Flomerics Group PLC
Annual Report 2007
INVESTING IN OUR FUTURE
DELIVERING OUR POTENTIAL 02 Financial highlights
03 Chairman’s statement
04 Chief Executive’s review
06 Delivering our potential through exploiting 
market opportunities
08 Delivering our potential through leveraging our 
global brand and international sales presence
10 Electronics Cooling
12 Mechanical Design
14 Business review
16 Board of Directors
17 Corporate governance statement
19 Directors’ remuneration report
21 Directors’ report
23 Statement of Directors’ responsibilities
24 Independent auditors’ report to the shareholders 
of Flomerics Group PLC
25 Consolidated income statement
26 Consolidated statement of changes in equity
27 Consolidated balance sheet
28 Consolidated cash flow statement
29 Notes to the consolidated financial statements
64 Company balance sheet
65 Notes to the Company financial statements
68 Information for shareholders Flomerics Group PLC Annual Report 2007 1
The market addressed by Flomerics’ products continues to expand due to the ever
increasing industrial demands of design and function.
Our products and services enable designers and engineers to predict the flow of liquids
and gases and heat transfer in engineering designs of a diverse nature:
– electronic systems
– valves, pumps and pipes
– buildings including airport terminals, data centres and atriums
– vehicles such as cars, trains and aircraft
– engines
– heating, ventilating and cooling systems including fans and heat exchangers
– marine design
– lighting, including both conventional and LED systems
Within electronics our tools provide great value to our customers by allowing design
engineers to understand and optimise the thermal properties of chips and packages
through innovative software simulation and specialist test equipment.
We continue to drive improvements in software performance and breadth of 
application for the benefit of our customers and to increase shareholder value.
INVESTING IN OUR FUTURE
DELIVERING OUR POTENTIAL FINANCIAL HIGHLIGHTS
+27%
CASH
£3.0m (2007)
£2.3m (2006)
+1 4%
DIVIDEND PER SHARE
1.6p (2007)
1.4p (2006)
TURNOVER BY REGION
1 Asia: £3.67m +35%
2 Europe: £7 .45m +25%
3 US: £5.15m -7%
1
3
2
TURNOVER
£16.3m (2007)
£14.2m (2006)
+1 4%
ADJUSTED PROFIT BEFORE TAX
£1.3m (2007)
£1.5m (2006)
-1 7%
2 Flomerics Group PLC Annual Report 2007 CHAIRMAN’S STATEMENT
During 2007 there was good progress with the strategic
repositioning of Flomerics following the acquisition of NIKA GmbH
(“NIKA”) in July 2006. Flomerics is continuing to maintain a strong
competitive position in its original field, the application of fluid flow
simulation to electronics cooling, where it is a world leader. It now
addresses this specialist market both by its original product,
FLOTHERM, and by the EFD product range acquired from NIKA. At
the same time the Company is taking advantage of EFD to address
much wider applications of fluid flow simulation and hence a much
larger market. The electromagnetics simulation business (“the EM
business”) was disposed of in January 2008 so that Flomerics can
have greater focus on fluid flow simulation.
Good progress was made with integrating the FLOMERICS and
NIKA technologies and increasing the sales team to implement the
new strategy. The Company is still at an early stage in building the
EFD business outside of its original markets, but the strong growth
in sales of the product has demonstrated the significant benefits
that the investments can bring to future periods.
Results
Total revenues for the year ended 31 December 2007 were up by
14% at £16.3m (2006: £14.2m). If revenues from the discontinued
EM business are excluded, revenues were up by 18% to £14.6m
(2006: £12.4m).
Profit before tax, amortisation of intangible assets (excluding
software and R&D capitalisation), goodwill impairment, share-based
payments and exceptionals (“adjusted PBT”) was £1.3m (2006:
£1.5m) reflecting the investments made during the year. There were
no exceptional items in 2007 (2006: £222,000). The unadjusted loss
Flomerics Group PLC Annual Report 2007 3
FLOMERICS IS CONTINUING TO MAINTAIN 
A STRONG COMPETITIVE POSITION IN ITS
ORIGINAL FIELD, THE APPLICATION OF 
FLUID FLOW SIMULATION TO ELECTRONICS
COOLING, WHERE IT IS A WORLD LEADER. 
“TOTAL REVENUES FOR THE YEAR ENDED
31 DECEMBER 2007 WERE UP BY 14% 
AT £16.3M.”
for the year was £1.90m (2006: £0.80m profit) and Basic loss per
share was 8.81p (2006: earnings per share: 4.45p)
Cash generated from operations was £1.9m (2006: £0.9m). 
Cash balances for the Group at 31 December 2007 were £2.97m
(2006: £2.34m). After the year end £1.6m cash was received from
the disposal of the EM Business. As at 31 March 2008 cash 
balances were in excess of £5.5m.
Dividend
The board is pleased with the progress being made and is proposing
that the dividend should be increased by 14% to 1.6p per share
(2006: 1.4p). Subject to approval at the Annual General Meeting,
the dividend will be paid on 3 June 2008 to shareholders on the
register at 9 May 2008.
Regional performance
In Europe and Asia-Pacific there was good revenue growth of 25%
and 35%, respectively, compared to 2006. In the US, revenue fell
slightly as a result of the loss of some key sales staff, but we now
have a full team in place to implement the new strategy there. The
breakdown of turnover by region was: Europe 45.8%, Asia Pacific
21.5% and US 31.7%.
Impairment of intangible assets
The main impact of IFRS on the 2007 accounts was that the
acquisition of NIKA has been restated under IFRS 3 and a value
attributed to the intangible assets acquired (such as customer lists
and technology) with the balance deemed to be goodwill. These
intangible assets have been amortised over an appropriate period
and the residual goodwill arising was subject to an impairment
review. After this review goodwill was written down by £2.22m
resulting in a total charge to the P&L of £3.1m in respect of 
these two items. 
