1 shareholders’meetings june 17, 2004 shareholders’meetings june 17, 2004 presentation of 2003...

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SHAREHOLDERS’MEETINGS

JUNE 17, 2004

SHAREHOLDERS’MEETINGS

JUNE 17, 2004

Presentation of 2003 resultsPresentation of 2003 results

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Summary

DYNACTION today Fine and Speciality Chemicals (70 %-owned by Dynaction)

CMD Engrenages et Réducteurs (virtually 100 %-owned by Dynaction)

Dynaction financial performance Business strategy and outlook

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DYNACTION today

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DYNACTION : An industrial Group

with an international vocation

An industrial Group generating EUR 257 in turnover

A Group firmly focused on a single industrial sector, Fine

Chemicals (74 % of turnover) and Exports (55 % of turnover)

A pro-active posture to face the downturn

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Significant events in 2003 and

first-half 2004

Economic difficulties in 2003 for fine chemicals (particularly pharmaceuticals synthesis)

PCAS acquisition of the Aventis VLG Chem site and signature of a medium-term partnership agreement 1 June 2004

PCAS disposes of non-strategic asset in early 2004 (Vernolab)

Creation of a new corporate entity in the U.S. (PCAS Inc) CMD continues to develop and gain international market shares

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DYNACTION

Growth focus in fine chemicalsDYNACTION Group

ChairmanChristian MORETTI

PCASJean-Paul BOUTELLIER

69.72 %

S.B.SSt Jean

Photochimie

Expansia

Créapharm

Other industrial activities

PCAS Finland

CMD Gmbh

V L G

CMD E&RRené BERNARDI

99.75 %

Fine and Speciality Chemicals

PCAS - turnover : EUR 191 million, work force : 1.372CMD - turnover : EUR 66 million, work force : 447

P.C.F

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Financial performance : Turnover

2001 2002 2003

290 272 25

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In EUR millions

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Financial performance :

Operating income

2001 2002 2003

17.5

18.7

6.8

In EUR millions

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Financial performance :

Consolidated net profit (loss)

-15

-10

-5

0

5

10

15

20

2001 2002 2003

Consolidated

In EUR millions

Attributable to the Group

-7.7-11.3

-0.7 -1.2

16.512.8

10

110

9299

2001 2002 2003

Shareholders’ equityNet bank borrowings

73

8984

2001 2002 2003

Shareholders’ equity

Bank borrowings

Financial performance :Group liabilities

151%

104%

117%

In EUR millions

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DYNACTION Business Strategy

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Group Business Strategy A pro-active posture to face the downturn

Focus exclusively on fine chemicals (disposing of CMD)

Expand partnership arrangements (Aventis)

Seek new markets (USA)

Contain cost (workforce reduced by 99 employees in 2003) and optimise investments

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Fine and Speciality Chemicals

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Fine and Speciality Chemicals

The businesses of PCAS

Fine chemicals- Molecule fabrication- High technological content- Small and medium-scale production- High-margin products – selling at over EUR 30/kg- Diversified customer base

Speciality chemicals- Broader concept than fine chemicals- Molecules and products- Performance products- Product and technology orientation, versus customer

orientation

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PCAS corporate profile

Fine chemicals (and « fine » speciality chemicals)

Very broad scope international activity

Customers who are leaders in their markets, and with solid footing

High R & D factor (6 to 8 % of turnover/p.a.)

Very flexible, high-quality productive assets

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PCAS

Quality industrial plant

11 specialised production units

4 cGMP sites (with VLG)

3 sites approved by the FDA

750 cubic meters of reactors, 350 of which under cGMP

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Flexible and multi-functional industrial

capacity

Medium-size plants in low-population areas

Certain plant specialities tailored to customers business :

- 3 cGMP plants inspected by FDA for pharmaceuticals manufacturing

- 1 low metal plant for electronics

- 1 plan specialised in olfaction Other entirely multi-functional for intermediate substances

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PCAS

Significant events 2003 - 2004

Economic difficulties in 2003 for pharmaceutical synthesis due to :

- Penury of authorisations for market introductions (especially in the U.S.)

- More stringent health spending by public authorities

- De-stocking by certain pharmaceutical laboratories

- The dollar’s weakness

Continuing recovery in electronics and photo-chemicals, begum during the second half of 2003

Disposal in February 2004 of the analytical services activity

Completion of a major medium-term co-operation agreement with Aventis

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PCAS

Operational organisation

Pharmaceutical Synthesis and Formulation

Aroma Chemicals - Cosmetics

Photochemistry – New Technologies

Fine Inorganic

Chemistry

Industrial Speciality Chemicals

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Pharmaceutical Synthesis and

Formulation

Customers :Pharmaceuticals industryFine chemicals

Products :Advanced intermediatesActive ingredients

Clinical batchesFormulations

Group sales breakdown

Pharmaceutical synthesis41 %

Pharmaceuticals

57 %

Pharmaceutical formulation16 %

Others43 %

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Main customers

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Aroma chemicals – Cosmetics

Customers :Users of perfume productsDetergent manufacturers

Cosmetics industry

Products : Fragrance molecules Active cosmetics

ingredients

Group sales breakdown

Aroma cosmetics12 %

Others88 %

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Main customers

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Photochemistry

New Technologies

Customers : Electronics

Graphic arts New technologies

Photography

Products :Organometallics

Photosensitive molecules and resinsSynthesis intermediates

Group sales breakdown

Photochemistry – New technologies

11 %

Others89 %

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Main customers

KIWO

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Industrial speciality chemicals

