sales Cost of sales increased from EUR 64.06 million for the 12 months of 2010 by 21.98% to EUR 78.14 million for the full year 2011. Measured in RMB, cost of sales increased by 23.31% 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 20.54 million for the 12 months of 2010 by 7.79% to EUR 22.14 million for the full year 2011. Measured in RMB, gross profit increased by 8.98% in this period. The gross margin amounted to 22.1% for full year 2011 compared to 24.3% for the comparable previous period. The gross margin while being in line with the average gross margins over the last 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 and higher depreciation. * EPS for 12 months 2010 is based on 10m shares, for 12 months 2011 it is based on the weighted average of shares (11.28m shares) ** Compared to the 2011 interim report all non-recurring IPO cost (including those previously included in administrative expenses) have been reclassified under other expense 1) Adjusted for non-recurring IPO expenses

34 Financial Report Management Report ANNUAL Report 2011 united power technology Other operating income Other operating income mainly consists of a government grant of EUR 0.749 million in respect of our achievement in new product development. Distribution and selling expenses Distribution and selling expenses increased from EUR 1.15 million for the full year of 2010 by 4.35% to EUR 1.2 million for the comparable period of 2011. Measured in RMB, distribution and selling expenses increased by 5.67% in this period. As a percentage of revenues, distribution and selling expenses have decreased slightly from 1.36% to 1.20% from full year 2010 to the full year 2011. Administrative expenses Administrative expenses increased from EUR 2.22 million for the full year of 2010 by 45.50% to EUR 3.23 million for the comparable period of 2011. Measured in RMB, administrative expenses increased by 47.34% in this period, mainly due to the higher costs of being a listed company. As a percentage of revenues, administrative expenses have changed from 2.62% for the 12 months of 2010 to 3.22% for the same period in 2011. Research and development expenses Research and development expenses increased from EUR 0.33 million for the full year 2010 by 212.12% to EUR 1.03 million for the comparable period of 2011. Measured in RMB, research and development expenses increased by 221.07% for this period. As percentage of revenues, research and development expenses have increased from 0.39% to 1.03% for the full year of 2010 to full year 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 1.54 million in 12 months 2010 by 279.87% to EUR 5.85 million for the full year 2011. Measured in RMB, other expenses increased by 285.13% in this period. As a percentage of revenues, other expenses have increased from 1.8% to 5.8% for the 12 months of 2010 to the full year 2011. The increase in other expenses are to a large part non-recurring one-off expenses of EUR 4.71 million in relation to our company s Initial Public Offering this year. Profit from operations (EBIT) EBIT for the full year of 2011 decreased by 25.03% to EUR 11.89 million year-on-year. Measured in RMB, EBIT decreased by 24.22% in this period. As a percentage of revenues, EBIT decreased from 18.75% to 11.86% for the full year 2010 to full year 2011. Adjusted EBIT (adjusted for nonrecurring one-off IPO expenses) decreased from EUR 16.88 million for the 12 months of 2010 by 1.66% to EUR 16.60 million in the comparable period of 2011. Measured in RMB, adjusted EBIT decreased by 0.62% in this period. The adjusted EBIT margin decreased from 19.96% for the full year of 2010 to 16.55% in the comparable period in 2011. Finance cost Finance cost decreased from EUR 0.19 million for the 12 months of 2010 by 47.37% to EUR 0.10 million for the comparable period of 2011. Measured in RMB, finance expenses decreased by 45.57% in this period. As a percentage of revenues finance expenses have decreased slightly from 0.23% to 0.10% for the full year of 2010 compared to full year 2011. Income taxes Income tax increased from EUR 2.17 million for the 12 months of 2010 by 3.23% to EUR 2.24 million in the comparable period of 2011. At group level, this represents a tax rate of 18.98%. Measured in RMB, income tax expenses increased by 4.48% in this period including a deferred tax of

united power technology ANNUAL Report 2011 Financial Report 35 Management Report EUR 0.51 million. 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. Our group level tax rate is expected to continue to exceed our nominal corporate tax rate due to non tax-deductible expenses incurred outside the PRC. Profit for the period and EPS Profit for the period decreased from EUR 13.50 million for the 12 months of 2010 by 29.26% to EUR 9.55 million in the comparable period of 2011. Measured in RMB, profit for the period decreased by 28.49% in this period. As a percentage of revenues, profit for the period decreased from 15.96% to 9.52% for the full year of 2010 to the full year of 2011. The EPS in the 12 months of 2011 was EUR 0.85, a decrease of 37.04% year-on-year. The reason for the decrease in profit and EPS was mainly the non-recurring expenses for the initial public offering (IPO). Adjusted profit for the period (adjusted for non-recurring one-off IPO expenses amounting to EUR 4.71 million) decreased from EUR 14.52 million in the 12 months of 2010 by 1.79% to EUR 14.26 million for the comparable period of 2011. Measured in RMB, adjusted profit for the period decreased by 0.75% in this period. The adjusted profit for the period margin decreased from 17.16% to 14.22% from the full year 2010 to full year 2011. The decrease in adjusted profit margin compared to 2010 is mainly because of the decreased gross profit margin for the reasons explained above. The adjusted EPS for the full year of 2011 was EUR 1.26. Segment information Residential generators Revenue for residential generators has increased by around 18% in 2011. Revenue for the 12 months of 2011 was EUR 56.2 million compared to the comparable period last year of EUR 47.6 million. Commercial generators Commercial generators segment showed the strongest increase and performance for the group by increasing 23.4% from EUR 28.5 million for the full year 2010 compared to this year s EUR 35.13 million. This is in line with the Company s strategy of increasingly focusing on generators with higher output and selling in categories with larger engine sizes. Outdoor power equipments The outdoor power equipment segment showed a slight decline from last year. Total segment revenue for the 12 months of 2011 was EUR 5.1 million compared to last year s comparable period of EUR 5.2 million. The decrease in this segment was mainly due to lower sales to one of our US clients compared to 2010. Components The components segment is currently not a strategic sector for the Company but rather taking advantage of opportunities in the market place. This segment represents less than 9% of the Company s total revenue. There was a slight increase from EUR 5.1 million for the full year 2010 to EUR 8.7 million for full year 2011.

36 Financial Report Management Report ANNUAL Report 2011 united power technology Assets and liabilities position The following table shows the consolidated balance sheet as at 31 December 2011 compared to the consolidated balance sheet as at 31 December 2010. United Power AG in EUR million United Power AG 31 Dec 2010 31 Dec 2011 (consolidated) Current assets 49.11 54.93 Non-current assets 23.15 56.76 Total assets 72.26 111.69 Current Liabilities 16.96 18.5 Non-current liabilities 0.24 2.04 Total liabilities 17.21 20.19 Total equity 55.06 91.50 Total liabilities and equity 72.26 111.69 Current Assets Inventories Inventories include raw materials, work in progress and finished goods. Inventories increased by 61.8% from EUR 4.51 million as at 31 December 2010 to EUR 7.30 million as at 31 December 2011. The increase is mainly due to the overall increase in company revenue and due to increased production in the lead up to the 2012 Chinese New Year holiday period which occurred early in 2012. Trade and other receivables Trade and other receivables increased from EUR 17.2 million in year-end 2010 to EUR 19.6 million for the 12 months of 2011. Trade receivable days decreased from 66 days for the full year 2010 to 60 days for the same period this year. Amounts due from related parties Amounts due from related parties decreased by 63.1% from EUR 0.65 million as at 31 December 2010 to EUR 0.24 million as at 31 December 2011. Cash and cash equivalents Cash and cash equivalents amounted to EUR 27.00 million (including EUR 0.79 million pledged bank deposit) as at 31 December 2011 which represented a slight increase of 4.66% from EUR 25.80 million (including EUR 0.94 million pledged bank deposit) as at 31 December 2010. Cash increased despite a substantial investment in property, plant and equipment boosted by the cash inflow from operations and from the proceeds of the IPO. Cash and cash equivalents comprises bank balances at international commercial banks amounting to EUR 26.88 million (EUR 25.80 million in 2010) and national commercial banks EUR 0.12 million (EUR 0.0 million in 2010). Non-current assets Property, plant and equipment Property, plant and equipment increased by 149% from EUR 20.99 million as at 31 December 2010 to EUR 52.27 mil lion as at 31 December 2011. The increase is mainly associated with our ongoing production capacity expansion. In particular, United Power has completed the installation of twelve new production lines. As a result, production capacity increased to more than 1,100,000 units per year. United Power achieved its announced 2011 year-end target capacity of 1,000,000 units per year ahead of time. Three of the new production lines are for residential generators, one for inverter generators, three for commercial generators, one for water pumps, one for high pressure washers and three new engine lines (including a new vertical engine line developed in-house). They are part of the second phase of production expansion at the production site in Gaoqi Industrial Park, Fuzhou. Property, plant and equipment is mainly located in Fuzhou, China and comprises buildings and land-use-rights (EUR 33.16 million), plant and equipment (EUR 16.94 million), motor vehicles and office equipment (EUR 1.52 million) and

united power technology ANNUAL Report 2011 Financial Report 37 Management Report deposits (EUR 0.64 million). The additions in property, plant and equipment amount to EUR 25.20 million for buildings and land-use-rights, EUR 2.58 million additions to plant and equipment plus EUR 11.34 million reclassifications from deposits and construction in progress (in total EUR 13.92 million) and EUR 0.72 million for motor vehicles and office equipment. The asset depreciation rate of 6.20% in 2011 (2010: 6.44%) is rather low. Liabilities Trade and other payables Trade and other payables decreased by 25.32% from EUR 12.65 million in 31 December 2010 to EUR 9.45 million as at 31 December 2011. Account payable days decreased from 52 days for the full year 2010 to 31.2 days for the comparable period in 2011. The payable days decrease is mainly due to our purchasing strategy to counter price increase requests from our suppliers by offering improved payment terms. Borrowings and amount due to shareholders Borrowings for the full year 2011 increased to EUR 6.58 million from EUR 3.03 million as at 31 December 2010 representing an increase of EUR 3.55 million. The additional borrowing was used to fund working capital and comprised an additional loan extended by a domestic commercial bank. The amounts due to related parties increased to EUR 0.86 million in 2011 from EUR 0.55 million in 2010. Equity to total assets ratio The total equity increased from EUR 55.1 million by 66.2% to EUR 91.5 million mainly due to the capital increase of EUR 18.9 million and increased retained earnings. Cash flows Overall cash increased slightly to EUR 27.0 million on 31 December 2011 year-on-year compared to the figure from 31 December 2010 of EUR 25.8 million. The IPO proceeds of 10 June 2011 contributed to the increase in the cash position but our investment activity associated with capacity expansion in line with the Company s strategy and increased working capital needs due to higher revenue affected the cash balance. in EUR million 2010 ( as if ) 2011 (consolidated) Operating cash flow before working capital changes 16.3 15.3 Cash generated from operations before interest and taxes 14.7 9.0 Cash generated from operating activities 12.8 6.5 Cash flow from investing activities 15.4 29.7 Cash flow from financing activities 16.6 22.5 Net increase in cash and cash equivalents 14.0 0.7 Cash at beginning of year 10.4 25.8 Effect of exchange rate changes 1.4 1.9 Cash and bank balances at end of the period 25.8 27.0 As United Power Technology AG was formed in April 2010 and the United Power s operating business injected in October 2010, the as if cash flow statement combines the United Power Hong Kong consolidated cash flow statement with the cash flow statement of United Technology AG for the period from its formation to 31 December 2010. See section 6 of the notes to the financial statements for further explanation of the as if figures. The equity to total assets ratio rose from 76.19% as at 31 December 2010 to 81.93% as at 31 December 2011.

38 Financial Report Management Report ANNUAL Report 2011 united power technology Cash generated from operations Cash generated from operations decreased by EUR 5.7 million to EUR 9.0 million at period ended 31 December 2011 mainly due to working capital requirements. Cash flow from investing activities The investment of the Company in property, plant and equipment for capacity and production expansion is reflected in the cash flow from investing activities. For the full year of 2011, the Company invested over EUR 28.20 million in property, plant and equipment resulting in negative cash from investing activity of EUR 29.71 million. Cash flow from financing activities Cash from financing activities on 31 December 2011 was EUR 22.5 million mainly from the injection of new capital by the IPO in 2011. This figure was an increase of EUR 5.9 million from the same period last year in which we received a private equity investment. The asset cover ratio decreased from 249.80% on 31 December 2010 to 175.04% on 31 December 2011. Human resources United Power s total number of employees increased from 789 at the end of 2010 to 884 at the end of December 2011. The number of employees averaged 850 employees over the course of the year. The employee split by function is shown in the table below: 2010 2011 Management 14 16 R&D 52 55 Sales & Marketing 28 32 Administration 155 155 Production 540 626 Total 789 884 SPLIT OF EMPLOYEES BY FUNCTION (in %) Sales & Marketing 3.62% Management 1.81% R&D 6.22% New borrowings raised are from three government owned banks in China. As at 31 December 2011 there are no unutilised bank facilities and no off-balance-sheet finance transactions. Administration 17.53% Workshops 70.82% Cash at end of period Overall cash increased to EUR 27.00 million compared to EUR 25.80 million for the full year last year representing a slight increase of 4.66%. as at 31 December 2011 United Power continues to strengthen its management, sales & marketing through further recruitment 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 of further expanding its product range to include products with higher performance and a better design. As at 31 December 2011, the R&D team had 55 members.

united power technology ANNUAL Report 2011 Financial Report 39 Management Report 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 global engine and generator developer. We continue to devote significant effort to improving and enhancing our existing products as well as developing 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 55 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 summarised below the status of our various product development activities: Residential generators We have launched a new residential generator (SX3250) for a new customer designed for sale in the US market. The new generator is based on the former model and is more fuel-efficient and also features significant design improvements to meet the customers requirements. Inverter generators IG3600 (3.2kw) is on the market and several units have already been sold into the European, Asian and African markets. The ASP is considerably higher than a comparable generator without inverter technology. IG2400S has now entered into commercial production stage and has meanwhile received all of the requisite international certificates (e.g. CE/GS/Noise/EMC etc.). IG1200S and IEG1200S have entered the pilot production stage. The inverter generator will mainly be sold to the European and North American markets, which have the highest quality requirements, and to our domestic market. We are also developing in-house 1kw and 2kw inverter engines, which are expected to be launched in May and July 2012, respectively. The two engines will significantly cut down the unit production cost of our inverter products. High-power generators More than 1,000 units of the new 10kw high power gasoline generator have already been sold to several customers in most of our customer geographical regions and United Power received a positive market response. The tests for the 10kw high power diesel generator have been completed and the sales and marketing process for the product has commenced. Vertical high-pressure washers We have also developed a series of new high pressure washer products with six different engine sizes 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 We developed a new natural gas generator and completed the testing phase at the end of 2011. The product has been developed primarily for the US market and we are currently proceeding with the product certification process required to enter into the US market. 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 development for the industrial generators is expected to be completed by the end of 2012.