Disposal
On 20 December 2007 the Board announced the disposal of the
Group’s electromagnetics business to CST GmbH for a consideration
of £1.6m. The sale was completed on 31 January 2008 and the
gain on disposal will be recognised in 2008. The proceeds will be
used to enhance the Company’s position for future growth in 
its core business areas.
Outlook
There is the opportunity for sales of the EFD product range to
continue growing strongly and to make an increasingly significant
contribution to the business. Investments in sales and marketing
during 2007 have placed the Company in an excellent position 
to take advantage of the wider market opportunity for the EFD
products whilst maintaining Flomerics’ leading position in the field
of electronics cooling. As a result, the Directors are excited about
the future and confident that the investments will start to deliver 
a significant increase in shareholder value. 
David Mann, Chairman
28 April 2008 CHIEF EXECUTIVE’S REVIEW
“FLOMERICS CELEBRATES ITS 20TH
ANNIVERSARY AS AN INDEPENDENT
COMPANY IN 2008, PLACING IT FIRMLY
INTO A RARE AND ELITE GROUP OF
COMPANIES THAT HAVE PROSPERED 
FOR SUCH A LONG PERIOD.“
2007 was a year of investment for Flomerics: investment in
expanding our sales and support teams to drive sales of the EFD
products acquired in 2006 (as part of the NIKA GmbH acquisition);
investment in marketing to begin to build the ‘EFD’ brand in North
America and in Europe outside of its original markets and investment
in collaboration of our development operations in London, Moscow
and India. Much was accomplished during the year which has put 
us into a strong position to build sales and take advantage of the
synergies between our various products and technologies in 2008
and beyond. 
Investment in Sales
The early part of 2007 saw our Regional Sales Directors active in
expanding their teams to take advantage of the opportunity to 
sell the EFD products in territories where NIKA had not previously
invested. The main focus for this was in the USA, France and the
UK. Finding the right people and organising the expanded teams to
give the best coverage of the geography and the opportunities took
longer than we had anticipated. However we finished the year with
a full complement of sales people and the engineers to support
their activities. Alongside the recruitment exercise we were active 
in making sure that all our engineers were trained in our full suite 
of Computational Fluid Dynamics (CFD) products (EFD, FLOTHERM
and FLOVENT).
Investment in Marketing
Following the disposal of the EM Business the Group is now focused
on the CFD market. This broadly divides into two sub-markets:
– Electronics Cooling (covered by our FLOTHERM, EFD and 
MicReD products)
– Mechanical Design (covered by our EFD and FLOVENT products)
A market survey carried out in 2007 confirmed once again that
Flomerics’ flagship product, FLOTHERM, remains the clear market
leader in thermal analysis of electronic equipment. At the same
time, the EFD products, which have enjoyed great success in central
Europe and in Japan but at the time of the acquisition by Flomerics
were little known outside of these territories, have seen a significant
increase in brand awareness in both North America and other parts
of Europe.
The relationships with our mechanical CAD (Computer Aided
Design) partners, in particular SolidWorks and PTC, continued and 
in the case of SolidWorks saw the release of a new product called
FloXpress. FloXpress is a new flow simulation product that is fully
embedded within SolidWorks®2008 3D CAD software and is
available free of charge to all SolidWorks®2008 users. It is a cut-
down version of the popular COSMOSFloWorks product – also
developed by Flomerics – that enables engineers and designers 
to simulate complex, 3D fluid flow and heat transfer processes via 
a simple, wizard-driven user interface inside the SolidWorks user
environment. The release of this product means a big increase in the
number of mechanical engineers able to access this remarkable 
MUCH WAS ACCOMPLISHED DURING THE
YEAR WHICH HAS PUT US INTO A STRONG
POSITION TO BUILD SALES AND TAKE
ADVANTAGE OF THE SYNERGIES BETWEEN
OUR VARIOUS PRODUCTS AND
TECHNOLOGIES IN 2008 AND BEYOND. 
4 Flomerics Group PLC Annual Report 2007 “THE INVESTMENTS MADE IN 2007 AND THE
INCREASED FOCUS ON OUR CORE CFD
BUSINESS WILL ALLOW US TO FOCUS ON
DELIVERING RESULTS IN 2008.”
Flomerics Group PLC Annual Report 2007 5
technology and this is expected to increase demand for Flomerics’
software products in the future.
Building familiarity with our products among young engineers and
students continues to be an important part of our marketing effort,
and 2007 saw a significant increase in the use of EFD by universities
and research institutes around the world.
Many of Flomerics’ customers are delighted to share their positive
experiences of using our products, and we continue to publish these
success stories to assist our sales efforts and provide strong editorial
for engineering publications and web portals around the world.
During 2007 we published a record number of success stories which
generated a good response, increased our web site traffic to record
levels and led to an increased number of requests for software
demonstrations – especially for the EFD products.
Research and Development
During 2007 we began the first phase of our plans to make better
use of the considerable expertise and technology managed and
developed in our development centres in the UK, Russia, India and
Hungary. The first evidence of this was the release of an electronics
specific module to be used alongside the EFD products. The EFD
products were already making inroads into certain electronics
applications but the introduction of this new product which saw 
the UK based FLOTHERM and Moscow based EFD teams working
closely together, further enhances the dominant position that
Flomerics has long held in the thermal design of electronics.
