Temperature Controlled Logistics [ABC Company] China Strategy - TC Development Plan

1. Temperature Controlled Logistics[ABC Company] China Strategy - TC Development Plan

2. Agenda • Executive Summary • China TC Market Overview & Growth Trends • TC Market Breakdown & Target Industry Segments • Global Competitors & Local Players • TC Market Rationale & Proposed Initiatives • Financial Impacts & Initiative Requirements • Implementation Plan & Risk Assessment • Next Steps & Decision Needs

3. Executive Summary (1/2) • Temperature Controlled Logistics, also regarded as Cold Chain Logistics or Perishable logistics, is an integrated temperature-controlled system in which product quality, integrity and safety are maintained throughout the process of export, packaging, packing, transport, handling, cold storage, distribution, delivery and placement at point of sale. • It applies to all temperature sensitive products such as frozen, chilled & fresh perishable foodstuffs, pharmaceutical products, Hi-tech electronic equipments, flowers and chemicals. • As Chinese consumers’ lifestyle and buying habits evolve, more attention has been paid to food safety. In most inshore cities, cold chain logistics market emerges and begins to boom. According to reliable data from officials, TC Logistics market in 2005 reached 1.3 trillion CNY and will expand to 4.8 trillion CNY by 2010. • However, with rapid market development, we have to overcoming market challenges: - Backward infrastructure, below-standard refrigerator vans, obsolete freezing technology - Complicated TC-related industry segments make TC logistics a technology and capital intensive industry, high return and high risk - Intensified competition from both experienced global competitors and emerging local players - Out-of-date cold chain management mainly due to scarcity of skilled and qualified professionals • Notwithstanding, current cold chain logistics market is in primary stage, few players and game rules, but a more-profit bright future.

4. Executive Summary (2/2) • The effective implementation of TC capability development plan will strengthen our existing advantage in TC-related FMCG market and make emerging TC-related Life Science market our next profit source. • Accordingly [ABC Company] ’s total revenue is expected to grow from €68mn in 2006 to €184mn by 2010, exceeding the forecast of initial financial planning. • TBD • To achieve these financial targets, investment requirements of €7.94mn besides of an increase of 7 indirect headcount are identified. • TBD • In a word, entry into TC market is aligned with [ABC Company] China Strategy, providing big potential to increase company’s revenue and profit in China’s intriguing and complex TC market.

5. Agenda • Executive Summary • China TC Market Overview & Growth Trends • TC Market Breakdown & Target Industry Segments • Global Competitors & Local Players • TC Market Rationale & Proposed Initiatives • Financial Impacts & Initiative Requirements • Implementation Plan & Risk Assessment • Next Steps & Decision Needs

6. China’s cold chain market is heating up and open to any player who has a long-term development plan. Current TC Market Size in China • The logistics sector in the People’s Republic of China is growing rapidly. • The total logistics industry in China was worth about 48.1 trillion RMB in 2005, of this temperature controlled logistics industry accounted for about 1.3 trillion RMB, with an expected nearly 30 % CAGR in next 5 years. 1) RMB Trillion Logistics Market in China 2005 - 2010 estimated 1) National Development and Reform Commission, National Bureau of Statistics of China and China Logistics and Purchasing Associationhttp://en.ndrc.gov.cn & http://www.stats.gov.cnhttp://www.chinawuliu.com.cn

7. China TC Market Breakdown - Industry 2) China TC Market Breakdown - Transport Model 2) Research results show clearly that huge opportunities remain in Food / Life Science Industry while road freight business should be a high potential sector for investment. Facts & Figures - Opportunities • China’s current TC market breakdown show TC-related Food Industry play a dominant role while TC-related Life Science Industry keeps strong growth. • Railway transport still remain a large portion of domestic TC-related transport market while road freight business should be a key growing element. (21% in China and about 80% in western countries 2) • Cold storage capacity per capita for China is only 12% of that of the U.S.A. • Millions of money Lost in cold chain • Problems such as backward infrastructure, below-standard refrigerator vans, obsolete freezing technology and out-of-date cold chain management result in great wastage in transit and fail to keep and protect perishable goods in an ideal condition. This has led to such a big loss in transport links that the cold logistics fee accounts for 70 percent of all costs. 1) 1) Shanghai Daily 12Jul Cold Chain Logistics 2) China Communication and Transportation Association & China Refer Group http://www.cctanet.org.cn/ & http://www.crgps.com/ Data is collected by China Logistics Council in 2004, also published in China’s TC Logistics Market Research Report

