Welcome to Reunert Analysts & Fund Managers

ReunertReunert ConsumerConsumer andand CommercialCommercial HoldingsHoldings LimitedLimited SouthSouth AfricaAfrica Itinerary

09h00 – 09h15 Welcome – Mr G Pretorius

09h15 – 09h45 Presentation & DVD on MEI

09h45 – 10h45 Tour * Panasonic Systems & Consumer Showrooms * Futronic / Akai / Nintendo Showrooms History 1960 • Barlows Manufacturing signed agreement with Matsushita Electric Industrial Company Limited of Japan (“MEI”) and goods were sold through Barlows Appliance Company and Telerama Rediffusion. 1975 • Manufacturing of Barlowvision televisions,car radios and radios commenced at a plant in New Germany, Durban for Telerama Rediffusion. 1980 • By 1980 the Barlowvision and Fuchs products had been discontinued in favour of the National Brand. Products manufactured included Television, Car Radio, General Audio, Hi-Fi and Cooker Control Panels. • National Panasonic Company (NPC) was established, based in Kew, and took over the distribution of all consumer products as a subsidiary of Barlows Manufacturing. Products were branded National, except for Hi-Fi which was branded Technics. 1984 • Telerama Rediffusion became National Office Automation, a part of NPC Limited. 1986 • NPC and Nashua combined under one Managing Director in one building based in Midrand (current Nashua Ltd. Building) • NPC launched a range of OA equipment which was sold through Franchise operations called Panash (Panasonic / Nashua joint franchises) 1987 • NPC launched the local logo N National and payoff line “The Quest for Zero Defect” 1988 • MEI decided to become more serious in Office Automation products and requested the Nashua / Panasonic operations be split. 1991 • The brand identity changed from National to Panasonic passing though many steps. History (contd.) 1992 • MEI withdrew all representation from South Africa on the grounds of apartheid after more than 20 years of representation. 1993 • Barlow Rand unbundled and Reunert Limited became our proud new owners. 1994 • MEI re-assigned a representative to our country on the declaration of freedom. 1997 • Panasonic OA business re-launched as Panasonic Systems Company and commenced selling telecoms, broadcast, CCTV and other products. 1998 • Airomatic was absorbed into NPC. 1999 • A strategy of vertical integration commenced and PanSolutions was launched. 2001 • The need for an alternative brand was recognised and Futronic was launched. 2002 • MEI made a global decision to discontinue Technics branded products. 2003 • An agency agreement was concluded with Nintendo. 2004 • MEI requested NPC to drop the slogan “Quest for Zero Defect” and use the global positioning statement “ideas for life”. 2005 • An agency agreement with Akai was concluded. Office Automation & IT Systems

Current Distribution : Product Categories Franchise network / Copiers Specialised dealers Fax Printers Scanners Consumables

Number of opposition brands +40

Major Competitors Copiers – Minolta/Canon/Nashua Fax – Hewlett Packard/Canon/Samsung Printers – Hewlett Packard/Brother/Epsom/Lexmark Panasonic No. 4

Warranties offered Retail – 1 year carry-in / Systems – 3-5 years on site maintenance contract Airconditioning Systems

Product Categories Current Distribution : Specialised dealer network Window Units

Midwall Units

Package

Number of opposition brands +60

Major Competitors Samsung LG Panasonic No. 2 Daiken

Warranties offered On site – 1 year main unit / 5 years compressor Presentation Systems

Product Categories Current Distribution : LCD Projectors Franchise network / Plasma Specialised dealers Panaboard Storage Devices

Number of opposition brands Projectors +60 Plasma +20 Panaboard +5 Major Competitors LCD Projectors – Epson/Beng Panasonic No. 1 Plasma – Pvision/Samsung/LG Panasonic No. 3 Panaboard – Nobo/Smart Panasonic No. 1

Warranties offered Retail – 1 year carry-in / Systems – 3-5 years on site maintenance contract Telecommunication Systems

Current Distribution : Specialised dealer network Product Categories Franchise network PABX Phones Cordless Phones

Number of opposition brands +15

Major Competitors PABX – Samsung / Marconi Phones – Telkom / GE / Siemens Cordless Phones – Siemens / GE

Warranties offered Panasonic No. 2 Retail – 1 year carry-in Systems – 3-5 years on site maintenance contract offered by dealer/franchise Car Audio Systems

Product Categories Current Distribution : Specialised dealer network Car Radios OEM Car Radios Aftermarket

Number of opposition brands +30

Major Competitors Phillips Sanyo Panasonic No. 2 JVC

Warranties offered 48 hour swap out Retail – 1 year carry-in P&A / OE – 3 years carry-in Broadcast & CCVE Systems

Product Categories Current Distribution : Cameras / Monitors / VTR / Lenses / Specialised dealer network Digital Recorders / Biometrics Tapes / Editors / Mixers

Number of opposition brands +20

Major Competitors Sony Avid Panasonic No. 3 Reditron

Warranties offered Broadcast – 1 to 3 years carry-in CCVE Main units – 1 year carry-in CCVE Systems – 3 to 5 years maintenance contract Direct Sales Operations Pansolutions

