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July 2014
Roadshow Presentation
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Disclaimer
This presentation has been prepared regarding the Company and its subsidiaries (collectively, the “Group”) solely for use at this meeting in connection with the proposed initial public offering of the Company (the
“Offering”) and not for any other purpose, commercial or otherwise. By attending this presentation or by reading the presentation slides, you (1) agree to be bound by these terms and (2) acknowledge that you will be
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This presentation contains confidential and proprietary information. The content of this presentation has not been independently verified. Certain factual statements and forecasts in this presentation are derived from
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respective affiliates, or their respective directors, officers, employees, agents, affiliates, advisors or representatives (collectively, “Representatives”).
Any purchase of securities in the Offering should be made solely on the basis of information contained in the preliminary offering circular and any supplemental offering circular and pricing supplements to be published in
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This presentation speaks as of April 2014. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company since such date.
1
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2
Today’s Presenters
Mr. XIAO Shu
Founder, Chairman & CEO
Mr. TAN Jibin
Executive Director
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Agenda
I
II
III
IV
V
Company Overview
Industry Overview
Investment Highlights
Financial Highlights
Company Strategy
Meeting Agenda
Closing Remarks and Q&A
3
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90% International Offering under Rule 144A within and Reg S outside US
10% Hong Kong Public Offering to Retail Investors in Hong Kong
Transaction Summary
Offering Size
Ozner Water International Holding Limited (Cayman) Issuer
The Main Board of the Stock Exchange of Hong Kong Listing Venue
54% for manufacturing of water purifying machines
20% for construction and other related expenses for the second phase of production facility in
Shaanxi province
c.11% (no more than 15%) for repayment of 50% of the Standard Chartered Loan balance
5% for sales and marketing activities
Remaining amount (no more than 10%) for working capital and general corporate purposes
Use of Proceeds
Offering Structure
Goldman Sachs (Asia) L.L.C. and Standard Chartered Securities (Hong Kong) Limited
Joint Sponsors, Joint
Global Coordinators, Joint
Bookrunners
25% primary shares of enlarged share capital, assuming no exercise of over-allotment option
Over-allotment option up to 15% of base offering size
4
HK$2.25-HK$2.70 per share Price Range
I. Company Overview
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6
Overview
Water Purification Business Air Sanitization Business
Source: Prospectus, Company Information 1 In terms of sales value to end users in 2012.
Design and oversee the installment of air sanitization
systems, as well as provide training and after-sales
services post-installation
Project arrangements set through engineering,
procurement and construction (“EPC”) contracts, where
principal contractors subcontract certain projects to us
Project focus on medical, food and electronics industries
Participated in 14 EPC contracts in 2013
Leading water purification services company, ranked No.1 in
commercial segment1 and No.3 in overall industry1
Lease water purifying machines and provide service to both
corporate and household end users (e.g. SF Express, Sinopec)
Service network covers 125 cities in China, with 850+ service
center staff and 100+ service vehicles
Leading domestic company that applies ozone technology for
water purification
Significant Revenue Growth Over Track Record Period
2011
RMB 102mm
43.9% 56.1%
2012
RMB 290mm
2013
RMB 402mm
Water Purfication Air Sanitization
31.9%
68.1%
22.0%
78.0%
Total
Revenue:
We are one of the fastest-growing water purification services company in China,
addressing the country’s need for clean, safe drinking water
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Key Model
Types
Usage
Hub model1:
for corporate headquarters
and department stores
For
office use
For schools
and hospitals
For kitchen use,
countertop style
For kitchen use,
under-cabinet style
Water Purification Services
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Diversified Portfolio of Water Purifying Machines
First Generation Second Generation
Service
Renewal Recharge on-site Remotely via wireless
Servicing
End users call for
on-site
troubleshooting
Machine automatically
reports to service center
Water
Recovery Ratio 20% to 50% ≥95%
Machine
Management Manual recording
Real-time tracking
via GPS
Corporate Models Household Models
Source: Prospectus, Company Information 1 One central processer with multiple water dispensers connected to it. 2 Of which 63,000 corporate models were from acquisition of Park Wealth in 2012.