8. Current market condition and regulatory landscape show us challenges in all sectors to overcome in coming years. Facts & Figures - Challenges Infrastructure • Railway • Rail routes are lacking in certain regions, e.g. between Guangdong and Fujian • Limited TC-related train, almost 8,000, accounting for 2%, with outmoded fresh-keeping carriage 1) • Road • Lack of a less-than-truck-load (LTL) system with broad reach • 40,000 backward refrigerator vans in 2000, accounting for 0.3% of its total freight cars 2) Facilities • Warehouse • Most of the refrigerated warehouses date from the 1950s and 1960s • Old-fashioned and full of difficulty providing different storage temperatures • Fragmented located with obsolete equipment and technology • Logistics center • Mono-functional playing role mainly as warehousing or cross docking • Inadequate management information system Regulation • Large gaps between central government policy and local practices • Food safety standards and regulations in cold chain logistics are still empty • Local protectionism and complicated licensing Technology • Some improvements in recent years but lag large behind western countries • Packing technology and standards in cold chain have not well developed Operation & Management • Out-of-date cold chain management and lack of TC-related training in relation to Ops • By 2010, China will need 400,000 supply chain and logistics professionals of junior college level or above 3) 1) Online Article from http://www.crgps.com 2) Shanghai Daily 12Jul, Logistics road remains bumpy for domestic refrigerated deliveries 3) Standard Chartered - The Guide to Supply Chain Manegement and Logistics 2006 / 2007

9. Increasing demands and higher requirements in TC market will make this undeveloped market alluring for all pioneers. Major Growth Trends - General Overview • Rapid economic growth • The Chinese economy has grown by over 9% annually in recent years. And growth rate in the logistics sector were even higher while the infrastructure conditions, along with the lack of logistics know-how remain the very important challenges which China is facing • Increasing domestic consumption • The per capita income in China is rapidly approaching USD 7500, which is the threshold for strong cold-chain demand • In recent years, with the rapid growth of China’s middle class, estimated to be approaching 150 million • Great potential in domestic consumption 1) • WTO entry and foreign investments • After the entry of WTO in 2001, more market opened and deregulated policies attracted huge foreign investments • More and more MNCs set foot in China’s market • At the same time, international standard for cold chain is heating up • Rising expectation of safe and better quality products • According to several recent studies, products safety is one of the hottest topic and a public concern in China’s big cities • Government makes efforts to improve the situation and ensure product safety such as food and medical partly due to upcoming events of Beijing 2008 Olympics and Shanghai exhibition in 2010 • Outsourcing service remain strong and professional cold chain logistics companies emerge • 60% of manufacturing companies will choose outsourcing their logistics activities in China, including temp-control services 2) • T&L outsourcing in China is expected to grow at 22% per year to reach 178.4 billion RMB by 2008 3) • This trend provides opportunities to develop China’s local 3PLs in cold chain logistics industry 1) BNP Paribas 2) Research result from Mercer Consulting and China Logistics Alliance Network 3) AT Kearney – Outsourced Logistics Market Outlook, 1998-2008

10. Regulation • Both local and international industry associations endeavor to enhance the standardization of Cold Chain in China • Central government decides to establish agriculture product cold chain system • Government plans to establish ”green roads network” for fresh and live products to flow across regions ( 2005 Feb, MOC) Technology Operation & Management • Talent Development and Deployment • Local education in relation to logistics management booms Substantial government investment in developing and expanding all modes of the transportation infrastructure would benefit those who enter into this market first. Major Growth Trends - Details Infrastructure • Road infrastructure will be expanded to over 75,000 miles of expressway by 2008 1) • Domestic airfreight market will have an additional 100 airports by year 2015 • By 2010, USD 30 billion will have been invested in sea port expansion • An additional 25,000 kilometers of new lines in the railway network during the next 15 years Facilities • Warehouse • More and more modern warehouses have been constructed catering to the demand of increasing strict logistic requirements • Newly-established ones are changing their roles in line with increasing demand from mono-function to providing various logistics service such as repacking and labeling • Logistics / Distribution Center • Many local governments are developing local logistics centers to build scale, e.g. Huatai Cold Chain Logistics zone in Hefei, Bohai Cold Chain Logistics Center in Tianjin 2) • Urgent information development and process standardization • Domestics players with government’s support begin RFID technology operation, such as Bailian Group 1) The Way Forward – The Future of the China Logistics Industry by Mark Millar, China Supply Chain Council 2) http://www.99sj.com

11. Agenda • Executive Summary • China TC Market Overview & Growth Trends • TC Market Breakdown & Target Industry Segments • Global Competitors & Local Players • TC Market Rationale & Proposed Initiatives • Financial Impacts & Initiative Requirements • Implementation Plan & Risk Assessment • Next Steps & Decision Needs

