Flowtech Fluid. Regulatory News (FLO)

28 May 2008 14:11



FLOMERICS GROUP PLC

Posting of Defence Document

Yesterday Flomerics Group PLC posted its defence document to its shareholders in relation to the unsolicited approach by Mentor Graphics. The following is extracted from the Chairman's statement, contained in the Defence document: 

"As you know, on 9th May 2008, the Mentor Board announced an unsolicited Offer for the entire issued share capital of Flomerics. Flomerics Shareholders should now have received an Offer Document from Mentor, dated 17th May 2008, which sets out the formal terms and conditions of the Offer. 

The Flomerics Board stated on 9th May 2008, and continues to believe, that this unsolicited Offer does not reflect the true value of your Flomerics Shares and recommends that shareholders take no action.

This decision was based on sound knowledge and information about Flomerics: - 

We have an experienced management team which has returned shareholder value year on year by growing the business: 

Since 2004 we have achieved revenue growth year on year from £10.2million to £16.3million in 2007;

Total revenue for the Flomerics Group in 2007 increased by over 14% from 2006

We have implemented an acquisition strategy to complement our organic growth, most recently with NIKA, which has expanded our product portfolio and customer base

Our focused strategy of investing in people and technology in 2006/7 has started to pay back:

We have just published our trading update for the first quarter of 2008 showing Adjusted Revenue up approximately 42% from Q1 2007 and Adjusted Profits up approximately £1.1million from the corresponding quarter of 2007*

Whilst investing in our focused strategy we have exercised appropriate financial controls to ensure balance sheet strength:

We have grown the business' cash balance by approximately £3million since the end of December 2007 to approximately £5.9million 

Flomerics is a market leader and international brand in target growth markets:

Flomerics commands a worldwide blue chip customer base in over 2,500 sites and approximately 7,000 users

The computer aided engineering Industry is expected to grow at a compounded annual growth rate of 13% through 2009 

The world electronic thermal management software market is expected to grow by 10% per year over the next 5 years 

The Company's performance in the first quarter of 2008 substantiates the fact that the management team has undertaken a focused strategy of investment in people and technologies, the benefits of which are now coming to fruition. This performance has been achieved on the back of the hard work and dedication of our employees, who remain committed to adding shareholder value through identifying opportunities and continuing to build a globally recognised successful market leader. We would like to thank them and, as key stakeholders, would like to assure them that we will continue to act in their best interests.

We, the Flomerics Board, are making determined efforts to ensure that you can realise the true value and potential of your investment.

The Flomerics Board, which has been so advised by Jefferies, believes that the Offer is wholly inadequate and therefore recommends you to reject it and take no action in relation to the Offer".

* These revenues and profits have been reported by BDO Stoy Hayward and Jefferies International Limited in accordance with the Takeover Code. Copies of the reports are included in the Defence Document posted to Flomerics shareholders on 27 May 2008. Q1 figures are reported as at the end of 31st March. Adjusted Profit is calculated as profit from continuing operations and before tax, amortisation of intangible assets (excluding software and development costs) and share based payments. Adjusted Revenue excludes revenues from the electromagnetics business disposed of on 31st January 2008. Revenue figures for 2004 and 2005 are prepared under UK GAAP and 2006 and 2007 are prepared under IFRS. None of the IFRS adjustments have had an impact on revenue.

-ends-

Enquiries:

Flomerics Group PLC:

Gary Carter, Chief Executive 020 8487 3000

Keith Butcher, Finance Director

Jefferies International Ltd  020 7029 8000

Andres Pieczanski

Sarah McNicholas

Oriel Securities Limited   020 7710 7600

Andrew Edwards

Michael Shaw

Citigate Dewe Rogerson

Ginny Pulbrook 020 7638 9571

Seb Hoyle