Industrial SD-WAN: Present & Future September 2017 Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject

Stock code: 1523

Industrial SD-WAN: Present & FutureSeptember 2017

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Disclaimer

The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning Plover Bay Technologies Limited (the “Company”). The Company makes no representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein.

In addition, the information contains projections and forward-looking statements that may reflect the Company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the Company’s assumptions are correct. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the Company's financial or trading position or prospects.

This presentation does not constitute an offer or invitation to purchase or subscribe for any securities or financial instruments or to provide any investment service or investment advice, and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto.

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• A networking company specialized in mission-critical Industrial and IoT solutions

• Products ecosystem from device software, purpose-built hardware to cloud platform

• SpeedFusion combines multiple mobile connections to form an unbreakable, high-bandwidth data pipe, enabling many new mobility applications that have not existed before

• High operating margins from strong R&D focus and asset-light structure

• Solid, diversified customers including global internet companies

Who We Are

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SD-WAN Market Landscape

Enterprise NetworksLargest market sizeHighly competitive

Homogenous network infrastructureSimilar use cases across different users

Deployed in largely similar environments

SpeedFusion SD-WAN is more than just a policy based SD-WAN

SpeedFusion is also a game changer in Enterprise SD-WAN:

Hot FailoverWAN Smoothing

Bandwidth Bonding

Industrial Networks (our focus)Long tail, small verticals

Little competitionFast growing

Use cases unique to verticalsDeployed in rugged environments

Industrial Internet combined with IoT is larger than today’s internet

LTE and low power WAN technologies will propel the growth of Industrial SD-WAN

Small verticals and diverse use cases mean fast moving teams have an advantage over well funded

established players

Today’s niche is tomorrow’s mainstream!

Software-Defined WAN

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Edge network

Emerging Vertical Markets

End users

Consumer Router

Specialized SD-WAN Router

Home networks

Enterprise HQ Public safety

Enterprise Router

Drivers of SD-WANNo. of remote connected devices+ Mobility requirement+ Data usage & bandwidth= Overall network costIT budget

Plover Bay SD-WAN routers:Ruggedized form factorsCloud device managementRapid deploymentBandwidth bondingUnbreakable connectivityNetwork cost savings

Transport

Maritime Construction

Branch 1

Branch 2..

Branch ..XSD-WAN Router

How The Networking World Is Evolving

Industrial “Long Tail” Verticals

Retail Stores

Internet of Things

Broadcast

Enterprise HQ and Branch Networks

Connected Vehicles

Broadband / Fiber / DSLMPLS

Fixed line network

Digital Signage

Public / private cloud

Industrial Router

Rapidly deployed

EnterpriseSD-WAN Router

Events Drones

Connectivity Options

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SD-WAN reaching an inflection point, just like Wi-Fi 15 years ago

Future of SD-WAN

We are here

Technology Adoption

Time

Industry growth accelerates Industry growth slows down

Innovators Early adopters Early majority Late majority Laggards

50% of WAN edge infrastructure to be based on SD-WAN by 2020 - (Nov 2016)

SD-WAN market estimated to grow from US$740M in 2016 to USD9,066M by 2021, at an expected CAGR of 65% - (April 2017)

SD-WAN infrastructure and services revenue will see a 70% CAGR, reaching USD8bn by 2021- (Jul 2017)

What the market says:

Wi-Fi (blue line) adoption close to 100% since its introduction in late-1990s. We expect SD-WAN to follow a similar adoption path

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Use Case of SD-WAN

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Government Enforcement Agencies

• SpeedFusion enables real time HD video surveillance and communications from mobile branches, such as police vehicles

• Rapid Deployable with high bandwidth ideal for security deployment for public events

• Seamless transition between government and public mobile networks

Public Safety / First Responders

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More Bandwidth for New Applications

Traditionally, 2-way radios were the main form of communications for first responders.