Strong focus on advanced products and high-quality service drives significant growth
7
Advanced Features of Water Purifying Machines Fast Growth in Installed Base
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276 371
6
33
0
100
200
300
400
2011 2012 2013
Corporate Household
(„000 Units)
2 107
309
463
92
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Air Sanitization Services
Selected Air Sanitization Projects
EPC Arrangement Process
Contract Bidding
Preparation of
bids for principal
contractors
System Design
Detailed planning
for equipment
production
Design of system
installation
Component
Procurement
Procurement of
self-designed
equipment
components
Control on project
cost and quality
Installation &
Inspection
Oversee
installation
Perform quality
control checks
Post-installation
Support & Services
On-site training
for machine use
and maintenance
One-year
warranty period
Source: Prospectus, Company Information
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Lab and Workshop of
Chang’e Lunar Satellite
Pharm
Production Workshop Medical
Operation Room
Food & Beverage
Canning Clean Workshop
Applying leading technologies for high-profile clients in the air sanitization business
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History and Development
2005 2011 2012 2010 2013
First round
investment
Drinking water
supplier for:
1) 26th World
University Games
2) Beijing
Aerospace
Control Center
Second round
investment
Deputy chief of
Industry Standard
Promulgation Panel
for water
purification industry
Started R&D on
water purification
technologies
Chairman XIAO
founded
Ozner Group
Acquisition of
Shanghai Comfort
Third round
investment
Chinese Enterprise
with Most Growth
Potential award
from Fudan
University and
Ernst & Young
Distribution
network reached
125 cities in China
History
Pre-IPO
Investment
Key
Milestones
Drinking water
supplier for
Shanghai Expo
Source: Prospectus, Company Information
II. Industry Overview
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Water Resource 33% of major rivers, 40% of major lakes and reservoirs, and 60% of
groundwater in China were contaminated and not drinkable¹
Water Treatment
Plants
90%+ of water treatment plants¹ were equipped with water treatment
technologies that cannot remove certain metal ions and chemicals
Water Delivery
Aged and eroded pipes cause water leakage and subsequent breeding of
pathogenic microorganisms in tap water
Toxic substances leak into tap water from inner lining of water pipes
Secondary Water
Supply
Water tanks on building roofs vulnerable to secondary pollution caused
by air pollution, container erosion and lack of maintenance
End Use as
Drinking Water
Tap water may be potable after boiling, though certain metal ions and
chemicals would remain
Increased Focus on Drinking Water Quality Due to
Worsening Water Contamination…
Source: Frost & Sullivan Report
¹ Data as of 2012.
Pollution from contaminated primary water sources and from secondary pollution
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China Tap Water Supply Chain Situation
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…Generating Substantial Demand for Different
Point-of-Use Drinking Water Solutions
Point-of-Use Drinking Solution Advantages Disadvantages
Boiled Tap Water
Low cost
Widely accessible
Residual bacteria, metals and chemicals
Potential poor taste and odor
Potential turbidity
Barreled Water Effective in removing bacteria,
metals and chemicals
Widely accessible
Relatively convenient
Secondary pollution from contaminated
barrels, aging dispensers or long-term
storage
Unreliable water quality due to
irregular maintenance
Inconvenience from delivery and
barrel replacement
Relatively costly
Water Processed by Purifiers1
Effective in removing bacteria,
metals and chemicals, with no
secondary pollution
Real-time monitoring of
water quality
Convenient
Relatively low cost (vs. barreled
water services)
Better taste with no odor
Not widely available; consumer
awareness of the benefits of water
purifiers is increasing
Can be costly depending on
brand / model
Source: Frost & Sullivan Report 1 Advantages and disadvantages comparison is mainly based on advanced electronic purifying machines, and not on non-electronic devices (e.g., Brita filters).