12. A detailed market breakdown and [ABC Company] ’s potential TC customers indicate that chilled products logistics market should be right place for strategic thrusts. TC Market Breakdown Current Focus Future Focus Most of existing TC customers can be satisfied by providing air-conditioned logistics service currently, however profit can only be enhanced by widening current market focus Source: The temperature ranges are based on the internal research conducted by Envirotainer and on the predefined requirements by the authorities, Packaging & Logistics- Business briefing by Martin Peter

13. Candy & Chocolate with 12% CAGR and Quick-frozen Product segments show good reason for [ABC Company] to invest heavily. Target Industry Sub Segments - Food Source: National Bureau of Statistics of China & others refer to Appendix

14. Rising concern of product quality & safety and strong growth of temp-controlled food consumption make China’s Food Industry first target for TC development plan. Target Industry Sub Segments - Food Key Findings Key Trends • In China, 90% meat product, 80% aquatic product and most milk, bean product are transported and sold without temperature control. However, in west countries, only 20% without temp control. • Due to lack of chill value-added service, the export price is only 60% of import price for apple and orange, and only 1/3 for grape. • China accounts 13% of global fruit production & 40% of vegetable output. • Vegetables and fruit spoilage in transport: 75 billion RMB every year because of primitive distribution and transportation system. • 12 million tons of fruit and 130 million tons of vegetables damaged on annual basis. 1) • Food Safety Regulation & Law is expected to be established before year-end 2006. • Fresh, prepared, ready to eat foods will become a key growth driver in China’s food retailing industry. • For instance, frozen meat has accounted for 10 to 15 percent of per capita yearly meat consumption. 2) • The consumption of temp-controlled products is keeping an annual increase of 8% over the past 5 years. Temp-controlled products account for 20% sales in retailer outlets. • Consumers are influencing the growth of temperature controlled food products in China. Based on recent survey, consumers pay more and more attention to food safety. • Such segment as Dairy Industry show lowest interest on outsourcing of logistics. 1) Cold Chain China Summit 12Jul 2006 - Alfred Cheung’s Presentation 2) Challenges and Opportunities: Cold Chain Logistics in China by Bill Tang – China Summit Cold Chain

15. Pharmaceuticals and medical equipments segment remain the key growing market in China’s TC-related landscape. Target Industry Sub Segments - Life Science Source: Datamonitor Industry Report & GCS Industry Strategy

16. China’s Life Science industry is regarded as High Risk and High Rewards. Heavy investment in fundamental phase would deliver highest profit in coming years. Target Industry Sub Segments - Life Science Key Findings Key Trends • At less than USD 15, China’s annual per-capita expenditure is one of the lowest in the world. • An estimated 97% of the drugs (excluding TCMs) produced by local companies are generics or counterfeit. • Sate Food and Drug Administration of China (SFDA) was set up in 2003 to streamline the process of drug approvals and registrations. • Implementation of a Good Manufacturing Practice (GMP) policy in July 2004 immediately forced more than 1,300 non-compliant companies to stop selling their products. • Since the 1980s, hundreds of foreign pharma companies have entered China’s highly fragmented market, where the top ten players control just 15% of total industry sales. • Today, multinationals have over 600 active joint ventures in China and most global industry giants have a China presence: Johnson & Johnson, Roche, Novartis, GlaxoSmithKline. • China’s 9,000 domestic producers of medical equipment occupy the low end of the market and present little competitive threat to MNCs. • A fast-growing middle-class consumer segment in size and spending power and concerns over drug safety and counterfeits will drive sales of imported pharmaceuticals. • Imported medical equipments account for significant market share and will remain key dominator for quite a long time. • More and more focus on operational quality and industry knowledge required - service failure can result in death • Global players will remain dominators in high end market while M&A will continue to play a key role in competition. • More opportunities for 3PL • -demands increase for greater transparency in the system and validated, temp-controlled logistics • -mergers and acquisitions result in unnecessary, expensive duplicate warehouses • -pharma company core competencies are in research, development and sales – not supply chain Source: Datamonitor & others refer to Appendix