Disposal of Electromagnetics Business
In December 2007 we announced the divestment of our
electromagnetics line of business (“the EM Business”) for £1.6m, 
in order to increase our focus on areas where the Group has much
better opportunities for growth. This disposal was completed on 
31 January 2008.
Since entering the electromagnetics simulation market in 1999,
Flomerics built up the usage of its products around the world.
However, with only a small share of the market the Directors
concluded that it would be difficult on our own to achieve a strong
competitive position in this field. The sale of the EM Business to 
CST GmbH, a company that specialises in electromagnetics
simulation, signals the beginning of a strategic relationship
providing best-in-class solutions to customers requiring
understanding of both CFD and EM problems. 
Finance Director 
In December, we announced the appointment of a new Finance
Director. Keith Butcher joined Flomerics from DataCash Group plc
where he became Finance Director in 2002. During his time with
DataCash he played an important role as part of the management
team overseeing a substantial growth in the Company’s market
capitalisation. Keith’s considerable experience is already having 
a positive impact on the running of the Company.
2007 Achievements
Despite difficult trading conditions in some territories we saw good
growth in billings in most areas of our business.
Regionally, Europe (+25%) and Asia-Pacific (+35%) saw good
revenue growth in 2007, with a particularly strong performance in
China and South-East Asia where we expect the opportunity to
continue to grow. US revenues fell slightly as we were impacted by
the loss of a number of key sales staff, however we now have a full
team in place. Turnover by region was: Europe 45.8% (2006: 42%),
Asia Pacific 21.5% (2006:19%) and US 31.7% (2006:39%).
Sales of the EFD products grew strongly and FLOVENT continued
the strong growth from last year.
Flomerics’ business is made up of new licence sales and recurring
revenues from existing customers who each year will renew their
commitment with us for a further year of maintenance or to extend
an existing lease arrangement. Particularly encouraging in 2007 
was the growth in new business which saw an improving trend
throughout the year as the investments made in the sales teams
and in marketing started to have an impact.
Flomerics 20th Anniversary
Flomerics celebrates its 20th anniversary as an independent
company in 2008, placing it firmly into a rare and elite group of
engineering software companies that have prospered for such 
a long period. This landmark is a testimony to the Company’s high-
integrity, people-oriented culture and its core concept of delivering
engineering simulation software for use by designers and engineers
rather than just full-time analysts and specialists. Flomerics has
reached an age that puts it among the most established companies
involved in computer aided engineering, and has just completed 
a record-breaking fiscal year where it has achieved a new high in
revenue and seen its worldwide customer base grow to over 2,500
sites and over 7,000 individuals.
The Future
The last three years have seen many changes at Flomerics. In
addition to the incorporation of the former NIKA team, we have
changed almost half of our senior management team and by doing
so added a significant level of sales management experience. We
have made two acquisitions (MicReD and NIKA) and disposed of 
our electromagnetics business. These changes together with the
investments made in 2007 and the increased focus on our core 
CFD business will allow us to focus on delivering results in 2008. 
We have had a very positive start to trading in 2008 and I believe
this demonstrates that the results of our hard work are beginning 
to show through.
Gary Carter, Chief Executive
28 April 2008 DELIVERING OUR POTENTIAL
THROUGH EXPLOITING 
MARKET OPPORTUNITIES
The addition of the EFD range of products has greatly expanded the
range of potential applications already addressed by our established
FLOTHERM and FLOVENT products. The market for general-purpose
fluid flow simulation tools is far larger than that for electronics cooling.
By expanding into these application areas we have considerably
increased the addressable market for our products. 
Increasingly complex designs and competition for innovative and
efficient products is driving our customers to increasingly rely on 
virtual prototypes built on a computer. This enables them to verify 
the suitability and performance of a design before committing to
physical tests or manufacture.
We continue to evaluate new tools to add to our products in order to
improve our competitive advantage whilst allowing our customers to
maintain leadership in their fields.
6 Flomerics Group PLC Annual Report 2007 General-purpose 
Computational Fluid Dynamics
Market – c£250m+
estimated growth 15% 
Electronics Cooling 
Market – c£45m+
estimated growth 10-15% 
Flomerics 
£16m
Flomerics Group PLC Annual Report 2007 7 8 Flomerics Group PLC Annual Report 2007
DELIVERING OUR POTENTIAL
THROUGH LEVERAGING 
OUR GLOBAL BRAND AND
INTERNATIONAL SALES PRESENCE
Flomerics has a long-established market leadership and respected global
reputation in the field of electronics cooling. The last year has seen 
a big investment in using this brand to continue to build the global 
market for our recently-introduced EFD products. Through the efforts 
of our global marketing and sales teams we are quickly establishing 
a reputation for being an innovative supplier of fluid flow simulation 
tools across a wide range of industries.
Our global sales and engineering organisation enables us to reach 
all the main markets for our tools around the world. Their depth 
of knowledge of our customers’ needs together with our range of 
possible solutions gives us a respected and valued role as part of 
their design processes. 
We will continue to expand our global presence to take advantage 
of business opportunities as they arise, enabling us to expand our 
global brand and to offer our customers the class of service which 
drives our success.