40 Financial Report Management Report ANNUAL Report 2011 united power technology Existing products improvement United Power has made further improvements (design, efficiency and/or environmental) to existing products such as the GG1200 (which has been launched as GG1256 with a 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 strictest EPA standards. The EPA III certificate has been obtained for the products with this technology. Finally, a new exterior design and appearance has been developed for the 2 5 KW residential generators: this offers a number of advantages including increased user-friendliness and safety as well as higher fuel efficiency due to enhanced cooling properties. Statement and report pursuant to section 315 paragraph 4 HGB (German Commercial Code) Subscribed capital The subscribed capital (share capital) of United Power Technology AG amounts to EUR 12,300,000.00 and is divided into 12,300,000 no par value bearer shares with a notional value of EUR 1.00 each. Restrictions regarding voting rights and the right to transfer shares Each share represents one vote. There are no restrictions on any shares and according to the Articles of Association there are also no restrictions on voting rights for shares of the Company. The board is not aware of any agreements between shareholders, which provide for restrictions on voting rights or the transfer of the shares. Direct or indirect participation in shares with more than 10% of the voting rights As at 31 December 2011, the following shareholders hold more than 10% of shares in United Power Technology AG: 24.26% are held by Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, (indirectly held by Mr. Xu Wu) with a corresponding amount of voting rights; 22.88% are held by Fortune Great Investments Limited, Road Rown, Tortola, British Virgin Islands, (indirectly held by Mr. Wei Song) with a corresponding amount of voting rights; 22.18% are held by High Advance Investments Limited, Road Town, Tortolam British Virgin Islands, (indirectly held by Mr. Zhong Dong Huang) with a corresponding amount of voting rights; 10.47% are held by Orchid Asia IV LP L.P., Cayman Islands, with a corresponding amount of voting rights. Shares with special rights There are no shares with special control powers. Voting rights of employees The employees, who hold shares, exercise their unrestricted (voting) rights directly. Appointment and dismissal of Management Board members. Amendments to the Articles of Association According to section 7 of the Articles of Association, the Management Board of United Power Technology AG consists of one or more persons. The Supervisory Board determines the number of members of the Management Board. The Management Board of United Power Technology AG consists of three members.

united power technology ANNUAL Report 2011 Financial Report 41 Management Report The Supervisory Board elects the Management Board members in accordance with section 84 of the German Stock Corporation Act (AktG) for a term not exceeding five years. Any extension of the term requires a Supervisory Board decision and cannot be decided earlier than a year before the end of the current contract period. In special cases, the district court can appoint a replacement for a member of the Management Board at the request of any person who has legitimate interest (for example other board members) (section 85 AktG). Such an appointment would be terminated immediately when, for example, the Supervisory Board appointed the member of the Management Board. The dismissal of members of the Management Board can only be for important reasons (section 84 paragraph 3 sentences 1 and 3 AktG). Important reasons are for example, general neglect of duties, inability to properly exercise the duties or the loss of confidence by the Annual General Meeting (AGM). The Articles of Association of the Company can be changed by the AGM and the changes will take effect once they are registered with the Commercial Register (Handelsregister). If the AGM decides to change of the Company s statutes according to section 179 and 133 AktG a majority of 75% of the cast votes cast is required. According to section 10 paragraph 3 of the Articles of Association the Supervisory Board is entitled to amend the Articles of Association, provided that such amendments affect only the wording. Authority of the Management Board to issue shares On 1 October 2010, the AGM authorised the Management Board, with the approval of the Supervisory Board, to increase the share capital of the Company until 5 October 2015, once or several times by up to a total of EUR 5,000,000.00 by issuing a total of 5,000,000 no par value bearer shares in consideration of contribution in cash or in kind (Authorised Capital 2010/II). On principle, shareholders are to be offered subscription rights; the statutory subscription rights may also be offered in such a way that the new shares are taken over by a bank or a syndicate of banks with the obligation to offer them to the Company s shareholders for subscription. The board of managing directors is authorised, in each case with the approval of the Super visory Board, to resolve on the exclusion of the subscription right of the shareholders. An exclusion of the subscription right, however, shall only be admissible in the following cases: a) if the new shares are issued to acquire companies, shares in companies or parts of a company; b) for fractional amounts. The Management Board shall decide, with the approval of the Supervisory Board, on the content of the rights to shares and the conditions of issuance of the shares. After utilisation of authorised capital or the lapse of the period for the utilisation of authorised capital, the Supervisory Board is authorised to amend the articles of association. With the issuance of 2,300,000 shares on 10 June 2011 an unused authorised capital of 2,700,000 shares is remaining as at 31 December 2011. Change of control provisions There are no agreements with United Power Technology AG which are subject to the condition of a change of control due to takeover offer. Agreement on compensation in the event of a takeover offer There are no agreements between the members of the Management Board or employees and United Power Technology AG, which provide for compensation in the event of a change of control due to a takeover offer.

42 Financial Report Management Report ANNUAL Report 2011 united power technology Remuneration report Management Board remuneration According to section 87, para. 1, and section 107, para. 3, sentence 3 of the German Stock Corporation Act, the Supervisory Board is responsible for determining the Management Board s remuneration. The remuneration for the Company s Management Board is based both on the size and the area of activity, as well as on the financial status of United Power Technology AG. The remuneration for the Management Board contains both a non-performancebased component, payable in twelve monthly salary payments, as well as bonus components. The Management Board members had various variable remuneration components, which, in the case of two Management Board members, were based on an increase in the EBITDA, and, in the case of one Management Board member, on the successful execution of the United Power Technology AG s IPO, along with other criteria. At the time of writing, the Management Board members do not receive any options to purchase United Power Technology AG shares. The Management Board members have not been promised any benefits in the event of the regular termination of their activity. One change took place in the Management Board in fiscal year 2011. With a resolution dated 27 April 2011, the Supervisory Board appointed Management Board member Oliver Kuan to the Management Board of United Power Technology AG effective 28 April 2011. Management Board member Oliver Kuan received a net salary in the amount of EUR 103,752.73 for fiscal year 2011. In addition, he received net remuneration in the amount of EUR 320,560.95 for his contribution to the IPO of United Power Technology AG. Oliver Kuan will receive a profit-sharing bonus of EUR 12,251.95 for other contributions in 2011. In addition, Management Board member Oliver Kuan was promised a profit-sharing bonus that was to be determinated by 31 December 2011. Management Board member Oliver Kuan was also promised a stock option plan. The introduction of such a stock option plan is planned as part of the 2012 Annual General Meeting. Details regarding the plan have yet to be determined. in EUR Fixed Bonus Xu Wu 2011 2010 Zhong Dong Huang 2011 2010 Oliver Kuan 2011 2010 Wang Liwei 2011 2010 Total 2011 2010 55,572.00 18,409.58 53,572.00 17,959.43 103,752.73 49,182.41 212,896.73 85,551.42 12,251.15 12,251.15 332,812.10 357,314.40 Insurance Pension Fund 264.00 206.41 264.00 206.41 528.00 412.82 Total 68,087.15 18,615.99 66,087.15 18,165.84 436,564.83 49,182.41 570,739.13 85,964.24

united power technology ANNUAL Report 2011 Financial Report 43 Management Report Supervisory Board remuneration Remuneration of the Supervisory Board shall be set at the Annual General Meeting and regulated in the articles of association of United Power Technology. In addition to having their expenses reimbursed (including any VAT expenses incurred in carrying out Supervisory Board activities), each member of the Supervisory Board shall receive fixed remuneration of EUR 20,000.00 payable after the end of fiscal year 2011. Supervisory Board member Hubertus Krossa shall receive an additional payment of EUR 20,000.00. Members who were not part of the Supervisory Board for the entire year shall receive a remuneration proportional to the time they were members. Variable payments were not made to the Supervisory Board for fiscal year 2011. At present, the Supervisory Board members do not receive any options to purchase United Power Technology AG shares. The Supervisory Board members received the following remuneration for the 2011 fiscal year: in EUR thousand 2010 2011 Mr. Wei Song (Chairman of the Supervisory Board) 14 20 Mr. Hubertus Krossa (Vice Chairman of the Supervisory Board) 9 40 Ms. Ning Cong 4 20 Total 27 80 Corporate governance declaration The corporate governance declaration is included in the annual report and was also published on our website www.unitedpower.de.com/en. Risk and opportunity management Risk management system In order to operate successfully in the current volatile environment, we need to anticipate developments at an early stage and systematically identify, assess and manage the resulting risks. It is equally important to recognise and exploit opportunities. United Power has implemented an internal risk management system to further mitigate the Group s exposure to financial risks, compliance risks and operational risks. The scope of our 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. United Power endeavours 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. The management and organisational structure is well defined and facilitates the flow of information among the functional departments. The organisational structure has four layers, senior management, middle management, functional leads and staff. The duties and functions are segregated between sales, purchase, production, human resource, finance, R&D and asset management departments.

44 Financial Report Management Report ANNUAL Report 2011 united power technology Management oversees the risk assessment process, including anticipating any changes, estimating the significance of risks, assessing the likelihood of occurrence, and determining the needed actions required. Weekly management meetings are held, involving the CEO and other senior management to discuss about the Group s operation matters and immediate action will be taken to mitigate the operational and financial risks. Management Board and Supervisory Board meetings are held at least once quarterly to discuss about the key operation matters and strategies (including financial decisions) and review the performance of the Group. The finance department monitors new and significant changes in financial reporting pronouncements and standards. Significant changes are communicated to appropriate accounting personnel in the parent and subsidiaries. The finance department is notified of changes in the Group s business practices and/or operating environment that may affect the method/process of recording transactions via written notice. Management tends to be conservative in the selection and application of accounting principles and accounting estimation. Estimates made by management are typically within or above the midpoint of the range of possible outcomes. The Group has strict policies on authorisation of transactions. All transactions that require cash and bank settlements must be approved by the General Manager. The Group has installed an internal audit department, which reports directly to the General Manager. The internal audit department is expanded in order to conduct a comprehensive financial and operational examination at each operating location using a risk-based approach to determine the frequency of visits to a specific entity. Human resources policies are in compliance with the labour laws in the People s Republic of China. According to the Group s recruitment process, all the candidates are required to undergo interviews by the department manager and HR manager. In addition, the performance review processes are performed regularly and with great diligence. The Group has a formal written code of conduct and employee manuals/policies, which are communicated to all employees. All employees are required to sign an agreement on compliance with the Group s code of conduct and ethics. Accounting-related internal control system United Power Technology AG s accounting-related internal control system (ICS) comprises the principles, methods, and measures used to ensure appropriate accounting. The accounting-related ICS is continuously refined and aims to ensure that the consolidated financial statements of United Power are prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), as well as with the regulations under commercial law as set forth in section 315a (1) HGB (German Commercial Code). Internal Audit is responsible for independently reviewing the functionality and effectiveness of the ICS in the Group and, to comply with this task, has comprehensive information, audit and access rights. In addition, the external auditors conduct a risk oriented audit to verify the effectiveness of those parts of the ICS that are relevant to financial reporting. Finance department manages the process of Group accounting and management reporting. Laws, accounting standards and other pronouncements are continuously analyzed as to whether and to what extent they are relevant

united power technology ANNUAL Report 2011 Financial Report 45 Management Report and how they impact on financial reporting. The relevant requirements are communicated to the relevant units. In addition, supplementary process directives, standardised reporting formats, IT systems, as well as IP-based reporting and consolidation processes support the process of uniform and compliant Group accounting. Where necessary we also draw on the services of external service providers. Finance department ensures that these requirements are complied with consistently throughout the Group. The staff involved in the accounting process receives regular training. Internal controls are embedded in the accounting process depending on risk levels. The accounting related ICS comprises both preventive and detective controls, which include: IT-based and manual data matching the segregation of functions the dual checking principle general IT checks such as access management in IT systems, and change management In order to ensure a high-quality accounting-related ICS, internal audit is closely involved in all stages of the process. Risk report Of all the risks indentified for the Group, the following section examines those risk areas of individual risks that could materially affect United Power s financial position and results. Our business operations may also be impacted by other risks that we are not currently aware of or did not consider significant. Insurable risks are covered by a Groupwide insurance program. United Power Group and United Power Technology AG are exposed to a number of risks related to the market for power equipment, the ability to develop new products, protection of trademarks and intellectual properties, rising commodity costs and component prices, rising labour costs, high fluctuation of workers and tightening requirements of Chinese regulations relating to environment protections. We minimze these risks by expanding our market share in our principal markets and improving our product quality. Furthermore we are aiming to establish new sales offices outside China in target markets within the next three years. United Power intends to establish their own or licensed brands in order to cover the above mentioned risks. Most of our financial risk arise from liquidity, credit, currency and interest rate risks. We monitor and manage these risks by means of regular analysis and evaluation of the investment risks. To ensure the Group s solvency and financial flexibility at all times, we maintain a liquidity reserve in the form of cash. The credit risk is managed by determining credit limits, diligent credit approvals and regularly monitoring accounts receivables.

