- 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

Agenda

The DACH market

Country Inhabitants (Million)

Extension (sq km) GDP ( USD)

Germany 82.7 357027 2.8 trillion

Austria 8.2 83859 0.3 trillion

Switzerland 7.3 41285 0.4 trillion

United Kingdom 59 243820 2.3 trillion

- 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

Prior in the DACH market

0

50000

100000

150000

200000

250000

300000

350000

GBP

Invoices, DACH

TOTAL

BFI

TOTAL 11607 195012 99385 142370 204687 321000

BFI 5617 96485 80986 121124 178657 101065

2001/2 2002/3 2003/4 2004/5 2005/6 2006/7

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

Future DACH SubsidiaryAdvantages• 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

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

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

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, ManualsMarketing Partner, Dedicated Campaigns

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

Staffing and Area Management

Jena Office:

H. RuchatzTechnical Support SpecialistSales Administrator

Field Based Sales Specialists:

North/West: DortmundSouth: Munich

Timeline

4 5 6 7 8 9 10 11 12 1 2 3

2007 2008

Business Strategy Finalised

Start legal process of setting up GmbH

GmbH registered, start of EU funding application

Office Opening

Staff Recruitment

EU funding strategy approved

Cost and Development

DACH Turnover and Forecast

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000G

BP

Turnover 140000 200000 340000 420000 540000 690000 880000

2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11

42.5 27.8 27.528.623.570% growth

Quarterly Sales ForecastQuarterly Sales (Inv)

0

100000

200000

300000

GB

P

2007/8

2008/9

2009/10

2010/11

2007/8 90000 65000 110000 155000

2008/9 125000 95000 150000 170000

2009/10 150000 130000 190000 220000

2010/11 185000 180000 250000 265000

Q1 Q2 Q3 Q4

Break Even Analysis Year 1

Brean Even Analysis, 2007/8

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

GB

P

Turnover

Fixed Cost

Total cost

Turnover 90000 155000 265000 420000

Fixed Cost 25845 121620 126603 179010

Total cost 68031 193706 261664 402808.5

Q1 Q2 Q3 Q4

Break Even Analysis Year 1-4Break Even Analysis

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

year

GB

P

Turnover 350000 420000 540000 690000 880000

Fixed cost 179010 209080 263184 344960

Total cost 190000 402808.5 506780 629584 802960

2006/7 2007/8 2008/9 2009/10 2010/11

DACH Profit Forecast

 GBP 2007/8 2008/9 2009/10 2010/11

Q1 21969 11268 20069.5 4650

Q2 -17525 -10144.5 11519.5 10050

Q3 -1108 14067 17679.5 37882.5

Q4 13855.5 18029.5 11147.5 20257.5

Total 17191.5 33220 60416 72840

Turnover 420000 540000 690000 880000

% of TO 4.1 6.2 8.8 8.3

Transfer to Prior Ltd. 46620 58500 72000 90000

Subsidies 44280 111960 68016 0

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