12
Since Early
Years
1990s
Post 2000
Water purifiers as a superior point-of-use drinking water solution
Development of Point-of-Use Drinking Water Solutions in China
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Significant Penetration Potential in a Highly
Fragmented Market
13
Rapidly Shifting Mix Towards Water Purifiers
Industry Leaders Are Well-positioned to Capture Share in a Fragmented Industry in Infant Stages
Top 10 Players 14.6%
Other Players 85.4%
Top 10 Players
9.9%
Other Players 90.1%
Source: Frost & Sullivan Report 1 Commercial premises measured in terms of billion liters consumed; residential premises measured in terms of million households. 2 Others refer to well water, fresh water, spring water, etc. that are consumed in rural areas, where the coverage of tap water was about 70% in 2012. 3 Market size is calculated based on sales value to end users.
Water Consumption – Commercial Premises¹ Water Consumption – Residential Premises¹
Overall Water Purifier Market in China (2012)³ Commercial Water Purifier Market in China (2012)³
2
4.7%
12.2%
32.0%
67.6%
61.0%
44.8%
5.5%
13.5%
19.3%
22.2%
13.2%
3.9%
2008
2012
2017E
0% 20% 40% 60% 80% 100%
1.4%
6.8%
27.7%
83.9%
66.6%
41.2%
14.7%
26.6%
31.1%
2008
2012
2017E
0% 20% 40% 60% 80% 100%
Others Boiled Tap Water Water Processed by Purifiers Barreled Water
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13.7 18.2 23.7
29.4 35.1
44.1 55.4
67.6
80.7
94.5
1.7 2.6
4.0
5.5 7.4
10.3
14.1
18.8
24.3
30.6
15.4 20.8
27.7
34.9
42.5
54.4
69.5
86.4
105.0
125.1
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Residential Commercial
Large Addressable Market with Strong Growth Potential
Source: Frost & Sullivan Report
¹ Market size is calculated based on sales value to end users.
Continuous double-digit growth in the drinking water purifier market in China
14
(RMB bn)
Market Size of Water Purifiers in China¹
III. Investment Highlights
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Investment Highlights
Extensive and Well-managed
Third Party Distribution Network
Superior Proprietary Technologies and
Strong R&D Capabilities
Innovative Lease and Service Business Model
with Distinctive Advantages Over
Conventional Drinking Water Business Models
Experienced Management Team that Helps Us
Achieve Our Strategic Goals
A Leading Water Purification Service Provider in a
Large Addressable Market with Strong Growth in China 1
2
3
4
5
16
Industry
Leader
Innovative
Business
Model
Distribution
Network
R&D
Capabilities
Management
Team
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6 33
92 101
276
371
0
100
200
300
400
2011 2012 2013
Household Corporate
A Leading Water Purification Service Provider in a
Large Addressable Market with Strong Growth in China
Expanding Installed Base of End Users
Large Addressable Market with Strong Growth
Sales Growth Outperformance Over Industry
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Leading Market Position1
Top 3 in Overall Market Top 3 in Commercial Segment
402
140
105
(RMB mm)
15.4 20.8 27.7 34.9 42.5
54.4 69.5 86.4
105.0
125.1
0
50
100
150
200
200
8
200
9
201
0
201
1
201
2
201
3E
201
4E
201
5E
201
6E
201
7E
Purifier Market Size in China¹
(RMB bn)
(„000 Units)
Source: Prospectus, Company Information 1 Market size is calculated based on sales value to end users. 2 Sales value for Ozner is calculated based on contract sales value.
Market
Share
5.4%
1.9%
1.4%
935
700
460
(RMB mm)
Market
Share
2.2%
1.6%
1.1%
Commercial Segment Residential Segment
231.8
22.5%
Industry
2011-2013 CAGR
48.8%
36.8%
Industry
2011-2013 CAGR
2 2
231.8%
#1
Total Installed 107 309 463
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Business
Model Drinking process
Benefits to End Users
Water
Quality Services Cost Convenience
Innovative Lease and Service Business Model with Distinctive Advantages Over Conventional Business Models
Source: Prospectus, Company Information
18
Ozner’s
Lease
and
Service
Model
Purifier
Sales
Model
vs.
vs.
