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SHAREHOLDERS’MEETINGS JUNE 17, 2004

SHAREHOLDERS’MEETINGS JUNE 17, 2004. Presentation of 2003 results. Summary.  DYNACTION today  Fine and Speciality Chemicals (70 %-owned by Dynaction)  CMD Engrenages et Réducteurs (virtually 100 %-owned by Dynaction)  Dynaction financial performance

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SHAREHOLDERS’MEETINGS JUNE 17, 2004

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  1. SHAREHOLDERS’MEETINGS JUNE 17, 2004 Presentation of 2003 results

  2. 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

  3. DYNACTION today

  4. 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

  5. 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

  6. DYNACTION Growth focus in fine chemicals DYNACTION Group Chairman Christian MORETTI Fine and Speciality Chemicals Other industrial activities PCAS Jean-Paul BOUTELLIER69.72 % CMD E&R René BERNARDI 99.75 % S.B.S St Jean Photochimie CMD Gmbh Expansia P.C.F PCAS Finland Créapharm PCAS - turnover : EUR 191 million, work force : 1.372 CMD - turnover : EUR 66 million, work force : 447 V L G

  7. Financial performance : Turnover 290 272 257 In EUR millions

  8. Financial performance : Operating income 18.7 17.5 In EUR millions 6.8

  9. Financial performance : Consolidated net profit (loss) Consolidated Attributable to the Group In EUR millions 16.5 12.8 -0.7 -1.2 -7.7 -11.3

  10. Net bank borrowings Shareholders’ equity Financial performance :Group liabilities In EUR millions Bank borrowings Shareholders’ equity 151% 117% 104%

  11. DYNACTION Business Strategy

  12. Group Business StrategyA 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

  13. Fine and Speciality Chemicals

  14. 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

  15. 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

  16. PCASQuality 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

  17. 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

  18. 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 Completion of a major medium-term co-operation agreement with Aventis Disposal in February 2004 of the analytical services activity

  19. PCAS Operational organisation  Pharmaceutical Synthesis and Formulation  Aroma Chemicals - Cosmetics  Photochemistry – New Technologies  Industrial Speciality Chemicals  Fine Inorganic Chemistry

  20. Pharmaceutical Synthesis and Formulation Group sales breakdown Pharmaceutical synthesis 41 % • Customers : Pharmaceuticals industry Fine chemicals • Products : Advanced intermediates Active ingredients Clinical batches Formulations Others 43 % Pharmaceuticals 57 % Pharmaceutical formulation 16 %

  21. Main customers

  22. Aroma chemicals – Cosmetics Group sales breakdown • Customers : Users of perfume products Detergent manufacturers Cosmetics industry • Products : Fragrance molecules Active cosmetics ingredients Aroma cosmetics 12 % Others 88 %

  23. Main customers

  24. PhotochemistryNew Technologies Group sales breakdown Photochemistry – New technologies 11 % • Customers : Electronics Graphic arts New technologies Photography • Products : Organometallics Photosensitive molecules and resins Synthesis intermediates Others 89 %

  25. KIWO Main customers

  26. Industrial speciality chemicals Group sales breakdown Industrial speciality chemicals 10 % • Customers: Petroleum industry Industrial lubricant manufacturers Anticorrosion specialists • Products : Additives Technical fluids Lubricants compatibles with food contact Others 90 %

  27. Main customers

  28. Fine Inorganic Chemistry Group sales breakdown • Customers : Electrical industry Electronics industry Pharmaceuticals industry • Products : Metal oxides (electroceramics and varistance) Metallic nitrates Pharmaceutical salts (bismuth – magnesium) Fine inorganic chemistry 7 % Others 93 %

  29. Main customers

  30. PCAS – Profit and Loss Account In EUR millions

  31. PCAS – Liabilities In EUR millions

  32. CMD Engrenages et Réducteurs

  33. CMD – Engrenages et réducteursA 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 - rubber World-wide presence

  34. CMD – Significant eventsEncouraging 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

  35. CMD – Profit and Loss Account And increasingly profitable enterprise In EUR millions

  36. CMD – Liabilities A healthy balance sheet In EUR millions

  37. DYNACTION financial performance

  38. Financial performance Profit and Loss Account

  39. Financial performanceLiabilities trend

  40. Share Ownership and Market Capitalisation Shareholder structure at 30 May 2004 Number of shares : 3,357,276 7,5% Market capitalisation EUR 65 millions Shareholders’ equity EUR 84 millions

  41. Business Strategy and Outlook

  42. Business Strategy and Outlook At the Group level Projected merger with PCAS  Other activities Anticipated disposal of CMD

  43. Business Strategy and Outlook  Pharmaceutical activities 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

  44. Business Strategy and Outlook • Non-pharmaceutical activities • 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)

  45. StrengthsSound 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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