Three branches

Johannesburg / Durban / Cape Town

Pretoria still to be opened

Employees – 400

Number of Accounts – 10,000

Product Categories

OA / IT / CCTV / PABX / Air Con./ Presentation

Offer full installation / reticulation and service backup package TOTAL SOLUTION ONE STOP SHOP

Expansion into retail product sales via high street shops Consumer Brown Goods & Photographic Current Distribution : Product Categories Discounters / Independents / Chain Stores VCR / Camcorder / Digital Still Cameras / Keyboards / Hi Fi / General Audio / DVD Players & Recorders

Number of opposition brands +80

Major Competitors LG Sony Sansui Panasonic No. 4 Samsung

Warranties offered 1 to 5 years carry-in Panasonic Television

Current Distribution : Product Categories Independents/Mass Discounters/ Chain Stores/Export Flat Screen/Round Screen/LCD/ Plasma TV

Number of opposition brands +50

Major Competitors A Brands – LG/Samsung/Sony Panasonic No. 4 B Brands – Sansui/Telefunken

Warranties offered 3 year carry-in – Flat screen 1 year carry-in – Round screen

Manufacturing Manufacturing

Highly advanced SMD insertion equipment Manufacturing

New lead free solder equipment Manufacturing

Third party assembly work FMCG

Current Distribution : Product Categories Wholesales/Supermarkets /Distributors Batteries / Industrial Batteries / Torches / Timer & Switches / Specialised Lighting

Number of opposition brands +9

Major Competitors Batteries & Torches Eveready/Duracell/Energizer Industrial Batteries Yuasa/CSB/G S Portalec Panasonic No. 2 Warranties offered 1 year carry-in – Industrial products Small Appliances

Product Categories Current Distribution : Microwave / Breadmaker / Iron / Discounters / Independents Vacuum Cleaner / Juicer-Blender / Personal Care

Number of opposition brands +80

Major Competitors LG Phillips Panasonic No. 5 Samsung

Warranties offered 1 year free exchange 5 years on microwave magnetron 1 to 5 years carry-in on smalls Consumer Electronics Revolution

Before 2000 Environment Current Environment

Distribution Industry Change Exchange rate Constant depreciation Great volatility FOB price erosion (GFK) 50% over 10 years 50% over 2-3 years Agents vs Multinational subsidiaries 90 – 10 20 –80 Retailing Industry Change Retailers Consolidation (major) 40 12 Discounter power (product change/market change) 15% 40% Brand differentiation Not required Key Issue Price premium for brand 15% 5% Number of competitive brands 10 80 Retailer direct import Limited Common Consumer Industry Change Advertising consumer reach – Mass market Identifiable Highly fragmented Global pricing No knowledge High knowledge Product choices (consumer/retailer) ● By features Limited Multi various (+ 5x greater) ● By category Identifiable Merged ● By brand (quality/features) Definable Undefinable (further brand erosion) Consumer type Knowledgeable about use Limited knowledge of use Good care of product Limited care of product Technical Service support All cost effective repair Variable Purchase psychology Functional Fashionable Total Consumer Electronic and Photographic

20 +17% 15

0 -3% -5 May-03 May-04 to Units Value 000's to May-04 May-05 Unit Price Erosion

CRT Television DVD Player & Recorder

3500 3500 3000 3000 2500 2500 2000 2000 Rand 1500 Rand 1500 1000 1000 500 500 0 0 Jan. 2003 Jan. 2004 Jan. 2005 Jan. 2003 Jan. 2004 Jan. 2005 Leader model price erosion = 56.6% Leader model price erosion = 68.9%

Camcorder Digital Camera

7000 5000 6000 4000 5000 4000 3000

Rand 3000 Rand 2000 2000 1000 1000 0 0 Jan. 2003 Jan. 2004 Jan. 2005 Jan. 2003 Jan. 2004 Jan. 2005 Leader model price erosion = 50.8% Leader model price erosion = 57.5%

Average Market Price Market Leader Model Price Panasonic Leader Model Price Unit Price Erosion

Plasma Television

25000 20000 15000

Rand 10000 5000 0 Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- 04 04 04 04 04 04 05 05 05 05

Average Selling Price 31% Erosion in 9 months Market Shift by Product Origin

Prior to 1990 1990 - 1995

European e

e Japanese

r P P Japanese Korean

Quantity Quantity

1995 -2000 2000 - 2005 Panasonic Japanese Japanese

Korean

e e

c c i

i Korean r

r Akai P P Chinese Product / European & Japanese Brand Chinese Brand Chinese Brand Quantity Quantity Futronic Futronic Current Distribution : Chain Stores / Independents Product Categories Television / DVD / Hi Fi / Microwaves / Mini Oven

Number of opposition brands + 80

Major Competitors Sansui Tedelex Futronic No. 9 Telefunken

Warranties offered 1 year carry-in Nintendo Current Distribution : Toy & Baby Stores/ Mass Discounters Product Categories Gaming Consoles – Game Boy/Game Cube/Nintendo DS Games – Activision/Ubisoft/THQ/Take2/Sega/Capcom/Konami

Number of opposition brands 3

Major Competitors Sony Microsoft Nintendo No. 2 Nokia

Warranties offered 1 year carry-in Thank you