17. Most of chemicals products require long term storage and special handing procedure such as DG handing, which keep this industry still a high entry level. Target Industry Sub Segments - Chemicals Key Findings Key Trends • Chemicals • In the first 5 months of 2006 the turnover of China’s petroleum and chemical industry stood at RMB 1.57 trillion, up 31 percent from the same period in 2005. Profits rose 27 percent to RMB 178 billion. 1) • China, currently as the 4th largest chemical producer is forecasted to become the 3rd largest chemical producing country by year-end 2006. • China is also the largest importer of chemicals globally. • The production of staple petrochemical products will remain either off-limits to foreign companies or subject to ownership restrictions. However, in areas where Chinese businesses lack technology or expertise, foreign capital can play a vital role. • Personal care • Market value: 109.4 billion RMB in 2004 • Cosmetic products play a primary role, 58 billion RMB in 2004. • Chemicals • A spectacular growth rate for the next 5 to 10 years, driven by intense demand from the domestic manufacturing sector. Total value is forecast to climb to US$162.4 by 2008. 2) • Import dependence remains a concern and will shape government policy towards the sector. • Chinese companies are also looking for outward investments and more potential for innovative forms of cooperation both inside and outside. • As for logistics and transportation operations, dangerous goods handling are strictly required as well as time and temperature sensitive products handing. • Personal care • Limited profit (compared with petrochemicals and plastic chemicals, etc) and more intensified competition • As large amount of personal care products belong to FMCG industry, KPI and delivery time requirements remain the key issue for 3PL to overcome. 1) These figures only include the 22,985 state-owned and other enterprises with annual sales of over RMB 5 million. Source: Xinhua’s China Economic Information Service, “Petroleum and chemical industry maintains leader of China’s industrial sector,” 7 July 2006 2) Datamonitor: Chemicals in China 2004 (base, consumer, pharmaceutical and speciality chemicals)

18. Still no qualified local players in this emerging market in addition to limited JVs, mainly from investment of Singapore-based firms. Target Industry Sub Segments - Flower Key Findings Key Trends • China, as the largest flowers producer in the world, enjoyed a USD 0.13bn export value and RMB 4.3bn domestic sales value in 2004. • Yunnan, Shanghai and Guangzhou play major roles in both domestic and export market. • Government Preference Policy • -reducing or rebating export administration fees for some specific species • -opening up a flower and plant export green passage in border ports • -setting up special flower and plant research and development funds • Temperature control requirements for cut flowers and potted plants became key challenge in transportation, especially in export business. • Overall market including domestic and export biz is expected to reach RMB 70bn by 2010. • With encouragement and support from government, huge potential for 3PL to enter this market. • Pre-cooling services and transportation monitoring services are treated as first priority from shippers’ view. • With increasing domestic demands for cut flower over next 10 years, temp-controlled transportation opportunities will be caught by those 3PLs who have a long time view. Source: Ministry of Agriculture of PRC, http://www.agri.gov.cn/ & others refer to Appendix

19. Agenda • Executive Summary • China TC Market Overview & Growth Trends • TC Market Breakdown & Target Industry Segments • Global Competitors & Local Players • TC Market Rationale & Proposed Initiatives • Financial Impacts & Initiative Requirements • Implementation Plan & Risk Assessment • Next Steps & Decision Needs

20. Competitor Movements - Global Players • According to our limited available data source, TNT Logistics and Kerry Logistics Network (KLN) outperform other global competitors in China TC Market nowadays. • TNT’s newly-established national life science distribution centre in SHA has turned itself into a key market player, especially in life science cold chain logistics industry. • Growing from a humble local warehouse operator in Hong Kong since 2000, KLN has grown to now a global logistics player with coverage of more than 150 cities in 16 countries and regions. Totally more than 54,000 sq m warehouse facilities for cold storage have helped KLN to widen its network even faster. • Besides, we also found some Japan-based logistics companies performed well, although their target customers limit to Japanese-related ones. • In a word, the giant players are still relatively weak in China’s local TC market with no major player staking a claim to market leadership yet. Therefore, the market is open to anyone that can develop TC capabilities despite that this takes time.

21. Despite of reaching agreement to sell its logistics division to Apollo Management, L.P, TNT still remains the primary competitor in CL market as well as in China’s TC market. Selected Global Competitors’ TC-related Action in China Market Source: company website & limited online news release

