Ukraine SCS Market Report

Ukraine SCSMarket July 21Report 2011You may find detailed information including volume of market; marketshares, popularity index, realized projects and types of projectsregarding Ukraine structured cabling products (SCS) market. Ozan Can Köseley

Despite the optimistic predictions of restraint global and national economies in the Ukrainian market some SCS some positive developments are occurred. Compared with 2009, the volume increased by 2.23% to $ 26.27 million 2010 was a year of hope for most market participants in Ukraine. It come true For somecompanies , because the turnover and the proportion of producers in the market increasedcompared to 2009, however it is not reached pre-crisis levels yet. Another past year has notbrought the expected results, sales figures continue to fall. Objects of Euro 2012 were a panaceafor some, for others - just a breeze lost opportunities.Statistical Approach The volume of Ukrainian market of SCS in 2010 increased compared to the year 2009 by2.23% to $ 26.27 million, results obtained by analyzing the dynamics of the activity of marketparticipants over the years. __________________________________________ The volume of the Ukrainian SCS market 2010 increased compared to 2009 to 2.23% to $ 26.27 million _________________________________________ Moreover, not all SCS companies agree with this conclusion. Thus, 51.1% believe that themarket in 2010, SCS has shown positive momentum, having grown by an average of 23.6%.Other(41.9%) are convinced that the size of the market fell, with approximately 41.7%. But there arestill 7.0% of companies that have not seen any changes. On the other hand, according to SCS companies, the market volume in 2010 correspondsto 55.2% before the crisis. In 2008, before the downturn, the volume of SCS market estimated at$ 53.5 million in this case the estimate of 2010 to make $ 29.5 million During the year the main efforts of the installers were focused on finding customers.Moreover, confidence in the good results was supported by tenders and even the preliminarydesign work on real objects. It was obvious that despite the absence of a construction boom,there is a real need for the project. However, many constraints have prevented these hopes cometrue. The lack of real financing leads to accumulation of pent-up demand. Installers of the new wave In recent years, activity in the market several SCS reduced. Companies that have managedto diversify its activities in time or take care of reliable customers remained as major players. Each company has time to realize the installation for the year a number of projects. But themost failed to gain sufficient pool of orders. It can be seen in Fig.1, which shows the distributionof shares of companies, the installers on the number of projects implemented in the past year. As it can be seen, just over half of companies, installed for the year to 10 projects. Thus76.1% of companies (three quarters of market participants) to build 20 projects SCS (8.5% more Ozan Can Köseley | Confidential 2

than in 2009). From 20 to 40 projects in 2010 installed a 6.5% of companies (14.1% less than in2009). Thus, in 2010 it can be said that growth in the share of small-volume projects. Number of Realized Projects From 100 to 12 Projects From 80 to 100 Projects From 60 to 80 Projects From 40 to 60 Projects From 20 to 40 Projects From 10 to 20 Projects From 10 Projects 8% 9% 41% 9% 9% 19% 5% Fig.1 Installed Ports 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 6000 6500 7000 7000 and more 35,6 20 11,1 8,9 6,7 4,4 2,2 2,2 2,2 2,2 2,2 2,2 0 0 Fig.2 If it is examined in more detail about the distribution of shares of companies on thenumber of installed ports Fig. 2, it is seen that a third of all companies surveyed (35.6%), set forthe year to 500 ports. From 500 to 1000 ports installed for the year 20.0% of companies. In total55.6% of companies installers (more than half the players) have set for 2010 to 1000 ports of SCS. Ozan Can Köseley | Confidential 3