46 Financial Report Management Report ANNUAL Report 2011 united power technology The foreign exchange rate risk is a risk relating to financial instruments. The management is monitoring closely the risk relating to the appreciation of the RMB, the weakness of the Euro according to the Euro-crisis, exchange rate risks and the costs and benefit of hedging operations. In the past hedging operations were not considered as necessary. In order to manage the interest rate risk, management performs sensitivity analyses on a periodic basis by evaluatig increases or decreases in interest rates. Based on our current evaluation, United Power Group is not exposed to any risks which would materially affect the profit or loss, financial position and assets or liabilities. Report on post-balance sheet events There were no transactions or other events of special significance after the balance sheet date of 31 December 2011. Outlook United Power Technology Group s growth continues to be 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 their commercial and industrial usage of its products. The investment plan is concentrated on capacity expansion. Total investment this year is expected to be around RMB 100 million (EUR 11 million), based on a currency rate of EUR/RMB of 1:9 more than 60% of which will be invested in property, plant and equipment and the rest in R&D, sales and distribution as well as general working capital requirements. The Company has the ability to finance its investment through operating cash flow and its existing cash balances. This year we plan to add another two to four product production lines, which we expect to still accommodate within the second phase of the production expansion of Gaoqi Industrial Park, which is our third factory. We will particularly focus our investment on new production lines for larger generator products including commercial generators and possibly industrial generator products in line with our strategy. We may adjust our investment plan in light of the demand prevailing at the time and capacity utilisation conditions. 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 (i.e. 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.

united power technology ANNUAL Report 2011 Financial Report 47 Management Report United Power has successfully continued to widen its international customer base in 2011 acquiring 50 new customers around the world, bringing our total number of customers to more than 200 in more than 50 countries. New supplier contracts for residential generators and commercial generators were signed with several retailers in UK, France, the US and sizeable wholesalers in Germany and Australia, respectively, and a specialised dealer in Nepal. Supplier contracts signed by United Power include a major Australian wholesaler, which supplies to Woolworth and Lowes, and with a German wholesaler, which supplies to the discounter Norma. United Power also entered new countries such as Brazil, Ireland and other new countries in Africa, Asia and Latin America. United Power continues to expande 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 through 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. It is intended to achieve strengthening of the Group s brands by 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. The uncertain global economic environment and particularly weaker demand from Europe as well as a slowdown in the Chinese construction market caused by tightening measures implemented by the Chinese government over recent months has impacted our growth and profitability, particularly in the later part of 2011. The year 2012 commenced with a largely unchanged picture: a still fragile global economic environment vulnerable to a multitude of potential shocks and risks and an possible recession in the eurozone. While we remain confident about our continuing profitable growth prospects particularly over the medium to long term, we do expect the weakness in our key export market Europe and weak Euro currency as well as a subdued Chinese construction market to continue to weigh on growth and profitability particularly in the first quarter and possibly second quarter of this year. In view of this uncharacteristically uncertain environment, we would not see it as prudent to provide detailed and definitive guidance for the next two years. Despite the adverse conditions in Europe and China (which are our two largest markets by end customer), we do however aim to grow faster than our industry (which is estimated to grow on average by about 7.5% annually until 2015) as a whole over the next two years and continue to gain market share globally. Assuming a stable EUR:RMB exchange rate and generally improved trading conditions in the later part of this year, our current expectation for revenue growth is about 10% for 2012. Our EBIT margin for 2012 and 2013 is expected to be somewhat lower compared to the adjusted EBIT margin of 2011 due to the effect of the RMB appreciation over the last year, our strategy to further strengthen our R&D and sales and distribution capabilities and also as a result of the increased administrative costs of being a listed company. We aim to gradually refine our guidance throughout the year. Eschborn, 27 March 2012

48 detailled index Consolidated Financial Statements 16.6 per cent In a challenging environment, United Power achieved an adjusted EBIT-margin of 16.6% for fiscal year 2011.

detailled index 49 Consolidated Financial Statements 50 Consolidated Statement of Financial Position 51 Consolidated Statement of Comprehensive Income 52 Other Comprehensive Income (Expenses) 53 Consolidated Statement of Changes in Equity 54 Consolidated Statement of Cash Flow 55 notes to the Consolidated Financial Statements

50 Financial Report Consolidated Financial Statements ANNUAL Report 2011 united power technology Consolidated Statement of Financial Position as at 31 December 2011 in EUR thousand Notes 2010 2011 Non-current assets Property, plant and equipment 19 20,988 52,269 Intangible assets 18 1,149 1,174 Available-for-sale investments 23 17 16 Deferred tax assets 21 98 1,260 Other non-current assets 20 898 2,041 23,150 56,760 Current assets Inventories 22 4,509 7,298 Trade and other receivables 24 17,209 19,558 Amounts due from related parties 34 649 238 Current recoverable income taxes 0 1 Other current financial assets 25 943 785 Other current assets 20 0 47 Cash and cash equivalents 25 25,800 27,002 49,110 54,929 Total assets 72,260 111,689 Capital and reserves Share capital 26 10,000 12,300 Additional paid-in capital 26 39,552 56,275 Revaluation reserve 26 1 1 Foreign currency translation reserve 26 1,907 9,432 Retained earnings 26 2,763 12,343 Equity attributable to owners of the parent 26 54,221 90,349 Non-controlling interests 26 834 1,154 Total equity 55,055 91,503 Liabilities Non-current liabilities Deferred tax liabilities 21 38 101 Other liabilities 206 1,941 244 2,042 Current liabilities Borrowings 27 3,031 6,582 Trade and other payables 28 12,651 9,448 Amounts due to related parties 34 546 857 Other provisions 29 86 167 Current tax liabilities 602 1,090 Amounts due to controlling shareholders 34 45 0 16,961 18,144 Total liabilities 17,205 20,186 Total liabilities and equity 72,260 111,689

united power technology ANNUAL Report 2011 Financial Report 51 Consolidated Financial Statements Consolidated Statement of Comprehensive Income for the period from 1 January to 31 December 2011 in EUR thousand Notes 2010 27.04. 31.12.2010 2010 ( as if ) 1) 2011 Revenue 7 22,120 84,593 100,283 Cost of sales 9 17,085 64,058 78,143 Gross profit 5,035 20,535 22,140 Other operating income 123 555 1,068 Distribution and selling expenses 318 1,151 1,204 Administrative expenses 722 2,218 3,233 Research and development expenses 114 325 1,032 Other expenses 11 703 1,535 5,849 thereof as a result of the IPO 461 1,019 4,705 Profit from operations (EBIT) 3,301 15,861 11,890 Interest income 0 0 4 Interest expense 14 15 193 104 Financial result 15 193 100 Profit before taxes 3,286 15,668 11,790 Income taxes 15 521 2,166 2,238 Profit for the period 16 2,765 13,502 9,552 Profit for the period attributable to: Owners of the Company 2,763 13,495 9,580 Non-controlling interests 2 7 28 2,765 13,502 9,552 Earnings per share in EUR (diluted basic) 2) 17 0.73 1.35 0.85 Adjusted EBIT 2) 3,762 16,880 16,595 Adjusted net income for the period 3) 3,226 14,521 14,257 Adjusted earnings per share (in EUR) 4) 0.85 1.45 1.26 1) For further explanation please see section 6 as if combined financial information for the preceding period in the notes to the financial statements. 2) Adjusted EBIT is the profit from operations (EBIT) adjusted for IPO expenses. 3) Adjusted net income for the period is the consolidated profit for the period adjusted for IPO expenses. 4) EPS for 12 months 2010 is based on 10m shares, for 2011 it is based on the weighted average of shares (11.28m shares).

52 Financial Report Consolidated Financial Statements ANNUAL Report 2011 united power technology Other Comprehensive Income (Expenses) for the period from 1 January to 31 December 2011 in EUR thousand 2010 2010 ( as if ) 1) 2011 Exchange differences arising on translation 1,936 2,636 7,555 Net (loss) gain arising on revaluation 1 3 0 Other comprehensive income (expense) for the period 1,935 2,639 7,555 Total comprehensive income for the period 4,700 16,141 17,107 Total comprehensive income (expense) attributable to: Owners of the Company 4,670 16,157 17,105 Non-controlling interests 30 16 2 4,700 16,141 17,107 1) For further explanation please see section 6 as if combined financial information for the preceding period in the notes to the financial statements.

united power technology ANNUAL Report 2011 Financial Report 53 Consolidated Financial Statements Consolidated Statement of Changes in Equity for the period from 1 January to 31 December 2011 in EUR thousand Share capital UP AG Capital reserves Revaluation reserve Foreign currency translation reserve Retained earnings Attributable to owners of the Company Noncontrolling interests Total equity 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 4,699 Balance as at 31 Dec 2010 10,000 39,552 1 1,907 2,763 54,221 834 55,055 Capital injection 2,300 18,400 20,700 20,700 IPO-cost 1,756 1,756 1,756 Contribution by non controlling shareholders 79 79 318 397 Profit for the period 9,580 9,580 28 9,552 Other comprehensive income (expense) for the year 7,525 7,525 30 7,555 Total comprehensive income (expense) for the year 7,525 9,580 17,105 2 17,107 Balance as at 31 Dec 2011 12,300 56,275 1 9,432 12,343 90,349 1,154 91,503

54 Financial Report Consolidated Financial Statements ANNUAL Report 2011 united power technology Consolidated Statement of Cash Flow For the period from 1 January to 31 December 2011 in EUR thousand 2010 2010 ( as if ) 2011 Profit before tax 3,286 15,668 11,790 Adjustments for: Allowance for doubtful debts 0 112 0 Depreciation on intangible assets and property, plants and equipment 237 645 1,868 Income tax expense (income) 66 66 126 Interest (income) expense, net 43 114 146 Other financial result 16 194 104 Other non-cash (income) expense 1 10 1,555 (Gain) loss from the disposal of intangible assets and property, plant and equipment 0 1 1 (Increase)/decrease in current assets 1,277 6,497 3,281 Increase/(decrease) in current liabilities 1,108 4,847 3,065 Cash generated from operations 3,392 14,686 8,950 Interest paid 41 263 104 Interest received 0 0 4 Income taxes paid 531 1,641 2,346 Net cash generated from operating activities 2,820 12,782 6,504 Payments for acquisition of: Intangibles 146 1,179 406 Property, plant and equipment 9,543 14,000 28,197 Short and medium term investments 28 0 1,245 Proceeds on disposal of: Property, plant and equipment 0 2 1 Government grants received 3 213 0 Advance to a related party 181 522 0 Interest income 42 113 142 Increase in cash and bank balances due to contribution in kind 32,855 1 0 Cash flow from investing activities 23,058 15,372 29,705 Repayment of borrowings 1,671 11,524 10,588 New borrowings raised 0 8,511 13,585 Payment of initial capital of UPT AG 50 50 0 Capital injection 719 18,946 2,300 Proceeds from new shares 0 0 18,400 Payment of IPO-cost 0 0 1,756 Capital contributions by non-controlling shareholders 0 782 647 Repayment of advances to controlling shareholders 0 180 44 Advances from controlling shareholders 0 45 0 Cash flow from financing activities 902 16,630 22,544 Net increase (decrease) in cash and bank balances 24,976 14,040 657 Cash and bank balances at beginning of year 0 10,369 25,800 Effect of exchange rate changes 824 1,391 1,859 Cash and bank balances at end of period 25,800 25,800 27,002

united power technology ANNUAL Report 2011 Financial Report 55 Notes Notes to the Consolidated Financial Statements For the period from 1 January to 31 December 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 10 June 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 consolidated financial statements of the Company for the financial year ended 31 December 2011 were authorised for issue by Management Board on 27 March 2012. The consolidated financial statements are presented in Euros. Amounts are stated in thousands of Euros (keur) except where otherwise indicated. The currency of the primary economic environment in which the Company and its subsidiaries operate is Renminbi ( RMB ) (the functional currency of the Company and its subsidiaries). The figures mentioned in the consolidated financial statements were subject to rounding adjustments that were carried out according to established commercial standards. As a result, the figures stated in a table may not exactly add up to the total values that may also be stated in the table. Dividends and foreign exchange restrictions Dividends to be paid by the operating Chinese subsidiaries generally have to be approved by Chinese government bodies. In addition, dividends are only payable if Chinese statutory reserves satisfy the related legal requirements. 2. Basis of preparation The consolidated financial statements of United Power have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), as well as with the regulations under commercial law as set forth in section 315a (1) of the German Commercial Code (Handelsgesetzbuch HGB). All IFRSs issued by the international Accounting Standards Board (IASB) which were effective at the date of the preparation of the accompanying consolidated financial statements and have been applied by United Power are adopted by the EU. The Group has not early applied the following new and revised standards and interpretations that have been issued but are not yet effective. IFRS 7 (amendments) Disclosures Transfer of financial assets (Effective date: 1 July 2011) The following new and revised standards and interpretations that have been issued but are not yet effective, are not yet endorsed by the European Union (EU): IFRS 1 (amendments) Replacement of a fixed date with the date of transition to IFRS for first time adoptors (Effective date: 1 July 2010)