With SpeedFusion, the 2-way radio line can be supplemented by LTE connections, adding more bandwidth to the network.

This extra bandwidth gives first responders access to more crucial information at their fingertips such as video streams, operation manuals, and site information.

Public Safety / First Responders

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Partnership with CUBIC DTECH LABS

The M3-SE product family from CUBIC DTECH LABS is the ultimate power house in small, secure, man portable communications systems. It is designed to support additional stackable modules.

The M3-SE Wireless Modules is licensed by Pepwave to provide 256-bit AES Encrypted SpeedFusion VPN Bonding.

M3-SE Wireless Moduleshttp://www.dtechlabs.com/wireless-module/http://www.dtechlabs.com/wp-content/uploads/2017/07/M3-SE-TVM3_Datasheet_10.0.pdf

Public Safety / First Responders

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Rapid Deployable Connectivity using SpeedFusion SD-WAN

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Construction sites

• Worksites require stable network for IP camera, employee attendance system and VPN link with head office

• SpeedFusion bonds multiple LTE connections to create unbreakable and high-bandwidth network for site engineers

• Time and cost savings: Deployment within hours, compared to months and the substantial connection fees needed to lay down a fixed line

Rapid Deployment

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Extending the Reach of TETRA, NXDN, and DMR 2-Way RadiosEnabling Multisite IP Deployments

• Previously, 2-way radios only worked with other radios that were connected to the same repeater.

• By forming SpeedFusion tunnels between headquarters and each remote site, they become a single network.

• This enables 2-way radios to communicate with other sites and headquarters as if they were connected to the same repeater.

Rapid Deployment

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Passenger buses and trains

• Multiple LTE connections for reliable guest Wi-Fi enhances customer satisfaction

• InControl 2 provides remote fleet tracking and management

• Provides local content and integrated web server on our Mobile SD-WAN Router

• Host your own PHP, Python and Docker-based web apps on our Mobile SD-WAN Router

Employee shuttle services for Silicon Valley giants

• Multiple LTE connections provides high-bandwidth and unbreakable connectivity

• Mobile office experience on the move through VPN with headquarter

• Greatly enhances productivity as staff can work on hour-long commutes

Transport

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Maritime

Oceangoing vessels

• When the vessel is at shore, it will be connected to point-to-point Wi-Fi.

• When this becomes unavailable, it will fail-over to cellular network connections provided by the MAX HD2 IP67.

• Once it leaves shore coverage, cellular networks will take over until they are out of reach of the cellular towers. At which point, VSAT takes over, with the Iridium satellite phone as an additional failover option.

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Maritime

Luxury yachts

• Multiple-LTE connection along the shores allows connectivity for productivity and entertainment on yachts

• Vastly cheaper and much lower latency compared to satellite connection

• Pepwave is becoming a standard option among reputed yacht builders

Passenger cruise and ships

• Multiple-LTE connections for reliable guest Wi-Fi enhances customer satisfaction

• Connected applications such as POS, Ticketing, and Tracking, now run more efficiently, saving time, money and frustration

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Maritime

Bypassing Internet Geo-Restrictions with SpeedFusion SD-WAN

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Live HD Broadcasting

• Live streaming of HD quality through multiple LTE connections

• Cheaper and faster than satellite

• WAN Smoothing reduces packet loss to ensure smooth streaming

• Working with JVC Kenwood to develop next-gen smart camcorders

Event

• Deployment in hours anywhere, including outdoor events with no fixed line access

Broadcasting

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Automatic Teller Machines

• Multiple cellular connection ensures 100% uptime in remote locations

Digital Signage

• Flexible sign locations with LTE connectivity

• Remote signage content management via InControl 2

• Location tracking and troubleshooting from a central location

Connected Cars and Autonomous Driving

• Unbreakable Connectivity is well-positioned for vehicle-to-vehicle communications, which will play a crucial role in autonomous driving

