H&K InternationalBoard Presentations

August 21, 2007

McDonald’s Sales

Mike Azhadi

Sales Administration

Tim Guthrie

Sales Administration Team

Tim GuthrieDirector of Sales

Administration

Tim GuthrieDirector of Sales

Administration

Jeff ThompsonCorproate Sr.

Project Manager

Nick HughesCorporate Sr.

Project Manager

Kathy ArnoldMcDonald's Sr.

Project Manager

Yvonne BurrMcDonald's Sr.

Project Manager

Pam EdmondsMcDonald's Sr. Project

Manager (Scheduling,Invoicing and reporting follow-

up)

DeAnna MansellMcDonald's

AdministrativeAssistant

Morris McHargueCorporate Project

Manager

Heather SartainCorporate Project

Manager

Lee LathamMcDonald's

Project Manager

Corey KirkMcDonald's

Project Manager

Kerri GarciaMcDonald's

Project Manager

Susan ThompsonSpecial Projects/

RolloutCoordinator

Aracely Brown/Miguel CaleraMcDonald's

International/Subway

Commercial Opportunities

Enhanced plan to support increased volume

Key focus areas:• Item shortage review• Contract revisions• Invoicing• RMA’s• Accountability• E&O and S&D focus• New reporting tools to support being

proactive not reactive

Short Lead-time

0

5

10

15

20

25

Qty

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31

Week

Short Lead Time

Corp

MCD

Corporate Sales

2007

Change in Corporate Sales Philosophy

• Fewer Customers• Focus on Details

– Improved Margins– Reduced E&O– Reduced A/R– Reduced Warranty

• Minimal Engineering / Manufacturing Resources– Consistency– Production Runs

Change in Corporate Sales Philosophy

• Future Customer– Established brand– Consistency– International potential– Partnership

• Fab as a buyout item– Single Items:

• Pizza Prep Table for Pizza Hut• Costco• Little Caesar's Pizza Rollout• Atlantic Food Bar

Existing Customers

• Aladdin• Applebee’s• Braum’s• Costco• IHOP

• Jason’s Deli• Subway• Whataburger• Pret a Manger

Potential Customers

•IKEA

•Little Caesar’s

•YUM

•Popeye’s

•Arby’s

•Sales / Margins

•Warranty

•E&O

•Reduction of Engineering Support

Key Area’s of Focus

Fab Sales / Margin / Expenses

Sales 2007 Estimate 8.5M

Margin YTD 27.2

Expenses 2007 Estimate <125>

Book of Business would be 31.7% margin with normal ppv

P&L

2006 YTD thru July ’07

Projected 2007

Sales 15,371 7,006 13,325

Margin 3,078 1,511 2,874

Engineering <949> <571> <972>

Sales/Admin <852> <426> <732>

Profit Before Allocations

1,277 514 1,170

8.3% 7.3% 8.8%

Corporate Sales Warranty Analysis

Values in '000

Costco Replacement

05

1015202530354045

2006 Warranty

2007 Warranty

Excess & Obsolete

•2006 –

•2007 –

•Review of E&O weekly

•Outside Buyers (i.e., Rush)

•Accountability

Reduction of Engineering Support

• Standardization• Additional architectural tools• Review of all PRF’s• Outsourcing• SLP

Open Discussion

H&K Norwood

David Spain & Rich Blauvelt

H&K Canada

David Spain

Operating Result YTD

H&K CanadaOperating result for 7 months ended J uly 2007

2007 2006YTD YTD

US$'000 US$'000

Net Sales 11,762 10,894

Actual Contribution Margin 1,845 1,637

Operating Expenses 1,276 1,076

Income From Operations 570 560

Remodel Opportunity

• Major opportunity to develop remodel sales in East & West– Need to focus effort of local team

– Drink systems

– Fryers – upcoming promotion

– Grills – 3 platen grill

– UV Systems – working with Ventmaster to align with our Hoods

Order Desk - Opportunity

• YTD sales of $3.917m compared to $2.759m for same period last year

• For the month of July we took 1,836 orders over the order desk, on average 18% of these orders were from the western market