56 Financial Report Notes ANNUAL Report 2011 united power technology IFRS 1 (amendments) Severe hyperinflation (Effective date: 1 July 2010) IFRS 9 (amendments) Financial instruments: Classification and measurement of financial assets (Effective date: 1 January 2015) IFRS 9 (amendments) Financial instruments: Classification and measurement of financial liabilities (Effective date: 1 January 2015) IFRS 10 (amendments) Consolidated financial statements (Effective date: 1 January 2013) IFRS 11 (amendments) Joint arrangements (Effective date: 1 January 2013) IFRS 12 (amendments) Disclosure of interests in other entities (Effective date: 1 January 2013) IAS 27 (2011) (amendments) Separate financial statements (Effective date: 1 January 2013) IAS 28 (2011) (amendments) Investments in associates and joint ventures (Effective date: 1 January 2013) IAS 12 (amendments) Deferred tax (Effective date: 1 January 2012) IAS 19 (amendments) Employee benefits (Effective date: 1. Januar 2013) IFRIC 20 (new interpretation) Stripping costs in the production phase of a surface mine (Effective date: 1 January 2013) Management Board anticipate that the application of these standards and interpretations will have no significant impact on the presentation of net-assets, financial position and results of operations of the Company. According the balance sheet disclosure the Company differentiates between non-current and current assets and liabilities, which were shown in the notes to the financial statements according to their maturity. The consolidated income statement is classified according to the cost of sales method. Thereby the revenues are compared with expenses incurred for their realization. The expenses are allocated to the functional areas production, sales and general administration. IFRS 13 (amendments) Fair value measurement (Effective date: 1 January 2013) IAS 1 (amendments) Presentation of items of other comprehensive income (2011) (Effective date: 1 July 2012)

united power technology ANNUAL Report 2011 Financial Report 57 Notes 3. Consolidated Group All subsidiaries are included in the consolidated financial statements. Subsidiaries are companies that are directly or indirectly controlled by United Power and are fully consolidated. The existence and effect of potential voting rights that are currently exercisable or convertible, including potential voting rights held by another entity, are considered when assessing whether an entity is controlled. Consolidated financial statements Name registered office of the Company Share capital (in thousands) Equity interest (in %) United Power Equipment Co., Ltd., Mongkok, Hong Kong (UP HK-Holding) 1 EUR 100 United Power Equipment Co., Ltd., Fuzhou, People s Republic China (UPEC) 39,100 USD 100 United Power France SASU, Lille, France 1) 10 EUR 100 Fujian United Power Equipment Co., Ltd., Fuzhou, People s Republic China (FUPEC) 20,000 RMB 100.0* Sealand Machinery Co., Ltd., Fuzhou, People s Republic China 10,000 RMB 100.0* Disheng WanKai Machinery Co., Ltd., Fuzhou, People s Republic of China (DWC) 2) 20,000 RMB 51.0* Shanghai Dai Fei International Trading Co., Ltd., Shanghai, People s Republic of China (SHDF) 1,000 USD 100 1) Incorporated by the Group in October 2011. 2) Incorporated by the Group and Mr. Wei Gao Xin (an independent investor) on 22 June 2010. The Group holds 51% and Mr. Wei Gao Xin 49% of shares in DWC. *Indirect. Additions to the consolidated group in 2011 financial year include United Power France SASU, a company established in Lille, France. United Power France SASU is a sales company for the European market. As of 31 December 2011, the company had not yet performed any significant transactions for the Group. The addition to the consolidated group in 2011 has no material impact on the comparability of the financial statements. The percentage of equity interests in the subsidiaries attributable to the Group did not change during the Track Record Period, except Sealand Machinery Co., Ltd. 43% equity of Sealand was acquired by UPEC from a minority shareholder. The purchase price of the Company amounts to approximately EUR 0.25 million. In financial year 2010 Sealand Machinery Co., Ltd., had revenues of approx. EUR 2.0 million. The acquisition of Sealand Machinery Co., Ltd., has no material impact on the comparability of the financial statements. IFRS 3, business combinations, was not applicable for the business combination in financial year 2010 in connection with the contribution of United Power Equipment Co., Ltd., Hong Kong. Thus, there are no effects on subsequent measurement that have to be reported. 4. Significant accounting policies The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards, as applicable in the European Union. The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, as explained below. Historical cost is generally based on the fair value of the consideration given in exchange for goods. The material principles on recognition and measurement outlined below were applied uniformly.

58 Financial Report Notes ANNUAL Report 2011 united power technology Basis of consolidation The consolidated financial statements incorporated in the financial statements of the Company and entities controlled by the Company. Control is achieved where he Company has the power to govern the financial and operating policies of an entity so as obtain benefits from its activities. The financial statements of United Power Technology AG and its subsidiaries are consolidated in accordance with IFRS under consideration of the Group accounting policies. The financial statements of the subsidiaries are prepared on the same reporting-date as the parent. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. The intra-group receivables and liabilities, investments and shares as well as income and expenses were eliminated. Total comprehensive income and expense of a subsidiary is attributed to the owners of the Company and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance. Cost of equity transaction Costs in connection with the initial public offering (IPO) by raising equity through the offering and issuance of new shares as far as they are attributable to the offer of new shares have been deducted from equity. Costs which were directly attributable to the listing procedure have been included as expenses in the period. Costs which were not clearly attributable have been allocated in relation to the new shares to the total of old and new shares between the share issue and the listing. Intangible assets Intangible assets acquired separately Intangible assets acquired separately and with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation for intangible assets with finite useful lives is provided on a straight-line basis over their estimated useful lives. An intangible asset is derecognised at its disposal or when no further economic benefit is expected from its use or its disposal. Gains or losses arising from derecognition of an intangible asset are measured at the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss in the period when the asset is derecognised. Internally-generated intangible assets Expenditures on research activities is recognised as an expense in the period incurred. An internally-generated intangible asset arising from development is recognised if, and only if, all of the following have been demonstrated: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and the resources to complete the development and to use or sell the intangible asset; and the ability to measure reliably the expenditure attributable to the intangible asset during its development.

united power technology ANNUAL Report 2011 Financial Report 59 Notes The amount initially recognised for an internally generated intangible asset is the sum of the expenditure incurred from the date when the intangible asset first met the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period incurred. Subsequent to initial recognition, an internally generated intangible asset is measured at cost less accumulated amortisation and accumulated impairment losses, on the same basis intangible assets acquired separately. In the reporting period all expenses related to research and development costs do not fulfil the described requirements and are therefore included in the income statement. Impairment of tangible and intangible assets, except Goodwill At the end of the reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. Property, plant and equipment Property, plant and equipment are carried at cost and depreciated over the estimated useful life. As at the reporting date, the book values are reviewed for impairment in regard of their recoverability and necessary revaluations and values are adjusted if necessary. Construction in progress for use in production, sales or administration is carried at cost less any recognised impairment loss. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are added to the cost of those assets according to Group accounting policies. Construction in progress is classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets commences when the assets are ready for their intended use. Production costs comprises direct material costs, direct production costs, special direct costs of production, indirect material costs, indirect production costs and depreciation of property, plant and equipment. Depreciation is provided to write off the cost of items of property, plant and equipment, other than construction in progress, over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method. If the recoverable amount of an asset (or a cash-generating item) is estimated to be less than its carrying amount, the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

60 Financial Report Notes ANNUAL Report 2011 united power technology Plant and equipment Motor vehicles Buildings Office equipment 10 years 5 years 20 years 5 years An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period in which the item is derecognised. Inventories Inventories are stated at the lower of cost and net realisable value. The production costs of finished goods and work in progress include all costs for product development, raw materials and supplies, direct personnel costs, other direct costs and indirect costs attributable to production (based on a normal operating capacity) and are calculated using the weighted average method. Acquisition costs of raw materials and supplies are measured at weighted average. The acquisition and production costs do not include borrowing costs. The net realisable value is the estimated sales price minus necessary variable cost of distribution, in normal course of business. The details of inventories are disclosed in Note 22 of the notes. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold in the course of ordinary activities, net of discounts and sales-related taxes. Revenue from sales of goods is recognised when the goods are delivered and title has passed respectively as at this date all rights, entitlements and obligations shall be assumed by purchaser. Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset s net carrying amount on initial recognition. Dividend income from investments is recognised when the rights to receive payment have been established. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee (finance lease). All other leases are classified as operating leases. The Group has not entered into finance leases in the reporting period and in preceding periods.

united power technology ANNUAL Report 2011 Financial Report 61 Notes The Group as lessor Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease. The Group as lessee Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. Prepaid lease payments Upfront prepayments made for the land use rights are initially recognised on the combined statement of financial position as other assets and are charged to the profit or loss as expenses over the periods of the respective lease. Foreign currencies The management has determined the currency of the primary economic environment in which the Group operates, to be Renminbi as the currency of the primary economic environment. Fluctuations in RMB primarily influence revenue and also the major cost for the supply of goods and major operating expenses. The presentation currency of the Group is EUR, being the presentation currency of its German domiciled legal parent and holding company, and therefore the financial information has been translated from RMB to EUR. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise. For the purpose of presenting the combined financial statements, the assets and liabilities of the Group are translated to EUR as its presentation currency using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates prevailing at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (the foreign currency translation reserve). The following exchange rates have applied: 2010 2011 Balance sheet date 31 December 1 EUR = RMB 8.8065 8.1625 Average 1 EUR = RMB 8.9247 9.0213 Balance sheet 31 December 1 HKD = RMB 0.8509 0.8107 Average 1 HKD = RMB 0.8708 0.8279 Preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the exchange rates prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

62 Financial Report Notes ANNUAL Report 2011 united power technology Government grants Government grants are not recognised as profit until there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are realisable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become realisable. Retirement Benefit Costs Contributions to statutory retirement benefit schemes are recognised as an expense when employees have rendered service entitling them to the contributions. These are defined contribution plans. The Company has no direct and indirect pension obligations which would be classified as defined benefit obligation. Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the combined statements of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the combined financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax assets and liabilities are presented net if an enforceable legal title for offsetting exists and if the deferred tax assets and liabilities are related to income taxes which are raised by the same tax authority for either the same taxpayer or different taxpayers which intend to achieve the settlement on a net basis. The carrying amount of deferred tax assets is reviewed at the end of a reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

united power technology ANNUAL Report 2011 Financial Report 63 Notes Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflect the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity, respectively. Where current or deferred tax arises from initial accounting for a business combination, the tax effect is included in the accounting for the business combination. Financial instruments Financial assets and financial liabilities are recognised in the combined statement of financial position when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Financial assets Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss (FVTPL), held-to-maturity investments, available-forsale (AFS) financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. At the end of the reporting period the Group holds solely financial assets classified as available for sale financial assets and loans and receivables. Effective interest method The effective interest method is a method of calculating the amortised cost of financial assets and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Interest income is recognised on an effective interest basis for debt instruments. Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at fair value through profit or loss, or neither (a) loans and receivables (b) nor held-to-maturity investments or (c) nor financial assets which are measured at fair value through profit or loss. The Group designated listed shares investment as available-for-sale financial assets, which are not held for selling in near future, or managed for short-term profit taking.

64 Financial Report Notes ANNUAL Report 2011 united power technology Available-for-sale financial assets are measured at fair value at the end of the reporting period. Changes in fair value are recognised in other comprehensive income and accumulated in revaluation reserve until the financial asset is disposed of or is determined to be impaired, at which time, the cumulative gain and loss previously accumulated in the revaluation reserve is reclassified to profit or loss. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, amount due from a director) are measured at amortised cost using the effective interest method, less any impairment losses. Interest income is recognised on basis of the effective interest method except of short-term receivables for which the interest effect would be immaterial. Impairments of financial assets Financial assets are assessed for indicators of impairment at the end of the reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investment have been affected. For an available-for-sale equity investment, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For loans and receivables, objective evidence of impairment could include: significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial reorganisation; or that the active market for this financial asset disappears because of financial problems. For certain categories of financial assets, such as trade and other receivables, assets that are assessed not to be impaired individually are assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, an impairment loss is recognised in profit or loss when there is objective evidence that the assets is impaired, and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the financial asset s original effective interest rate. The carrying amount of the financial assets is reduced by the impairment loss directly for all financial assets with exception of trade and other receivables, where the carrying amount is reduced through the use of an allowance ac-

united power technology ANNUAL Report 2011 Financial Report 65 Notes count. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a trade or other receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity investments, impairment losses previously recognised in profit or loss are not reversed through profit or loss in subsequent periods. Any increase in fair value subsequent to impairment loss is recognised directly in other comprehensive income and accumulated in revaluation reserve. Cash and cash equivalents include cash-accounts and short-term cash deposits at banks are measured at amortised cost. Financial liabilities and equity Financial liabilities and equity instruments issued by a group entity are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Financial liabilities are categorised as either financial liabilities measured at fair value through profit or loss or other financial liabilities. The Groups financial liabilities are solely belonging to the category other financial liabilities. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Interest expense is recognised on an effective interest basis.

