Interim Results

Flomerics Group PLC
27 July 2005


FOR IMMEDIATE RELEASE                                               27 JULY 2005



                                FLOMERICS GROUP PLC
  
                                   Interim Results
                         "Record profit for the half year"

Flomerics Group PLC, supplier of analysis software to the telecommunications,
semiconductor and computer industries and other sectors of the electronics
industries, announces its results for the six months ended 30 June 2005.


Key Points


•    Turnover up 19% at £5.3 million (2004 : £4.4 million) - excluding
     contribution from the MicReD acquisition, turnover up 13% at £5.0 million.


•    Profit before tax and amortisation of goodwill increased to
     £380,000 (2004 : £65,000 loss).


•    Successful acquisition in April 2005 of Microelectronics Research
     and Development Ltd (MicReD) which contributed £0.3 million to turnover and 
     £93K to profit before tax and amortisation of goodwill.


•   Revenue from Europe up by 25%, excluding the contribution from
    MicReD.


•   Sales of the principal thermal analysis product, FLOTHERM, up by
    16% (2004 : down 7%) and sales of FLO/EMC, the companion product for
    electromagnetic analysis, up by 43%.


•   Strong cash position of £3.5 million (2004 : £2.6 million).


Commenting on the results, David Mann, Chairman, said:


"We have been very encouraged by these excellent results for the first half of
2005. The directors believe that the Company is well placed to meet market
expectations for the year, with a better balance between the first and second
half than in previous years.


The management team is committed to maintaining this momentum, and to achieving
ongoing improvements in profit margin. With a strong balance sheet, the company
is well positioned to take advantage of business expansion opportunities as they
arise."



Enquiries:


Flomerics                                            020 8487 3000
David Tatchell, Chief Executive
Gary Carter, Chief Operating Officer
Chris Ogle, Finance Director


Buchanan Communications                              020 7466 5000
Nicola Cronk / Frances Adigwe

Chairman's Statement


Introduction


I am delighted to report that Flomerics' results for the first half of 2005
demonstrate both strong progress in our business and continuing recovery in our
markets. Turnover (including the recently acquired business, MicReD) is up 19%
on the same period last year - on a like-for-like basis (without the
contribution from MicReD) turnover growth is 13%. Coupled with continuing
careful management of the cost base, the strong turnover figures enabled us to
achieve a record profit for the half year.


Results


Turnover was £5.3 million (2004: £4.4 million). Excluding the contribution from
MicReD, turnover was £5.0 million. Recurring revenues accounted for 51% (2004:
52%) of total turnover. Administrative costs were up by 6%, resulting in a
profit before amortisation of goodwill and taxation of £380,000 (2004: £65,000
loss).



Our cash position continues to strengthen, to £3.5m, compared with £2.6 million
a year ago.



In order to compare like-with-like, the comparisons made below with the same
period in the prior year are all at constant rates of exchange. For the same
reason, the figures exclude contributions from MicReD.



All regions achieved growth in turnover - Europe 25%, the US 12% and Asia
Pacific 4%. In Europe, we benefited from a large sale, which enabled our Italian
office to triple its sales over 2004. In Asia Pacific we are in the process of
changing our distribution arrangements in Japan in order to strengthen our
presence in this key market.



Looking at sales by product, FLOTHERM sales were up by 16% (2004: down 7%),
reflecting the continuing strength of this market leading, thermal-analysis
product in the recovering electronics market.



The new thermal product, FLO/PCB, released last year (for thermal analysis at
printed circuit board level) is building momentum. The product is becoming
established alongside FLOTHERM at a number of major customers, and is beginning
to make a good contribution to sales.


FLO/EMC (the companion product to FLOTHERM, which analyses electromagnetic
emissions from electronics equipment) achieved continuing good growth, of 43%.



MicReD



In April we announced the acquisition in Hungary of Microelectronics Research
and Development Limited (MicReD). MicReD's main product (the T3Ster) is
instrumentation used for the thermal characterization of electronic chip
packages.



In the period to end June, MicReD has been successful in closing sales in Korea
and in Europe, contributing a total of £264,000 to first half turnover. We see
good opportunities in North America, and consequently we are recruiting to
provide dedicated resources in that market.



Dividend


As in previous years no interim dividend will be paid.


Outlook


We have been very encouraged by these excellent results for the first half of
2005. The directors believe that the Company is well placed to meet market
expectations for the year, with a better balance between the first and second
half than in previous years.