So, apparently, many companies have Segment SCS seek and find alternative ways of earning forexistence, engaging in the performance of work in related fields. A characteristic feature of the SCS market the past year is the overall decline in the numberof projects carried out by installers for the year. Thus, among the respondents there is nocompany that would be implemented during the year over 120 projects. Back in 2009 suchcompanies in the market was around 3%, and the number of installations for the year amountedto two hundred. And it is in a difficult sector for SCS-2009. However, during this same time anumber of new companies those have done fairly large projects in the hotel complexes at thesites of Euro 2012. However, noticed another trend - the market there are companies, installers, who do nothave a state-certified specialists. This suggests that these players came to the SCS segment of theadjacent sectors and the "low-power designs," performed in a package with "electricalinstallation", or hire a subcontractor to the SCA professional installers. A characteristic feature of the portrait is the number of installers trained professionalsemployed by the company on various brands of SCS. There is a simple installer, which has a three-day training and has a lot of practice for installation of SCS. There are specialists in the design ofcable systems. There is a separate specialty by installing "smart" SCS. Thus, manufacturers areoffering the opportunity to receive not only general knowledge, but also special. As in the previous study, the first and second places respectively occupied by the companyR & M (24, 9%) and AMP Netconnect (17,6%), with SCS on the market the most trainedprofessionals Fig. 3 . Diagram of distribution obtained by a simple summation of the claimedcertificates are available at the hands of the installers. In addition to acting and there areoverdue. Some have certificates in the hands of AESP, 3 M , ITT NS & S , KRONE , RiT .Perhaps theyare still useful. Compared with the previous year there have been some rearrangements. Thus, reversedMolex PN (3rd place) and Vinet (4th). Castling also occurred between Panduit (5th place) andLegrand (6th). Ozan Can Köseley | Confidential 4

Systimax Shares of Trained Professionals 2% Siemon Brand-Rex RIT Others 3% Corning 2% 2% 4% IvyNET 2% 4% R&M OK-Net 25% 4% AESP 5% AMP Netconnect 18% Legrand Vinet Molex PN 6% 8% 9% Panduit 7%Fig.3 At the same time the company installers appreciate received documents confirming the status of their staff. And if you calculate how many certificates have certain market participants, Fig. 4. The most numerous (31.9%) group of companies (the group “experienced "installers) is between five and ten certificates (in 2009 it included 20.3% of companies). Group of “mature "companies (from 10 to 20 certificates) are somewhat reduced its share - from 34.8% in 2009 to 23.4% in 2010.”Company-experts "(from 20 to 30 certificates) have reduced their presence with 10,4% in 2009 to 6.4% - in 2010. Group “guru "(from 30 to 50 certificates) improved its position (from 7.2 to 10.6%). More than 50 certificates are in the current study, 2.1% of the companies. There are also players who ignore the need to have certificates (6.4%). This is a fairly weighty group. More than From 30 to 50 Without certificates Ratio of Certified Staff 50 certificates certificates 11% 6% 2% From 20 to 30 certificates From 5 6% certificates 19% From 10 to 20 certificates From 5 to 10 24% certificates 32%Fig 4 Ozan Can Köseley | Confidential 5

It can be easily calculated their share in Fig. 5. In the first place in this ranking istraditionally the company R & M - 70,2% of companies have a staff of certified professionals ofthe brand, which is 6.4% higher than in 2009. In second place is also traditionally AMP Netconnectwith a share of 53.2%, which is 9.1% worse than in 2009. Third place, as in 2009, with Molex PN(44,7%). This figure is almost the last year of the study. Brand Vinet to 36.2% took 4 th place,reducing its stake to 2.9%. In 2010, Legrand has exchanged positions with Panduit ratedpopularity certificates. Shares of other brands of SCS in this year fell by 5-10% compared to2009. The results show that in the state from companies those installers reduce the diversity ofspecialists in various brands of SCS. Ranking of Certified Staff R&M AMP NetConnect Molex PN Vinet Legrand Panduit Config IvyNET Siemon OK-Net AESP RIT Systimax 70,2% 53,2% 44,7% 36,2% 27,7% 25,5% 14,9% 14,9% 14,9% 12,8% 12,8% 10,6% 10,6% Fig 5 Projects and installations in 2010 Most of the projects SCS (85.8%) performed on the components of the category 5e Fig.6. And only 8.5% - on the category 6 and above. Compared with 2009 the share of projects in thecategory 6 increased by 1.8%. Ozan Can Köseley | Confidential 6