66 Financial Report Notes ANNUAL Report 2011 united power technology Financial liabilities Financial liabilities including trade and other payables, amounts due to related parties and other borrowings are subsequently measured at amortised cost using the effective interest method. Equity instruments Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs. Derecognition Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. If the Group retains substantially all the risks and rewards of ownership of a transferred asset, the Group continues to recognise the financial asset and recognise collateralised borrowings for the proceeds received. When a financial asset is fully derecognised, the difference between the carrying amount and the sum of the past or future consideration received plus all accumulated gains or losses that were recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. 5. Key sources of estimation uncertainty The presentation of financial position and results of operations is dependent upon accounting policies, assumptions and estimates. The actual amounts may differ from those estimates insofar as each assumption and estimate has inherent uncertainty. The consolidated financial statements include the following described material estimates and assumptions. The valuation of assets on initial recognition as well as the determination of the market value at the balance sheet date is connected with estimations of fair value. The determination of fair value is based on appraisals of the management. The assumptions and estimates are reviewed on a regular basis. The impact of amendments in the assumptions and estimates are recorded in the reporting period in which they are identified. In the event that amendments are related to other reporting periods, they are recorded in the appropriate period. The following assumptions and estimates are related to future reporting periods and may have material impacts on assets and liabilities in the following financial year. Impairment of trade receivables The trade receivables are impaired when possible losses in regard of the realisation of the receivables become apparent. The carrying amounts of trade receivables as at 31 December 2011 were keur 16,664. As at 31 December 2011 keur 0 valuation allowances were recorded.

united power technology ANNUAL Report 2011 Financial Report 67 Notes Depreciation and impairment of property, plant and equipment Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives, after taking into account their estimated residual value. The Company assesses annually the residual value and the useful life and adjusts the carrying amount if necessary. This may cause future amendments in the valuation. The amounts of depreciation and impairment are shown under note 19. There are no other relevant judgements made by management in regards to the consolidated financial statements except for the judgements made by management in regards to use of estimates that are described above. 6. As if combined financial information for the preceding period In October 2010, the Company acquired 100% of the shares in United Power Equipment Company Limited, Mongkok, Hong Kong ( UP HK-Holding ) by a contribution in kind. 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 known as the 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 with effect from the date on which the business combination occured between the entities under common control occurred. Consequently, the comparative financial information for the preceding period 2010 included in the consolidated financial statements does not reflect the results of the acquired sub-group for the period before the transaction occurred. For a better understanding of the Groups development the Company has prepared an as if consolidated statement of comprehensive income as well as an as if consolidated statement of cash flows. This should help to raise transparency of business development and should help the user of financial statements to understand the developments in the financial year 2011 especially in respect to the net assets, financial and earnings position. Additionally the management uses the above mentioned as if statements for purposes of deviation analysis. 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 31 December 2010 has been calculated as follows:

68 Financial Report Notes ANNUAL Report 2011 united power technology As if consolidated statement of comprehensive income Statement of comprehensive income UP HK-Holding 2010 Statement of comprehensive income UP AG 2010 2010 Total as if adaptations Total 2011 as if P&L in EUR thousand 1 2 3 (1+2) 4 5 (3+4) Revenue 84,593 84,593 84,593 Cost of sales 64,058 64,058 64,058 Gross profit 20,535 20,535 20,535 Other operating income 555 59 614 59 555 Distribution and selling expenses 1,151 1,151 1,151 Administrative expenses 1,942 335 2,277 59 2,218 Research and development expenses 325 325 325 Other expenses 1,535 1,535 1,535 Operating result 16,137 276 15,861 15,861 Interest expense 193 193 193 Financial result 193 193 193 Income before taxes 15,944 276 15,668 15,668 Income taxes 2,232 2,232 66 2,166 Profit for the period 13,712 276 13,436 66 13,502 Net income attributable to: Owners of the parent 13,705 276 13,429 66 13,495 Non controlling interests 7 7 7 Net income 13,712 276 13,436 66 13,502 Exchange differences arising from translating foreign operations 2,636 2,636 2,636 Net gains/loss arising on revaluation of available for-sale-investments 3 3 3 Other comprehensive income/loss 2,639 2,639 2,639 Total comprehensive income 16,351 276 16,075 66 16,141 Total comprehensive income attributable to: Owners of the Company 16,367 276 16,091 66 16,157 Non controlling interests 16 0-16 - -16 16,351-276 16,075 66 16,141

united power technology ANNUAL Report 2011 Financial Report 69 Notes As if consolidated statement of cash flows Group cash flow statementup HK-Holding 2010 Cash flow statement UP AG 2010 2010 Total as if adaptations Total 2011 as if P&L in EUR thousand 1 2 3 (1+2) 4 5 (3+4) Profit before tax 15,944 276 15,668 Adjustments for: (Reversal of) allowance for doubtful debt 112 112 112 Depreciation on intangible assets and property, plants and equipment 645 645 645 Income tax expense 66 66 Interest (income) expense, net 114 114 114 Other financial results 194 194 194 Other non-cash (income) expense 10 10 10 (Gain) loss on the disposal of intangible assets and property, plant and equipment 1 1 1 (Increase)/decrease in current assets 6,429 2 6,431 66 6,497 Increase/(decrease) in current liabilities 4,593 254 4,847 4,847 Cash generated from operations 14,710 24 14,686 14,686 Interest paid 263 263 263 Income taxes paid 1,641 1,641 1,641 Net cash generated from operating activities 12,806 24 12,782 12,782 Payments for acquisition of: Intangibles 1,179 1,179 1,179 Property, plant and equipment 14,000 14,000 14,000 Proceeds on disposal of: Property, plant and equipment 2 2 2 Government grants received 213 213 213 Advance to a related party 522 522 522 Interest income 113 113 113 Dividend income 1 1 1 Cash flow from investing activities 15,372 15,372 15,372 Repayment of borrowings 11,524 11,524 11,524 New borrowings raised 8,511 8,511 8,511 Proceeds from new shares and capital contributions 18,946 50 18,996 18,996 Capital contributions by non-controlling shareholders 782 782 782 Repayment of advances to controlling shareholders 180 180 180 Advances from controlling shareholders 45 45 45 Cash flow from financing activities 16,580 50 16,630 16,630 Net increase in cash and bank balances 14,014 26 14,040 14,040 Cash and bank balances at beginning of year 10,369 10,369 10,369 Effect of exchange rate changes 1,391 1,391 1,391 Cash and bank balances at end of period 25,774 26 25,800 25,800

70 Financial Report Notes ANNUAL Report 2011 united power technology 7. Revenue Revenue represents revenue arising from sales of goods. An analysis of the Group s revenue as follows: Outdoor power equipment industrial equipment landscaping machines in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 Portable generators 20,662 76,297 91,295 Outdoor power equipment 908 5,183 5,115 Components 550 3,113 3,873 22,120 84,593 100,283 Components engines parts other Revenue by segments in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 8. 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 is regularly reviewed by the management. The information is also used for internal assessment of performance. Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on types of goods or services delivered or provided. The Group s reportable segments under IFRS 8 are therefore as follows. Portable generators residential use unit commercial unit Portable generators Residential use unit 11,059 47,601 56,156 Commercial use unit 9,487 28,476 35,139 Outdoor power equipment Industrial equipment 698 4,594 4,893 Landscaping machines 211 590 222 Components Engines 687 2,915 2,125 Parts 495 1,954 4,703 Other 0 196 1,906 Total segment revenue 22,637 86,326 105,144 Inter-segment revenue elimination 633 1,953 4,793 Other adjustments 1) 116 220-68 22,120 84,593 100,283 1) Other adjustments are related to freight expenses and sales tax surcharge included in the revenue.

united power technology ANNUAL Report 2011 Financial Report 71 Notes Results by segments in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 Portable generators Residential use unit 2,213 10,786 10,803 Commercial use unit 2,343 7,410 9,216 Outdoor power equipment Industrial equipment 62 951 993 Landscaping machines 58 157 46 Components Engines 209 877 637 Parts 19 89 123 Other 15 45 189 Total segment result 4,919 20,315 22,007 Other adjustments 1) 116 220 133 Consolidated gross profit 5,035 20,535 22,140 Unallocated items: Other operating income 123 555 1,068 Distribution and selling expenses 318 1,151 1,204 Administrative expenses 722 2,218 3,233 Research and development expenses 114 325 1,032 Other expenses 703 1,535 5,849 Interest income 0 0 4 Interest expenses 15 193 104 Consolidated profit before tax 3,286 15,668 11,790 1) Other adjustments are related to freight expenses included and sales tax surcharge 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 for the full year 2011. The activities by invoicing customer of the Group are mainly in the PRC. It should be noted that managemt conducts its own analysis as to revenue by end customer geography which it believes is a more useful guide for indicating ultimate demand for its products. The geographical segmentation is as follows: Geographical segmentation The following table shows the geographical segmentation by invoicing customers: in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 People s Republic of China 12,596 45,245 55,907 Poland 1,101 4,517 3,672 United States of America 3,159 14,825 19,085 Russian Federation 1,088 4,480 9,120 Other foreign countries 4,176 15,526 12,499 22,120 84,593 100,283 in the revenue. The 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. Differences between accounting policies under PRC GAAP and IFRS are immaterial, insofar as it is not necessary to prepare reconciliations and explanations. Since For internal analysis management also conducts geographical split of revenues by end customers. In the reporting period as well as in the comparison periods all non-current assets except financial assets are in People s Republic of China. Revenues with one customer amounting to more than 10% of the total revenues did not take place.

72 Financial Report Notes ANNUAL Report 2011 united power technology 9. Cost of sales in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 Material 16,447 61,620 73,713 Overhead 379 1,382 2,900 Labor 259 1,056 1,530 17,085 64,058 78,143 10. Other Operating Income Other operating income is mainly related to Government grants. in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 Government grants 62 389 749 Other 61 166 319 123 555 1,068 Government grants represent the incentive subsidies granted by the PRC local government authorities to the Group s subsidiaries as incentives mainly for two purposes: (1) For grants relating to product research and development activities carried out by the Group, the grant income is recognised as related research and development expenses that have been charged to profit or loss. (3) For grants that are incentive payments to provide immediate financial support to the Group, the grants are recognised as income when they are received. The grants were unconditional, non-recurring and had already been received by the Group s subsidiaries. 11. 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 capitalised. 12. Headcount and payroll expenses Total personnel costs compared to the previous year were: in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 Wages and salaries 611 2,381 3,492 Social security costs 104 372 390 715 2,753 3,882 Employer contributions to statutory pension insurance in China amounted to keur 390. For fiscal year 2012 expenditures is expected to be similar to that in fiscal year 2011. (2) For grants relating to capital expenditure incurred by the Group, the grant income is recognised on a systematic basis, which matches the depreciation of the related assets.

united power technology ANNUAL Report 2011 Financial Report 73 Notes The Group employed an annual average of 850 employees based on continued activities. The employees were acting in the following functions: Employees (annual average) 2010 2011 Production and services 135 596 Administration 49 200 Research and development 13 54 197 850 The previous year is a short financial year 2010. Based on the as if comparable period, the Group employed an annual average of 789 employees in 2010. 15. Income tax expense The income tax expense include expenses for current tax of keur 2,745 which are offset with income of deferred tax of keur 507. In total, income taxes were keur 2,238. The following tax rates were used as the basis for the tax calculation: Hong Kong 16.5% People s Republic of China 25.0%* Germany 25.6% * Reduced tax rate of 12.5% until 31 December 2011 which is released over a tax benefit. The effective tax can be reconciled as follows: 13. Depreciation Depreciation of property, plant and equipment amounted to keur 1,725 (2010: keur 216, 2010 as if : keur 561). 14. Interest expense Interest expense of keur 104 includes interest expense with keur 286 less amounts capitalised of keur 182. Borrowing costs capitalised during the reporting period arose on the borrowing pool. The calculation was made by applying a capitalisation rate of 7%. in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 Profit before tax 3,286 15,668 11,790 Income tax at local tax rates (China) 25% +891 +3,986 +2,947 Income tax at local tax rates (Germany) 70 70 138 Effect of tax benefit granted to a subsidiary 480 2,050 2,421 Effect of tax losses not recognised +1,271 Tax effect of expenses that are not deductible +180 +300 +579 521 2,166 2,238

74 Financial Report Notes ANNUAL Report 2011 united power technology 16. Profit for the year Profit for the year has been calculated after charging/ (crediting): in EUR thousand 27.04 31.12.2010 2010 ( as if ) 2011 Cost of inventories recognised as an expense 17,085 64,058 78,142 (Reversal of) allowance for doubtful debt 112 0 Depreciation of property, plant and equipment 216 561 1,725 Foreign exchange (gains) and losses 99 305 740 Amortisation of intangible assets (included in administrative expenses) 21 65 26 Amortisation of prepaid lease payments (included in administrative expenses) 5 19 117 Gain on disposal of property, plant and equipment 1 1 17. Earnings per share The income and the weighted average of shares which is the basis for the income per share are as follows: in EUR 27.04 31.12.2010 2010 ( as if ) 2011 Income attributable to owners of the parent in EUR at 2,763,314 13,495,020 9,580,748 Income for calculation of the basic income per share in EUR at 2,763,314 13,495,020 9,580,748 Weighted average number of shares for the calculation of the basic income per share 3,781,250 10,000,000 11,284,166 Earnings per share 0.73 1.35 0.85 18. Intangible assets Intangible assets are related to computer software. In the period from 1 January 2011 through 31 December 2011 the software was amortised over its useful life. in EUR thousand 2011 Cost: As at 27 April 2010 0 Additions from contribution in kind of UP HK-Holding 861 Additions/disposals 52 Deposits 350 Currency translation adjustments 7 As at 1 January 2011 1,270 Additions/disposals 49 Currency translation adjustments 108 1,427 Accumulated amortisation: As at 27 April 2010 0 Additions from contribution in kind of UP-Holding 96 Additions 21 Currency translation adjustment 4 As at 1 January 2011 121 Additions 117 Currency translation adjustments 15 253 Carrying amounts: As at 27 April 2010 0 As at 1 January 2011 1,149 As at 31 December 2011 1,174 The intangible assets primarily consist of accounting and management software. Office administration computer software has finite useful life and is amortised over its estimated useful life of ten years. Accounting computer software has finite useful life and is amortised over its estimated useful life of two years. The weighted average number of shares for the calculation of basic earnings per share is equivalent to the calculation of the diluted earnings per share.

