BSA LIMITED — Capital/Financing Update 2007

Dec 9, 2007

HILLS INDUSTRIES LIMITED BSA Merger and Capital Raising Presentation Presentation By David Simmons Managing Director

Introduction

• Hills has entered into a merger implementation agreement with BSA which, subject to a number of conditions, Hills will hold a 50.1% of the merged group following the transaction

• Transaction is expected to be EPS accretive in FY08 for Hills (including additional shares issued through placement)

• Hills is undertaking a placement to raise up to $50 million by way of a bookbuild ($5.50 - $5.70 per share) to fund the BSA acquisition

• Share Purchase Plan to be offered to existing shareholders to fund future identified acquisitions

• Business conditions are solid across group

• Confirmation of guidance given at AGM of flat 1[st] half FY08 earnings but expected to be ahead of FY07 for full year

Offer Details

Amount to be raised Approximately $50 million through placement: Number of shares 8.928 million (5.1% of issued capital) to be offered: Price: To be determined by way of a book build. Indicative range $5.50 to $5.70 per placement share. Discount: This represents a discount of 3.4% - 6.8% to the last closing price of $5.90 (5.8% - 9.1% discount to 1 week VWAP). Share Purchase Hills shareholders registered on 12 December 2007 will be entitled Plan (SPP): to subscribe for up to $5,000 worth of shares at the lower of placement price and 5% discount to VWAP of 5 days trading prior to SPP closing date. Ranking: Pari passu with existing shares

Timetable

Institutional briefings:

Hills announces trading halt: Offer opens: Offer closes: Allocations advised: Placement announced: Trading halt lifted: DvP settlement of placement: Placement shares commence trading:

Monday 10 Dec 2007 9am Monday 10 Dec 2007 10am Monday 10 Dec 2007 3pm Tuesday 11 Dec 2007 7pm Tuesday 11 Dec 2007 By 10am Wednesday 12 Dec 2007 By 10am Wednesday 12 Dec 2007 Friday 14 Dec 2007 10am Monday 17 Dec 2007

Our Track Record

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15 consecutive years of record profit…
60,000
50,000
40,000
30,000
20,000
10,000
-
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
$8.00
… resulting in strong share price increase
$6.00
$4.00
$2.00
$0.00
CAGR = 14%
NPAT After Minorities ($'000)
Hills share price
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Overview of the BSA Transaction

• Hills has entered into a merger implementation agreement that provides for the proposed merger of Hills’ existing Antenna & TV Systems business in Australia and New Zealand with BSA, a placement of BSA shares to Hills and a return of capital to existing BSA’s shareholders

• The transaction comprises:

• BSA Acquiring the Antenna & TV Systems business and issuing 92,283,904 new shares to Hills. The Hills businesses include: Hills Antenna & TV Systems, STEP Electronics, Access Television Services and Hills Signal Master New Zealand

• BSA making a placement of convertible notes to Hills at $0.90 per note totaling $47.5M, which will convert into 52,777,778 BSA shares

• A return of capital of $0.25 per BSA share held by all shareholders other than Hills

• A conversion of 4 BSA shares into 3 BSA shares

Overview of the BSA Transaction

• The Transaction is subject to the following conditions precedent being satisfied:

• An independent expert issues a report that the transaction is fair and reasonable to BSA shareholders

• Approval by BSA shareholders in accordance with the Corporations Act 2001 and the listing rules of the ASX

• The S&P ASX200 index not closing below 15% from the level at which it closes on the date of the merger implementation deed on more than 5 consecutive days

• BSA and Hills conducting due diligence to their respective satisfaction

• BSA obtaining a tax ruling in support of the Transaction from the ATO

Summary of BSA Transaction Benefits

• EPS accretive to Hills on a post placement basis in FY2008

• Opportunity to build a vertically integrated business focused on the entertainment sector with significantly increased diversity

• Hills brings significant product opportunities in markets with growth (FTTH, satellite, delivery of triple play, wholesale A/V market)

• Hills has the R&D, engineering, manufacturing and sourcing capabilities. BSA has the delivery mechanism

• No other organisation in the space will have the same end to end capability

• BSA balance sheet strengthened and backed by a “Big Brother”

• Absolute focus on profitable growth

• Size and backing to pursue opportunities

Summary of BSA Transaction Benefits

• Hills is committed to holding, adding value and creating a sustainable quality business

• Hills provides access to corporate resources across the business spectrum from M&A to compliance

• Synergies exist between the BSA’s Triple M business and existing Hills businesses and contacts

• Cost synergies via purchasing power to be aggressively pursued

• Hills New Zealand operations provide a beach head for BSA

• • Market re-rating of BSA

• Will be consolidated

Electronic Security & Entertainment

Electronic Security & Entertainment - Where are we focused?