Communications
3 Com
Alcatel
Cisco
JDS Uniphase
Lucent Technologies
Marconi
Motorola
NEC
Nokia
Nortel
Computers
Apple
Casio 
Dell
HP
IBM
Sony
Sun Microsystems
Toshiba
Office
Black & Decker
Blaupunkt
Bosch-Siemens
Grohe
Miele
Océ
Philips
Samsung
Sanyo
Defence
Airbus
BAE Systems
Bell Helicopter
General Dynamics
Lockheed Martin
Raytheon
US Army
NASA Ames
Semiconductors
Agilent
AMD
Infineon
Intel
Motorola
Philips
Semiconductor
ST Microelectronics
Texas Instruments
Transportation
Alstom Transport
Delphi Delco
Ford
Magneti Marelli
Robert Bosch
Siemens Automotive
Toyota Auto Body
Honda Flomerics Group PLC Annual Report 2007 9
Europe
France 
Hungary 
Germany
Italy 
Russia 
Sweden 
United Kingdom 
Spain 
USA
San José
Boston 
Austin
Rest of the World
China
Japan 
India
Israel 
Singapore
South Korea 
Taiwan
South Africa 
Sales Offices
Sales Agents
R&D Operations
US
32%
£5.15m
Global office network
Revenues by geography
Europe
46%
£7.45m
Asia
23%
£3.67m DELIVERING OUR POTENTIAL
ELECTRONICS COOLING
Electronics Cooling is the largest part of our business. Flomerics is
the provider of software tools used by electrical and mechanical
engineers to analyse temperatures in the design of circuit boards
and complete electronic systems. Our client list includes virtually
every major electronics company in the world. 
Flomerics’ software enables design engineers to solve thermal
management problems quickly, accurately and cost-effectively. 
As a result, our customers save time and money during design 
and test cycles and accelerate time to market for their products. 
Flomerics’ software tools and solutions for Electronics Cooling 
are based around our world-leading FLOTHERM product, the EFD
product set and the MicReD portfolio of products. 
FLOTHERM is the undisputed worldwide market-leading tool for 
the thermal analysis of electronic equipment such as computers,
telecommunications equipment, control systems for the military 
and even domestic hi-fi equipment. Heat affects the reliability and
lifetime of almost every type of electronic equipment. As products
develop, processing speeds increase, functionality grows and the
equipment gets smaller and more compact, so that thermal
problems intensify. FLOTHERM applies Computational Fluid
Dynamics (CFD) methods to predict airflow and temperatures
throughout electronic equipment. This enables engineers to identify
the source of any over-heating within the component or product
and devise the most effective design solutions. 
FLO/PCB is a software tool for accelerating the conceptual design of
high-density printed-circuit boards. FLO/PCB improves communication
and collaboration between product marketing, electrical and
mechanical engineers, and enables them to address layout and
thermal issues as the functional specification is being defined. 
ThermPaq is a new product that automates the thermal
characterisation of IC packages.
EFD is a software tool ideally suited to customers whose applications
do not demand the level of specialisation provided within
FLOTHERM. This has helped widen the range of customers who 
can now benefit from Flomerics’ product set.
MicReD’s product set focuses on the thermal characterisation 
of integrated circuit packages, MEMs, LEDs and printed 
circuit boards. 
10 Flomerics Group PLC Annual Report 2007
CLIENT: ANTARES ADVANCED TEST TECHNOLOGIES
PRODUCT: FLOTHERM
Background
An Antares customer that produces semiconductors for
military and space applications asked Antares to provide 
a burn-in test system that could simultaneously handle 
a wide range of products. In order to handle these products,
each socket would need to be capable of sensing the
temperature of the device, and either heating or cooling 
the device to keep it at the proper burn-in temperature
which may be either above or below ambient temperature.
Solution
Flomerics’ FLOTHERM thermal simulation software enabled 
the customer to test several types of devices simultaneously
at a wide range of temperatures both above and below
ambient. It enabled Antares to accurately predict the thermal
resistance of each design iteration without having to build
and test the prototype. The ability to quickly simulate
thermal performance made it possible to evaluate a large
number of different design concepts in a short space of time.
“I could easily identify thermal blockages by looking for
changes in temperature across a relatively small area, so 
I was able to concentrate on reducing thermal resistance 
in these areas.” Trevor Moody, Thermal and Mechanical
Engineer, Antares – FLOTHERM is the worldwide market-leading
software tool for the thermal analysis of
electronic equipment 
– Clients include virtually every major electronics
company in the world 
– The EFD family of products provides the user
with the ability to simulate fluid flow directly
across a wide range of applications and from
within the users design environment
Flomerics Group PLC Annual Report 2007 11 12 Flomerics Group PLC Annual Report 2007
DELIVERING OUR POTENTIAL 
MECHANICAL DESIGN
Flomerics’ Engineering Fluid Dynamics (EFD) product family 
is a new breed of software tools that apply the principles of
Computational Fluid Dynamics (CFD). These enable mechanical
design engineers to analyse complex fluid flow and heat transfer
processes and to optimise design across a wide range of products
and industries. 
The Flomerics EFD product family is tightly integrated with leading
3D mechanical computer-aided design (MCAD) software such 
as Pro/ENGINEER®, CATIA V5 and SolidWorks™. In the case 
of SolidWorks™, the product is sold under the brand name
COSMOSFloWorks® through the SolidWorks™ sales channel. 
The EFD family of products is our fully-featured general-purpose 
3D fluid flow and heat transfer analysis software that has been
developed for design engineers. ‘EFD’ stands for Engineering Fluid
Dynamics and the software we have developed is significantly
different from traditional Computational Fluid Dynamics (CFD). The
key advantage of EFD over CFD is that EFD speaks the language of
engineers. EFD eliminates the complexities of engineering design,
enabling engineers to work more quickly, accurately and
productively. The EFD family, unlike FLOTHERM and FLOVENT, is not
specific to one industry sector and can therefore be sold to a much
broader range of customers. 
FLOVENT is a powerful CFD software tool that predicts 3D airflow,
heat transfer and contamination distribution in and around
buildings of all types and sizes. 
FLOVENT provides a fast and easy-to-use menu system designed
specifically for the optimisation of heating, ventilating and 
air-conditioning (HVAC) systems. Applications span datacentres 
and IT rooms, auditoriums, shopping malls, office buildings,
underground car parks, passenger vehicles and airport terminals. 
