Coolingzone.com - Flomerics Sells Electromagnetics Business to CST GmbH

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december 2007

flomerics group plc (“flomerics” or “the company”), the global supplier of simulation software to the engineering and electronics industries, is pleased to announce that it has divested its electromagnetics line of business (“the em business”), in order to increase its focus on areas where the company has much better opportunities for growth. the em business is being sold to computer simulation technology gmbh (“cst”) with effect from 1 january 2008 for a cash consideration of �1.6 million, subject to the financial results of the em business for the year ended 31 december 2007 and other normal terms and conditions.

since entering the electromagnetics simulation market in 1999, flomerics has built 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 the directors have concluded that it would be difficult for flomerics on its own to achieve a strong competitive position in this field. the sale of the em business to cst, a company that specialises in electromagnetics simulation, signals the beginning of a strategic relationship. customers will be able to benefit from using a combination of world-leading products from the two companies.

following the sale of the em business, flomerics will have a greater focus on fluid flow simulation. the directors believe this will enable it to maintain a strong competitive position in the area of electronics cooling, where the company is world leader, and to take better advantage of the efd products acquired through nika, which are applicable to wider applications of fluid flow simulation. sales of the efd product range have been growing strongly and there is the opportunity for them to make a significant contribution to the future of the business. the proceeds of the disposal will be used to enhance the company’s position for future growth in our core business areas.

in the six months ended 30 june 2007, the em business contributed �0.9 million to turnover and approximately �0.1 million to profit before tax (pre allocation of overhead). as at 30 june 2007 the company had an intangible asset of �0.2 million relating to the em business and a deferred revenue credit of approximately �0.4 million. the company will pay to cst an amount of �0.25 million to fulfill its maintenance obligations relating to the deferred revenue credit. it is expected that the divestiture will lead to some reduction in earnings per share in the short term until the benefits of the greater focus are realised. 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 electronics cooling business will benefit our customers and investors alike. at the same time, we are delighted to have found a partner in cst with a commitment to the continuation of providing the best tools in the business for electromagnetics simulation and i am confident that our customers will see significant benefits from 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 technology follows cst’s strategy of providing the most complete technological offering for the high frequency em market. we will ensure a high level of continuity for all users of the microstripes and flo/emc products and are looking forward work closely with all customers.”

for further information please contact:

gary carter, flomerics group plc: 020 8487 3000
christian taylor-wilkinson/charlie geller, conduit pr: 020 7429 6666
andrew edwards, oriel securities limited (nominated adviser): 020 7710 7600

about flomerics
flomerics (www.flomerics.com) is a world-leading developer of engineering simulation software and services for analysis of fluid flow, heat transfer. flomerics' business model is drastically different from traditional analysis because its software is designed to be embedded deeply into the design process and used by mainstream design engineers, not just by analysis specialists.

about cst
cst (www.cst.com) develops and markets software for the simulation of electromagnetic fields in all frequency bands. its success is based on the implementation 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 such as ibm, intel, mitsubishi, samsung, and siemens. with 130 employees worldwide and a network of qualified distributors, over 170 people are dedicated to the development and support of its em products in more than 30 countries.

Sharon Shepard | January 2008