1. Ad Rem – Challenges and Opportunities for the Australian Book Industry Creator-To-Consumer (C-2-C) Workshop October 3rd, 2001

2. 2 ©Accenture 2001 All Rights Reserved Ad Rem Ad Rem was an EPICS funded project which achieved its objectives and outcomes through participation of more than 50 organisations in the Australian book industry The Ad Rem value chain analysis painted a quantitative picture of the Australian book industry and identified improvement opportunities estimated to be worth $155 million annually The Ad Rem participants and team developed four divergent and plausible scenarios for the Australian book industry and a range of possible strategies A final report and an industry forum will mark the end of the Ad Rem project and pass the ‘baton’ on to the industry

3. 3 ©Accenture 2001 All Rights Reserved Ad Rem – Objectives and Outcomes Ad Rem was an EPICS funded project which achieved its objectives and outcomes through participation of more than 50 organisations in the Australian book industry To identify and evaluate the challenges and opportunities Provide insights as to how the industry and individual firms may achieve a sustainable strategic position in the future Objectives: Short/medium term focus: Improvement opportunities worth $155m Long term focus: Industry scenarios and supporting strategies Outcomes: Participation: 50 companies 120 executives Funding: Main funding under the EPICS scheme by the Federal Government through its Department of Industry, Science and Resources ‘In kind’ contributions from McPherson’s Printing Group, Accenture and other participating organisations

4. 4 ©Accenture 2001 All Rights Reserved Value Chain Analysis – The Chain The Ad Rem value chain analysis painted a quantitative picture of the Australian book industry BooksellerPublisherPrinterAustralian Royalties 4% O/S Printing Local Printing Royalties 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 1994199619982000 11.1% 8.9% 7.4% 7.6% - Value Chain - ($10 book retail value, 2000) - Industry Profitability - (1994 - 2000) Profit margin = 3.1% 100% Profit margin = 7.9% 62% Profit margin = 1.3% 12%

5. 5 ©Accenture 2001 All Rights Reserved Value Chain Analysis – Opportunity Areas The Ad Rem project estimated that greater collaboration and consolidation in the book industry offer opportunities worth approximately $155 million annually Current cost level (p.a.) $101m $825m $39m $116m $83m Improvement potential (p.a.) $47m(47%) $39m(5%) $9m(23%) $50m(43%) $10m(12%) Key levers Collaborative demand planning Collaborative inventory planning Book range management Consolidation of volume Aggregation at (near) industry level Area Returns Inventory Write-offs Distribution Paper sourcing $155m

6. 6 ©Accenture 2001 All Rights Reserved Scenario Planning – Scenario Map Nature of Demand Nature of Supply Increasing demand for reading material, available in mixed formats, with more niche content, available from multiple purchasing channels Reduced demand for reading material, mainly in paper-based format, containing content with mass appeal, available mainly via shops Some companies, diversified along the book industry value chain, emerge in a transaction based marketplace Existing businesses remain specialised and collaborate to maximise industry performance Shoulder to Shoulder Land of the Giants Paradise Found Dog Eat Dog The Ad Rem participants and team developed four divergent and plausible scenarios for the Australian book industry and a range of possible strategies

7. 7 ©Accenture 2001 All Rights Reserved A final report and an industry forum will mark the end of the Ad Rem project and pass the ‘baton’ on to the industry Synthesises of highlights from the Scenario Planning and Value Chain Analysis deliverables Contains additional information about industry issues, including views based on interviews with CAL, authors, and others Time frame: mid October, 2001 Final Report: Accenture will host an industry wide forum to disseminate findings from Ad Rem and pass the ‘baton’ on to the industry Time frame: mid November, 2001 Industry Forum: For more information about Ad Rem and access to the detailed deliverables, please refer to the project web-site: www.adrem-online.net Next Steps