Air quality and contaminant control applications include
laboratories, research facilities and hospitals. 
FLOVENT uses the same software structure and analysis engine 
as FLOTHERM, our market-leading product. However, the user
interface within FLOVENT has been specifically tailored to suit the
building design industry. 
With our EFD products set, Flomerics has successfully extended its
range of solutions and applications beyond electronics to address 
a market sector that is worth some £200m per year worldwide. 
CLIENT: SHAW AERO DEVICES, USA
PRODUCT: EFD.LAB
Background
Shaw Aero Devices designs, develops and manufactures 
a wide range of products in the areas of fuel, oil and
water/waste systems and components. Shaw’s customer was
interested in purchasing a large quantity of a solenoid valve
similar to one of their standard products for an unmanned
aerial vehicle. The customer specified a pressure drop of 0.75
pounds per square inch (psi) at a flow rate of 4.45 gallons per
minute while Shaw’s standard valve measured out at 6.09 psi. 
Solution
In the past, this would have required building and testing 
a series of designs in an effort to eliminate constrictions with
no guarantee of success. EFD.LAB reduced the time required
to simulate flow by analysing the model and automatically
identifying fluid and solid regions without user interaction.
Shaw were able to run a series of simulations and design
iterations, until they achieved the acceptable pressure level.
“CFD simulation dramatically reduced the time needed to
meet our customer’s demanding specifications. We moved
from the beginning of the project to the development 
of an acceptable software prototype in only one day.” 
Rob Preble, Project Engineer, Shaw Aero Devices, Inc Flomerics Group PLC Annual Report 2007 13
– Flomerics’ EFD solutions provide significant
advantages over conventional CFD products 
– EFD eliminates the complexities of engineering
design, enabling engineers to work more
quickly, accurately and productively
– The EFD family widens our marketplace 
by appealing to less specialised users with 
a much broader range of applications. 
– FLOVENT is the industry-leading product
focused on the HVAC market  Group Financial Performance
Turnover for 2007 increased by 14% to a record £16.3m. Excluding
revenues from the Electromagnetic business (“the EM Business”)
revenues increased by 18% to £14.6m (2006: £12.4m). 
Profit before tax, amortisation of intangible assets, goodwill
impairment, share-based payments and exceptionals (“adjusted
PBT”) was £1.3m (2006: £1.5m). The charge for the year for share-
based payments was £116,000 (2006; £97,000). There were no
exceptional items in 2007 (2006: £222,000). The unadjusted loss 
for the year was £1.90m (2006: £0.80m profit) and Basic loss per
share was 8.81p (2006: earnings per share: 4.45p).
The goodwill impairment charge of £2.22m (2006: £nil) and
intangible amortisation charge of £684,000 (2006: £338,000) relate
to the acquisition of NIKA GmbH in July 2006. The impairment of the
NIKA carrying value resulted from a slower than anticipated growth in
sales of the NIKA products in 2007 and a prudent was view taken.
However the directors are encouraged by the start in 2008. 
Costs
Cost of sales, which comprise royalties paid to third-party licensors
and manufacturing costs of the Group’s hardware products for the
full year, amounted to 4.4% of revenue (2006: 3.8%). 
Research and development (R&D) costs have increased, mainly
because the cost of the NIKA development team in Moscow was
only included in the 2006 results from 1st July, but also reflecting
general wage inflation. Staff numbers in our teams in Moscow, the
UK and India however, have remained broadly similar since the
acquisition of NIKA. R&D costs accounted for 20.5% of Group
revenue in the period (2006: 20.4%).
Staff related costs are the Group’s biggest expense. These increased
to £9.5m from £7.6m while the average number of staff increased
from 191 to 242 reflecting the acquisition of NIKA. At the end of
the year the Group employed 229 people. 
Disposal of the EM business
In December 2007 agreement was reached to dispose of the
electromagnetics part of the business (“the EM Business) for £1.6m.
Completion was on 31 January 2008 and we have since received
the proceeds from the purchaser. As a result the EM revenues have
been separately shown as discontinued operations and only costs
directly attributable to the EM business have been shown in this
column. General overheads and management costs are not allowed
to be attributed to this discontinued operations. 
Cashflow and Financing
Cash balances at the end of 2007 were £2.97m (2006: £2.34m).
Cash generated from operating activities was £1.6m 
(2006: £545,000). Debtors were £0.7m higher than they were 
at the end of 2006 at £6.1m, in line with revenue growth.
Major non-operating cashflows included capital expenditure of
£386,000 (2006:£547,000); and a dividend paid of £299,000
(2006: £195,000). The net increase in cash was £0.6m.
BUSINESS REVIEW
“TURNOVER FOR 2007 INCREASED BY 
14% TO A RECORD £16.3M. EXCLUDING
REVENUES FROM THE ELECTROMAGNETIC
BUSINESS REVENUES INCREASED BY 18%
TO £14.6M.”
14 Flomerics Group PLC Annual Report 2007 Flomerics Group PLC Annual Report 2007 15
The Group has borrowings of £305,000 which relates to the
mortgage on a freehold property that is being repaid over ten 
years. There are no other borrowings.
Trade debtors at the end of 2007 were £5.3m (2006: £4.8m).
Debtor days at 31 December 2007 were 74 (2006: 72 days).
Share Capital
During the year 300,146 shares were issued to employees exercising
share options and as part of the acquisition of MicReD, taking total
shares in issue to 21,631,516 at 31st December 2007.
As part of the completion terms relating to the acquisition of NIKA
GmbH in 2006 1,265,000 shares were issued in March 2008 to the
vendors of NIKA GmbH.