Customers : Petroleum industry

Industrial lubricant manufacturers Anticorrosion specialists

Products : Additives Technical fluids Lubricants compatibles with food

contact

Group sales breakdown

Industrial speciality chemicals 10 %

Others90 %

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Main customers

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Fine Inorganic Chemistry

Group sales breakdown

Fine inorganic chemistry 7 %

Others93 %

Customers : Electrical industry Electronics industry Pharmaceuticals industry

Products :Metal oxides

(electroceramics and varistance)

Metallic nitrates Pharmaceutical salts (bismuth – magnesium)

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Main customers

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PCAS – Profit and Loss Account

In EUR millions

2003 2002Turnover 190.6 210.1

Gross margin 128.3 142.3

% of turnover 67.3 % 67.7 %

Depreciation and provisions 17.9 15.6

Operating profit 5.3 18.4

Net financial result -4.2 -4.0

Net income before goodwill amortisation

0.9 9.5

Net income excluding minority interests

-0.8 6.8

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PCAS – Liabilities

2003 2002

Consolidated shareholders’ equity 60.5 63.9

Current account (quasi equity) 15.2 15.2

Total shareholders’ equity 75.7 79.1

Financial debt, excluding current account 73.7 68.0

Debt to equity ratio 97 % 86 %

In EUR millions

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CMD Engrenages et Réducteurs

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CMD – Engrenages et réducteurs

A clear business strategy

CMD Engrenages et réducteurs : one of the world leaders in high-torque power transmission units for heavy industry

Its business : to design, manufacture and install high-torque, low-speed systems

Five major target markets : - cement and mining - metallurgy - energy - sugar - rubberWorld-wide presence

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CMD – Significant events

Encouraging results

2003 turnover was 7 % greater than it was in 2002

Operating income expanded by 44 % and net income doubled compared with the previous year’s figure

CMD’s enjoys a healthy balance sheet structure, with a debt to equity ratio of 30 %

The outlook for 2004 is in with 2003, despite a foundry closing

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CMD – Profit and Loss Account

In EUR millions 2003 2002Turnover 65,9 61,6Gross margin 36,6 35,2

% of turnover. 56 % 57 %Depreciation and provisions 3,7 3,1Operating profit 3,2 2,4Net financial result -0,5 -0,4Net income attributable to the Group 2,3 1,1

And increasingly profitable enterprise

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CMD – Liabilities

2003 2002

Shareholders’ equity 22,3 20,7

Financial debt 6,7 8,3

Debt to equity ratio 30 % 40 %

In EUR millions

A healthy balance sheet

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DYNACTION financial performance

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Financial performance

Profit and Loss Account

In EUR millions 2003 2002

Turnover 256.5 271.9

Gross margin 151.3 161.7

% of turnover 59.0% 59.5 %

Operating expenses 144.5 143.0

Operating profit 6.8 18.7

% of turnover 2.7 % 6.9 %

Net financial result -5.9 -4.7

Extraordinary items 1.2 -8.1

Net income -0.7 16.5

Of which attributable to the Group -1.2 12.8

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Financial performance

Liabilities trend

In EUR millions

Consolidated Dynaction SA

2003 2002 2003 2002

Shareholders’ equity 84.2 88.5 58.7 61.9

Cash and cash equivalents

12.2 25.7 2.9 10.1

Bank borrowings 111.0 117.6 19.5 25.4

Net bank borrowings 98.8 91.9 16.6 15.3

Debt to equity ratio 117 % 104 % 28 % 25 %

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Share Ownership

and Market Capitalisation

Public47 %

Union Etudes et Investissements

5 %

Treasury stock9%

Adroit Private Equity AG

16 %

C.Moretti15 %

Anblan SA8 %

7,5%

Number of shares : 3,357,276

Market capitalisation EUR 65 millionsShareholders’ equity EUR 84 millions

Shareholder structure at 30 May 2004

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Business Strategy and Outlook

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Business Strategy and Outlook

At the Group level

Projected merger with PCAS

Other activities

Anticipated disposal of CMD

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Business Strategy and Outlook

Short-term challenges :• Obstacles remain for certain products (rebates withheld)• Some major players are still very cautious

Yet :• Restructuring of major laboratories underway, full of promise

for the future• Agreement signed with Aventis securing the medium term• Establishment of a U.S. operation with promise of future

revenues• Improved Group R & D efficiency• Continued cost containment and investment optimisation

Pharmaceutical activities

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Business Strategy and Outlook

• Despite the dollar’s weakness, second-half 2003 recovery is holding up in 2004

• Projects underway suggest a growth upturn in 2005

• Promising development of acrolein chemistry, proficiency in which is confirmed (raw material used in the synthesis of products for aroma chemicals, pharmaceuticals and the graphic arts, whose handling requires special safety equipment)

Non-pharmaceutical activities

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Strengths

Sound fundamentals

• Promising market fundamentals :

- an ageing population and growing health needs - increasingly complex molecules - upswing in outsourcing - bio-tech companies and start-ups provide a growth relay for

the future - inevitable development of generic and super generic products• World renowned, state of the art technologies• A high-quality Regulatory Affairs department• Customers who are market leaders, and on solid footing• Flexible and high-performance production assets

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