Unmanned Systems

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Enterprise

Ultra-high Bandwidth on-demand and Disaster Recovery for Offices & branch networks

• Multi-LTE SpeedFusion SD-WAN enables true Fixed Mobile Convergence for Enterprise networks

• New 8-slot based APX platform (Advanced Performance SD-WAN) available in Q4, 2017

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This video demonstrates the difference between a SpeedFusion Hot Failover and standard failover

Standard failover routers do NOT have session persistence in the event of a failover. While failover times can be improved by changing settings on these routers, nothing will change the fact that https traffic on the failed WAN will drop and have to be reconnected on the backup connection.

For many applications, this means a failover will leave you disconnected. For example, processing a credit card payment, a login to online banking, a VoIP call. The session is built over the primary WAN and when that WAN fails, you will have to re authenticate on the second WAN. You would be taken back to the login screen for e-mail or banking, have to process the card again, make a new phone call, etc.

SpeedFusion Hot Failover for Unbreakable VPN

SpeedFusion Hot Failover:https://youtu.be/OdDHIzLLuyU

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SpeedFusion SD-WAN enabled VoIP

SpeedFusion SD-WAN enabled VoIP:https://youtu.be/psLPiq2uFtQ

Courtesy of Peplink/Pepwave authorized reseller 3GStore

Typical failover routers will leave you disconnected in the event of a primary connection failure, while SpeedFusion provides an always on unbreakable connection.

We are not showing the router used in the first half of the video. The purpose of the video is not to single out another manufacturer as this applies to ALL non SpeedFusion routers, rather this video is meant to educate people on the difference between standard failover and SpeedFusion bonding.

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Retail branches

• SpeedFusion Hot Failover for Unbreakable VPN and VoIP connections

• Not tied down by fixed line contracts when stores relocate

• InControl 2 allows centralized SD-WAN management across all branches

• Costco Mexico, Two major realty agencies in Hong Kong, Go-to-market partnership with cellular operators.

Pop-up stores

• Store location no longer restricted by availability of physical WAN/LAN ports

• Secure and stable LTE connections for POS terminals in temporary pop-up stores

Retail

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Company Financials

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1H17 Result Highlights

6 months ended Jun 30(USDm)

2015 2016 2017YoY

Change

Revenue 10.7 12.0 17.8 +48%

Gross profit 5.9 7.9 10.5 +33%

Operating income 2.2 4.0 5.0 +25%

Net profit 1.4 2.8 4.1 +48%

Non-GAAP net profit¹ 1.9 3.3 4.6 +37%

Basic EPS (US cents)² 0.18 0.37 0.41 +11%

Non-GAAP EPS (US cents)² 0.26 0.45 0.46 +3%

Dividend per share (HK cents) - 1.73 2.58 +49%

• Non-GAAP net profit excludes listing expenses of US$544k/US$537k in 1H15/1H16 and share option expenses of US$438k in 1H17

• Pursuant to our IPO, share count used in GAAP and Non-GAAP basic EPS calculations were 1H15: 750 million / 1H16: 750 million / 1H17: 1,000 million

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Solid Balance Sheet and Cash Flow

Key ratio 1H16 2016 1H17

Current ratio (times) 2.2 4.3 4.5

Cash & deposit – total debt (USDm) 5.4 18.9 16.2

Operating cash flow (USDm) 3.4 4.4 1.2

Capex (USDm) 0.3 0.7 1.5

Days of trade receivables 41 43 44

Days of inventory turnover 201 190 196

Days of trade payable 12 17 14

ROE (%) - 33.4 32.8

• Capex was mainly spent on acquiring office units as R&D center, in line with IPO use of proceeds

• Inventory mainly consist of components for SD-WAN routers

• ROE = Net profit during the period / average of opening & ending balance of equity x 2

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Key revenue drivers in 1H17:

• Broad-based revenue growth driven by increasing awareness of SD-WAN technology

• Wireless SD-WAN routers saw robust growth from expanding applications that require rapidly-deployed high-speed Internet

