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Quarterly Report Q1 For the three months ended April 2, 2016

CONTENTS Letter to Shareholders Managements Discussion and Analysis Selected Annual and Quarterly Information Consolidated Financial Statements Notes to Consolidated Financial Statements 3 4 14 15 2

Fellow Shareholder, I am pleased to report that our Quarter 1, 2016 financial performance exceeded our expectations in these challenging economic times. The Company attained increases in both sales an

Q1 manag em en t s d is c uss i o n an d analys i s Q1 MANAGEMENTS DISCUSSION AND ANALYSIS Hammond Power Solutions Inc. HPS or the Company is a North American leader in the design and manufacture of

DOLLARS IN TH O US AN D S U N LESS OTH ERW I S E S TAT E D a substitute for net income determined in accordance with IFRS. Order bookings represent confirmed purchase orders for goods or services rec

Gross margin Gross margin rates for Quarter 1, 2016 were 24.3 compared to Quarter 1, 2015 margin rates of 22.2 an improvement of 2.1 of sales. The change in margin rates can be attributed to product a

DOLLARS IN T H O US AN D S U N LESS OTH ERW I S E S TAT E D Foreign exchange gainloss The foreign exchange loss in Quarter 1, 2016 was 321. This loss relates primarily to the transactional exchange p

D OL LARS IN TH O USAN D S U N LESS OTH ERW I S E S TAT E D Summary of quarterly financial information unaudited Fiscal 2016 Quarters Sales Net earnings Net earnings per share basic Net earnings per

DOLLARS IN TH O US AN D S U N LESS OTH ERW I S E S TAT E D Accumulated other comprehensive income Changes to the accumulated other comprehensive income AOCI balance include foreign currency translati

The Company is acutely cognizant of these risks and continually assesses the current and potential impacts that they have on the business. HPS continuously strives to curtail the negative impact of th

DOLLARS IN T H O US AN D S U N LESS OTH ERW I S E S TAT E D Credit A substantial portion of the Companys accounts receivable are with customers in manufacturing sectors and are subject to credit risk

Financial instruments On July 24, 2014 the IASB issued the complete IFRS 9 Financial Instruments IFRS 9 2014. The mandatory effective date of IFRS 9 is for annual periods beginning on or after January

DOLLARS IN T H O US AN D S U N LESS OTH ERW I S E S TAT E D of experience, engineering expertise, solid supplier relationships and a broad and unique business perspective gained through our diverse p

Selected Annual and Quarterly Information tabular amounts in thousands of dollars The information contained in the following table presents the historic audited annual financial information as at Dec

D OL LARS IN THOUS AN D S U N LESS OTH ERW I S E S TAT E D Consolidated Statements of Financial Position unauditied tabular amounts in thousands of dollars As at April 2, 2016 December 31, 2015 Ass

Consolidated Statements of Earnings unauditied Three Months Ending tabular amounts in thousands of dollars April 2, 2016 March 28, 2015 63,137 49,123 14,014 6,746 5,822 1,446 Sales Cost of sales

D OL LARS IN TH O USAN D S U N LESS OTH ERW I S E S TAT E D Consolidated Statements of Comprehensive Income unauditied tabular amounts in thousands of dollars Three Months Ending April 2, 2016 Marc

Consolidated Statements of Changes in Equity unaudited For the three months ended April 2, 2016 tabular amounts in thousands of dollars SHARE CAPITAL CONTRIBUTED SURPLUS AOCI RETAINED EARNINGS N

D OL LARS IN THOUS AN D S U N LESS OTH ERW I S E S TAT E D Consolidated Statements of Changes in Equity unaudited For the three months ended March 28, 2015 tabular amounts in thousands of dollars S

Consolidated Statements of Cash Flows unauditied tabular amounts in thousands of dollars Three Months Ending April 2, 2016 March 28, 2015 Cash flows from operating activities Net earnings Adjustmen

Quarters ended April 2, 2016 and March 28, 2015 tabular amounts in thousands of dollars except per share The accompanying unaudited interim financial statements of Hammond Power Solutions Inc., HPS o

Quarters ended April 2, 2016 and March 28, 2015 tabular amounts in thousands of dollars except per share Transfer of assets On September 11, 2014 the IASB issued Sale or Contribution of Assets betwee

Quarters ended April 2, 2016 and March 28, 2015 tabular amounts in thousands of dollars except per share 5. Joint venture The Company has a 55 economic interest and voting interest in Corefficient.

Quarters ended April 2, 2016 and March 28, 2015 tabular amounts in thousands of dollars except per share 7. Longterm debt Opening balance Repayments Term loan CAD Term Loans EUR Term loan INR Exchan

10. Related party transactions Related parties Arathorn Investments Inc. beneficially owns 2,778,300 2015 2,778,300 Class B common shares of the Company, representing 100 of the issued and outstandi

Canada Hammond Power Solutions Inc. Corporate Head Office 595 Southgate Drive Guelph, Ontario N1G 3W6 15 Industrial Road Walkerton, Ontario N0G 2V0 10 Tawse Place Guelph, Ontario N1H 6H9 Italy Hammon

Corporate Officers and Directors William G. Hammond Chairman of the Board and Chief Executive Officer Stock Exchange Listing Toronto Stock Exchange TSX Trading Symbol HPS.A Legal Representation Bor

HAMMONDPOWERSOLUTIONS.COM

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