22. Aggressive Action - Local Players • The total number of officially registered logistics service providers in China is said to be 800,000. No reliable figures for the number of unregistered carriers. • But mainly due to high-level cost and risk into cold chain logistics, there are few competitors with remarkable operation volume. Reliable data from relevant association shows that there are almost 20 local players whose cold chain storage capability is above 20,000 tons and most of the providers only possess less than 10,000 tons capabilities with old-fashioned warehouse and vans. 1) • Major Advantages of local players consist of low cost, high flexibility and adaptive to local practice. • However below-standard cold chain facilities and lack of enough talents, few domestic players have strong predominance except some state-invested cold chain logistics providers, mainly centralized in coastal cities such as SHA, BJS and CAN. • Among them, Sino-trans Yuhe Cold Chain Logistics exceeds due to its strong financial background and fast-developing players include Shanghai Xintiantian Cold Logistics Co Ltd, Shenzhen ST-Anda Logistics and Eternal Asia Supply Chain Management Co., LTD. • Some company-owned cold chain logistics companies perform even better in TC market, such as Speed-fresh logistics under “Bright Diary” company and Shuanghui logistics under Shuanghui Group. 1) China Froze Food Network, http://www.freezefood.cn ; Shanghai Association of Refrigerated Warehouse, http://www.csarw.com

23. Large SOEs such as Sino-trans determined to become the leading logistics provider despite of intrinsic SOE mindset and inadequate management skills. Selected Local Players’ TC-related Action in China Market Note: Local Players List includes Large SOEs, local and JV players Source: company website & limited online news release

24. Special Case - Nontraditional Players Health and Life Science Food & Beverage • Zuellig Pharma China • http://www.zuelligpharma.com.cn • Founded in 1939 with the name F.E. Zuellig, the Company was engaged in general trading activities for many years. In 1992, a separate pharmaceutical business was incorporated to focus on the development of a modern pharmaceutical and healthcare product distribution company. • Then ZPC was established in 1993 with the vision to enter China early. With rapid growth, despite WTO timeline, in May, 2003 Zuellig Pharma was granted the first foreign-invested pharmaceutical distribution license by the Ministry of Commerce and State Food and Drug Administration, and became the first foreign investor in China to legally distribute pharmaceuticals. • Nowadays, ZPC has become a leading provider of cutting-edge logistics services covering inventory management, warehousing, distribution and customer order management despite of higher quotation • Source: company website & personal network • HAVI FOOD SERVICES GROUP • http://www.hfssea.com/ & http://www.havigroup.com/ • Founded in 1974 in USA, HAVI FOOD SERVICES GROUP has been reputable exclusive logistics provider of McDonald’s with successful cold chain management. • Kang Xin Logistics • http://www.kxlogistics.com/ & http://www.rich.com/ • Invested by world’s premier family-owned food companies - Rich Products Corporation, KXL has become the leader in domestic TC-related Food & FMCG industry. • Since Rich is known around the world as the founder of the non-dairy segment of the frozen food industry and a leading supplier and solutions provider to the food service, in-store bakery and retail marketplaces, Tianjin-based KXL owns nearly 10,000 sqm cold storage capabilities and 50 refrigerator vans (estimated). Its WMS also remain the most advanced among the industry. • Source: company website & online article

25. Some pioneers in TC-related Food & Healthcare below - all of these players are adept at their focused TC-related industry and no evidence indicates that they want to make decentralization. Special Case - Nontraditional Players Source: company website, online news and personal network

26. Agenda • Executive Summary • China TC Market Overview & Growth Trends • TC Market Breakdown & Target Industry Segments • Global Competitors & Local Players • TC Market Rationale & Proposed Initiatives • Financial Impacts & Initiative Requirements • Implementation Plan & Risk Assessment • Next Steps & Decision Needs

27. WHS Location • Total Space • Facilities • Facility Type • 16,650m2 Operating total TC WHS area of 99,800m2, [ABC Company] has stable foundation for further investment despite of limitation caused by road transportation vendor management. [ABC Company] Current TC Capabilities Overview - Facilities NOT EXHAUSTIVE Current Focus • Shanghai • 1 x 6,900m2 • 1 x 8,420m2 • 1 x 520m2 • 1 x 760m2 • 1 x 50m2 • Air-conditioned, multi-user • Air-conditioned, multi-user • Air-conditioned + freezer (Kodak) • Air-conditioned + freezer (J&J) • Air-conditioned, dedicated (LV) • The total temp-controlled warehouse space consists of • 98,520m2 air-conditioned space for more than 10 TC customers, 83% space is centralized in SHA, BJS & CAN • more than 1,280m2 freezer room space • Current solutions for temp-controlled road transportation are • highly reliant on external transportation providers / subcontractors • Beijing • 46,000m2 • 1 x 14,000m2 • 1 x 32,000m2 • Air-conditioned, multi-user • Air-conditioned, multi-user • Guangzhou • 19,000m2 • 1 x 10,000m2 • 1 x 9,000m2 • Air-conditioned, multi-user • Air-conditioned, multi-user • Shenyang • 6,000m2 • 1 x 6,000m2 • Air-conditioned, multi-user • Chengdu • 4,500m2 • 1 x 4,500m2 • Air-conditioned, multi-user • Wuhan • 4,000m2 • 1 x 4,000m2 • Air-conditioned, multi-user • Tianjin • 3,000m2 • 1 x 3,000m2 • Air-conditioned, multi-user • Kunming • 350m2 • 1 x 350m2 • Air-conditioned, dedicated (Mars) • Fuzhou • 300m2 • 1 x 300m2 • Air-conditioned, dedicated (Mars) • Road Transport • Key Facts • Pan-China • - 6 x 24 mt A/C trailers owned, used for long haul transportation between BJS, SHA & CAN, i.e. 5-6 dept per week SHA/BJS • - Above TC 100 Trucks leased to cover 25 cities in mainland China • - The complex subcontractor structure hampers effective quality and performance management Source: [ABC Company] China Presentation & Interviews with Site Managers