Tap
Water
Water Purification Service Drinking
Water
Tap
Water
Water Purifier Drinking
Water
Buy water
purifiers
After-sales
Service
On-site Service
(in c.7-10 days)
Pay extra
service charges
Barreled
Water
Model Barreled
Water
Water Delivery Daily
Changing
of Barrels
Drinking
Water
Water
Storage
Delivery to
End Users’
Premises
Contact
service center
Pay annual service fee
and enjoy 24/7
after-sales service
Lease and service business model providing tangible benefits to end users
#2
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Business Model
Initial Cost1
(Household/Corporate)
Subsequent Cost2
(Household/Corporate)
Total Cost in 10 Years
(Household/Corporate)
Total Savings By
Using Ozner’s Machines
(Household/Corporate)
1,680 / 2,500 680 / 2,300 7,800 / 23,200 –
2,996 / 6,9883 1,000 / 2,7503 11,996 / 31,738
1,669 / 6,5504 1,369 / 6,2504 13,988 / 62,800
vs.
vs.
19
Source: Frost & Sullivan Report
Note: Both initial cost and subsequent cost were 2012 data 1 Initial cost for our services refers to annual service fee. Initial cost for purifier sales model refers to purchase prices for water purifying machines . Initial cost for barreled water refers to annual charge for water use. 2 Subsequent cost for our services refers to annual service fee . Subsequent cost for purifier sales model includes maintenance cost . Subsequent cost for barreled water refers to annual charges for water use. 3 Assuming both initial cost and subsequent cost for both household and corporate models are equal to median of the costs for selected comparable competitors.
4 For household model, we assume that the end user is a family of 3 members who drinks 1 bottle of water every 4 days, water costs of RMB 15 per bottle for 365 days. For corporate model, we assume that the end user has
30 staff who drink 2.5 bottles of water per day, water costs of RMB 10 per bottle for 250 working days. Initial cost for both household and corporate models include RMB 300 of water dispenser cost.
Ozner’s
Lease
and
Service
Model
Purifier
Sales
Model
Barreled
Water
Model
Innovative Lease and Service Business Model with Distinctive Advantages Over Conventional Business Models
Competitive pricing schedule compared to other business models for end users
#2
4,196
(35.0%)
8,538
(26.9%)
6,188
(44.2%)
39,600
(63.1%)
(RMB)
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Highly visible recurring revenue and stable cash flow
1,145
450 450 450 450 450 450 450 450 450
(2,000)
(1,000)
0
1,000
2,000
3,000
4,000
5,000 (RMB)
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10
Illustrative Cash Flow Structure (Household Model)
Accumulated cash
flow for Ozner
Innovative Lease and Service Business Model with Distinctive Advantages Over Conventional Business Models
Initial investment2
Source: Prospectus, Company Information 1 Yr. 1 cash flow is assumed to be the mid-point of the range of first-year annual leasing fee (RMB 1,010-1,280); Yr. 2 to Yr. 10 cash flow is assumed to be the mid-point of the range of subsequent year annual
leasing fee (RMB 400-580), less the service fee of RMB 40, which is estimated by dividing warranty utilised in 2013 (RMB 12mm) by the number of machines installed at the end of 2012 (309K units). 2 Initial investment amount is estimated by dividing capex on revenue generating assets in 2013 by the number of new installed machines in 2013. 3 Renewal rate represents the percentage of our water purifying machines that remained installed and in service at the same end user’s premises after one-year service period.