• Provide extended hours in warehouse and order desk to cater for Western market

K24• We have been taking estimated 15 per day • Opportunity to further develop K24

– Ability to pay on-line– Order confirmation (stock is available)

Sales by Province by Customer - YTD August 10, 2007

Note: Includes only customers with sales over $1.0 K for PAR and K24 combined

# Cust's > $1.0K # Cust's per % to TotalSales $'s Sales YTD Province Customers

BC 303,185 82 207 40%Alberta 367,546 87 177 49%Sask 58,322 14 39 36%Manitoba 178,119 40 59 68%NWT 4,020 1 2 50%Yukon 0 0 2 0% Total West 911,192 224 486 46%

Ontrario 1,848,490 433 502 86%Quebec 1,149,156 217 285 76%Nova Scotia 150,294 31 50 62%New Brunswick 155,959 22 41 54%Newfoundland 85,884 11 27 41%PEI 22,425 7 7 100% Total East 3,412,208 721 912 79%

Total Canada 4,323,400 945 1,398 68%

IKEA

• Global strategy to develop Corporate Accounts

• Developing relationship with IKEA Canada together with John Egan

• Working with H&K Ireland & H&K Dallas to ensure standard Fab equipment manufactured in Mexico

• Equipment testing scheduled for Aug/Sep ‘07

• Recruited a local Project Manager to manage the account

• Tax effective structure using Irish Branch

H&K Group

Mexico Project

Guy Wade, Josue Paredes & Colin Burns

Project Team

• Guy Wade

• Josue Paredes

• Colin Burns

• Mark Hogan

• Ed Hudson

• David Spain

Organization ChartJosue

ParedesVP Latin America

TOTAL EMPLOYEES356 as of July 2007

Wilfrido Bucio

Financial Controller

*Reporting to DeWayne

Ahner

Jorge MartinezEngineering

Manager

Carlos BarriosProduction Manager

Myrsa UrbinaCost

AccountantAssistant (1)

AP (2)Imports (1)

Miguel SchiavonFinancial

Accountant

Supervisors (13)

Prodn(266)Temps (33)

Engineers (6)

Napoleon GonzalezLogistics Manager

*Reporting to Mark Hogan

Efren CerdaInventoryManager

*Reporting to Mark Hogan

Logistics Assistant (1)

Supervisor (1)Warehouse (7)

Buyer Admin Assistant

E Corzo Sales AdminManager

Sales admin (2)Install Admin

(1)Installers (3)

Paco Martinez

HR Manager

Assistants (2)Reception (1)

IT (1)

Tax (1)AR (1)

Josue ParedesVP Latin America

TOTAL EMPLOYEES356 as of July 2007

Wilfrido Bucio

Financial Controller

*Reporting to DeWayne

Ahner

Jorge MartinezEngineering

Manager

Carlos BarriosProduction Manager

Myrsa UrbinaCost

AccountantAssistant (1)

AP (2)Imports (1)

Miguel SchiavonFinancial

Accountant

Supervisors (13)

Prodn(266)Temps (33)

Engineers (6)

Napoleon GonzalezLogistics Manager

*Reporting to Mark Hogan

Efren CerdaInventoryManager

*Reporting to Mark Hogan

Logistics Assistant (1)

Supervisor (1)Warehouse (7)

Buyer Admin Assistant

E Corzo Sales AdminManager

Sales admin (2)Install Admin

(1)Installers (3)

Paco Martinez

HR Manager

Assistants (2)Reception (1)

IT (1)

Tax (1)AR (1)

Achievements in last 12 months

• Full implementation of Orion and related systems;

• All IVA Returns are now current;

• Received 2006 tax refund ;

• Pitex solution in place for historical and current;

• Audit 2006 has been completed;

• Tax Effective Supply Chain in place for Contract Manufacturing;

• Controls have been implemented in KE in the last 12 months which have had a major positive influence on the business:– All goods scanned in and out leading to improvements in

inventory control, purchasing, sales invoicing, margins, and shipping;