28. [ABC Company] ’s TC capabilities today are regarded as mission impossible to meet customers’ fast-growing requirements for TC-related services in coming 5 years. Existing Major TC Customers Breakdown [ABC Company] TC Customers’ Revenue 2005 - 2010 estimate [in CNY mn] 5.5% 13.6% 14% 14% 14% 12% 12% 7% 12% 300.1 • As complete acquisition of EAC (Mars logistics) in 1994, Mars remains the largest TC customer of [ABC Company] in China until now • Customers in Life Science Industry, i.e. J&J, Novatis indicate high potential to invest heavily • By 2010, the total revenue is forecasted to double 268.6 239.9 214.3 191.5 144.4 CAGR 2005 act. 2006 est. 2010 est. • Current key customers are Mars, Cadbury, Ferrero Rocher, Starbucks, Kraft, Xian-Janssen, BM Squibb, Novatis, J&J Medical and Kodak. Total revenue reached 144 million CNY in 2005 and is expected to exceed 300 million CNY by 2010. • 85% - 90% of total TC-related revenue generated by WHS operation and road transportation in relation to customers mentioned above. Source: [ABC Company] China Presentation and attachable financial data from ops supervisors

29. CAGR Avg. Capacity Shortage Mars, taking more than 60% of total stock volume, will continue to play a leading role in coming years while our capacity is expected to meet shortage by 2007 Q3. Space Planning - SHA* Capacity Re-develop during Jul-Aug06 Underlying Stock VolumeGrowth vs TC Capacity Supply [pallets] Stock Volume 2006 act. • Without any planned TC capacity development initiatives, [ABC Company] experienced risk of performance failure due to unexpected stock volume boom during Jul to Aug 2006 • Despite of enhanced capacity 18,500 plts equipped, [ABC Company] is still facing capacity shortage from 2007 Q3, mainly due to strong growth of FMCG customers, i.e. Mars, Cadbury & Kraft • We are also expecting 5% additional biz gain per year from potential TC customers from both FMCG & Life Science Industry 18,500 Without TC Initiatives 11,000 • Starbucks • Janssen • BMS • Heideberg • Agfa • Kraft • Cadbury • Mars • 11,287 • 9,223 • 7,275 • 10,870 • 15,387 • 13,374 Estimated Stock Volume 2007 est. Without TC Initiatives CAGR 16% • 5% add. bizper year 18,500 [ABC Company] Capacity On-Hand1) • 14,068 • 12,499 • 10,139 • 14,612 • 20,687 • 18,157 * Kodak and J&J Medical Stock Volume don’t include due to limited size Source: On-Site Data collected from Mars Ops, Team Analysis 1) Huting 11,000 + YinXi 7,500 = 18,500

30. How to fill up the stock gap between peak season and low season should be major task while a long-term TC capacity development plan can help. Space Planning - SHA* [ABC Company] Capacity On-Hand1) [ABC Company] Capacity Proposed CAGR Avg. Underlying Stock VolumeGrowth vs TC Capacity Supply [pallets] Stock Volume 2008 est. Stock Volume 2009 est. • Beijing Olympic Games 2008 and Shanghai Expo 2010 will definitely boost up the CAGR relatively • By 2010, existing TC customers’ stock volume is forecasted to reach 29,000 plts while with 5% add. biz gain per year, [ABC Company] will meet totally more than 33,000 plts TC-related stock • Therefore a proposed TC capacity enhancement to 30,000 plts is of great importance to both meet customers’ increasing requirements and win the potential contracts CAGR 14.5% CAGR 11% 18,500 Stock Volume 2010 est. 30,000(Phase2) CAGR 14.8% TC Initiatives Executed • 5% add. bizper year 25,000(Phase1) • Starbucks • Janssen 18,500 • BMS • Heideberg • Agfa • Kraft • Cadbury • Mars • 22,949 • 20,342 • 16,472 • 23,808 • 33,829 • 29,677 * Kodak and J&J Medical Stock Volume don’t include due to limited size Source: On-Site Data collected from Mars Ops, Team Analysis 1) Huting 11,000 + YinXi 7,500 = 18,500