united power technology ANNUAL Report 2011 Financial Report 75 Notes 19. Property, plant and equipment Property, plant and equipment changed in the reporting period as follows: in EUR thousand Building Plant & equipment Motor vehicles Office equipment Deposits and construction in progress Total Acquisition and production cost As at 27 April 2010 0 0 0 0 0 0 Additions from contribution in kind of UP-HK-Holding 6,102 1,370 423 499 2,086 10,480 Additions 162 826 295 41 10,029 11,353 Currency translation adjustments 437 26 17 48 71 599 As at 1 January 2011 6,701 2,222 735 588 12,186 22,432 Additions 25,195 2,580 514 209 0 28,498 Disposals 0 0 7 1 0 8 Reclassifications 0 11,344 0 0 11,344 Currency translation 3,179 1,641 112 68 198 4,802 At 31 December 2011 35,075 17,787 1,354 864 644 55,724 Accumulated depreciation As at 27 April 2010 0 0 0 0 0 0 Additions from contribution in kind of UP-HK-Holding 587 248 58 158 0 1,051 Additions 129 40 20 27 0 216 Currency translation adjustments 109 31 10 27 0 177 As at 1 January 2011 825 319 88 212 0 1,444 Additions 923 459 211 132 0 1,725 Disposals 0 0 7 1 0 8 Currency translation 162 74 29 30 0 295 At 31 December 2011 1,910 852 321 373 0 3,456 Net carrying amounts as at 27 April 2010 0 0 0 0 0 0 Net carrying amounts as at 1 January 2011 5,876 1,903 647 376 12,186 20,988 Net carrying amounts as at 31 December 2011 33,165 16,935 1,033 491 644 52,268 The buildings are erected on land use rights under mediumterm leases for a period of 50 years and will expire in 2057 and 2058. The land use rights are located in Fuzhou, the People s Republic of China. The depreciation rates are 5% on buildings, 10% on plant and equipment and 20% on motor vehicles and office equipment. The Group pledged buildings with carrying amounts of keur 3,034 to secure borrowings of the Group (see also note 27). The Group is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

76 Financial Report Notes ANNUAL Report 2011 united power technology 20. Other assets Other assets increased by EUR 1.2 million to keur 2,088 (current and non-current other assets). Other assets mainly include prepaid lease payments. On 31 December 2011 the Company had capitalised a total keur 2,028 for prepaid lease payments, of which keur 43 is recorded as current assets and keur 2,071 is recorded as non-current assets; keur 43 of this amount is shown as current assets and keur 2,028 as non-current assets: Deferred tax assets have resulted primarily from the tax benefit of the IPO cost accounted for as deduction from equity (keur 592), the tax effects on deferred government grants (keur 476) and loss carry-forwards (keur 192). Deferred tax liabilities have resulted primarily from the tax effects on the capitalisation of borrowing costs. Deferred taxes are calculated at the tax rates that are expected to apply in the period when the deferred tax assets or liabilities are realised. in EUR thousand 2011 Cost: As at 1 January 2011 970 Addition 1,113 Currency translation adjustments 76 2,159 Amortisation: As at 1 January 2011 55 Addition 26 Currency translation adjustments 7 88 Carrying amounts: As at 1 January 2011 915 As at 31 December 2011 2,071 22. Inventories in EUR thousand 31.12.2010 31.12.2011 Raw material 1,711 2,121 Work in progress 1,623 1,027 Finished goods 1,175 4,149 4,509 7,297 23. 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. The Group has pledged prepaid lease payments of keur 952 in order to secure liabilities of the Group (see note 27). 24. Trade and other receivables 21. Deferred Taxes Deferred taxes are recognised in the consolidated financial statements as follows: in EUR thousand 31.12.2010 31.12.2011 Deferred tax assets 98 1,260 Deferred tax liabilities 38 101 60 1,159 in EUR thousand 31.12.2010 31.12.2011 Trade receivables 15,428 16,664 Allowance for doubtful debts Deposits 502 1,070 Value-added tax receivable 51 847 Advance payments to suppliers 373 638 Advance lease payments 19 0 Other receivables 836 339 17,209 19,558

united power technology ANNUAL Report 2011 Financial Report 77 Notes Period on sales of goods generally ranges from 30 to 60 days. No interest is charged on trade receivables for the overdue balance. Allowances for doubtful debts are recognised based on historical experience. Before accepting any new customer, the Group obtains the background and financial information and performs an assessment on the potential customer s credit quality and defines credit limits for the customer. As at 31 December 2011, 73% of trade receivables were neither past due nor impaired. Included in the Group s trade receivable balance and presented in the table below are trade receivables past due at the end of the reporting period which the Group has not recognised an allowance because there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral or other credit enhancements over these balances nor does it have a legal right to offset against any amounts owed by the Group to the counterparties. The following analysis shows the overdue but not impaired receivables. in EUR thousand 31.12.2010 31.12.2011 Current trade receivables 15,428 16,664 Overdue Past due 1 30 days 3,228 4,973 Past due 31 60 days 346 179 Past due 61 180 days 939 93 Past due over 180 days - 37 4,513 5,282 25. Cash and cash equivalents In addition to the cash and cash equivalents of keur 27,002 (2010: keur 25,800), keur 785 (2010: keur 943) of the bank deposits are pledged to secure short-term lines of credit. They are shown under the other financial assets. Bank balances carry interest rates of 0.5% per annum and the pledged bank deposits carry interest rates of 3.1% per annum. in EUR thousand 31.12.2010 31.12.2011 Cash and cash equivalents 25,800 27,002 Pledged bank deposits 943 785 26,743 27,787 26. Equity Subscribed Capital Number of shares Share capital (EUR) 1 January 2011 10,000,000 10,000,000 Issuance of new shares 2,300,000 2,300,000 31 December 2011 12,300,000 12,300,000 Issued capital comprises: Fully paid ordinary shares 12,300,000 12,300,000 12,300,000 12,300,000 Fully paid ordinary shares: 1 January 2011 10,000,000 10,000,000 Capital increase by issuance of new shares 2,300,000 2,300,000 31 December 2011 12,300,000 12,300,000 The subscribed capital of the parent is 12,300,000 and is divided into no-par value bearer shares with a computed value of the participation in the share capital of EUR 1.00. As at the end of the reporting period no impairments were necessary. The Group pledged trade receivables with a carrying amount of keur 1,690 in order to secure bank loans (see Note 27).

78 Financial Report Notes ANNUAL Report 2011 united power technology On June 2011 the Company has issued 2,300,000 new shares with a computed value of EUR 1.00 per share on the Frankfurt Stock Exchange at an initial share price of EUR 9.00 per share. In total a gross proceeds of EUR 20.7 million were received. EUR 2.3 million have been accounted as addition as an subscribed capital. Fully paid no-par value bearer shares with a computed value of EUR 1.00 carry one vote per share and carry a right to dividends. Authorised capital The Board of Management is authorised to increase the Company s share capital up to five years from the registration of the authorisation into the commercial register with the approval of the Supervisory Board by issuing new shares against cash and/or non-cash contributions once or repeatedly, but in total not exceeding a total of EUR 5,000,000. Since Company has issued 2,300,000 new shares on June 2011 an authorised capital of 2,700,000 is remaining. The amount of the capital reserve reflects the received share premium from the issuance of no-par value bearer shares with a computed value of EUR 1.00 after deduction of expenses that are directly attributable to the issuance of new shares. The revaluation reserve (keur -1) results from the accumulated profits or losses from the revaluation of non-current available-for-sale assets. These are recognised in the other comprehensive income except when amounts which are reclassified to profit or loss in the event of disposal or determination of impairment. The foreign currency translation reserve of foreign operations amounts to keur 9,432. Differences from the translation of functional currencies of foreign operations are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. Translation differences from foreign currency translation are reclassified to profit or loss on the disposal of the foreign operation. The profit for the period allocated to the owners of the parent (EUR 9,580 thousand) is recognised in retained earnings. in EUR thousand 31.12.2010 31.12.2011 Reserves Additional paid-in capital 39,552 56,275 Revaluation reserve 1 1 Foreign currency translation reserve 1,907 9,432 Retained Earnings 2,763 12,343 44,221 78,049 27. Borrowings The borrowings are related to secured bank borrowings. The average effective interest rates are approximately 7% per year. in EUR thousand 31.12.2010 31.12.2011 Secured bank borrowings 3,031 6,582 in EUR thousand 31.12.2010 31.12.2011 Additional paid-in capital 1 January 2011 0 39,552 Effects of contribution in kind 39,552 0 Proceeds from issuance of new shares 0 16,644 Other payment into the capital reserve 0 79 39,552 56,275 The following carrying amounts have been pledged to secure bank borrowings: in EUR thousand 31.12.2010 31.12.2011 Buildings 5,858 3,034 Prepaid lease payments 915 952 Trade receivables 533 1,690 7,306 5,676

united power technology ANNUAL Report 2011 Financial Report 79 Notes 28. Trade and other Payables in EUR thousand 31.12.2010 31.12.2011 Trade payables 9,170 5,695 Notes payable 1,952 927 Advance payments 624 891 Others 905 1,935 12,651 9,448 The maturity of trade payables is as follows: in EUR thousand 31.12.2010 31.12.2011 Short-term 8,401 6,691 Overdue (0 to 60 days) 769 19 9,170 6,710 Other payables are due within one year. 29. Other provisions in EUR thousand Supervisory Board remuneration Audit cost Office Rent Total Balance 1 January 2011 35 50 1 86 Additional provisions recognised 91 50 0 141 Reductions arising from payments 9 50 0 59 Reductions arising from remeasurements 0 0 1 1 117 50 0 167 The expected outflow of the other provisions is within one year. 30. Deferred government grant income During the year ended 31 December 2011, the Group received government subsidies of keur 1,663 to compensate for the building cost of a plant. The amounts have been deferred and are to be released to income over the useful lives of related assets once the assets are ready for their intended use by the management and depreciation commences. During the year ended 31 December 2011, keur 108 was released to income. 31. Non-cash transactions Material non-cash transactions did not take place in the period from 1 January to 31 December 2011. 32. Capital risk management The Group aims to ensure the future ability to repay liabilities and to maintain financial substance. The financial substance is mainly measured with the equity-to-assets ratio. Part of this financial ratio is the balance sheet total of the consolidated financial statements and the equity shown in the Groups consolidated financial statements. The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of net debt (which includes short-term borrowings), cash and cash equivalents and equity attributable to the owners of the Company comprising share capital and reserves as disclosed in the Consolidated Financial Statements. The directors of the Company review the capital structure regularly. As part of this review, the Group considers the cost of capital and the risks associated with each class of capital, and will balance its overall capital structure through the payment of dividends, new shares as well as additional borrowings.

80 Financial Report Notes ANNUAL Report 2011 united power technology The gearing ratio (ratio of net assts and equity at the end of the reporting period) was as follows: in EUR thousand 31.12.2010 31.12.2011 Debt (i) 3,031 6,582 Cash and bank balances 25,800 27,002 Net debt 22,769 20.420 Equity (ii) 55,055 91,503 Net debt to equity ratio 41.36% 22.31% Equity-to-assets ratio 76.19% 81.93% (i) Debt is defined as long- and short-term borrowings (excluding derivatives and financial guarantee contracts), as described in note 27. (ii) Equity includes all capital and reserves of the Group that are managed as capital. 33. Financial Instruments IFRS 7 requires to demonstrate the sensitivity analysis to be demonstrated, which show the impacts of hypothetical changes of relevant risk variables on profit and loss or equity and the market risk. In this connection the Group is mainly affected by currency risks. The impacts are evaluated by hypothetical changes in risk variables on the portfolio of the financial instruments. The financial instruments are classified in the following categories: in EUR thousand 31.12.2010 31.12.2011 Loans and receivables (including cash and bank balances) Trade and other receivables 17,190 19,558 Amounts due from related parties 649 238 Pledged bank deposits 943 785 Cash and cash equivalents 25,800 27,002 Value-added tax receivable -51-848 Advance to suppliers -373-638 44,158 46,097 Available-for-sale financial assets 17 16 44,175 46,113 Financial liabilities at amortised cost 15,649 15,995 The risks associated with these financial instruments include market risk (interest risk, currency risk and other price risk), credit risk and liquidity risk. The management monitors these exposures in order to ensure appropriate timely measures are taken to minimise risks. Market risk Interest rate risk The Group s fair value interest rate risk relates primarily to its fixed-rate bank borrowings.the Group s cash flow interest rate risk relates primarily to its variable-rate bank balances and pledged bank deposits. The management performs sensitivity analyses on a periodic basis by evaluatig increases or decreases in interest rates. During the reporting period, an increase or decrease of 27 basis points in interest rates would increase or decrease the Group s post-tax profit approximately +/ keur 15. There would be no impact on other comprehensive income and equity. Currency risk Certain Group transactions are denominated in foreign currencies, thereby creating risks due to exchange rate fluctuations. The Group s operating transactions are performed in RMB, HKD, USD and EUR. The Group has material amounts of foreign currency monetary assets and liabilities in USD (keur 7,537 in liabilities and keur 1,750 in assets) and RMB (keur 52,269 in assets) as at the balance sheet date.