– Purchase orders controls in place which helped with the opportunity to take advantage of rising surcharge rate;

– Moved to US$ only invoicing to McDonalds in Mexico reducing the number of invoices required and aiding AR and margin control;

– Tighter management of steel utilisation for nesting producing a gain of $187k in 2007 compared to a loss of $517k in 2006;

Achievements in last 12 months

Hours Sold

• Increase in Std hours from 94k July ’04 YTD compared to to 220k in July ’07 YTD, increase of 134%;

• Increased hours sold YTD July 2007 by 45% compared to same period last year;

KE Hours SoldYTD July

07 Hrs% Total Hours

YTD July 06 Hrs

% Total Hours

Asia Pacific 43,333 19.6% 25,262 16.5%Dallas McD's 90,682 41.0% 57,014 37.3%Dallas Corporate 18,750 8.5% 28,196 18.5%Europe 55,335 25.0% 27,326 17.9%International 3,161 1.4% 1,099 0.7%Domestic 9,999 4.5% 13,758 9.0%TOTAL 221,260 100.0% 152,655 100.0%

Sales

• Domestic sales now account for 17% of KE’s total sales

• Surcharge and scrap account for $5,494k sales in 2007 compared to $1,201k in 2006;

• NA market (excluding Mexico) accounts for 33% of sales excluding surcharge;

• Australia, Rugby and International accounts for 27% excluding surcharge;

Kitchen Equipment Sales YTD July 07 International,

1%

Europe, 13%Dallas

Corporate, 7%

Dallas McD's, 26%

Australia, 13%

Surcharge, 24%

Domestic, 13%

Scrap, 3%

Gross Profit / Contribution

• Steel utilisation has improved from loss of $517k last year to gain of $187k YTD;

• Surcharge recovery of $656k in 2007 compared to under-recovery of $(47k) in 2006

• Better management of Scrap and negotiation of rates resulting in $600k;

• Adverse Contribution variance presents the biggest challenge costing $505k YTD compared to contributing $197k in 2006, adverse swing of $702k.

529

756

1,769

1,467

656

-47

600

197

-505

197

-44

-705

-1,000

-500

0

500

1,000

1,500

2,000

$k

Domestic Interco Surcharge Scrap ContVariance

Other(E&O,Frt,

etc)

Sales Category

Split of KE Gross Profits YTD Jul 07

YTD July 07

YTD July 06

Inc 208 for LABOP which should be Interco

Productivity Kitchen Equipment de San Luis

PRODUCTIVITY / PRODUCTIVIDAD 2006-2007

45%

50%

55%

60%

65%

70%

75%

80%

Janu

ary

Febru

ary

Mar

chApr

ilM

ayJu

ne July

Augus

t

Septe

mbe

r

Octob

er

Novem

ber

Decem

ber

MONTHS

PE

RC

EN

T

200

210

220

230

240

250

260

270

280

2006

2007

Budget

# Emp's

Productivity - Challenges

• Productivity has reduced as headcount has increased;

• YTD 2007 productivity is running at 61% (May was 58% and June & July were 55%) compared to 68% in 2006,

• Strategy in place for management restructuring to improve all areas of production

• Nearly 7,000 hours have been outsourced YTD – aim to increase to 50,000 annually

• Standard hours per week have averaged 7,605 – strategy to increase to 9,000 hours per week

Valuing Potential Opportunities

• The potential Group wide savings from opportunities in Mexico are valued at $5m made up as follows:– Productivity Factor to 70% $1.000m

– Steel Utilisation 80% (on target) $0.750m

– Overtime reduction 50% of current $0.500m

– Increased Group PPV from 1,000 extra hours per week$1.500m

– Additional 500 outsourced hours per week $0.750m

– E&O improvements$0.150m

– Other costs savings $0.350m

– TOTAL POTENTIAL GROUP WIDE$5.000M

Note: PPV is based on $30 per standard hour saving exclusive of landed factors for Europe and Australia.