Deferred Consideration
Under the terms of the acquisition of MicReD, deferred
consideration was due depending on the results in 2005 and 2006.
Following the performance in those years, the final instalment of
the deferred consideration of €380,000 was paid out during the
period and 209,000 Flomerics shares were issued.
Under the terms of the acquisition of NIKA GmbH, no deferred
consideration is due to be paid.
Impact of adoption of IFRS
The Group adopted International Financial Reporting Standards
(IFRS) with effect from 1 January 2006. The 2006 results were
restated under IFRS and announced to the market along with 
our last interim results.
The main impact of IFRS on the 2007 accounts were that the
acquisition of NIKA has been restated under IFRS 3 and a value
attributed to the intangible assets acquired (such as customer lists
and technology) with the balance deemed to be goodwill. These
intangible assets have been amortised over an appropriate period
and the goodwill arising was subject to an impairment review. After
this review, goodwill was written down by £2.22m, resulting in 
a total charge to the P&L in the year relating to intangible assets
and goodwill of £3.1m.
The other significant change under IFRS was the treatment of
research and development costs. Under IAS 38, if certain criteria are
satisfied the development costs must be capitalised and amortised
over the anticipated period that benefits are expected. The impact
of this in the 2007 accounts was £233,000 and the carrying value
on the Balance Sheet at the year end was £336,000.
Business risk 
The principal risks facing the Group and discussed by the Board
relate broadly to the Group’s technology, the competitive
environment and managing a diverse range of products. These 
are addressed by the Risk Committee, which meets on a regular
basis as outlined in the Corporate Governance section of the
Directors Report. During 2007 risks assessed included the loss of 
key employees and the risk of the EM business not having critical 
mass to compete in the market place. As a result of this assessment
the EM business was disposed of in January 2008 as detailed in 
this report. 
Interest rate risk
The Group is cash positive and places its balances on short-term
deposits with highly regarded financial institutions. Changes in
interest rates will affect the return on cash balances. The Group
does not hold or issue derivative financial instruments.
Liquidity risk
The Group is cash positive and has a policy of ensuring sufficient
funds are always available for its operating activities. While the need
for borrowing facilities are not required at present, the Board
continually monitors the Group’s cash requirements.
Foreign currency exchange risk
The majority of cash at bank is held in Sterling, Euro and US dollar
accounts however we also maintain modest balances in other
currencies. There are also trade balances and investments in these
currencies. The Group’s foreign exchange risk is hedged by way of
forward exchange contracts where appropriate and any resulting
gains or losses are recognised in the profit and loss account. 
Credit risk
The Group has a small exposure to credit risk from credit sales. It is
the Group’s policy to assess the credit risk of new customers before
entering into contracts. Historically, bad debts across the Group
have been very low.
Shareholder information
The Group’s website at www.flomerics.com contains a wide range
of information about our activities and visitors can download copies
of the Report and Accounts as well as customer testimonials and
product demonstrations.
Keith Butcher, Finance Director
28 April 2008
03* £0.5m
04* £0.8m
05* £1.1m
06 £1.5m
07 £1.3m
Adjusted Profit before tax (£m)
03 £10.2
04 £10.2
05 £11.4
06 £14.2
07 £16.3
Turnover (£m)
* Profit under UK GAAP . 16 Flomerics Group PLC Annual Report 2007
BOARD OF DIRECTORS
Gary Carter
Gary Carter, aged 48, is the Chief Executive.
He read Mathematics at Leeds University
followed by a PhD in Computational Fluid
Dynamics. Following industry experience
with the aero-engine division of Rolls-Royce,
he moved into the world of engineering
simulation software where he spent
seventeen years working with Aveva, PDA
Engineering, MSC.Software and most
recently ANSYS in various development,
support, sales and marketing roles
culminating in his appointment as European
Vice President for ANSYS. He joined
Flomerics in January 2005.
David Mann
David Mann, aged 63, is the Non-Executive
Chairman. He read Theoretical Physics at
Cambridge University and worked for
Logica plc from 1969 to 1994, where he
became Chief Executive and then Deputy
Chairman. He is currently Chairman of Velti
plc (quoted on AIM), Deputy Chairman of
Charteris plc (AIM) and Senior Independent
Non-Executive Director of Aveva Group plc
(Official List). He is a Past President of the
British Computer Society and a Past Master
of the Information Technologists’ Company
in the City of London. 
Peter Teague
Peter Teague, aged 53, is a Non-Executive
Director. He read Mathematics at London
University (Imperial College) and qualified 
as a Chartered Accountant with KPMG in
London. Following experience in industry
and commerce with AT&T in a number of
positions, including Vice President and Chief
Financial Officer, AT&T UK, and with BBC
Worldwide as Finance & IT Director and
Managing Director, UK Region, he now
pursues a plural career. Peter is on the
board of a number of companies and 
chairs the Audit Committee at Ofcom.
Tom Rowbotham
Tom Rowbotham, aged 66, is the 
Non-Executive Deputy Chairman. He has 
a PhD in the Transmission Line Modelling
(TLM) method of electromagnetic analysis
from Nottingham University. He was a
founder of Kimberley Communications
Consultants Ltd, and was Chairman when 
it merged with Flomerics Group PLC in
1999. He has been Director of BT’s R&D
Laboratories. He is currently a Venture
Partner at Vesbridge Partners, Boston. 
He is also on the boards of a number 
of companies in the UK and USA. 
