Flomerics Group PLC - Acquisition of Microelectronics Research & Development Limited

Flomerics Group plc

Acquisition of Microelectronics Research & Development Limited

Flomerics Group plc (“Flomerics” or “the Company”), supplier of virtual prototyping analysis software for the electronics industries announces the acquisition of the entire share capital of Microelectronics Research & Development Limited (“MicReD”) for a maximum total consideration of approximately €2.1 million. Initial consideration is approximately €898,000, of which €653,000 is payable in cash, the remaining €245,000 is satisfied by the issue of 250,663 Ordinary Shares of 1 pence each in the Company (“Ordinary Shares”), 80% now and 20% after 1 year. The deferred consideration is dependent on the financial performance of MicReD in 2005 and 2006.

MicReD is a Hungarian based company and was formed in 1997 as a spin-off from Budapest University of Technology. MicReD employs 13 people all located in Budapest and is led by the Chief Executive Officer, Marta Rencz. The management team of MicReD will all remain with the business. Its primary product is the T3Ster (pronounced Trister) – instrumentation and software used for measuring the thermal performance of chip packages. Existing customers include Philips, Infineon, ST Microelectronics, Intel, Samsung and IBM. In the year to 31 December 2004 MicReD had audited income of approximately €538,000 and made a profit before tax of €288,000. In the previous year the unaudited turnover was approximately €123,000. The net assets at 31 December 2004 were €234,000.

The semiconductor companies that make up the main target market for the T3Ster represent a significant, and strategically important, sector of the Flomerics’ customer base. The use of the T3Ster enables them to evaluate and improve the thermal performance of chip-package designs – often alongside the complementary use of Flomerics’ thermal analysis software. Just as the need for Flomerics’ products is driven by the increasing miniaturisation and thermal densities of electronics devices – so exactly the same trends are driving the need for the T3Ster.

The acquisition is thus strongly synergistic with Flomerics’ current core business, and represents a significant step for Flomerics towards providing a complete thermal-design solution for its customers.

In order to satisfy part of the initial consideration application has been made for 200,530 new ordinary shares of 1p each to be admitted to trading on AIM with effect from 5 May 2005. Following admission the issued share capital of the Company will be 14,847,110 Ordinary Shares of 1p each.

Commenting on the transaction David Tatchell, Flomerics’ Chief Executive said “This is an important first step in delivering on our strategy of growing the Company by acquisition in a way that complements our organic growth plans. I am delighted to welcome into the Group the world-leading expertise that the MicReD team bring. The T3Ster has many applications in markets where Flomerics is well established, and we believe therefore that there is great potential to expand the business.”

Marta Rencz said “We are very excited to be a part of the Flomerics group. Flomerics is the acknowledged standard setter in this field and their infrastructure will enable us to maximise the potential of our products.”

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