31. Opportunities Challenges [ABC Company] Strength [ABC Company] Weakness Overall Market • The demand for cold chain logistics service is keep increasing • Millions of money Lost in cold chain • Cold Chain service price is more than customers can accept • Strong intention to be a primary player in China’s TC market • Still no detailed investment plan Infrastructure & Facilities • Outmoded facilities • Lack of modern logistical hardware • Backward infrastructure • Below-standard refrigerator vans • High Investment - Compared with ambient logistics, 4 times bigger in warehouse, 2 times bigger in trucks • 6x24 mt air-suspended, air-conditioned trailers • Long term partnership with subcontractors, up to above 100 temp-controlled vehicles • Existing temp-controlled vans don’t cover pan-China’s TC requirements • Supports from government: Tax, Tolls and management fee • Urgent information development and process standardization • National standards for cold chain operation is still empty • Temperature, humidity, sanitation, safety and time are strictly required • Global experience • Limited understanding of CIQ, HACCP, GMP, GSP, etc as well as cold chain technology Regulation & Technology Operation & Management • Little or no cold chain knowledge / experience and lack of general cold chain training • Cold chain operation is very complicated • Almost 15 years experience, mainly focusing on FMCG industry • Still lack of qualified logisticians to meet increasing business needs • Few players and less competition – First In, First Win • Aggressive global and local players remain, e.g. TNT, Sino-trans Yuhe • Good relationship with Sino-trans • EXEL’s TC capabilities and experience can help • Limited partnership with TC-related vendors • Lag behind compared to TNT or Sino-trans Competition Investment just for what is suitable, not for what is advanced; Invest in people, not only equipment. TC Market Rationale - by Market FOR DISCUSSION

32. Opportunities Challenges [ABC Company] Strength [ABC Company] Weakness Food • Booming domestic consumption and urgent need to improve food safety and quality • Such segment as Dairy Industry show low interest on outsourcing of logistics • Local players with lower price play a primary role currently • Almost 15 years experience • Especially in candy & chocolate segment industry • Good relationship with local partners • Limited capabilities and validated, temp-controlled WHS facilities restrict us from strengthening our services to existing customers as well as developing new business • Booming domestic and global consumption • Global industry giants play a key role, while most of them are GCS customers • Strong intention to outsource logistics ops • Strict regulatory requirements from GMP and SFDA • High-level operational quality and industry knowledge required • Huge competition from global and local players • Almost 10 years experience commenced from relationship with Xian Janseen • Ditto Life Science • Booming domestic and global consumption • Dangerous goods handling are strictly required as well as time and temperature sensitive products • Global experience in relation to handling low-DG and chemical goods • Existing and potential biz from personal care segment, i.e. P&G • Ditto Chemicals • Booming domestic and global consumption • Pre-cooling services and transportation monitoring services are required • No qualified freight cars for flowers transportation until now • EXEL’s strong presence in perishables logistics handling focusing on air export biz • Ditto Flower Focus on Life Science and keep primary advantage in TC-related Food Industry; Develop chemicals sub segment strategy and domestic cut flower logistics market. TC Market Rationale - by Industry FOR DISCUSSION

33. Proposed Initiatives - BTS temp-controlled facility (1/2) Source: Proposals Summary for TC Facility by Jack Yang

34. Proposed Initiatives - BTS temp-controlled facility (2/2) Source: Proposals Summary for TC Facility by Jack Yang

35. Agenda • Executive Summary • China TC Market Overview & Growth Trends • TC Market Breakdown & Target Industry Segments • Global Competitors & Local Players • TC Market Rationale & Proposed Initiatives • Financial Impacts & Initiative Requirements • Implementation Plan & Risk Assessment • Next Steps & Decision Needs