Service resources in 125 cities for
sufficient end user coverage
Timely response (within 24 hours)
to on-site servicing requests
High Renewal Rates3
Machine Model 2012 2013
Corporate 98.6% 97.2%
Household 99.5% 99.4%
3,5351
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Payback period of c.2 years
IRR of 37%
High End User Satisfaction
#2
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Strong economic incentives to
ensure distributors‟ loyalty
Minimum reliance on distributors
Manage our assets more
effectively
Faster penetration and better
access to potential end users
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Sophisticated and Difficult-to-duplicate Distribution Network
Source: Prospectus, Company Information
Recurring revenue stream
No need to purchase or
maintain inventory
No need to provide post-
installation services
Benefits for Distributors Benefits for Us
Extensive and Well-managed Third Party
Distribution Network
Win-Win Management Philosophy
Strong control over its assets (machines) and quality of service
Only For Sourcing End Users
439 Principal Distributors
1,263 Sub-distributors
Commercial
End Users
Residential
End Users
#3
Inventory
Management
Machine
Installation
Post-installation
Service
End User Distributors
Long-term relationship with exclusive and loyal distributors create significant entry barrier
Co
mp
reh
en
siv
e IT
Su
pp
ort
Servicing Servicing
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Extensive Nationwide Distribution Network Growing Rapidly…
714 871
2011 2012 2013
Principal Distributors Sub-distributors
468
246
513
358 439
1,263
…And Diversified Across Different Regions1
11.2%
28.5%
34.4%
25.9%
2013 Rental Income Breakdown
Our headquarters
1,702 Total Distributors in 125 Cities Across 30 Provinces
Source: Prospectus, Company Information 1 South China includes Guangdong, Guangxi and Hainan.
East China includes Shanghai, Anhui, Fujian, Jiangsu, Shandong and Zhejiang.
North China includes Beijing, Tianjin, Hebei, Shanxi, Shaanxi and Inner Mongolia.
Regions covered by our distribution network
(No. of distributors)
No. of Distributors 2013 % Total
East China 539 31.7%
North China 499 29.3%
South China 458 26.9%
Other Regions 206 12.1%
Total 1,702 100.0%
22
East China North China South China Others
Beijing
Guangxi
Hunan
Hubei
Hainan
Xinjiang
Ningxia
Jiangsu
Shanghai
Hebei
Inner Mongolia
Shanxi
TTianjin
Shandong
Sichuan
Henan
Heilongjiang
Jilin
Anhui
Zhejiang
Fujian
Shaanxi
Guangdong
South China (centered in Guangzhou
and Shenzhen)
East China (centered in
Shanghai)
North China (centered in
Beijing)
Liaoning
Chongqing
Jiangxi
Yunnan
Qinghai
Guizhou
Gansu
Extensive and Well-managed Third Party
Distribution Network
Extensive coverage to increase market penetration and support Company’s fast growth
#3
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Multiple absorption filters
Remove harmful substances
in water
Reverse osmosis with 0.0001
micrometer pore filter
Improved by patented
technologies
Ozone sterilization to
kill germs and prevent
secondary pollution
Energy efficient and no
chemical contamination
Periodic water quality
testing and consumption
tracking
Alerting service center to
assign repair service
A
P
O
+
Innovative APO+ Technology
23
Source: Prospectus, Company Information 1 95%+ for second generation machines; water recovery ratio for first generation machines is c.20%-50%.