KE Opportunities

• Main area of opportunity to improve Productivity;– Increase in productivity factor from 61% to the

70% budget target reducing the contribution variance currently running at a loss for the year $505k YTD which is pro rata $1m per year potential gain from current position;

– Improved steel utilisation using new laser and continued focus;

– Significant reduction in overtime which has cost $442k YTD;

– reduce hidden costs arising from inefficiencies;– Knowledge transfer and development of

engineering function in Mexico at a reduced cost compared to other sites providing quicker design to floor time and value engineering;

Other KE Opportunities

• Other areas outside production for opportunities:– Continue to drive commercial awareness in KE

Management Team and staff through the implementation of the Commercial Index;

– Sourcing opportunities to reduce cost / landing costs;– Continued improvement on E&O management;– Undertake cost reduction program to manage costs

outside production– Improved domestic sales which have significantly

higher margin than intercompany sales;– Implement standard installation charge per zone in

Mexico to McDonalds to improve service to McDonalds and reduce amount of work in KE;

– Implementation of the Norwood Small-wares project in Mexico.

Group Opportunities

• Potential to develop KE staff as a low cost base for carrying out functions for other Group companies:– Continue to develop engineering function in

Mexico at a reduced cost compared to other sites;

– Develop the Cost Accountant role in KE by recruiting a junior cost accountant in KE and then developing the cost accountant manager to undertake a week per month in Dallas so that KE’s costing and procedures are in sync with Group;

– Movement of some of Group functions to KE – high-volume routine transactions;

Future Approach to Maximise Opportunities and overcome Challenges

– What will change to ensure opportunities will be achieved;

• Invest in internal resources to maximise efficiency and drive performance;

• Doing fewer things better – not over burdening better staff;

• Working as a global operation to implement policies and improvements throughout the Group;

• Continue to maximise hours in low cost environment for Group wide benefit.

Manufacturing

Guy Wade & Josue Paredes

Manufacturing

• Hours Produced• Productivity• Steel Utilization• Outsourcing• People• Machinery

Mfg. Standard Hours

• Mexico– 2007 YTD 230,407– 2006 YTD 172,575– Diff 57,832– % Change +34%

• Dallas– 2007 YTD 78,721– 2006 YTD 63,395– Diff 15,326– % Change +24%

Mfg. Productivity

• Mexico– 2007 YTD 60%– 2006 YTD 68%– 2006 YE 68%

• Dallas– 2007 YTD 72%– 2006 YTD 68%– 2006 YE 68%

Steel Utilization/Scrap

• Dallas– 2006 42%

– 2007 YTD 35%

– Target 33%

• Each Point of Improvement equates to $25k of savings

• Mexico– 2006 27%

– 2007 YTD 26%

– Target 25%

• Each Point of Improvement equates to $80k of savings

Outsourcing in Mexico

• Companies enlisted– 1 Machine Company– 2 Welding, Finishing and Assembly

• > 800 BOT Tables Outsourced• 7500 hours YTD• Equates to $188k Saving vs. Mfg

in Dallas• Current Outsourcing is on hold

– Awaiting NSF Approval

People

• SLP – 276 Direct

– 4 Shifts in Machine (Punch and Laser)

– 121 New Hires this year

– 51 EE < 3 months experience

• Dallas – 89 Direct EE

Machinery

Mexico• Trumpf Laser installed May 07

– T 5000 Punch was down total of 2 ½ weeks in July and Aug

– Without Laser in place, we would have missed numerous deliveries

• Two additional Brake Press’ installed - June and July

H&K Plan to Win

• Focus on doing fewer things better• Working with fewer accounts on a

global basis • Utilising a global structure to drive

improved global performance• Investment in internal resources to

drive improved performance • Replacing high cost manufacturing

with more sub-contracting

H&K Plan to WinDoing Fewer Things Better

Mexico• Target of 8,000

Standard hours per week – End of year target is 9,000

• Steel Utilization

• Outsourcing 1,000 hours per week

Dallas• Monthly Targets on

Production Hours

• Steel Utilization

• Reducing Mfg cost per hour

• Reducing Steel SKU’s

H&K Plan to WinGlobal Structure to drive improved Performance

• Monthly Mexico Call – (Josue, Colin, David S., Mark H., Ed H., Guy W.)

