20th Dec 2007 07:02
Flomerics Group PLC20 December 2007 Embargoed until 7am 20 December 2007 Flomerics Group PLC Divestment Flomerics Group PLC ("Flomerics" or "the Company"), the global supplier ofsimulation software to the engineering and electronics industries, is pleased toannounce that it is divesting its electromagnetics line of business ("the EMBusiness"), in order to increase its focus on areas where the Company has muchbetter opportunities for growth. The EM Business is being sold to ComputerSimulation Technology GmbH ("CST") with effect from 1 January 2008 for a cashconsideration of £1.6 million, subject to the financial results of the EMBusiness for the year ended 31 December 2007 and other normal terms andconditions. Since entering the electromagnetics simulation market in 1999, Flomerics hasbuilt up the usage of its MicroStripes and FLO/EMC products around the world.However, the Company still has only a small share of the market and thedirectors have concluded that it would be difficult for Flomerics on its own toachieve a strong competitive position in this field. The sale of the EM Businessto CST, a company that specialises in electromagnetics simulation, signals thebeginning of a strategic relationship. Customers will be able to benefit fromusing a combination of world-leading products from the two companies. Following the sale of the EM Business, Flomerics will have a greater focus onfluid flow simulation. The directors believe this will enable it to maintain astrong competitive position in the area of electronics cooling, where theCompany is world leader, and to take better advantage of the EFD productsacquired through Nika, which are applicable to wider applications of fluid flowsimulation. Sales of the EFD product range have been growing strongly and thereis the opportunity for them to make a significant contribution to the future ofthe business. The proceeds of the disposal will be used to enhance the Company'sposition for future growth in our core business areas. In the six months ended 30 June 2007, the EM Business contributed £0.9 millionto turnover and approximately £0.1 million to profit before tax (pre allocationof overhead). As at 30 June 2007 the Company had an intangible asset of £0.2million relating to the EM business and a deferred revenue credit ofapproximately £0.4 million. The Company will pay to CST an amount of £0.25million to fulfill its maintenance obligations relating to the deferred revenuecredit. It is expected that the divestiture will lead to some reduction inearnings per share in the short term until the benefits of the greater focus arerealised. The directors plan to issue a trading statement in early January 2008,which will give guidance on the results for 2007 and the prospects for 2008. Commenting on the announcement, Gary Carter, Chief Executive of Flomerics, said: "I believe that the increased focus on the fluid flow simulation and electronicscooling business will benefit our customers and investors alike. At the sametime, we are delighted to have found a partner in CST with a commitment to thecontinuation of providing the best tools in the business for electromagneticssimulation and I am confident that our customers will see significant benefitsfrom the focus they have on this industry." Commenting on the announcement, Bernhard Wagner, Managing Director of CST said: "The acquisition of the Flomerics EM business line and its TLM technologyfollows CST's strategy of providing the most complete technological offering forthe high frequency EM market. We will ensure a high level of continuity for allusers of the MicroStripes and FLO/EMC products and are looking forward workclosely with all customers." For further information please contact: Gary Carter 020 8487 3000 Flomerics Group PLC Christian Taylor-Wilkinson/Charlie Geller 020 7429 6666 Conduit PR Andrew Edwards 020 7710 7600 Oriel Securities Limited (Nominated Adviser) About Flomerics Flomerics (www.flomerics.com) is a world-leading developer of engineeringsimulation software and services for analysis of fluid flow, heat transfer.Flomerics' business model is drastically different from traditional analysisbecause its software is designed to be embedded deeply into the design processand used by mainstream design engineers, not just by analysis specialists. About CST CST (www.cst.com) develops and markets software for the simulation ofelectromagnetic fields in all frequency bands. Its success is based on theimplementation of unique, leading edge technology in a user-friendly interface.CST's customers operate in industries as diverse as Telecommunications, Defence,Automotive, Electronics, and Medical Equipment, and include market leaders suchas IBM, Intel, Mitsubishi, Samsung, and Siemens. With 130 employees worldwideand a network of qualified distributors, over 170 people are dedicated to thedevelopment and support of its EM products in more than 30 countries. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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