Trojan Technologies

Doing Business in China

Global Offices with staff of 700Canada London & Guelph (475)US Multiple locations (155) Europe 5 Offices (40)China Multiple locations (30)

• >$200M in sales

• >15% CAGR since 2003

• 5.0% investment in R & D

• Over 6,500 municipal UV installations on 6 continents,treating over 1000 m3/sec

• >100 new jobs in Canada during 2008-2010

• Partnerships: Over 200 offices in 90 countries on 6 continents

• Logistics & Manufacturing in Canada, US, Europe and China

TROJAN - BUSINESS OVERVIEW

Winner of the 2009 Stockholm Water Industry Award

Disinfection UV Oxidation

Inactivation of bacteria, viruses and other pathogens through nucleic acid disruption by UV photons

Destruction of chemical contaminants via direct UV photolysis and UV light-induced activation of hydrogen peroxide (UV-oxidation)

WATER PURIFICATION WITH ULTRAVIOLET LIGHT

Municipal Drinking Water – New York City – 100 m3/s

Trojan Installation in Binhe, CHINA Trojan Voted #1 Disinfection Brand in China for last 3 years

Why Go to China?

• Significant problem of water scarcity

• Water treatment is a stated China government priority

• Potentially large market – business growth opportunity

But …

• Lot’s of “bad news” stories – JV’s gone bad, IP knock-offs

Strategic Opportunity

• Develop the capacity to compete “anywhere” and win

• Invest in a China-based Product Development Centre to develop capacity to innovate at “China pace” for Low

& Medium Price Point markets

• Leverage partnerships at appropriate level

performance

Trojan

#1

2005 UV Product Picture – China pr

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Situation:

Start of 11th 5 year plan, municipal waste water market. Primarily big projects.

International brands introduced into China. Local competitors started to emerge.

International

Local

Trojan

performance

Trojan

#1

2009 UV Product Picture – China pr

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Situation:

End of 11th 5 year plan. Projects shift to smaller urban centers.

More local competitors entered into market. Local competitors put added pricing pressure into market.

International

Local

Trojan

performance

2011 UV Product Picture – China pr

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New Trojan

Situation:

12th 5 year plan. Projects in smaller urban centers.

Trojan introduces 2 new products to address High and Medium Price point segments of market.

International

Local

Trojan

#6

#1

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#4#5

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New Trojan

Sustaining Competitive Advantage

• Requirement: Be cost-competitive vs. local competitors

• Begin with extensive market assessment of customer “must have’s”

• Cost reduce quickly through China team’s expertise:

– “bare bones / high quality”

– ultra cost-conscious at component level

– “intense” collaboration with local component suppliers

• Achieve incremental cost breakthrough via new core technology

• 2 year assignment in Shanghai for Senior research leader from Canada

• Full integration with London-based team