• Negotiation of Steel• Monthly Global Steel Utilization Meeting• Global Sourcing – identification of top selling

Fab items from all locations• Movement of E&O and Steel between

facilities• Standardizing Software Globally

– Radan– Inventor– Vault

H&K Plan to WinInvestment in Internal Resources to drive Improved Performance

• Improve Performance from Key Positions– Production Manager - new– Commercial Manager released– QC Manager - new– Hire Programmers at low cost facility to

assist Dallas mfg

• New machinery– Laser– Two new brake Machines

H&K Plan to WinReplace High Cost Mfg with Lower Cost Solutions• Subcontracting in Mexico

– Goal 1,000 hours per week

• Sourcing in China– Goal 100,000 hours per year

• Outsourcing Engineering – India and Philippines– Expansion of staff in Mexico

• Programmers hired in Mexico for Dallas Mfg

Mfg. Challenges

• Mexico– Hiring, Training, Maintaining Staff in

rapidly expanding SLP• GM opening in 2008

– Maintaining Quality Controls/Systems with so many new people

– New Management Team– Managing Outsourcing of additional

production– Building allegiance to H&K within

employee base

Mfg. Challenges

• Dallas– Maintaining Flexible Workforce to

expand/contract hours– Union Contract– Age and useful Life of Equipment

• Steel Utilization with Punches

– Reducing Cost of Standard Labor Hour

Engineering

Guy Wade, Josue Paredes & Vince Botto

Dallas Engineering

• Accomplishments– Inventor

• Dallas, Rugby and SLP are on Same versions

• 537 Corp & 544 McDonald's Items and Sub Assemblies in Dallas Vault

• 178 Corp & 127 McDonald's Items and Sub Assemblies in SLP Vault

– Growth & Development of SLP Engineering

• Current Staff 6

• End of year goal 12

• <1 year = 4

• Other– Formalized Cross Functional Value

Engineering Team• Members include managers from Plant and

Engineering

• Meet Bi-weekly

– YTD Identified 20 Items for $174,743 in cost reductions

– Redesigning Family of Center Islands with SLP's Assistance Approx. $100,000 Annual Savings

Engineering Accomplishments

Value Engineering ScorecardCount Item Date Started Sub Team

LeaderMaterial Labor Trim Other Unit

TotalProjected

Units Unit Total Team Total

1 MDE-806616-1000 01/12/07 Seewald 80.53 80.53 200 16,106.00 16,106.00 2 IHP111 Family of tables 01/23/00 A.BARTON 23.94 23.94 30 718.20 16,824.20 3 JAD1148 REDESIGN TOP 01/22/07 A.BARTON 13.44 178.48 191.92 23 4,414.16 21,238.36 5 70029 01/08/07 M. Seewald 15.00 15.00 1400 21,000.00 42,238.36 6 69481 01/29/07 M. Seewald 0.00 100 - 42,238.36 7 67380 01/29/07 M. Seewald 0.00 0 - 42,238.36 8 62960 01/29/07 S. Rowland 0.00 70 10,640.00 52,878.36 9 PPT154 01/29/07 J. Reil 0.00 0 - 52,878.36 10 77067 02/08/07 G. Krone 4.53 4.53 250 1,132.50 54,010.86 11 PPT08-19 03/08/07 J. Reil 5.49 5.49 355 1,948.95 55,959.81 12 64739 03/02/07 J. Reil 0.00 1900 6,326.00 62,285.81 13 PPT15-017 03/02/07 J. Reil 0.00 70 1,745.00 64,030.81 14 PPT03-12 03/02/07 J. Reil 0.00 81 1,955.00 65,985.81 15 PPT03-11 03/02/07 J. Reil 0.00 81 2,205.00 68,190.81 16 69111 04/05/07 B. Jackson 5.84 2.00 7.84 2800 21,952.00 90,142.81 17 Costco 010-011-021 04/23/07 Barton 126.46 409.00 535.46 50 26,773.00 116,915.81 18 Wire Rack ECO 11 Items 06/13/07 Seewald 5.24 2545 13,335.80 130,251.61 19 77200 04/26/07 Ly 2.51 55.78 251.82 310.11 100 31,011.00 161,262.61 20 77079 02/22/07 Ly 134.80 134.80 100 13,480.00 174,742.61

