26 June 2003 - Eurogentec: Results improving and international expansion

Seraing, 26 June 2003 - Today, Eurogentec publishes its annual results for the 2002-2003 financial year, which closed on 31 March 2003:

- Consolidated turnover: EUR 30.6 million (+18%)
- Big rise in cash flow (+28%) and EBITDA (+13%)
- Net profit: EUR 1.0 million (-21%)
- Net profit before extraordinary items: EUR 1.5 million (+21%)
- International expansion picks up speed: acquisition in Germany, joint venture in Singapore and two offices in the United States
- Group management structure strengthened
- Marketing and sales teams further developed
- Cautiously optimistic for 2003-2004 financial year

Eurogentec reported 18% growth in consolidated turnover during the 2002-2003 financial year, which is better than the growth of the international market. Profitability is also improving: cash flow and EBITDA were up 28% and 13% respectively over the course of the year. Net profit is down 21%, due to an exceptional charge; if this is removed, profits climbed 21%. These good results, despite the slowdown in economic growth, are due first and foremost to the quality and uniqueness of Eurogentec's products and services, and its utter reliability in its relationships with customers.

Of Eurogentec's various activities, the 'Biologics' Business Unit experienced the biggest growth in turnover:
+ 63% on the previous year. This Business Unit, which provides research and development and production services for the bio-pharmaceutical industry, saw its production capacity greatly expanded in August 2002 when new facilities were inaugurated at Sart-Tilman. Excellent trading results and rising profitability attest to the resounding success of this investment, and the 'Biologics' Business Unit now accounts for 25% of Eurogentec's turnover.

The 'Genomics' Business Unit, which is devoted to the production of tools for use in gene function studies and manufacturing oligonucleotides (synthetic DNA), achieved 18% growth during the financial year and accounts for 58% of total turnover. The main growth drivers are the development of ever more sophisticated products (Real-Time PCR kits, siRNA, DNA chips), and breaking into new markets (United States, Asia). Eurogentec ranks 6th in the world in this sector.

The 'Proteomics' Business Unit is dedicated to the study of the functions of proteins and the manufacture of peptides and antibodies. This is a very lucrative activity, but growth in this area was thwarted during the financial year by the suspension of a major contract. Nevertheless, the range of 'Proteomics' products harbours great potential for the future. Eurogentec is currently working very hard on research and development in this field, and these efforts should bear fruit from the next financial year.

Lastly, Eurogentec used to have a fourth Business Unit, 'Instrumentation', which was shut down in September 2002 after losing the exclusive distribution contract which justified its existence. This closure, which gave rise to an extraordinary loss of EUR 400,000, had the effect of increasing the company's operating profits overall.

International expansion

The United States is the most important market for research in Genomics and Proteomics, and thus for Eurogentec products. The company successfully completed two major operations during the last financial year: the opening in Philadelphia in May 2002 of a commercial office, Eurogentec North America Inc., and the acquisition of the 'Oligonucleotides' division of Epoch Bioscience in San Diego in May 2003. These two strategic steps enable Eurogentec to produce and market in the States synthetic DNA products of the very highest calibre, with a wide range of applications.

Asia is another vital market. The joint venture Nippon EGT, launched in August 2001 in Toyama, Japan, is developing well. Furthermore, Eurogentec has just announced the conclusion of an agreement with Research Biolabs for the establishment of a joint venture in Singapore called Research Biolabs EGT Pte, in which Eurogentec has a 51% stake. In the long run, this very promising market will potentially open up China to Eurogentec.

Lastly, Eurogentec has greatly strengthened its expertise and range of products in proteomics, thanks to the acquisition of Wita Proteomics AG, renamed Eurogentec Proteomics GmbH. This Berlin-based company specialises in the analysis of proteins using '2D gels', a state-of-the-art technology which will enable yet more improvements to products and customer service.

A strong and independent company

Eurogentec has a solid financial base (it has equity capital of EUR 16.0 million), allowing it to sustain the company's growth both through acquisitions and by agreeing the necessary investments in equipment and infrastructure. Besides the new 'Biologics' production unit, Eurogentec has built a new office and laboratory complex to accommodate all its Belgian activities at the Sart-Tilman site.

Since April 2003, the day-to-day management of the company has been taken care of by an Executive Board under the chairmanship of Yves Brigode. This Board consists of the managers of the three Business Units, the regional manager in the United States, the financial director, the human resources manager and Jean-Pierre Delwart, Managing Director.

Outlook

Eurogentec is looking ahead to the next financial year with cautious optimism. Although the weak global economy is slowing down the speed at which companies in the sector can develop, Eurogentec still hopes to achieve double-digit growth in 2003-2004, thanks in particular to the major investments made over the last 2 years. As it has full geographic coverage at present, its priority will be to increase market penetration and improve its understanding of its customers through its reinforced marketing and sales teams.

"We supply a market that has phenomenal growth potential (search for new drugs and treatments, diagnostic tools…)", explains Professor Joseph Martial, Chairman of the Board of Directors. "During the last financial year, we made great strides towards our goal of becoming a global player in innovative research tools for genomics, proteomics and biopharmaceuticals. We are confident that we have all the resources required to continue to grow in volume, profitability and quality."

About Eurogentec

Eurogentec s.a. develops, produces and supplies research and development (R&D) tools and services for the pharmaceutical industry and university laboratories. Formed in 1985 as a spin off from the University of Liège, the company set up its headquarters at the Science Park in Sart Tilman (Liège). It has subsidiaries in the United States, France, Germany, England and The Netherlands and a branch in Switzerland. Eurogentec is present in Japan via joint venture Nippon EGT and in Singapore via the joint venture Research Biolabs EGT. In 2001, Eurogentec was crowned Belgian Business of the Year. In June 2002, it was awarded the "Grand Prix Wallonie" for Export - Europe by the Walloon Export Agency (AWEX). The group currently has 300 employees, 32 of whom are doctors of science. Its turnover has grown from EUR 12.3 million in 1998 to EUR 30.6 million in 2002-2003.

For more information, please contact:

EUROGENTEC s.a.
Jean-Pierre Delwart, Managing Director
Isabelle Body, Communication Coordinator
Parc Scientifique du Sart Tilman - 4102 Seraing - Belgium
Tel.: +32 (0)4 372 74 00 - Fax: +32 (0)4 365 16 04
e-mail: j.p.delwart@eurogentec.com - i.body@eurogentec.com