Revenue Breakdown

43%50%

49%

31%26%

22%23%

20%

22%

3%4%

7%

1H15 1H16 1H17

North America EMEA Asia Others

Revenue by region

35% 28% 23%

47% 47%

55%17% 21%

18%

4%

4%

10.712.0

17.8

1H15 1H16 1H17Total

Software licenses

Warranty & support services

Wireless SDWAN routers

Wired SDWAN routers

Revenue by product(USDm)

+12%

+48%

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Gross Profit & Margin

Gross margin stayed within historical range

• 1H17 GPM lowered to 59% from 63% in 2016• We shipped new single-WAN wireless models (eg. MAX BR1 Mini) with relatively lower margin to

drive adoption. We believe this opens up new market opportunities in the future• High-end SD-WAN routers remain highly profitable

65.4%

69.0%

66.1%68.6%

66.0%

35.7%

45.2%

53.0%

47.0%

44.1%

55.4%

60.6%

65.8%

61.4%59.0%

1H15 2H15 1H16 2H16 1H17

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%Segment gross margin

Wired SDWAN

Wireless SDWAN

Company blended

41% 33% 27%30% 26%

31% 38% 38%

40% 41%26%27%

28%

23% 26%

7%

7%7%

5.96.7

7.9

10.010.5

1H15 2H15 1H16 2H16 1H17Wired SDWAN routersWireless SDWAN routersWarranty & support servicesSoftware licenses

Gross profit and breakdown(USDm)

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Operating Expenses

Opex to sales remained at 33% level

• R&D expenses increased 62% YoY due to higher R&D staff count, increased average salary and increased components and parts incurred for new product development

• Admin expenses increased 47% YoY due to increases in average staff salary and legal & professional fees.

6 months ended Jun 30 2015USDm % of sales

2016USDm % of sales

2017USDm % of sales

Selling & Distribution 0.47 4.4% 0.61 5.0% 0.64 3.6%

Admin expenses 1.28 12.0% 1.34 11.2% 1.97 11.1%

R&D 2.03 18.9% 2.02 16.7% 3.27 18.4%

Total Opex 3.79 35.3% 3.97 33.0% 5.88 33.1%

Other income 0.06 0.5% 0.02 0.2% 0.37 2.1%

Operating income 2.22 20.7% 3.98 33.1% 4.99 28.1%

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Appendix: Income Statement

Income statement

Year ended Dec-31 (US$'000) 2014 2015 2016 1H16 2H16 1H17

Revenue 17,946 21,860 28,358 12,033 16,325 17,788

Cost of sales -6,910 -9,166 -10,413 -4,110 -6,303 -7,286

Gross profit 11,036 12,693 17,945 7,923 10,022 10,502

Other income 306 69 104 24 80 369

Selling and distribution exp. -1,035 -1,003 -1,697 -607 -1,090 -637

Administrative expenses -2,049 -2,710 -3,412 -1,344 -2,068 -1,974

R&D expenses -3,969 -3,907 -4,990 -2,015 -2,975 -3,268

Operating profit 4,289 5,142 7,950 3,981 3,969 4,992

Listing expenses 0 -1,001 -1,252 -537 -715 0

Finance cost -4 -1 -23 -14 -9 -11

Profit before taxation 4,285 4,140 6,675 3,430 3,245 4,981

Income tax expenses -542 -783 -1,435 -629 -806 -846

Profit for the period 3,743 3,357 5,240 2,801 2,439 4,135

Non-GAAP adjustments:

+ Listing expenses 0 1,001 1,252 537 715 0

+ Stock option expenses 0 0 408 0 0 438

Non-GAAP Earnings 3,743 4,358 6,900 3,338 3,154 4,573

Per share data (US cents):

