Electrohome Announces a Write Down of its Investment in Fakespace and a Change in Accounting Method 

Kitchener, Ontario - December 2, 2004 -- Electrohome Limited ("Electrohome") announced today that it has decided to write-down its investment in Mechdyne Corporation (which carries on business as "Fakespace Systems") and that it is changing its method of accounting for its investment in Fakespace Systems to the cost method from the equity method.

Change in Carrying Value

For the past two years Electrohome substantiated its carrying value of Fakespace Systems, primarily based on previous equity financings of Fakespace Systems, the value ascribed to Fakespace Systems at the time of its merger in 2003 and Fakespace's dominant position in its marketplace. However, there are now other factors which must be taken into consideration, including changing market conditions, unfavourable foreign exchange rates and the fact that equity markets for high-tech securities have declined since Fakespace completed its previous financings. In order to substantiate the carrying value of Fakespace Systems, Electrohome commissioned an independent third party Certified Business Valuator ("CBV") to provide a valuation estimate. Based on the estimate of the CBV, the Corporation wrote down the value of its investment in Fakespace to $4.0 million. As a result of this change, Electrohome will take a $6.1 million (non-cash) charge in the fourth quarter of fiscal 2004.

Change in Accounting Method

Since Fakespace Systems Inc. merged with Mechdyne Corporation on April 1, 2003, Electrohome's 30.6% equity interest in the resulting entity has been accounted for under the equity method.

Over the 18 months from the merger to September 30, 2004, Electrohome's ability to influence Fakespace System's polices has diminished, to the point where Electrohome's management has determined that Electrohome no longer has significant influence over the operating, investing and financing policies of Fakespace Systems. As a result, effective July 1, 2004, Electrohome will use the cost method to account for its investment in Fakespace Systems. The result is that the investment in Fakespace Systems will remain on Electrohome's balance sheet as an investment at its revised carrying value and income will only be recorded if and when dividends are received.

Electrohome continues to hold its 30.6% interest in Fakespace Systems which is the largest international company operating exclusively in the advanced visualization marketplace, and a 5.7% interest in Immersion Studios Inc. which produces specialty digital interactive cinema. Going forward, Electrohome's earnings will be based on investment income from Fakespace and Immersion Studios (in the form of dividends, if and when received), on royalties from third parties for the use of the Electrohome brand name, and investment income from marketable securities. These earnings are currently more than offset by post-employment benefit costs and corporate expenses, with the result that Electrohome anticipates an operating loss for the current fiscal year. Electrohome also has a number of one-time opportunities related to other existing assets which could result in additional future earnings.

Electrohome's annual report is scheduled to be mailed to shareholders on December 21, 2004.

Electrohome's shares are traded on the TSX under the symbols ELL.X and ELL.NV.Y.

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For further information, contact John A. Pollock, Chairman and Chief Executive Officer or Gary Dumoulin, Vice-President and Secretary at (519) 749-3319.