Keith Butcher
Keith Butcher, aged 45, is the Finance
Director and Company Secretary. He read
Management Science at Warwick University
and qualified as a Chartered Accountant
with KPMG. Before joining Flomerics in
January 2008 he was Finance Director 
of DataCash Group plc where during his 
tenure the market capitalisation grew from
£8m to £300m. He previously worked for
PricewaterhouseCoopers and Diagonal plc. CORPORATE GOVERNANCE STATEMENT 
Flomerics Group PLC Annual Report 2007 17 
The Board of Directors is accountable to shareholders for the good corporate governance of the Group. The principles of corporate 
governance are set out in the Financial Reporting Council’s revised Combined Code on corporate governance issued in 2006. Under 
the rules of the Alternative Investment Market (AIM) the Company is not required to comply with the Code and the Board considers 
that the size of the Group does not warrant compliance with all of the Code’s requirements. This statement sets out how the 
principles of the Code that the Directors consider are relevant to Flomerics Group PLC are applied. 
Board of Directors 
The Non-Executive Chairman of the Company is David Mann. Gary Carter was appointed as Chief Executive in 2005. Tom 
Rowbotham as the Non-Executive Deputy Chairman is the senior independent Non-Executive Director. Tim Morris stepped down 
from the Board on 24 January 2007 and was replaced by Peter Teague as Chairman of the Audit Committee. Chris Ogle stepped 
down as Finance Director on 31 December 2007 and was replaced by Keith Butcher. Wolfgang Biedermann, non-Executive Director, 
stepped down from the Board on 15 April 2008. 
The Board now comprises two Executive Directors (Chief Executive and Finance Director) and three Non-Executive Directors. For the 
size of the Group, it is considered that this gives the necessary mix of industry specific and broad business experience necessary for 
the effective governance of the Group. The Board meets regularly, normally on a monthly basis, and is particularly concerned with 
the Group’s strategy. 
The Group has a senior management team which is responsible for the day to day management of the Group. This is comprised of 
the Chief Executive, the Finance Director, the Chief Technology Officer, Regional Directors for the US, Europe and Asia Pacific, the 
Director of Marketing, Director of Software Development UK and India, Director of Software Development Moscow, and the 
Product Director. 
The Board met twelve times during the year, excluding ad hoc meetings convened to deal with procedural matters. 
 Board Meetings Audit Committee 
Remuneration  
Committee 
Nominations  
Committee Risk Committee 
Director 
No. of 
possible 
attendances
No. 
attended
No. of 
possible 
attendances
No.
attended
No. of 
possible 
attendances 
No. 
attended 
No. of 
possible 
attendances
No. 
attended
No. of 
possible 
attendances
No. 
attended
Chairman   
D Mann 12 11225 5 11 n/a n/a
Executive Directors   
G Carter 12 12225 5 11 n/a n/a
C Ogle* 12 12 2 2 n/a n/a n/a n/a 3 3
Non-Executive 
Directors   
T Morris** 1 1 n/a n/a n/a n/a n/a n/a n/a n/a
T Rowbotham 12 12225 5 1133
W Biedermann 12 10 n/a n/a n/a n/a n/a n/a n/a n/a
P Teague** 11 11 2 2 n/a n/a n/a n/a 3 3
*  Chris Ogle resigned on 31 December 2007 and was replaced by Keith Butcher. 
** Tim Morris resigned on 27 January 2007 and was replaced by Peter Teague. 
Audit Committee 
For the period under review, the Audit Committee comprised Peter Teague (Chairman) and David Mann with Gary Carter, Chris Ogle 
and the external auditors generally in attendance. Peter Teague replaced Tim Morris on 24 January 2007 and Tom Rowbotham 
stepped down from the Committee at the same time because it was felt that for the size of the company two independent Directors 
is sufficient. The remit of the Committee is to ensure the continued operation of good financial practices throughout the Group;  
to monitor that controls are in force to ensure the integrity of financial information; to review the interim statement and annual 
financial statements; and to provide a line of communication between the Board and the external auditors. The Audit Committee 
normally meets two times a year. 
Remuneration Committee 
A separate report on remuneration including the composition and remit of the Committee has been included on page 19.  CORPORATE GOVERNANCE STATEMENT 
 
18 Flomerics Group PLC Annual Report 2007 
Risk Committee 
The Risk Committee is chaired by the Non-Executive Deputy Chairman, Tom Rowbotham, and for the period under review comprised 
Chris Ogle, the Finance Director, Ian Clark, the Product Manager for the company’s major product, FLOTHERM, and Andrew Manning, 
the Director of Engineering Services for Flomerics, Inc. During 2007, the Committee was rationalised to comprise: Tom Rowbotham 
as Chairman, Peter Teague and Chris Ogle. Keith Butcher replaced Chris Ogle in 2008. 
This Committee was set up in 2000 in response to a recommendation of the Turnbull Report, which offered guidance to Directors on 
complying with the internal control requirements of the Combined Code. 
The role of the Committee is to identify the risks facing the business, to quantify their impact, and to ensure that they are managed 
within acceptable levels. 
During 2007, the Committee reviewed the current status of the management of major risks to the business, and the impact of the 
actions that the executives had taken. 
The highest priority risks were chosen after discussion with all the executives and the Board. The executives then drew up an action 
plan to address each risk. 
One senior executive was assigned responsibility for each risk in order to assure its continuous relevance, that actions were carried 
out to plan, and that quarterly progress reports were produced. The Risk Committee reviewed these reports and informed the Board 
about progress, while feeding back comments to the executives. 
The Committee is satisfied that in every case the executives had taken the task of managing the risk programme very seriously and 
the Risk Committee concludes that the actions taken during 2007 have resulted in significantly reduced risks for the business. 
The principal risks facing the Group and discussed by the Board relate to the Group’s technology, the competitive environment and 
managing a diverse range of products. 
Nomination Committee 
The Nomination Committee comprises David Mann, Tom Rowbotham and Gary Carter. It is chaired by David Mann, except when 
matters concerning the Chairmanship are being discussed. 