Flomerics' strategy has been to address the opportunities associated with the
recovery in the electronics industries with an improved and expanded set of
market leading products and a global presence. The results for the first half of
2005 begin to demonstrate the success of this strategy.


The management team is committed to maintaining this momentum, and to achieving
ongoing improvements in profit margin. With a strong balance sheet, the company
is well positioned to take advantage of business expansion opportunities as they
arise.



David Mann
Chairman
Flomerics Group plc
27 July 2005




CONSOLIDATED PROFIT AND LOSS ACCOUNT
Interim results for the six months to 30 June 2005
                                           30-Jun-05      30-Jun-05      30-Jun-05    30/06/2004*      31-Dec-04
                                         (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)      (Audited)
                                          Continuing    Acquisition          Group
                                          Activities
                                               £'000          £'000          £'000          £'000          £'000

Turnover                                       4,992            264          5,256          4,430         10,241

Cost of sales                                   (91)          (147)          (238)           (74)          (201)

Gross Profit                                   4,901            117          5,018          4,356         10,040

Administrative expenses                      (4,702)           (24)        (4,726)        (4,452)        (9,367)

Amortisation of goodwill                        (41)           (18)           (59)           (41)           (82)

Other Operating Income                            35              -             35             41             75

Operating Profit / (loss)                        193             75            268           (96)            666

Interest receivable and other income              72              -             72             30             71

Interest payable and similar charges            (19)              -           (19)           (40)           (66)

Profit / (loss) on Ordinary                      246             75            321          (106)            671
Activities Before Taxation

Tax on profit on ordinary activities            (51)           (15)           (66)              -          (102)

Profit / (loss) on Ordinary                      195             60            255          (106)            569
Activities After Taxation

Dividends                                          -              -              -              -          (161)

Transferred to Reserves                          195             60            255          (106)            408

Earnings / (loss) per share                                                  1.73p        (0.72p)          3.88p

Diluted earnings / (loss) per share                                          1.66p        (0.71p)          3.85p

* As restated - see Note 7.



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
                                                                           30-Jun-05      30-Jun-04    31-Dec-04
                                                                         (Unaudited)    (Unaudited)    (Audited)
                                                                               £'000          £'000        £'000

Profit / (loss) for the Period                                                   255          (106)          569

Unrealised gain / (loss) on translation of foreign currency                       31           (59)        (105)
investments

Total Recognised gain / (loss)                                                   286          (165)          464



CONSOLIDATED BALANCE SHEET                                                 30-Jun-05      30-Jun-04    31-Dec-04
At 30 June 2005                                                          (Unaudited)    (Unaudited)    (Audited)
                                                                               £'000          £'000        £'000
Fixed Assets
Intangible assets                                                              1,448            411          376
Tangible assets                                                                1,756          1,648        1,658
                                                                               3,204          2,059        2,034

Current Assets
Stock                                                                             10              -            -
Debtors                                                                        3,338          3,232        3,891
Cash at bank and in hand                                                       3,504          2,571        3,314
                                                                               6,852          5,803        7,205


Creditors: amounts falling due within
one year                                                                     (3,582)        (2,666)      (3,605)

Net Current Assets                                                             3,270          3,137        3,600

Total Assets Less Current Liabilities                                          6,474          5,196        5,634

Creditors: amounts falling due after
one year                                                                       (617)          (476)        (446)


Net Assets                                                                     5,857          4,720        5,188


Capital and Reserves
Called up share capital                                                          148            146          146
Shares to be issued account                                                      249              -            -
Share premium account                                                          1,734          1,602        1,602
Merger reserve                                                                   759            759          759
Profit and loss account                                                        2,967          2,213        2,681

Equity Shareholders' Funds                                                     5,857          4,720        5,188





CONSOLIDATED CASH FLOW STATEMENT                                           30-Jun-05    30/06/2004*    31-Dec-04
for the six months to 30 June 2005                                       (Unaudited)    (Unaudited)    (Audited)
                                                                               £'000          £'000        £'000
Operating Activities
Operating profit / (loss)                                                        268           (96)          666
Depreciation and amortisation charges                                            211            216          395
Exchange differences                                                              22           (59)         (72)
Decrease in stock                                                                 43              -            -
Decrease / (increase) in debtors                                                 584            603        (375)
(Decrease) / increase  in creditors                                            (170)          (249)          513
Net Cash Inflow From Operating Activities                                        958            415        1,127


Net cashflow from returns on investments and servicing
of finance                                                                        53           (10)            5
Taxation paid / (received)                                                      (23)            (6)          227
Net cashflow from capital expenditure                                          (247)          (142)        (302)
Net cash paid for acquisition                                                  (360)              -            -
Equity Dividend paid                                                           (161)          (146)        (146)
Net Cashflow Before Financing                                                    220            111          911

Net Cashflow From Financing                                                     (30)           (30)         (60)


Increase in Cash in the Period                                                   190             81          851


* As restated - see Note 7.


RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
                                                                        30-Jun-05       30-Jun-04     31-Dec-04
                                                                      (Unaudited)     (Unaudited)     (Audited)
                                                                            £'000           £'000         £'000

Increase in Cash in the Period                                                190              81           851

Cash outflow from decrease in debt and lease financing                         30              30            60

Foreign exchange differences                                                    -               -          (27)

Movement in Net Funds in the Period                                           220             111           884

Net Funds at Beginning of Period                                            2,805           1,921         1,921

Net Funds at End of Period                                                  3,025           2,032         2,805


NOTES TO THE INTERIM REPORT



1.   ACCOUNTING  POLICIES

The financial information contained in this Interim Report does not constitute
statutory accounts. The interim results, which have not been audited, have been
prepared using accounting policies consistent with those used in the preparation
of the Annual Report and Accounts for the year ended 31 December 2004. Those
accounts have been filed with the Registrar of Companies and received an
unqualified audit report.



2.   TAXATION

Taxation for the six months to 30 June 2005 is based on the effective rate of
taxation that is estimated to apply to the year ending 31 December 2005.



3.   EARNINGS PER SHARE

Basic earnings / (loss) per share is calculated by dividing the profit / (loss)
on ordinary activities after taxation in the period by the weighted average
number of shares in issue in the period as follows:


                                                                 Unaudited              Unaudited
                                                                 6 months ended         6 months ended
                                                                 30 June 2005           30 June 2004

Profit / (loss) for the period (£'000)                                      255                (106)
Weighted average number of shares in issue ('000)                        14,717               14,647
Earnings / (Loss) per share (p)                                            1.73               (0.72)
Diluted weighted average number of shares ('000)                         15,356               14,840
Diluted earnings (loss) per share (p)                                      1.66               (0.71)



The diluted earnings per share calculation is based on a fair value of 68p per
share (30 June 2004: 74p).



4.   SEGMENTAL INFORMATION

The group's turnover for each geographic area of operation is:
                                                     30 Jun 05             30 Jun 04             31 Dec 04

                                                         £'000                 £'000                 £'000
United States of America                                 2,032                 1,893                 4,291
Europe                                                   2,062                 1,550                 3,899
Asia Pacific                                             1,162                   987                 2,051
                                                         5,256                 4,430                10,241


Segmental information on profit before tax and net assets is disclosed in the
Annual Report.



5.    ANALYSIS OF NET FUNDS
                                                      30 Jun 05             30 Jun 04             31 Dec 04

                                                          £'000                 £'000                 £'000
Cash in hand and at bank                                  3,504                 2,571                 3,314
Debt due after one year                                   (416)                 (476)                 (446)
Debt due within one year                                   (63)                  (63)                  (63)
Total                                                     3,025                 2,032                 2,805

Debt represents a mortgage that was taken out on a property acquired in 2001.



6.   ACQUISITION

On 28 April 2005, the Group acquired the entire share capital of
Microelectronics Research and Development Limited ("MicReD") for a maximum total
consideration (before expenses) of approximately €2.1 million (approximately
£1.4 million). The maximum consideration is only payable on an over-target
performance. For an "on target" performance the total consideration will be
approximately £1.2 million. This figure has been assumed in the provisional
calculation of the goodwill shown below:


                                                                              £'000s
Fair value of net assets acquired:                                               178

Goodwill                                                                       1,131
                                                                               1,309

Satisfied by:
Shares Issued                                                                    134
Shares to be Issued                                                               33
Cash                                                                             445
Acquisition Costs                                                                 79
Deferred Consideration:
Cash less than 1 year                                                            201
Cash more than 1 year                                                            201
Shares                                                                           216
                                                                               1,309


7.   PRIOR YEAR RECLASSIFICATION

As noted in last year's Annual Report, in previous years rental income was
classified within other interest receivable and other income. The directors
believe it is more accurate for this to be shown in other operating income. The
effect of this is to increase operating profit by £35,000 (and to reduce the
operating loss in 2004 by £41,000). There is no impact on the retained profits.








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