• Other– Global Design Exchange

• Transferred IKEA from Rugby• Transferred Jason's Deli from SLP• Joint Design (SLP & Dallas) of Concept

Refrigerator• Developed Open Refrigerated Display Case with

NSF Certification

– Nesting Activity in Dallas has shown Good Progress

• Increased the number of Nests and Sheets utilized

• Positive affect on overall Utilization and Reduction of Scrap

Engineering Accomplishments

Number of Nested Sheets

050

100150200250300

Nest

s

0100200300400500

Shee

ts

Sheets

Nests

• Other– Global Design Exchange

• Transferred IKEA from Rugby• Transferred Jason's Deli from SLP• Joint Design (SLP & Dallas) of Concept

Refrigerator• Developed Open Refrigerated Display Case with

NSF Certification

– Nesting Activity has shown Good Progress• Increased the number of Nests and Sheets utilized• Positive affect on overall Utilization and Reduction

of Scrap• Decision to utilize existing Inventory . . .

Reduced Number of sheets 50%

Engineering Accomplishments

SS Sheets

6062 58905524 5352

4848 4721 4552 42753920

0

1000

2000

3000

4000

5000

6000

7000

H&K Plan To Win

• Focus on doing Fewer things Better• Working with fewer accounts on a

Global basis• Utilize Global Structure to drive

Improved Global Performance• Investment in internal resources to drive

improved performance• Replacing High cost Engineering

through out sourcing and sub-contracting

Engineering Strategy

Doing Fewer Things Better– Weekly review of Incoming Projects for

Rationalization

– Better Accommodate Prototyping Requirements• Refrigeration Items

– Use of Emerson Design Services for testing and Design

– D10• Little Caesars "Sun" Project

– Monthly review/discussion of potential E&O items• Management of issues

Global Structure to Drive Global Performance– Provide seamless transfer of Engineering

Data between Three Groups• Migrate to Inventor 08

– Working with VAR & IT to develop execution plan – Sept 07

• Automatic loading of BOM into Orion– Initial work with FDS more work required

– 1st Qtr 08– Goal to outsource 100 hours / week to

SLP Engineering– Radan in Mexico

Engineering Strategy

Engineering Strategy

Invest in Internal Resources to drive Improved Performance– Enhance use of Web Based Technology

• Electronic PRF– Basic form developed, needs modification

and rollout• Shear List Program (Communicates Eng info

to Shop)– Corrected the Access program for Inventor

and AutoCad– Need to develop project plan and budget

with IT

Replace Higher Cost Engineering through Outsourcing and Sub-Contracting– New Organization

New Engineering Organization

V. BottoV. Botto

Mfg/Eng LiaisonC. Reaser

Mgr McDonaldsPrototypeL. Nguyen

Mgr CADA. Barton

R&DJ. ReilElec/Ref

N. Vashishta

EstimatingD. Ayers

E. SchwartzSr Proj EngG. Krone

Proj EngT. Nguyen

Proj EngA. McKee

Sr Proj EngD. Boote

Sr Proj EngJ. Martinez

Proj EngC. Murray

Proj EngE. Dear

Sr Proj EngC. Glaze

Lab TechJerrod Alford

Proj EnjB. Posey

D. Stanglin

SLP75 +/- Hrs/week

ReferConsultant(s)

ProgrammingM. Byouk

SuppotS. Widner

New Product Development/Innovation Team Sustaining Product Deployment Team

SLP25 +/- Hrs/week

Finance

David Spain, Guy Wade & DeWayne Ahner

North America YTD July 2007

• Sales Actual PY’

– Dallas $ 81 m $ 60 m– Mexico $ 20 m $ 14 m– Norwood $ 17 m $ 11 m– Canada $ 12 m $ 11 m