36. [ABC Company] revenue is expected to grow by 26% year-to-year while implementation of an aggressive TC initiatives can make our growth rate reach 27.4% annually. Financial Impacts - Total Revenue FOR DISCUSSION CAGR '06 to '10 Underlying Business Growth and Initiatives Impacts[in € mn] • 174 Revenues Estimate 2006 - 2010 CAGR 26% Revenue from business as usual • With TC Initiatives equipped, [ABC Company] ’s revenue growth is forecasted to reach CARG of 27.4% • The total revenue is forecasted to increase at least € 10 mn compared to former financial planning without TC Initiatives • Effective implementation of TC initiatives will enhance [ABC Company] ’s capabilities to meet forecasted demands from existing and potential TC clients Without TC Initiatives Revenue from other initiatives • 68 • Other Initiatives1) • Underlying • Business • 54 • 2006 • 2010 • 184 Revenues Estimate 2006 - 2010 Additional revenue from TC Initiatives CAGR 27.4% TC Initiatives Executed • 68 • TC Initiatives • Other Initiatives1) • Underlying • Business • 35 • 2006 • 2010 1) Other Initiatives = Healthcare, SPL, I2M initiativesmentioned in [ABC Company] Logistics China – Strategy 2010 Source: [ABC Company] China Strategy, Team Analysis, Interviews

37. People Investment and Capability Enhancement should remain primary focus in coming years to meet TC initiatives targets Initiatives Requirements - Proposed TC Strategy FOR DISCUSSION Requirement Details Incremental cost/Investment Need People & Organizational • Set up long-term people development plan in relation to cold chain management (Learning & Development Center) • 1 Ops Manager for SHA Facility in 20073 Ops Manager in BJS & CAN from 2008 • Build up an Temp-controlled Logistics Promotion Team focusing on global and local business development support - 3 Executives required in SHA, BJS & CAN € 0.1 mn1) € 0.06 mn ~ €0.44 mn Incremental indirect staff cost '07 '08 '09 '10 € mn 0.02 0.08 0.08 0.10 Infrastructural & CapacityGrowth • Implementation of proposal BTS facility set up in SHA to consolidate all services for existing TC customers, expanding TC capability to 20,000sqm by 2007 • Invest in BJS facility to expand TC capability to 50,000sqm by 2008 • Invest in CAN facility to expand TC capability to 25,000sqm by mid 2009 € 2.0mn (SHA BTS) € 3.2mn (BJS) €2.3mn (CAN) Technology • Development or implement TC-related IT system, i.e. RFID to enhance operational performance TBD Operational Assets • TBD TBD 1) Additional cost besides of € 0.6 mn budgeted for LDC Source: Team Analysis

38. Agenda • Executive Summary • China TC Market Overview & Growth Trends • TC Market Breakdown & Target Industry Segments • Global Competitors & Local Players • TC Market Rationale & Proposed Initiatives • Financial Impacts & Initiative Requirements • Implementation Plan & Risk Assessment • Next Steps & Decision Needs

39. Launching of multi-user TC Facilities and recruitment of local talents who are experienced in TC market are our upcoming main focus. Implementation Plan & Potential Risks - TC Initiatives • 2006 • 2007 • 2008 • 2009 • 2010 • Action • Responsible • Q1 • Q2 • Q3 • Q4 • Q1 • Q2 • Q3 • Q4 • Q1 • Q2 • Q3 • Q4 • Q1 • Q2 • Q3 • Q4 • Q1 • Q2 • Q3 • Q4 • Roll-out TC facility - SHA • Roll-out TC facility - BJS • Roll-out TC facility - CAN • DG1)/WW1) • DG/WW • DG/WW Go-Live Implementation Planning • Multi-user TC Facilities Approval Go-Live ID Implementation Planning Approval Implementation Go-Live ID Planning Approval • Develop detailed learning & development plan • Build up Temp-controlled Logistics Promotion Team • TBD • TBD • TBD WORK IN PROGRESS Planning Roll-out Cold Chain Management Knowledge Champion ID • People& Organization Team Development, Knowledge Improvement ID Recruitment & Training • TBD • TBD • Risk • Slowdown in business outsourcing and/or loss of minor accounts • Delay in construction of multi-user TC Facility • Operational problems due to lack of qualified ops managers and knowledge in relation to cold chain management • High operating cost due to regulatory alteration, especially in FMCG industry Source: Team Analysis • 1) DG: Desmond Gay, WW: Windy Wu

40. Agenda • Executive Summary • China TC Market Overview & Growth Trends • TC Market Breakdown & Target Industry Segments • Global Competitors & Local Players • TC Market Rationale & Proposed Initiatives • Financial Impacts & Initiative Requirements • Implementation Plan & Risk Assessment • Next Steps & Decision Needs

41. Decision Needs & Next Steps Decisions I • Confirm China TC Development Plan • Sign-off of investment needs • Approval of headcount increase Next Steps II • Action Plan Responsibility Due date • Develop implementation organisation TBDTBD • Develop detailed implementation plan TBDTBD