Shares of Project Types Mixed Category 6 and more Category 5e 6% 9% 86% Fig 6 Unprotected solution Fig. 7. continues to lead among the installations and occupy 75.5%(5.8% more than in 2009). The share of mixed projects has not changed - 5.5%. As it can be seen, during the reporting period the popularity of unprotected solutions hasincreased significantly. Thus 70.2% of companies have installed a protected SCS, andcombined. Accordingly, 29.8% of the companies fulfilled projects only unprotected components. An interesting feature of SCS market in 2010: with an increase in the share of projects inthe components category. 6 or more and also the proportion of unprotected solutionsincreased. This could signify only one thing - customers are increasingly using unprotectedsolutions category 6. Shares of Project Types Mixed Protected Unprotected 6% 19% 76% Ozan Can Köseley | Confidential 7

Fig. 7 In 2010, among the small-sized of completed projects SCS (up to 50 ports) was 54.5% Fig.8. Medium-sized projects (from 50 to 200 ports), there are 27.8%. The share of large cablesystems (200 to 500 ports) is 12% and, finally, over very large (500 ports), in 2010, was b uilt to5.7%. Shares of Project Types Very large projects (500 ports) Large cable systems (200 to 500 ports) Medium-sized projects (from 50 to 200 ports) Small-Sized projects (Up to 50 ports) 6% 12% 54% 28%Fig. 8 It is believed that the cable system must necessarily pass the certification. Only in this caseit has the right to be a full of SCS. In practice this ideal yet far enough away. The share ofcertified projects based on 2010 amounts to only 15.6% of certified ports - 33.1%. Most SCSprojects Fig. 9. and SCS ports Fig. 10 are certified for brands and R & M AMP Netconnect. Shares of Certified SCS Projects Siemon OK-net Panduit Molex PN AMP Netconnect R&M 1% 3% 5% 12% 52% 27% Ozan Can Köseley | Confidential 8

Fig. 9 Shares of Certified SCS Ports Siemon OK-net Panduit Legrand Molex PN AMP Netconnect R&M 2% 2% 4% 6% 7% 43% 36%Fig. 10 What brands are popular among SCS professionals in the current environment? Most of the projects implemented by brands AMP Netconnect (27,4%), OK-net (11,3%), R & M (11,0%), Panduit (10,2%) Fig. 11 A significant proportion of installations (21.4%) made either by unmarked components, or as a "grab-bag (from all that was at hand). Note that in the projects implemented by the participants of this survey, there were no one on the equipment installed SCS 3M, Nexans, RiT. Single installation of products found on AESP, Krone, PC Net. Popularity Index Among Professionals Others Siemon Noname 1% 0% AMP Netconnect 21% Premium 27% AESP Line Exalan Systimax 0% 0% 1% 1% OK-net Corning 11% IvyNET 1% 2% Legrand R&M Panduit 11% 10% Vinet 2% 4% Molex PN 7% Fig. 11 Very surprisingly OK-net on the number of completed projects was on the 2nd place after AMP Netconnect. This is due probably to the high popularity of cable components Odessa Ozan Can Köseley | Confidential 9

manufacturer. For instance, in Fig. 12 presented an index of cable systems of various brands inthe projects of Ukrainian installers. It indicates the proportion of companies who have used foryears in their installations. The diagram shows that almost half of companies (48.0%) during theyear used for their projects cabling R & M. ACS AMP Netconnect is used in installations only36.2% of companies, Panduit - 34% of the companies. But OK-net is used in this practice as 29.8%of the installers - a 4.3% increase over Molex PN. Actually, this index represents a real popularityrating in the market SCS of different brands of cable systems. Index of Cable Systems in Projects R&M AMP NetConnect Panduit OK-net Molex PN Vinet IvyNET Legrand Corning Systimax 48,9% 36,2% 34,0% 29,8% 25,5% 19,1% 12,8% 12,8% 6,4% 6,4%Fig.12 Market share occupied by one or another brand that is directly linked to the distribution ofinstalled ports Fig. 13. First of all, "grab-bag of" noname and got into the sector "Others". Thereason is that the installers are generally found it difficult to give an exact number of ports "grab-bag", but can estimate the number of ports that are implemented in one or another brand. Ozan Can Köseley | Confidential 10