Basic EPS 0.50 0.45 0.60 0.37 0.25 0.41

Non-GAAP EPS 0.50 0.58 0.80 0.45 0.32 0.46

Dividend per share 0.49 0.37 0.47 0.22 0.25 0.33

Basic weighted avg. shares 750 750 867 750 985 1,000

Segment breakdown

Year ended Dec-31 (US$'000) 2014 2015 2016 1H16 2H16 1H17

Segment revenue

Wired SD-WAN routers 7,493 6,987 7,687 3,273 4,414 4,067

Wireless SD-WAN routers 7,635 10,685 14,291 5,685 8,606 9,832

Warranty and support services 2,580 3,905 5,189 2,536 2,653 3,114

Software licenses 240 282 1,191 539 652 775

Segment gross margin

Wired SD-WAN routers 69.8% 67.1% 67.5% 66.1% 68.6% 66.0%

Wireless SD-WAN routers 44.7% 40.7% 49.4% 53.0% 47.0% 44.1%

Warranty and support services 83.7% 86.4% 86.9% 87.0% 86.8% 87.0%

Software licenses 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Geographic revenue breakdown

North America 41.9% 42.0% 48.8% 42.6% 49.6% 49.3%

Asia Pacific 25.3% 21.4% 20.3% 23.7% 19.5% 21.9%

EMEA 27.2% 33.6% 24.5% 31.1% 26.2% 21.6%

Other 5.6% 3.0% 6.4% 2.7% 4.6% 7.2%

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Appendix: Balance Sheet & Cash Flow

Balance Sheet

Year ended Dec-31 (US$'000) 2014 2015 2016 1H17

Property, plant & equipment 595 556 694 1,941

Deposits for acquiring property 0 0 106 0

Intangible assets 90 277 383 431

Total non-current assets 685 833 1,183 2,372

Inventories 3,651 4,138 6,678 8,970

Trade and other receivables 3,328 3,857 5,315 6,331

Pledged bank deposit 0 0 129 0

Bank balances and cash 3,696 6,062 19,193 17,296

Others 816 459 0 0

Total current assets 11,491 14,516 31,315 32,597

Trade and other payables 1,983 1,045 1,884 1,100

Deferred revenue 1,768 2,852 3,551 3,921

Tax liabilities 499 516 1,589 1,595

Bank borrowings 60 1,239 318 690

Others 154 1,809 0 0

Total current liabilities 4,464 7,460 7,342 7,306

Deferred tax liabilities 49 40 56 38

Deferred revenue 611 736 854 1,008

Bank borrowings 455 0 0 421

Total non-current liabilities 1,116 776 910 1,467

Share capital 0 0 1,288 1,288

Reserves 6,596 7,113 22,958 24,908

Equity to owners of the Company 6,596 7,113 24,246 26,196

Statement of Cash Flows

Year ended Dec-31 (US$'000) 2014 2015 2016

Cash generated from operations 3,451 3,797 4,766

Income tax paid -358 -777 -346

Net cash from operating activities 3,093 3,019 4,420

Additions to intangible assets -78 -265 -240

Purchase of property, plant and equipment -352 -215 -462

Deposits paid for acquisition of property 0 0 -106

Change in pledged bank deposit 0 0 -129

Interest received 7 0 0

Others 554 -436 0

Net cash used in investing activities 130 -915 -937

Dividends paid -3,701 -2,800 -3,228

Interest paid -4 -1 -23

New bank loan raised 0 1,239 318

Repayment of bank borrowings 0 0 -1,238

Proceeds from issue of new shares 0 0 14,701

Others 66 1,764 -876

Net cash from financing activities -3,639 202 9,654

Net increase in cash & cash equivalents -416 2,306 13,137

Cash at the beginning of the year 4,133 3,696 6,062

Effect of foreign exchange rate changes -20 60 -6

Cash at the end of the year 3,696 6,062 19,193

Q&A

Investor Relations ContactPhone: +852 2990 7667Email: [email protected]