Absorption
Purification
Ozonation
Cloud Technology (+)
Superior Proprietary Technologies and
Strong R&D Capabilities
Our Second Generation Water Purifying Machines
Tab Water of 1.0L
Rejected
Water
Discharge
0.05L
Tap
Water
Rejected
Water
Purified
Water
Rejected
Water
Tank
Ozone
Filter
Drinking
Water
Tank
Ozone
Generator
Other
Filters
PPF
Filter
Ozone
Generator
Water
Tank
RO
Filter
Proprietary, patented design of the RO membrane which
significantly improves water recovery rate to over 95%
from industry levels of 20% to 50%¹
Purified
Water of
0.95L
Proprietary, patented technologies tailored specifically for water purification in China
#4
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24
Recognized By Domestic and Global Institutions
International SGS Test
ISO9001 & ISO14000
Certificate
Drinking Water Permit from
China’s Ministry of Health CB Certificate
CE Certificate
(European Union) RoHS Certificate
(European Union)
Patented Inventions and Designs Setting Water Purification Industry Standards
Help set national technical standards for water
purifying machines in China
Appointed in 2012 and 2013 as deputy chief of
“Industry Standard Promulgation Panel” under
the “National Household Electric Appliance
Technical Standardization Committee”
102 utilization and design
patents, including:
– 18 patents on ozone
technology
– 7 patents on reverse
osmosis technology
Source: Prospectus, Company Information
Superior Proprietary Technologies and
Strong R&D Capabilities
Strong R&D capabilities and achievements recognized globally
Set up own R&D center with accomplished
researchers, and supported by collaborations
with Hong Kong Polytechnic University and
Zhejiang University, to develop:
Water quality meets or surpasses many
domestic and global industry standards
Purifying machines pass numerous
product and process safety tests
conducted periodically
#4
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Entrepreneurial and Dedicated Management Team
Founder
and
Chairman
Mr. XIAO Shu
Over 15 years of industry and business experience; inventor of
several patented water and air purification technologies
Established Shanghai Comfort in 2005, formerly head of production
and R&D at several appliance companies
Oversees strategic development and execution of business plans
Production
Mr. XIAO Lilin
Over 10 years of experience in production and supply chain
management
Previously in the production department of numerous electronics
and appliance manufacturers
Oversees purifying machine production and construction of facilities
Technology
and
R&D
Mr. ZHU Mingwei
Nearly 20 years of industry and technical experience
Qualified engineer; member of technology certification committee
Oversees R&D and air sanitization business
Sales
and
Services
Mr. HE Jun
Over 12 years of industry and business experience
Accredited as senior quality and environment manager
Oversees service and sales of water purification business
Finance
Mr. TAN Jibin
10 years of experience in finance
Formerly senior auditor in Deloitte and associate finance manager
in Hong Kong-listed company
Oversees financial and administrative affairs
Source: Prospectus, Company Information
Sophisticated Financial
Sponsors with Long
Proven Track Records
25
Experienced Management Team that Helps Us
Achieve Our Strategic Goals
#5
Work with management
to develop business
strategy and enhance
corporate governance
IV. Financial Highlights
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Overview of Financial Performance
0
100
200
300
400
2011 2012 2013
Water Purification Air Sanitization
(RMB mm)
58
187
273 56.7%
64.5% 67.8%
0%
20%
40%
60%
80%
0
100
200
300
400
2011 2012 2013
(RMB mm)
23
102
153 22.4%
35.0% 38.0%
0%
20%
40%
0
100
200
300
2011 2012 2013
(RMB mm)
Revenue Growth Gross Profit and Margin
Net Profit and Margin Return on Equity
27
102.3
290.4
402.3
43.9%
56.1%
31.9%
68.1%
22.0%
78.0%
7.4%
22.2% 22.7%
0%
10%
20%
30%
2011 2012 2013
Robust growth and profitability during track record period
Source: Prospectus, Company Information 1 Return on equity is calculated by dividing net profit by the average of the beginning and end balance of shareholders’ equity and due to Fresh Water Group.
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53
124
185 72
120
157
0
100
200
300
400
2011 2012 2013Rental Income to be Recognized in Next Fiscal Year
Rental Income to be Recognized in Current Fiscal Year
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Contract Sales
Revenue in Current Year
Revenue Deferred to Next Year
2013 2014
Water Purifying Service Provided Water Purifying Service Yet to be Provided
RMB 1,200
RMB 300
RMB 900
Water Purification Business – Revenue Recognition & Contract Sales
Financial Performance
Contract Sales
53
124 185
72
120
0
50
100
150
200
250
300
350
2011 2012 2013
Rental Income From Contract Sales of Previous Fiscal Year
Rental Income From Contract Sales of Current Fiscal Year
(RMB mm)
53
196
305
125
244
342 (RMB mm)
Recognized Revenue in Current Year (Rental Income)
28
Key Assumptions:
Water purifying machine installed
for end user in Oct 1, 2013
Annual leasing fee is RMB1,200
Illustrative Revenue Recognition
High visibility and stability of cash flows
Source: Prospectus, Company Information
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53
162 175
33
131
4
2
8
0
50
100
150
200
250
300
350
2011 2012 2013
Other Revenue
Rental Income From Existing Machines (Income From ServiceRenewal)
Rental Income From Newly Installed Machines (Income From FirstYear Service)
(16.9%)
Water Purification Business – Profitability
(RMB mm) (RMB mm)
33,832
64,403
46,969
10,467
38,601
43,781
0
20,000
40,000
60,000
80,000
100,000
120,000
2011 2012 [09-2013]
空气净化 净水器
Revenue1 Gross Profit and Margin
Financial Performance (Cont’d)
29
57
198
314
47
159
247
81.8% 80.5% 78.7%
0.0%
30.0%
60.0%
90.0%
0
50
100
150
200
250
300
350
2011 2012 2013
(7.1%)
(41.4%)
Other revenue
Rental Income – Existing Machines (service renewal)
Rental Income – Newly Installed Machines (first year of service)
Rapid growth with stabilizing profitability
Source: Prospectus, Company Information 1 Revenue includes rental income, training fee and sales of machines.
