1. 1 The Building Sector and the Taps Market A Global Study Speaker: Luca Ferrari, Market Analyst European Congress of the Valves and Taps Industry 19 May 2016, Lyon - France

2. 2 Introduction Founded in 1972, and part of the privately-owned Business Research Group since 2002, BRG Building Solutions is a specialist research consultancy dedicated to serving the market information needs of the global building products industry from its offices in London, New Jersey, Beijing and New Delhi. BRG’s core areas of expertise are in the HVAC and bathroom products industries covering: Core heating products: boilers, radiators, water heaters and furnaces. Low carbon renewable heating technologies: heat pumps, solar thermal and biomass. Ventilation and air conditioning products. Sanitary, kitchen and plumbing products. The focus of this presentation uses the sanitary taps market as a benchmark, taking data from our individual country and global industry reports. However, the trends discussed will be relevant to any number of building products, such as valves, pumps and fittings. The main objectives of the following presentation will be the following: Objectives: To discuss future developments within the main world markets Evaluating how emerging markets are likely to impact mature countries Consider how mature markets will and could react to the changing global landscape Objectives: To discuss future developments within the main world markets Evaluating how emerging markets are likely to impact mature countries Consider how mature markets will and could react to the changing global landscape

3. 3 Future Developments of Leading Markets Source: BRG Building Solutions interviews and research

4. 4 Future Developments of Leading Markets Source: BRG Building Solutions interviews and research

5. 5 The Opportunity of Large Emerging Markets Catalyst News article on high lead content sparks concerns in China with the safety of drinking water. Government amends existing quality standards to include maximum lead levels. Effect on Market 60% of domestic manufacturers struggle to meet new quality and low lead requirements. Consolidation of market share by large manufacturers begins, prices increase due to new manufacturing laws. Opportunity Higher average prices in China opens door to increasing foreign imports that are within norm. Increasing demand cannot be met by reduced number of local manufacturers, foreign manufacturers can meet demand.

6. 6 The Threat of Large Emerging Markets Top 10 non-Chinese taps manufacturers €3.7b² China global taps exports €3.8b¹ Increasing demand for lower priced products Greater supply of cheaper foreign products Decrease of 6% in real average prices 2008-2015 ¹Source: Trademap ²Source: BRG Building Solutions interviews and research

7. 7 The Changing Nature of Distribution

8. 8 Manufacturer The promise of delivery has to be guaranteed with effective transport hubs & fast lead times Distributors must be chosen carefully to ensure steady supply of business and avoid credit issues Distributor Pressure from installers to provide quick delivery Distributor prioritises manufacturers with efficient transport Installer Changing attitude towards keeping stock, provoked by reduced liquidity Stock is requested from the distributor when an job is confirmed.

9. 9 Conclusion: Points to Remember

10. 10 Thank You For Your Attention BRG London Team Contact : Luca Ferrari | Senior Analyst D: +44 208 832 7849 | Office: +44 208 832 7860 | lferrari@brggroup.comlferrari@brggroup.com | www.brgbuildingsolutions.com |www.brgbuildingsolutions.com Contact : Luca Ferrari | Senior Analyst D: +44 208 832 7849 | Office: +44 208 832 7860 | lferrari@brggroup.comlferrari@brggroup.com | www.brgbuildingsolutions.com |www.brgbuildingsolutions.com