united power technology ANNUAL Report 2011 Financial Report 81 Notes The sensitivity analysis of the management regarding the increase or decrease in currency rate leads to the result that an increase or decrease of exchange rates of RMB, USD or HKD to the Euro of 10% would result in a profit of aproximately +/ keur 169. There is no impact on the other comprehensive income. Other price risk The management believes that the Group does not have significant exposure to price risk. Therefore, no sensitivity analysis has been performed. Credit risk The management has taken measures in order to minimise credit risk. These measures include determining credit limits, diligent credit approvals and regularly monitoring accounts receivables. The Group has a concentration of credit risk in respect of bank balances and bank deposits. Approximately 98% of the bank balances and bank deposits as at 31 December 2011 were deposited at three major banks, which are stateowned banks located in the People s Republic of China. Liquidity risk In order to reduce liquidity risk, the Group maintains a sufficient amount of liquidity. The Group did not have unutilised bank facilities as at 31 December 2011. The following tables detail the Group s remaining contractual maturity for its non-derivative financial liabilities as at 31 December 2009, 2010 and 2011 based on agreed repayment terms. The tables have been drawn up based on undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows. Non-derivative financial liabilities Weighted average interest rate < 3 month 3 6 month 6 12 month Total undiscounted cash outflows Carrying amounts as at 31 December 2011 Carrying amounts as at 31 December 2010 % keur keur keur keur keur keur Trade payables 8,556 8,556 8,556 12,027 Borrowings from banks 8 1,596 2,760 2,539 6,895 6,582 3,031 Liabilities due to related parties 857 857 857 546 Liabilities due to the controlling shareholder 45 11,009 2,760 2,539 16,308 15,995 15,649

82 Financial Report Notes ANNUAL Report 2011 united power technology Fair value The fair values of financial assets and financial liabilities are determined as follows: The fair value of financial assets and financial liabilities with standard terms and conditions and traded in active liquid markets is determined with reference to quoted market bid prices; and The fair value of other financial assets and financial liabilities is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates from observable current market transactions. The management considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost approximate their fair values. Fair value measurements recognised in the combined statement of financial position The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable: Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The fair values of available-for-sale financial assets are level 1 measurements. 34. 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. Related parties Trading transactions The transactions of goods between the group companies and related parties are as follows: in EUR thousand 31.12.2010 31.12.2011 Sales of goods: United Generating Power Nigeria Ltd., Trade receivables 119 Advance payments Fuzhou Wankai Machinery Co., Ltd. 530 Purchase of goods: Fuzhou Rongli Power Fittings Co., Ltd. 1,044 4,968 The companies are controlled by controlling shareholders.

united power technology ANNUAL Report 2011 Financial Report 83 Notes Amounts due from related parties Nature and relationship with related parties The Group has the following liabilities against non-consolidated other related persons resulting from trade payables: Name Fuzhou Wankai Machinery Co., Ltd. ( Wankai ) United Generating Power Nigeria Ltd., ( UP Nigeria ) Relationship with the Company An entity wholly owned by Mr. Wei Gaoxin, non-controlling shareholder of DWC An entity controlled by the controlling shareholder (Mr. Wei Song, Mr. Xu Wu and Mr Zhong Dong Huang) in EUR thousand 31.12.2010 31.12.2011 Fuzhou Rongli Power Fittings Co., Ltd. 546 857 Related persons The Group has the following receivables against the following non-consolidated related parties: in EUR thousand 31.12.2010 31.12.2011 Fuzhou Wankai Machinery Co., Ltd. ( Wankai ) Advance payments 530 245 United Generating Power Nigeria Ltd., ( UP Nigeria ) Trade receivable 119 0 649 245 Wankai is controlled by Mr. Wei Gaoxin, non-controlling shareholder of DWC. UP Nigeria is controlled by controlling shareholder (Mr. Wei Song, Mr. Xu Wu and Mr. Zhong Dong Huang). The receivables are unsecured and non-interest bearing. Management Board and key management personnel The following persons are members of the Management Board: Mr. Xu Wu, Chairman of the Management Board, Co CEO, Fuzhou/China Mr. Zhong Dong Huang, Vice Chairman of the Management Board, Co CEO, Fuzhou/China Mr. Li Wei Wang, CFO, Fuzhou/China until 28 April 2011 Mr. Oliver Kuan, CFO, Fuzhou/China from 28 April 2011 Amounts due to related parties Nature of relationship with related parties Name Fuzhou Rongli Power Fittings Co., Ltd. ( Rongli Power ) Relationship with the Company An entity controlled by Mr Zhong Dong Huang, a key management personnel of the Group The Management Board has received salaries of keur 570 and retirement benefit plan contributions of keur 1. 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 (24. 26%) Mr. Zhong Dong Huang (22.18%)

84 Financial Report Notes ANNUAL Report 2011 united power technology Supervisory Board Members of the Supervisory Board include the following persons: Mr. Wei Song, General Manager of Fortune Great Investments Limited, Tortola, British Virgin Islands, Chairman of the Supervisory Board, Fuzhou/China Mr. Hubertus Krossa, self-employed Master of Business Administration (Diplom-Kaufmann), Vice-chairman of the Supervisory Board, Wiesbaden/Germany Mrs. Ning Cong, General Manager of Orchid Asia Group Management Ltd., Hong Kong Island/Hong Kong Mr. Hubertus Krossa is also a member of the Supervisory Board of Eckelmann AG, Wiesbaden/Germany 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: in EUR thousand 31.12.2010 31.12.2011 Remuneration of Supervisory Board 35 117 36. Operating lease arrangements Operating leases relate to the property owned by the Group with lease terms of 2 and 5 years. The leases do not contain an option to purchase the property. The rental income earned by the Group from its property, amounted to keur 44 in the financial year (2010: keur 13) in EUR thousand 31.12.2010 31.12.2011 Within one year 52 56 From two four years 52 86 104 142 37. Capital commitments Capital commitments in respect of the acquisition of property, plant and equipment and intangible assets contracted but not provided for in the consolidated financial statements total keur 408 (as at 31 December 2010: keur 4,046). 38. Audit fees Deloitte & Touche GmbH ( Deloitte ) was appointed as the auditor for United Power Technology AG and the Group for financial business year 2011. Total fees paid to Deloitte which are entirely related to auditing and include travelling cost and value added tax, amount to keur 207. Shareholders The liabilities due to majority shareholders amount to EUR 0 (as at 31 December 2010: EUR 0.05 million). 35. Remuneration report The information in the remuneration report is part of the Group management report. An additional description of the information reported in the remuneration report has been therefore omitted. 39. Declaration of compliance with the German Corporate Governance Code Pursuant to section 161 of the German Stock Corporation Act (AktG), the Management Board and Supervisory Board issued a corporate governance declaration on the recommendations of the provisions of the German Corporate Governance Code as amended. The declaration was published on the Company s website at www.unitedpower.de.com/en.

united power technology ANNUAL Report 2011 Financial Report 85 Notes 40. Shareholdings in United Power Technology AG Directors dealings The members of the Management Board and the Supervisory Board have the legal obligation to notify United Power Technology AG immediately according to section 15a of the Wertpapierhandelsgesetz (German Securities Trading Act) ( WpHG ) of the purchase and sale of shares in United Power Technology AG. Management Board Mr. Wu Xu owns indirectly 24.26% shares in United Power Technology AG (2,984,399 voting rights) as at 31 December 2011. Mr. Zhong Dong Huang owns indirectly 22.18% shares in United Power Technology AG (2,728,567 voting rights) as at 31 December 2011. Supervisory Board Mr. Wei Song owns indirectly 22.88% shares in United Power Technology AG (2,813,845 voting rights) as at 31 December 2011. Mr. Hubertus Krossa owns directly 0.03% shares in United Power Technology AG (4.086 voting rights) as at 31 December 2011. Shareholdings 15 June 2011 1. On 10 June, pursuant to section 21, paragraph 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Holding S.A., Nyon, Switzerland, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 30.50% (3,050,000 voting rights). These 30.50% (3,050,000 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG. Voting rights attributable to Kepler Holding S.A. were held by the following companies controlled by her, whose voting rights in United Power Technology AG amounts to 3% or more: Kepler Capital Markets S.A., Frankfurt branch. 2. On 10 June, pursuant to section 21, paragraph 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Capital Markets S.A., Frankfurt branch, Frankfurt, Germany, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 30.50% (3,050,000 voting rights). 17 June 2011 1. On 16 June, pursuant to section 21, paragraph 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), FORTUNE GREAT INVESTMENTS Limited, Road Town, Tortola, British Virgin Islands, informed us that, as at 10 June 2011, its voting rights in our Company fell below the threshold of 15% and was 14.50% (1,787,006 voting rights) on that day. 2. On 16 June, pursuant to section 21, paragraph 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), HIGH ADVANCEINVESTMENTS Limited, Road Town, Tortola, British Virgin Islands, informed us that, as at 10 June 2011, its voting rights in our Company fell below the threshold of 15% and was 14.06% (1,729,908 voting rights) on that day. 3. On 16 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Wei Song, People s Republic of China, informed us that, as at 10 June 2011, its voting rights in our Company fell below the threshold of 50% and was 43.95% (5,406,033 voting rights) on that day. Of these, 14.50% (1,784,006 voting rights) were attributable to him through Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 29.45% (3,622,027 voting rights) through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, and High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG.

86 Financial Report Notes ANNUAL Report 2011 united power technology 4. On 16 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Xu Wu, People s Republic of China, informed us that, as at 10 June 2011, its voting rights in our Company fell below the threshold of 50% and was 43.95% (5,406,033 voting rights) on that day. Of these, 15.38% (1,892,119 voting rights) were attributable to him through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 28,57% (3,513,914 voting rights) through Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, and High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG. 5. On 16 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Zhong Dong Huang, People s Republic of China, informed us that, as at 10 June 2011, its voting rights in our Company fell below the threshold of 50% and was 43.95% (5,406,033 voting rights) on that day. Of these, 14.06% (1,729,908 voting rights) were attributable to him through High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 29.89% (3,676.125 voting rights) through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, and Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG. 6. On 15 June, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Gabriel Li, Hong Kong, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 13.03% (1,303,440 voting rights). Thereof 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG through Orchid Asia IV L.P., Cayman Islands, OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands, Orchid Asia IV Group Limited, Cayman Islands, Orchid Asia IV Investment Limited, British Virgin Islands, YM Investment Limited, British Virgin Islands, and The Li 2007 Family Trust, British Virgin Islands. 0.26% (26,069 voting rights) were attributable to Gabriel Li pursuant to section 22 paragraph 1 Sentence 1 No. 1 WpHG through Orchid Asia IV Co-Investment Limited, Cayman Islands, through YM Investment Limited, British Virgin Islands and The Li 2007 Family Trust, British Virgin Islands. 7. On 15 June, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), The Li 2007 Family Trust, British Virgin Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 13.03% (1,303,440 voting rights). Thereof 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No. 1 WpHG through Orchid Asia IV L.P., Cayman Islands, OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands, Orchid Asia IV Group Limited, Cayman Islands, Orchid Asia IV Investment Limited, British Virgin Islands, YM Investment Limited, British Virgin Islands, and The Li 2007 Family Trust, British Virgin Islands. 0.26% (26,069 voting rights) were attributable to The Li 2007 Family Trust pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG through Orchid Asia IV Co-Investment Limited, Cayman Islands, through YM Investment Limited, British Virgin Islands. 8. On 15 June, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), YM Investment Limited, Tortola, British Virgin Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 13.03% (1,303,440 voting rights). Thereof 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG through Orchid Asia IV L.P., Cayman Islands, OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands, Orchid Asia IV Group Limited, Cayman Islands, Orchid Asia IV Investment Limited, British Virgin Islands, YM Investment

united power technology ANNUAL Report 2011 Financial Report 87 Notes Limited, British Virgin Islands, and The Li 2007 Family Trust, British Virgin Islands. 0.26% (26,069 voting rights) were attributable to YM Investment Limited pursuant to section 22 paragraph 1 Sentence 1 No. 1 WpHG through Orchid Asia IV Co-Investment Limited, Cayman Islands. 9. On 15 June, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV Investment Limited, Tortola, British Virgin Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277.371 voting rights). These 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG through OAIV Holdings L.P., Cayman Islands, and Orchid Asia IV Group Management Limited, Cayman Islands. 10. On 15 June, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV Group Limited, George Town, Grand Cayman, Cayman Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277.371 voting rights). These 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG through OAIV Holdings L.P., Cayman Islands, and Orchid Asia IV Group Management Limited, Cayman Islands. 11. On 15 June, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV Group Management Limited, George Town, Grand Cayman, Cayman Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277.371 voting rights). These 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG through Orchid Asia IV L.P., Cayman Islands, and OAIV Holdings L.P., Cayman Islands. 12. On 15 June, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), OAIV Holdings L.P., George Town, Grand Cayman, Cayman Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277.371 voting rights). These 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG through Orchid Asia IV L.P., Cayman Islands. 13. On 15 June, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV L.P., George Town, Grand Cayman, Cayman Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277.371 voting rights). 14. On 10 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Private Shareholders S.A., Luxemburg, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 30.50% (3,050,000 voting rights). These 30.50% (3,050,000 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG. Voting rights attributable to Kepler Holding S.A. were held by the following companies controlled by her, whose voting rights in United Power Technology AG amounts to 3% or more: Kepler Holding S.A. Kepler Capital Markets S.A., Frankfurt branch. 15. On 14 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), FORTUNE GREAT INVESTMENTS Limited, Road Town, Tortola, British Virgin Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights was 17.84% (1,784,006 voting rights).