Share of Installed Ports Others Vinet Legrand Molex PN OK-Net Panduit R&M AMP NetconnectFig.13 Most installations in 2010, holds the components of the cat. 5e - 85.8%. Therefore it is interesting to examine the distribution pattern of project installations and ports it to this category. The distribution of SCS projects components for cat. 5e is shown in Fig. 14. Most of the projects category. 5e performed on SCS AMP Netconnect (27,8%), annual growth rate of 4.3%. The second largest number of installations is "grab-bag" (24.2%), an increase of 3.4% compared to 2009. Although many participants questioning confidently refer it to the leaders on the number of installations, the survey data indicate that the time of final victory, "grab-bag" has not yet arrived. The share of projects OK-net has not changed (10.5%). But the number of projects Panduit has grown by 4.3%. In this performance R & M (9,2%) and Molex PN (7,3%), this time following the results of 2009, respectively, 5.5 and 5.9%. Shares for SCS projects in Category 5e OthersCorning Exalan Legrand Ivynet Vinet 2% 1% 1% 2% 2% 6% Molex PN 6% AMP Netconnect 32% Panduit 8% R&M 9% Mixed and Noname 16% OK-Net 15%Fig.14 Ozan Can Köseley | Confidential 11

But as it is known that the number of projects is not fully describe the picture of the market, so to analyze the distribution of the number of ports cat. 5 for brand names Fig. 15. A considerable part of them (28.3%) based on the components of AMP Netconnect. The second position is R & M (14,3%), third - Panduit (13,5%). More modest results, but still - a well-deserved fourth place - a cable system OKnet (8,3%). This is followed by Legrand (5,6%) and Vinet (5,2%). Shares of other brands do not reach 2%. As compared with 2009 significantly increased the share of AMP Netconnect (at 8,3%), OK-net (3,8%), Legrand (3,2%). Slightly decreased the proportion of installed ports in the overall picture of the market at the "grab-bag" (-3.8%), and Molex PN (-4,9%). Share of Installed Ports in Category 5e Others PC 2% Mixed and Noname ExalanNet 11% Corning 1% 1% 1% Ivynet AMP Netconnect 1% Vinet 29% 5% Legrand 6% R&M 14% OK-Net Panduit 8% 14% Molex PN 7%Fig.15 Although the cabling category 6 and above (6A, 6 A ) take on the market for only 8.5% of the number of installations that nevertheless interesting to see the distribution of the number of ports between the manufacturers in this sector Fig. 16. Picture is quite unusual. First of all, the first place in the ports category. 6 or more - the company R & M (48,1%), the second - AMP Netconnect (31,8%). Together, they provide 79.9% of the market demand for solutions cat. 6 and above. These results suggest that if you want to build high-quality cable system customers opt for the two brands. In third place Panduit (5,1%). Significant proportion - from Systimax (4,4%) and Legrand (3,5%). Ozan Can Köseley | Confidential 12

Share of Installed Ports in Category 6 or more Others Corning Molex PN OK net Legrand Systimax Panduit AMP Netconnect R&M 2% 3% 3% 1% 2% 4% 5% 48% 32%Fig.16 Segments Range of customers in need of SCS, is quite wide. Traditionally, it is divided into ten sub segments whose analysis can detect changes in the requirements and availability of effective demand in various sectors of the economy. Fig.17 is a diagram illustrating the degree of activity of the installers in each area. The vertical columns indicate the proportion of charts of companies that performed in 2010, projects for companies of various segments. Degree of Activity Commercial Structures Trading Enterprises Banks and Financial Inst. Industrial Enterprises and Service Companies 77,3% 53,2% 44,7% 36,2% Fig. 17 SCS projects carried out in virtually all sectors of the economy. Most (77.3%) have installed SCS for commercial structures. In carrying out projects for trading enterprises is 52.3% of Ozan Can Köseley | Confidential 13

