Agenda

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. DACH Turnover and Forecast 1000000 900000 800000 700000 600000 GBP 500000 400000 300000 200000 100000 0 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 140000 200000 340000 420000 540000 690000 880000 Turnover % growth 42.5 70 23.5 28.6 27.8 27.5 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