The evlving rle f jewellery in the platinum market CEO Platinum Guild Internatinal LBMA Mumbai Nvember 2007 Missin statement PGI is a wrldwide rganisatin dedicated t creating, expanding and strengthening cnsumer and trade markets fr platinum jewellery. We nurture and prmte the desire fr platinum jewellery and we prvide infrmatin, expertise and practical help t turn that desire int a prduct and a sale. LBMA Precius Metals Cnference 2007 1
'000 z '000 $ Changing rle f platinum jewellery Pre 2000 PGI s jewellery rle was t grw demand as supply increased (shck absrber) Increasing unces and $ value Share f platinum sales by applicatin 1991-1999 6000 5000 4000 3000 2000 1000 1000 900 800 700 600 500 400 300 200 100 Investments Other industrial Autcatalyst Net Jewellery Pt Av $ Price 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 0 LBMA Precius Metals Cnference 2007 2
'000 z '000 $ Sessin 3a Changing rle f platinum jewellery 2001-2007 Jewellery as price tensiner: Supply increased by 20% ver the perid Autcatalyst demand increased 100% Jewellery demand cntracted by 30% Demand exceeded supply leading t a rising price $ value f platinum sld in jewellery increased Additinal recycling in Japan and China underlines strng cnsumer demand fr platinum jewellery Share f platinum sales by applicatin 1999-2007 industrial demand dminates 8000 1400 7000 1200 6000 1000 5000 4000 3000 800 600 Investments Other industrial Autcatalyst Net Jewellery Pt Av $ Price 2000 400 1000 200 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Est. 0 LBMA Precius Metals Cnference 2007 3
Dllar value f new platinum sld int manufacturing jewellery markets cntinues t increase Value in $ 000 2500000 2000000 1500000 1000000 500000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Est Other Eurpe USA Japan China Jhnsn Matthey 2007 reprt Platinum sales including recycled metal underline cnsumer demand,000 unces 2500 2000 1500 1000 500 0 2007 Others Eurpe US Jewellery Japan include recycling Japan China inc Recycling China Jhnsn Matthey review Japan recycling PGI LBMA Precius Metals Cnference 2007 4
Effect f metal price increase n the retail price in Japan Taking an example f Pt900 Wedding Ring - 5gms Retail prices: 2001-46,000 yen (abut US$385) 2005-60,000 yen (abut US$500) 2006-83,000 yen (abut US$690) 2007-87,000 yen (abut US$725). An increase f 89% ver 2001 White Gld Ring - 5gms 2007-41,000 yen (US$340) in K18 2007-34,000 yen (US$280) in K14 2007-28,000 yen (US$230) in K10 Japan: sales share f jewellery csting less than $500 % 80 70 60 50 40 30 20 10 0 72 71 72 71 44 45 23 1996 2000 2004 64 Platinum jewellery All jewellery (gld and platinum) LBMA Precius Metals Cnference 2007 5
PGI s rle Create demand fr platinum jewellery in rder t help balance demand t the supply f newly mined platinum Sell thrugh recycled jewellery Prtect the platinum brand frm cannibalisatin Act as a price tensiner Mtivate the jewellery industry t prduce and sell platinum in a highly cmpetitive price sensitive white metal jewellery market against the default gld and the margin and price pprtunity presented by palladium Strategy - a multi-step apprach Develp the cre unce markets China Japan, US and UK Prvide supprt frm Italy and Germany n exprt and design Wrk in India and with Indian jewellery industry t develp dmestic sales and build exprts LBMA Precius Metals Cnference 2007 6
Market verview China Current market Jhnsn Matthey 2007 estimate up - at 780,000 unces Recycling remains significant mainly retailers Overall platinum jewellery manufacturing up with higher cnsumer fftake Successful launch f new brand ambassadr Bridal grwing pair ring campaign expanded int 16 cities LBMA Precius Metals Cnference 2007 7