$ 130 m $ 96 m

• Inc from Ops– Dallas $ 7.5 m $ 3.8 m– Mexico $ 1.2 m $ .1 m– Norwood $ 1.4 m $ .9 m– Canada $ .6 m $ .6 m

$10.7 m $ 5.4 m

• Dallas– 10 employees– 50% staff attrition

• Mexico– 9 employees

• Norwood– 4 employees

Staffing – Finance

Dallas ControllerAaron Garelis

N.A. ControllerDeWayne Ahner

Norwood Acct MgrCindy Clement

N.A. Senior Acct.Felix Suarez

Mexico ControllerWilfrido Bucio

Accomplishments

• Standard Monthly Financial Reporting package for Mexico, Dallas, and Norwood

• Standardized cost and variance reporting for Dallas/SLP

• Introduced steel/trim landing factor in Dallas/SLP

• Monthly Control packs completed on timely basis

• Intercompany accounts reconciled on monthly basis

• Introduced Commercial Index report together with Logistics

• All Mexico IVA tax returns are now current• Secured 2006 Mexico Income tax refund by

June ‘07

Accomplishments cont’d

• Documented Dallas Accounting Processes• Introduced StarQuery to select User Group • Reviewed ORION Item Master Selling Prices

and Margins – Dallas/SLP • Dallas A/P discounts (100% in 2007, 99% in

2006)– $538k YTD ’07 compared to $336k YTD ‘06

• Improved cash management – Greater use of Chase facility using the Anglo

Guarantee– Dallas/Norwood/Mexico on-line banking– Created Mexico USD account and forecasting

report– Implemented lockbox upload in Norwood

H&K Plan to Win

• Focus on doing fewer things better• Working with fewer accounts on a global

basis• Utilising a global structure to drive improved

global performance• Investment in internal resources to drive

improved performance • Replacing high cost manufacturing with

more sub-contracting

Supporting the Future Business Strategy• Accurate information on timely basis

– Supporting the business by providing relevant accurate information

– Continued focus on improving daily performance levels

• Increased Commercial Focus– Highlight and escalate commercial issues in business– Review Commercial Index report on monthly basis– Freight analysis– Installation analysis– Warranty analysis– CBI weekly KPI and monthly P&L– Maximize the company’s investment in resources (capital and

human)– Review of Manufacturing/Engineering cost base (Dallas & SLP)

• Steel Utilization• Productivity• Reduce overtime• Engineering resource/productivity

Supporting the Future Business Strategy

• Sales Analysis – Sales by Market Manager– Overdue Reporting– Evaluate profitability on customer accounts

• Corporate accounts• Metrics on BOT, BOP, CBI rollouts

– RMA/CN analysis• Increase awareness of cost to business

• Process re-engineering– Elimination of non-value added processes– Automation of process where practical– Outsourcing of routine high volume transactions

• Cash Management / Banking– Pooling of Cash resources – reduce interest / debt– ACH payments – reduce check cutting process– Lockbox upload in Dallas – reduce data input

Commercial Index

FrequencyOwner Individual

Contract Revisions report JB JM/RB/SB DailyOrder Priority report BJ SB DailyUninvoiced/NFS/Awaiting Freight reports TG DM WeeklyAwaiting Freight reports MH/TG HS WeeklyReturns Not Credited report TG DM WeeklySales Price Overrides report TG DM WeeklyS/S Utilisation Reports BJ SB WeeklyOutstanding P.O.s report FB Buyers WeeklyOpen M.O.s Report BJ SB WeeklyLanding Factor report FB RA MonthlyItem Shortage report TG/MH S.A./JB MonthlyO&E report MH/TG/MA JB MonthlyWarehouse 98 Action Plan MH/TG/MA/BJ HW MonthlyOverdues analysis AG A/R WeeklyFreight Account analysis AG MR MonthlyWarranty analysis AG SG MonthlyInstallation analysis AG JPhillips MonthlyRMA/CN analysis AG/MH HW MonthlyNo Charge Freight/Installation analysis AG/MH HW Monthly

Dallas

Global I.T.

David Spain