installation. The same number is also for implemented projects for the state. Banks and financial institutions are the fourth most popular (47.7%). Next coming is industrial enterprises (43.2%) and service companies (34.1%). Company installers rarely tied to the companies of certain sectors of the economy. But sometimes small companies are guided in their activities in certain sectors, getting them 90-100% returns. Most of these installers are working in the public sector, business or trade. Moreover, these installations are a lot on the market. For example, the percentage of installers whose income is 95% or more dependent on public institutions in 2010 amounted to 6.8%. Solely on businesses (business offices, business centers, hotels, etc.) oriented 9.1% installers. Most work with companies trading 2.3% of companies. The structure of real consumption in the sectors of the economy is shown in Fig.18 . In fact, this distribution is installed SCS ports on different sectors, because these data were put on the base of the diagram. The most profitable segment is businesses (35.3%). The share of banks is (16.0%) more than two times lower. Still less involved government - their share is 12.5%. Not far behind from the previous segment of the trade enterprises (11.1%).Industrial enterprises occupy 8.9% of the market, telecom - 6.5%. Shares of Sectors Businesses Banks Government Trade Enterprises Industrial Enterprises Telecom Service Companies Others 35,3% 16,0% 12,5% 11,1% 8,9% 6,5% 6,4% 3,3%Fig. 18 It is observed increasing activity in the market segments, government agencies, industrial and commercial enterprises. There is also a decline in the financial sector, businesses and service companies. But the companies who indicated the decline in the commercial sector, two times less than that declared on the growth in it - the advantage on the side of the optimists. Plastic pipes and channels SCS installers also use various auxiliary equipment - communication cabinets, racks, metal trays (solid and mesh), corrugated pipe, plastic pipes (ducts). In the study of SCS market it will be considered as additional areas. It is important that the situation is analyzed only in a segment of Ozan Can Köseley | Confidential 14

structured cabling systems. This means that the results of this study cannot be applied to the segments as a whole, as based on an analysis of the performance of companies in the segment of the installers of SCS. Plastic cable channels are quite in demand in the SCS. It is convenient to compare the sales of baskets of value indicators. But in practice it is quite difficult. Therefore, market share is determined, depending on the length of lined boxes Fig.19 Place, occupied the first three companies (DKS, Kopos, Marshall-Tufflex), unchanged compared with 2009. The first is with a market share of 43.0% is occupied DKS cable channels, improve on the output of the previous period to 14.4%. Second place at Kopos (18,3%), lower than that in 2009 at 6.6%. The third is Marshall-Tufflex (10,8%), to reduce its presence in the market by 9.1%. The total share of three winners of this year is 79.6% (2009 rate below 9.2%). Legrand shares with 8.7% moved from fifth (in 2009) for fourth place, almost without changing its market share. MK Electric has reduced its presence also in it with 10.2% in 2009 to 7.0% in 2010. Note the growth rates in ducts Simon Connect (trademark Cimabox) and REHAU. Market Share Cable Channels Cimabox 2% Others Thorsman 5% REHAU 2% 3% MK Electric 7% DKS 43% Legrand 9% Marshall Tufflex 11% Kopos 18%Fig. 19 Index (or rating) popularity of cable channels Fig. 20 represents the proportion of companies using the 2010 products from different brands in installations. Rating characterizes the level of brand awareness and market confidence in the brand, the availability of products in stock. And here the first six positions without any change take the same companies as in 2009. Moreover, MK Electric, Legrand compromise market share, though ahead of the competition on popularity ratings. Ozan Can Köseley | Confidential 15

Poplarity Index of Cable Channels 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% DKS Kopos Marshall MK Legrand Cimabox Panduit REHAU Thorsman Tufflex ElectricFig. 20 With regard to such a popular equipment for the cable as plastic tubing, then at the moment the overwhelming majority of Ukrainian installers (63.9%) use in their pro jects corrugated pipe of "BCS" Fig. 21 . Somewhat lower than the popularity Kopos - 38,0%. Brand "Slope" (the plant "Ukrmetallorukav") has the popularity of 16.7%. Rating corrugated pipe Flexa, produced by "NetLine" is 8.3%. Other producers on the market there Exalan, Legrand, REHAU, Thorsman, but their ratings are much lower than that provided by four. Poplarity Index of Plastic Pipes 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% DKS Kopos Slope FlexaFig. 21 Ozan Can Köseley | Confidential 16

Ukraine SCS Market Report

by Ozan Köseley

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