Favurite Metal Type - China Platinum is the favurite metal in all cities except Guangzhu Base: thse wh wn jewellery and can understand the definitin f Pt/KWG/Pd 100% 90% 80% 70% 41 35 46 31 46 37 19 60% 50% 72 40% 30% 20% 51 55 47 61 51 56 76 10% 0% 16 Tt al(n=2949) SH(n=448) GZ(n=434) BJ(n=480) XA(n=362) SY(n=462) CD(n=355) CS(n=408) Platinum/Pt Pure Gld KWG KYG Palladium/Pd China U&A Survey 2006 Oracle China Amng brides married in 7 tier ne cities 2004/05: 84% acquired at least ne piece f platinum wedding jewellery Virtually all f these acquired at least ne ring A third f wedding rings were plain platinum; virtually all the rest cntained a slitaire diamnd 61% f wedding jewellery acquirers cnsidered platinum a must fr wedding jewellery 46% f cunter space in level A cities is taken up by platinum and platinum and diamnds Surce: China U&A/bridal studies in 7 Tier A cities 2006 LBMA Precius Metals Cnference 2007 8
Japanese Platinum Jewellery cnsumptin nt just new metal New metal supply Recycled metal Ttal dmestic 305,000 z* 239,000 z** 544,000 z Jewellery Exprts - surplus 41,000 z *** Ttal platinum usage in jewellery 585,000 z * JM 2007 **PGI estimate *** Gv trade stats Japan Market update Increased cmpetitin frm accessries etc Challenge f ecnmy and finance fr the sectr Strng cnsumer desire fr platinum favurite metal Recycling grwing Retirement an pprtunity LBMA Precius Metals Cnference 2007 9
Japan 2006 - Bridal platinum still dminates Platinum s share f engagement rings = 93% Platinum s share f wedding bands = 75% US Market Cntext - Platinum Market Update High-end bridal perfrming well Retailers Tiffany and high end independents Web Blue Nile High platinum price primary barrier t sales Dmestic manufacturers reprt sales dwn Mid market chains price pints Men s wedding bands mst affected Market adapting with revised designs and ff shre manufacturing LBMA Precius Metals Cnference 2007 10
PGI marketing segments Three key segments: Bridal China, Japan, US, UK, Italy, Germany, France Key entry pint t platinum jewellery fr cnsumers utside China and Japan Emtinal ccasin justifies price and assciatin Wmen s jewellery China, Japan, India, Germany, Italy Backbne f Asian market prmtins Often with diamnds platinum s natural partner Retirement Japan frm 2007 Research Prgramme evaluatin Advertising Clear branding Trade marketing Educatin and sales training Facilitatin f supply Marketing cnsultancy Prduct Design: cmmercial cllectins t cncept pieces Technical: R&D, ally develpment, trubleshting Vice f the cnsumer t the trade Creative develpment POS PGI Cnsistent use within and acrss markets PR Media Wide range f traditinal channels Use f new and innvative media Online Dedicated PGI site Specialised micrsites Presence n ppular nn-pgi sites In-stre merchandising On-line catalgue Onging editrial cverage PR-led prmtins Cnsumer and trade events LBMA Precius Metals Cnference 2007 11
Bridal jewellery < China TV and Print US and Eurpe > Advertrial LBMA Precius Metals Cnference 2007 12
Wmen s jewellery < China TV and Print ^ < India and Japan China Jewellery LBMA Precius Metals Cnference 2007 13
Retirement Prgramme Japan Intrduced in 2007 Respnse t Baby bmer retirement pprtunity Researched psitively qualitatively and quantitatively Well received by trade adds new segment pprtunity and n cannibalisatin Features well liked/knwn singer/actr Return t TV after 6 years Cunters in 1,800 stres LBMA Precius Metals Cnference 2007 14
Auspicius Days India India: Akshaya Tritiya Sales prmtin fcused n astrlgically auspicius day Retailers reprted equivalent f 2 mnths sales in ne day Attracted new custmers t platinum ^ Leaflet linking white with auspicius day Featured platinum medallin > PGI websites www.preciusplatinum.cm Infrmatin abut platinum, its histry, design ideas and hw t buy and care fr it Strng visual link with natinal campaigns < China Japan v < USA LBMA Precius Metals Cnference 2007 15
Trade marketing: in-stre merchandising < China bridal jewellery windw display Japan exhibitin sale merchandising > Internatinal Brands - Cartier Cartier launch new cllectin histric theme platinum predminates LBMA Precius Metals Cnference 2007 16
Watches platinum exprts up 23% Lking frward Cmpetitin t jewellery is grwing. In the white metal categry - fr bth platinum and palladium t grw will require a differentiated apprach. Retailers will need t deal with a greater chice f white metals, the winners will need t be seen t be imprtant t their business as well as desired by the cnsumer LBMA Precius Metals Cnference 2007 17
LBMA Precius Metals Cnference 2007 18