The DACH market

1
Agenda

• The DACH market
• Business development past and present
• Opportunities
• Future plans
• DACH subsidiary
• Location
• Setup and Structure
• Business Strategy
• Funding Opportunities
• Staffing and Area Management
• Timeline
• Cost and Development Projection

2
The DACH market

• Germany 3rd largest Microscopy Market estimated
  at 90-150 million GBP
• Home market of two major microscope
  manufacturers (Leica, Zeiss)
• Large micro-technology sector employing over
  680000 people in total
• Strong manufacturing sector in the areas of
  other optical technologies
• Micro-technology market as a whole shows strong
  growth

3
Prior in the DACH market
4
Opportunities

• Growing the business in the 3rd largest market
  for microscopy
• Further Establishing Prior as market leader in
  microscope automation
• Product Development through new OEM contracts
• Increasing Profits by selling directly
• Setting up local support structure

5
Future DACH Subsidiary

• Advantages
• Local representation
• Better position against competition
• Local support and contact point
• Purpose
• Grow business and turnover
• Become important profit source for Prior
• Further establish Prior as market leader

6
Location

• Central Location in Germany
• Good infrastructure
• Important centre for optical industries
• Long history as centre for optical innovation
• Well known University
• Fraunhofer and Max-Planck Institutes
• Business Centre for Micro-Technologies

www.tip-jena.de
7
Setup and Structure

• Independent business entity
• GmbH (Gesellschaft mit beschränkter Haftung)
• good reputation
• legal form of choice for many traditional,
  privately owned businesses.
• limited liability of all partners
• ability to conclude contracts
• ability to regulate profits by adjusting transfer
  prices from the UK
• ability to invoice management charges from the UK
  and to thereby decrease tax liability in Germany

8
Business Strategy

• OEM Accounts
• Key Accounts
• Product Development
• Customer Focus

• End User Accounts
• Product Range
• Prior Brand Name
• High Margin

• Distributors
• Complete Solutions
• Market Share
• Marketing

Regional Management - Regional Technical Sales
Specialists - Key Account Management - Jena
Office Technical Support - German Language,
OEM capacity
Marketing German Language Literature, Website,
Manuals Marketing Partner, Dedicated Campaigns
9
Funding Opportunities

• EU funding
• 50 of total payroll for 2 years
• Eligible if locating in Eastern Germany
• Availability of funding confirmed by consultancy
  before setup
• Local funding
• Up to 70 of rental cost for 3 years when setting
  up in Jena Technology Centre
• Access to workshop, meeting rooms and other
  facilities

10
Staffing and Area Management
Jena Office H. Ruchatz Technical Support
Specialist Sales Administrator Field Based Sales
Specialists North/West Dortmund South Munich
11
Timeline
Staff Recruitment
Office Opening
GmbH registered, start of EU funding application
Start legal process of setting up GmbH
EU funding strategy approved
Business Strategy Finalised
12
Cost and Development
13
Quarterly Sales Forecast
14
Break Even Analysis Year 1
15
Break Even Analysis Year 1-4
16
DACH Profit Forecast
17
Summary

• Sales in DACH have risen by 70 last year
• Very good potential for growth in 3rd largest
  microscopy market
• Local subsidiary based in Jena to open September
  2007
• New subsidiary will be profitable in 1st year and
  subsequent years
• Early recruitment of sales and support staff
  possible through EU funding schemes