• Opportunities with the convergence of IP & IT based solutions

• FTTH & FTTN (the triple play)

• Further product range diversification

• A/V wholesale expansion

- Current performance

• Ahead of last year

• All businesses performing well

Home, Hardware & Eco

Home Hardware & Eco

• Where are we focused?

• Product range expansion of Hills Eco

• Regional expansion of Team Poly

• Further offshore sourcing

• Improving logistics and distribution

• Current performance

• Behind last year but restructuring in Home & Hardware kicking in

• Strong demand in Team Poly for water storage solutions

• Air Comfort Seating performing well in Hills Healthcare

Building & Industrial Products

Building & Industrial Products - Where are we focused?

• Regional expansion of Orrcon

• Consistent major project delivery/contract wins in Orrcon.

• Major projects in oil and gas

• WA market opportunities – mining and infrastructure

• Increased market share in Fielders and Orrcon

• Current performance

• Compressed Margins - AUD strength & overstocking in pipe & tube market

• Below last year in Orrcon

Our Acquisition Track Record

Since placement and SPP of $80 million in 2004:

• Earnings per share growth of 22.1% from 22.6 cents per share to 27.6 cents per share

• Dividend growth of 22.2% from 22.5 cents per share to 27.5 cents per share

• 8 acquisitions completed including Orrcon, Team Poly, Audio Telex/Crestron, Brisbane Sheet Metal, Alquip, Air Comfort Seating Systems and Impressive Steel Distribution

Hills Group

• Sale of Edwardstown manufacturing site

• Flat 1[st] half FY2008, above LY for the full FY2008

• Profit on sale of Edwardstown to be booked in 1[st] half FY2008. Provision for losses on SRWP pipe contract to be booked in 1[st] half FY2008. Both individually significant items but expected to net off after tax

• Interim dividend of 13.5 cents confirmed

Summary

• Hills has entered into a merger implementation agreement with BSA which, subject to a number of conditions, Hills will hold a 50.1% of the merged group following the transaction

• Transaction is expected to be EPS accretive in FY08 for Hills (including additional shares issued through placement)

• Hills is undertaking a placement to raise up to $50 million by way of a bookbuild ($5.50 - $5.70 per share) to fund the BSA acquisition

• Share Purchase Plan to be offered to existing shareholders to fund future identified acquisitions

• Business conditions are solid across group

• Confirmation of guidance given at AGM of flat 1[st] half FY08 earnings but expected to be ahead of FY07 for full year

Appendix – Hills Overview

Group Strategy

Hills is a Diversified Company developing competitive businesses in three industry segments

• Electronic Security & Entertainment

• Home, Hardware & Eco Products

• Building & Industrial Products

Hills Group - Financial Highlights 2007 2006 % Change ’000 $’000 Revenue 1,013,999 931,799 + 8.8% EBIT 82,273 73,265 + 12.3% EBT 73,168 67,385 + 8.6% NPAT (After Minorities) 47,173 43,261 + 9.0% EPS (Cents) 27.6 25.9 + 6.4% DPS (Cents) 27.5 26.0 +5.8%

Electronic Security & Entertainment - Products

Code Pad

IP Camera

CCTV Camera

Digital Video Recorder

Optimax 600 Digital Antenna

Satellite Dish and LNB

Digital Set Top box V-Sat Dishes

Electronic Security & Entertainment - The Numbers 2007 2006 $’000 $’000 % Change Revenue 277,174 263,854 + 5.0% EBIT 31,726 34,024 - 6.8% EBIT/Revenue 11.4% 12.9%

Home & Hardware & Eco - Products

Ladders

Scaffolding

Wheelbarrow

Clotheslines

Playing Mantis

Shower Commodes Deluxe Chair

Patient Lifter

Medication Cart

Vienna Bed

Home, Hardware & Eco - The Numbers

2007 2006 $’000 $’000 % Change Revenue 191,354 168,933 + 13.3% EBIT 13,817 12,325 + 12.1% EBIT/Revenue 7.2% 7.3%

Building & Industrial - Products

Precision Tube

Structural Pipe & RHS

API Oil, Gas & Water Linepipe

Flooring

Galvabond

Roofing

Carports

Building & Industrial Products - The Numbers 2007 2006 $’000 $’000 % Change Revenue 544,684 498,203 + 9.3% EBIT 36,025 26,762 + 34.6% EBIT/Revenue 6.6% 5.4%