88 Financial Report Notes ANNUAL Report 2011 united power technology 16. On 14 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), FORTUNE SUNRISE INVESTMENTS Limited, Road Town, Tortola, British Virgin Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 18.92% (1,892,119 voting rights) on that day. 17. On 14 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Wei Song, People s Republic of China, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 54.06% (5,406,033 voting rights). Of these, 17.84% (1,784,006 voting rights) were attributable to him through Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 36.22% (3,622,027 voting rights) through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, and High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG. 18. On 14 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Xu Wu, People s Republic of China, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 54.06% (5,406,033 voting rights). Of these, 18.92% (1,892,119 voting rights) were attributable to him through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 35.15% (3,513,914 voting rights) through Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, and High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG. 19. On 14 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Zhong Dong Huang, People s Republic of China, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 54.06% (5,406,033 voting rights). Of these, 17.30% (1,729,908 voting rights) were attributable to him through High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 26.76% (3,676,125 voting rights) through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, and Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG. 20. On 15 June, pursuant to section 21, section 1 Sentence 1 and section 22 paragraph of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Private Shareholders S.A., Luxemburg, informed us that, as at 10 June 2011 voting rights in our Company fell below the theshold of 30% and was 28.50% (3,505,555 voting rights) at that day. These 28.50% (3,050,000 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG. Voting rights attributable to Kepler Private Sharholders S.A. were held by the following companies controlled by her, whose voting rights in United Power Tech nology AG amounts to 3% or more: Kepler Holding S.A. Capital Markets S.A., Frankfurt branch. 21. On 15 June, pursuant to section 21, paragraph 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Holding S.A., Nyon, Switzerland, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company fell below 30.0% and was 28.50% (3,505,555 voting rights) at that day. These 28.50% (3,505,555 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG. Voting rights attributable to Kepler Holding S.A. were held by the following companies controlled by her, whose voting rights in United Power Technology AG amounts to 3% or more: Kepler Capital Markets S.A., Frankfurt branch.

united power technology ANNUAL Report 2011 Financial Report 89 Notes 22. On 15 June, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Capital Markets S.A., Frankfurt branch, Frankfurt, Germany, informed us that, as at 10 June 2011 fell below 30% and was 28.50% (3,505,555). 5 July 2011 1. On 1 July, pursuant to section 21, paragraph 1 sentence 1 and 22 paragraph 1 sentence 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Private Shareholders S.A., Luxemburg, informed us that, as at 28 June 2011, its voting rights in our Company fell below 25%, 20%, 15%, 10%, 5%, 3% and was 1,626% (200,000 voting rights) at that day. These 1.626% (200,000 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG. 2. On 1 July, pursuant to section 21, paragraph 1 sentence 1 and 22 paragraph 1 sentence 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Holding S.A., Nyon, Switzerland, informed us that, as at 28 June 2011, its voting rights in our Company fell below 25%, 20%, 15%, 10%, 5%, 3% and was 1,626% (200,000 voting rights) at that day. These 1.626% (200,000 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG. 3. On 1 July, pursuant to section 21, paragraph 1 sentence 1 and 22 paragraph 1 sentence 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Kepler Capital Markets S.A., Frankfurt branch, Frankfurt, Germany, informed us that, as at 28 June 2011, its voting rights in our Company fell below 25%, 20%, 15%, 10%, 5%, 3% and was 1,626% (200,000 voting rights) at that day. 4. On 1 July, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), FORTUNE GREAT INVESTMENTS Limited, Road Town, Tortola, British Virgin Islands, informed us that, as at 28 June 2011, its voting exceeded 15% and 20% and was 22.63% (2,784,053 voting rights) at that day. 5. On 1 July, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), FORTUNE SUNRISE INVESTMENTS Limited, Road Town, Tortola, British Virgin Islands, informed us that, as at 28 June 2011, its voting exceeded 15% and 20% and was 24.01% (2,952,802 voting rights) at that day. 6. On 1 July, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), HIGH ADVANCEINVESTMENTS Limited, Road Town, Tortola, British Virgin Islands, informed us that, as at 28 June 2011, its voting exceeded 15% and 20% and was 21.95% (2,699,678 voting rights) at that day. 7. On 1 July, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Wei Song, People s Republic of China, informed us that, as at 28 June 2011, its voting rights in our Company exceeded 50% and was 68.59% (8,436,533 voting rights) at that date. Of these, 22.63% (2,784,053 voting rights) were attributable to him through Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 45.96% (5,652,480 voting rights) through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, and High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG. 8. On 1 July, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Xu Wu, People s Republic of China, informed us that, as at 28 June 2011, its voting rights in our Company exceeded 50% was 68.59% (8,436,533 voting rights) at that date. Of these, 24.01% (2,952,802 voting rights) were attributable to him through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 44.58% (5,483,731 voting rights) through Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, and High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG.

90 Financial Report Notes ANNUAL Report 2011 united power technology 9. On 1 July, pursuant to article 21, section 1 of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Zhong Dong Huang, People s Republic of China, informed us that, as at 28 June 2011, its voting rights in our Company exceeded 50% and was 68.59% (8,436,533 voting rights) at that date. Of these, 21.95% (2,699,678 voting rights) were attributable to him through High Advance Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG, and 46.64% (5,736,855 voting rights) through Fortune Sunrise Investments Limited, Road Town, Tortola, British Virgin Islands, and Fortune Great Investments Limited, Road Town, Tortola, British Virgin Islands, pursuant to section 22 paragraph 2 sentence 1 WpHG. 6 October 2011 1. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Mr Gabriel Li, Hong Kong, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 13.03% (1,303,440 voting rights). Thereof 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG through Orchid Asia IV L.P., Cayman Islands, OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands, Orchid Asia IV Group Limited, Cayman Islands, Orchid Asia IV Investment Limited, British Virgin Islands, YM Investment Limited, British Virgin Islands, and The Li 2007 Family Trust, British Virgin Islands. 0.26% (26,069 voting rights) were attributable to Gabriel Li pursuant to section 22 paragraph 1 Sentence 1 No. 1 WpHG through Orchid Asia IV Co-Investment Limited, Cayman Islands, through YM Investment Limited, British Virgin Islands and The Li 2007 Family Trust, British Virgin Islands. 2. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), The Li 2007 Family Trust, British Virgin Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 13.03% (1,303,440 voting rights). Thereof 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG through Orchid Asia IV L.P., Cayman Islands, OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands, Orchid Asia IV Group Limited, Cayman Islands, Orchid Asia IV Investment Limited, British Virgin Islands, YM Investment Limited, British Virgin Islands, and The Li 2007 Family Trust, British Virgin Islands. 0.26% (26,069 voting rights) were attributable to The Li 2007 Family Trust pursuant to section 22 paragraph 1 Sentence 1 No. 1 WpHG through Orchid Asia IV Co-Investment Limited, Cayman Islands, through YM Investment Limited, British Virgin Islands. 3. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), YM Investment Limited, Tortola, British Virgin Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 13.03% (1,303,440 voting rights). Thereof 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG through Orchid Asia IV L.P., Cayman Islands, OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands, Orchid Asia IV Group Limited, Cayman Islands, Orchid Asia IV Investment Limited, British Virgin Islands, YM Investment Limited, British Virgin Islands, and The Li 2007 Family Trust, British Virgin Islands. 0.26% (26,069 voting rights) were attributable to YM Investment Limited pursuant to section 22 paragraph 1 Sentence 1 No. 1 WpHG through Orchid Asia IV Co-Investment Limited, Cayman Islands. 4. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV Investment Limited, Tortola, British Virgin Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277.371 voting rights). These 12.77%

united power technology ANNUAL Report 2011 Financial Report 91 Notes (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG through OAIV Holdings L.P., Cayman Islands, and Orchid Asia IV Group Management Limited, Cayman Islands. 5. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV Group Limited, George Town, Grand Cayman, Cayman Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277.371 voting rights). These 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG through OAIV Holdings L.P., Cayman Islands, and Orchid Asia IV Group Management Limited, Cayman Islands. 6. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV Group Management Limited, George Town, Grand Cayman, Cayman Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277.371 voting rights). These 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence 1 No. 1 WpHG through Orchid Asia IV L.P., Cayman Islands, and OAIV Holdings L.P., Cayman Islands. 13 October 2011 1. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), YM Investment Limited, Road Town, British Virgin Islands,, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 13.03% (1,303,440 voting rights). Thereof 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG through Orchid Asia IV L.P., Cayman Islands, OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands, Orchid Asia IV Group Limited, Cayman Islands and Orchid Asia IV Investment Limited, British Virgin Islands. 0.26% (26,069 voting rights) were attributable to YM Investment Limited pursuant to section 22 paragraph 1 Sentence 1 No. 1 WpHG through Orchid Asia IV Co-Investment Limited, Cayman Islands. 2. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV Investment, Road Town, British Virgin Islands,, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277,371 voting rights). The 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG through Orchid Asia IV L.P., Cayman Islands, OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands and Orchid Asia IV Group Limited, Cayman Islands. At the same time 12.77% (1,277,371 voting rights) are atributable to Orchid Asia IV L.P. pursuant to section 22 paragraph 1 Sentence 1 No. 6 WpHG. 3. On 30 September, pursuant to section 21, section 1a of the Wertpapierhandelsgesetz (German Securities trading Act ( WpHG ), Orchid Asia IV Group Management Limited, George Town, Grand Cayman, Cayman Islands, informed us that, as at 9 June 2011 the day of the initial public offering, its voting rights in our Company was 12.77% (1,277,371 voting rights). The 12.77% (1,277,371 voting rights) were attributable pursuant to section 22 paragraph 1 sentence No.1 WpHG through OAIV Holdings L.P., Cayman Islands, Orchid Asia IV Group Management Limited, Cayman Islands. At the same time 12.77% (1,277,371 voting rights) are atributable to Orchid Asia IV L.P. pursuant to section 22 paragraph 1 Sentence 1 No. 6 WpHG.

92 Financial Report Notes ANNUAL Report 2011 united power technology 41. 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. 42. Proposal on the utilisation of United Power s net retained earnings At the annual general meeting the Management Board and the Supervisory Board will propose to carry forward the retained earnings. 43. Approval of the Consolidated Financial Statements The financial statements were approved and authorised for issuance by the Management Board on 27 March 2012. Eschborn, 27 March 2012 The Management Board

united power technology ANNUAL Report 2011 Financial Report 93 Responsibility Statement Responsibility Statement Pursuant to section 37 y of the German Securities Trading Act (WpHG) in conjunction with section 37 w Para. 2 No. 3 WpHG. To the best of our knowledge, and in accordance with the applicable financial reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the management report of the Group 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. Eschborn, 27 March 2012 Management Board United Power Technology AG

94 Financial Report Independent Auditor s Report ANNUAL Report 2011 united power technology Independent Auditor s Report We have audited the consolidated financial statements prepared by the United Power Technology AG, Eschborn, comprising the income statement and statement of comprehensive income, the balance sheet, the cash flow statement, the statement of changes in equity and the notes to the consolidated financial statements and the group management report for the business year from January 1, 2011 to December 31, 2011. The preparation of the consolidated financial statements and the group management report in accordance with IFRS, as adopted by the European Union (EU), and the additional requirements of German commercial law pursuant to 315a Abs. 1 HGB ( German Commercial Code ) are the responsibility of the parent Company s management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer. Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations.

united power technology ANNUAL Report 2011 Financial Report 95 Independent Auditor s Report In our opinion, based on the findings of our audit, the consolidated financial statements of the United Power Technology AG, Eschborn, comply with IFRS, as adopted by the EU, the additional requirements of German commercial law pursuant to 315a Abs. 1 HGB and give a true and fair view of the net assets, financial position and results of operations of the group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the group s position and suitably presents the opportunities and risks of future development. Frankfurt, 27 March, 2012 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft (Lüdke) (Meyer zu Schwabedissen) Wirtschaftsprüfer Wirtschaftsprüfer [German Public Auditor] [German Public Auditor]

96 Financial Report Further Information ANNUAL Report 2011 united power technology Financial Calendar Publication Interim report 3-months 2012 14 May 2012 Annual General Meeting 2012 12 June 2012 Half-year report 2012 14 August 2012 Interim report 9-months 2012 12 November 2012 Imprint Published by: United Power Technology AG Mergenthalerallee 10 12 65760 Eschborn Germany Phone: +49 6196 400804 Fax: +49 6196 400910 E-mail: it@unitedpower.cn Concept and design: Kirchhoff Consult AG, Hamburg Photographs: United Power Technology AG Date of publication: 13 April 2012 Investor Relations: Phone: +49 40 60 91 86 50 Fax: +49 40 60 91 86 16 E-mail: it@unitedpower.cn Internet: www.unitedpower.de.com/en 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 characterised 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.

Photo credits: Ignacio Hennigs (page 12 f.) www.dreamstime.com (page 14 f.) Agus Sutanto (page 16 f.) Christoph Hurni (page 18 f.)

United Power AG United Power Technology AG Mergenthalerallee 10 12 65760 Eschborn Germany Phone: +49 6196 400 804 Fax: +49 6196 400910 Email: IR@unitedpower.cn