ANTEOTECH LTD — AGM Information 2015

Nov 8, 2015

9[th] November, 2015

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2015 Annual General Meeting - Chairman’s Address

Before moving on to the resolutions, I would like to briefly address you regarding the opportunity we have before us at Anteo. Earlier in the year, we announced that we would be seeking to grow the business under a strategy which consisted of five core pillars. In his presentation, Geoff will cover this topic in more detail, however the piece that I will focus on is the fifth pillar, which relates to the acquisition of synergistic assets.

Your Board has been canvassing M&A opportunities for the past 24 months and about a year ago, via our relationship with Ferghana Partners, we came across DIAsource ImmunoAssays SA. DIAsource is a Belgian specialty diagnostics company.

Having reviewed over 30 potential acquisitions, this one stood out. There were lots of things to like about DIAsource, and I’d like to run you through a few of them now:

DIAsource has been operating in Europe since the early 1970’s. It has steadily been increasing its global reach, and at this point in time, has sales in 75 countries.

Execution risk with this transaction was considered to be minimal as we saw that the company would be able operate on a business as usual basis, with one exception. Immediately we saw the opportunity to integrate Mix&Go into DIAsource’s products.

We had been searching for manufacturers around the world. DIAsource’s manufacturing facility was operating at 60% capacity, therefore there was opportunity for Anteo to manufacture Mix&Go utilising the excess capacity. The DIAsource manufacturing facility is fully IVD certified, meaning that in-vitro diagnostics can be produced in this facility at scale. For Anteo, this would mean that we could access margin in the manufacturing process that we expected to share with third party manufacturers. Secondly, and as importantly, IVD customers we are in negotiation with could be confident in our ability to supply a quality product at scale, enabling escalated earnings.

The DIAsource product range was identified as being of great strategic interest to Anteo. Geoff will step through the DIAsource product range with you shortly, but there are two points that I will highlight here. We believe that penetration with the current DIAsource RIA – or radioimmunoassay product range – has the ability to increase, while several tier 1 diagnostic providers who had previously been selling RIA products retreat from this part of the market. This is a trend we’ve been witnessing, and it leaves the door open for smaller players – like the combined DIAsource / Anteo group – to capitalise upon this opportunity and further grow the company’s healthy RIA revenues.

Similarly, the Vitamin D range is of great appeal to our business. As the demand for Vitamin D driven products increases in popularity, revenue prospects continue to grow in this part of the market. These market factors, combined with our in-house expertise in Vitamin D development, make this range particularly appealing and an ongoing growth area for the DIAsource business.

Of course, with acquisitions come people and it’s often a difficult process of working through how teams must be restructured. In this case, the people are a core part of the value proposition behind DIAsource. The Chairman, Rolf Sickmann will join the Anteo Board, and current CEO & Founder, Jozef (Jef) Vangenechten, will be continuing as CEO of the DIAsource company and we will leave the head count as is.

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With deals like this, it is important to look at the financial metrics of the business under review. DIAsource held great appeal due to the steady upward trends shown in its financial reporting, and underlying profit metrics. Geoff will talk through the specifics of revenue and earnings growth, but with EBITDA margins of 20%, I’m sure you’ll agree it’s an attractive looking proposition, and one that is set to grow even before the integration of Mix&Go into the portfolio.

Which brings me to an important point. Following a robust due diligence exercise, your Board concluded that DIAsource ticked the boxes as a standalone acquisition target. If we were to leave the business to run with a “business as usual” approach, it would be expected to continue achieving its internal revenue targets. However, there was one additional important point of great interest for the Anteo Board, which was the ability for Mix&Go to improve economics of the DIAsource business.

As you know, the use of our Mix&Go nanoglue for the life sciences market has frequently demonstrated excellent results for customers. It enables customers to develop tests and assays with increased performance and efficiency, improved sensitivity and stability, and at reduced costs. In third party testing, we’ve found that Mix&Go when coupled with incumbent testing approaches can reduce the amount of reagent used by up to 90%. With the incorporation of a low-cost ingredient like Mix&Go into existing tests, the impact on the customer is that they can produce a reduced-cost test which operates better, and attracts higher margins.

While the cost reduction is variable depending on the test, if we introduce even a 10% margin improvement across the DIAsource range of over 300 products, we achieve two outcomes: 1) we improve the economics of the already profitable DIAsource business and 2) we deliver almost instant insertion of Mix&Go into new products and markets.

We are focused on completing the transaction. We have been working closely with our advisors to get the right blend of funding to deliver an outcome that is in the best interests of shareholders. We are seeking to finalise these funding arrangements as soon as practicable and will update all shareholders once finalised. I’d like to reiterate though, that your Board is delighted to have found such a strong acquisition target, and one that we have a good cultural connection with.

The Board is confident that the combination of the DIAsource acquisition and the growing global diagnostics market dynamics work favourably for our existing Anteo business, and make this an exciting time for Anteo and its shareholders.

On behalf of my fellow Directors, I’d like to thank our loyal shareholders for the ongoing support. I believe we’ve laid significant ground-work to deliver profitable and sustainable growth to shareholders and look forward to addressing you with the perspective of a different Anteo in 2016.

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End of Address