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11
28 26
24.7%
30.5% 28.9%
0%
5%
10%
15%
20%
25%
30%
35%
0
20
40
2011 2012 2013
37 51
42
30
38 50
0
50
100
2011 2012 2013Contract Sales to be Recognized in Next Fiscal Year
Contract Sales to be Recognized in Current Fiscal Year
(RMB mm)
Air Sanitization Business – Profitability & Contract Sales
Revenue
Contract Sales
(RMB mm)
Financial Performance (Cont’d)
30
Gross Profit and Margin
Sales Revenue
(RMB mm)
37
81 80
8 6
8
4 2
0
50
100
2011 2012 2013Rendering of Services Sales of Equipment Consulting Fee
45
93 88
37 51 42
30 38
0
50
100
2011 2012 2013
Revenue From Contract Sales of Previous Fiscal Year
Revenue From Contract Sales of Current Fiscal Year
37
81 80
67
88 92 (RMB mm)
Stable air purification business to provide income diversification
Source: Prospectus, Company Information
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5 8 11 1 3
18
2 3
3
1
3
4
7
10
13%
7%
11%
0%
2%
4%
6%
8%
10%
12%
14%
0
20
40
60
80
100
2011 2012 2013
OthersDepreciation and AmortizationRental ExpensesProfessional ServiceSalary and Welfare% of Revenue
10 18 22 3
7
17
5
7
9
4
8
2
2
2
19%
13% 14%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
20
40
60
80
100
2011 2012 2013
Rental ExpensesDepreciation and AmortizationOthersAdvertising and Marketing ExpensesSalary and Welfare% of Revenue
57
(RMB mm) (RMB mm)
33,832
64,403
46,969
10,467
38,601
43,781
0
20,000
40,000
60,000
80,000
100,000
120,000
2011 2012 [09-2013]
空气净化 净水器
Selling and Distribution Expenses Administrative Expenses
Selling, Distribution & Administrative Expenses
31
19
38
13
21
45
Effective operating cost control
Source: Prospectus, Company Information
c.8% ex.
IPO
expenses
V. Company Strategy
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33
Company Strategy
Water Purification Services
Acquiring and retaining end users are our top priorities
Intensify Sales and Marketing Efforts
Increase Production Capacity
Expand Distribution Network
Traditional sales and marketing initiatives such as subway /
bus ads, online ads and social media to increase publicity
New media platforms such as gift card promotions through
QQ, Weibo and Wechat to promote word-of-mouth advertising
Further enhance image and market reputation to boost brand
awareness particularly in the residential segment
Increase production capacity in anticipation of
increased market demand
Expand production facility in Shaanxi province
Further expand distribution network and increase
market share
1 2
4 3
Source: Prospectus, Company Information
Ac
qu
irin
g E
nd
Us
ers
R
eta
inin
g E
nd
Us
ers
Shanghai
Guangzhou
Beijing
Shenzhen
Ac
qu
iring
En
d U
sers
Enhance Service Quality & Shorten Response Time
Expand regional sales offices and local service teams to
ensure timely response
Using technology to provide early feedback on end user
usage habits and shorten service response time
Ozner “Cloud”
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Company Strategy (Cont'd)
Air Sanitization Services
Marketing Focus On Key Strategic Industries
Food & Beverage Electronics
Medical Healthcare
Industries of focus for further expansion / development
34
Further Expand Air
Sanitization Business
Leverage existing
technologies and operational
experience to grow and
diversify client base
Focus on clients in medical
and healthcare industries
Apply air sanitization
technologies in residential
segment
Source: Prospectus, Company Information
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Conclusion
35
“Must-Have”
Opportunity
1
2
3
4
5
Extensive and Well-managed
Third Party Distribution Network
Superior Proprietary Technologies and
Strong R&D Capabilities
Innovative Lease and Service Business Model
with Distinctive Advantages Over
Conventional Drinking Water Business Models
Experienced Management Team that Helps Us
Achieve Our Strategic Goals
A Leading Water Purification Service Provider in a
Large Addressable Market with Strong Growth in China
Industry
Leader
Innovative
Business
Model
Distribution
Network
R&D
Capabilities
Management
Team
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36
Thank You!
Q&A
Appendix
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(RMB) Initial Year Subsequent Year Initial Year Subsequent Year
Corporate Model1 1,010 to 2,380 400 to 1,090 2,500 2,300
Household Model 1,010 to 1,280 400 to 580 1,680 680
Indicative Distributor Leasing Fees & End User
Service Fees
Paid By Principal Distributor to Company
Source: Prospectus, Company Information. Leasing fees and service fees reflect 2012 figures. 1 Excluding hub model. 2 Assuming the principal distributor pays initial year leasing fee of RMB 1,695 to the Company (average of 1,010 and 2,380) and subsequent year leasing fee of RMB 745 to the Company (average of 400 and 1,090). 3 Assuming the principal distributor pays initial year leasing fee of RMB 1,145 to the Company (average of 1,010 and 1,280) and subsequent year leasing fee of RMB 490 to the Company (average of 400 and 580).
38
Paid By End User to Principal Distributor
Illustrative Profitability Analysis for Principal Distributor (Corporate Model)2
805
1,555 1,555 1,555 1,555 1,555 1,555 1,555 1,555 1,555
0
1,000
2,000
3,000
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
(RMB)
Illustrative Profitability Analysis for Principal Distributor (Household Model)3
535
190 190 190 190 190 190 190 190 190
0
300
600
900
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
(RMB)
Accumulated Gross Profit: RMB 14,800
Accumulated Gross Profit: RMB 2,245
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Use of Proceeds
Use of Proceeds and Capital Expenditure
39
Manufacturing purifying machines
54% Manufacturing
facilities 20%
Loan repayment 11%
Sales & Marketing
5%
Working capital & general purposes
10%
Historical Capital Expenditures
154 206
256
26
70
162
1
1
32
0
100
200
300
400
500
2011 2012 2013
Revenue Generating Assets Property, Plant and Equipment
Other Capex
450
277
180
(RMB mm)
Source: Prospectus, Company Information
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Post-IPO Shareholding Structure
After Exercise of Over-allotment Option
Ozner Water International Holding Ltd.
(SEHK: 2014)
Mr. XIAO Shu
Mr. WANG
Xiaogang
(angel investor)
SAIF Partners Ares Goldman Sachs Other public
shareholders
19.12% 6.38% 25.50% 21.15% 7.94% 13.36%
Ozner Water Group Ltd.
(BVI)
HK Fresh Water Park Wealth
100% 100%
Shaanxi Haoze Shanghai Haoze Shanghai Comfort
100% 100% 100%
…
Other Onshore Subsidiaries
…
Other Onshore Subsidiaries
100%
Offshore
Onshore
40
Note: The above structure includes 63,300,000 shares of over-allotment option executed but does not account for the exercise of the Pre-IPO share option scheme (10% of the enlarged issued
share capital).
Och-Ziff Capital
Management
6.56%
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