The Committee is responsible for reviewing the structure, size and composition of the Board, identifying suitable candidates for the 
approval of the Board when vacancies arise and ensuring effective Board succession planning. 
Peter Teague was appointed to the Board in January 2007 as a Non-Executive Director, replacing Tim Morris as Chairman of the 
Audit Committee. 
Keith Butcher was appointed to the Board in January 2008 as an Executive Director, replacing Chris Ogle as Finance Director. 
Internal financial control 
The Board is ultimately responsible for the Group’s system of internal financial control and for reviewing its effectiveness. This is 
achieved through the following means: 
The Group maintains a comprehensive process of financial reporting. The annual budget is reviewed and approved by the Board 
before being formally adopted. The Board receives financial reports of the Group’s performance compared to the budget and prior 
years with explanations of significant variances. In addition, monthly reforecasts and cash flow forecasts are presented to the Board. 
A thorough recruitment process ensures, as far as possible, that its employees hold principles of the highest integrity. This is an 
essential part of the Group’s culture. 
The effectiveness of the Group’s internal financial control is the responsibility of the Audit Committee and, to the extent that they 
are perceived to be a risk, of the Risk Committee. The maintenance and constant improvement of these controls is the responsibility 
of the Finance Director. The external auditors review the internal financial controls relevant to expressing their audit opinion and 
report to the Audit Committee on their findings where appropriate. 
The existence of internal controls cannot entirely eliminate risk and no absolute assurance against loss to the Group can be made. 
Going concern 
The Board reports as to whether it is appropriate for the financial statements to be prepared on a going concern basis. 
The Group’s finances are currently sound and the net funding position is positive. Looking beyond the annual budget, the product 
roadmap and financial plans for the Group are reviewed and updated annually. On this basis, the Board continues to adopt the 
going concern basis in preparing the financial statements. DIRECTORS’ REMUNERATION REPORT 
Flomerics Group PLC Annual Report 2007 19 
Remuneration Committee 
The Remuneration Committee (“the Committee”) is chaired by David Mann and comprises David Mann (as Chairman) and  
Tom Rowbotham. The Chief Executive is normally in attendance, except when his own remuneration is being discussed. 
The principal function of the Committee is to set the remuneration and other benefits of the Executive Directors and senior 
managers including pension contributions, share options and bonus payments. The Committee also approves the overall salary 
increase made across the Group as recommended by the Chief Executive and it oversees all bonus and share option schemes. 
The policy of the Committee is to pay remuneration comparable to other peer companies, within the limits of what can be afforded.  
Bonus payments 
The Committee oversees a bonus system for the senior management team which is reviewed annually. The intention of the scheme is  
to ensure that the Executive Directors are strongly incentivised to exceed budget performance. 50% of the potential bonus payment 
is directly related to the financial performance of either the entire Group or, where relevant, the area under their responsibility.  
The other 50% is paid at the discretion of the Committee and is based on their individual performance. 
During 2007, the Executive Directors and other senior managers, excluding the Chief Executive could earn up to a maximum of 50% 
of their basic salary as a bonus. The Chief Executive could earn up to a maximum of 60% of his basic salary as a bonus. For 2007 the 
profit for the Group was at a level whereby any bonuses paid to the senior management were entirely discretionary. 
The Group also runs a scheme for employees whereby a portion of the Group’s pre-tax profit is set aside to be distributed amongst 
the Group’s employees. For the year ended 31 December 2007, none of the Group’s profits have been set aside in this way. 
Share Options 
The Committee recognises that share options can play an important part in aligning the interests of shareholders, Directors and 
staff. Share options that are granted have performance conditions attached, which ensure that the options only vest if those 
conditions are met. 
Directors’ Service Contracts 
Executive Directors have “rolling” service contracts. The Chief Executive’s contract is terminable by either party giving twelve 
months’ notice. In the case of all other Executive Directors the notice period is six months. 
Non-Executive Directors do not have service contracts. Letters of agreement are in place dated 7 November 1995 for David Mann,  
28 July 1999 for Tom Rowbotham and 6 February 2007 for Peter Teague. In each case, the arrangement is terminable with three 
months’ notice. 
Remuneration of Non-Executive Directors 
Fees paid to Non-Executive Directors are detailed on page 20. The intention is to pay fees that are comparable with those paid by 
companies of similar size and complexity. The remuneration of the Non-Executive Directors is proposed by the Chief Executive and 
the Finance Director and approved by the Board.  DIRECTORS’ REMUNERATION REPORT 
20 Flomerics Group PLC Annual Report 2007 
Directors’ Remuneration 
Emoluments paid to Directors in the year comprised: 
 
Salaries/ 
fees  
£’000 
Bonus  
£’000 
Benefits  
£’000 
Total  
2007  
£’000 
Total  
2006  
£’000 
D W Mann 30 – – 30 28 
G C Carter 142 – 1 143 213 
C J R Ogle* 124 20 1 145 127 
T R Rowbotham 21 – – 21 19 
P R Teague 17 – – 17 – 
T R T Morris** 2 – – 2 13 
 336 20 2 358 400 
Pension contributions 
The Group made contributions under the Company Group Personal Pension Plan, a defined contribution scheme, as follows:  
 
2007  
£’000 
2006  
£’000 
G C Carter 11 10 
C J R Ogle* 10 9 
 21 19 
Directors’ interests in Share Options 
Share options have been granted to the following Directors under the Company’s Share option scheme: 
 No. of shares under option   
 
At  
31 December  
2006 
Issued  
in year 
Lapsed  
in year 
At  
31 December  
2007 
Exercise  
Price 
Exercise  
date 
G C Carter 100,000 – – 100,000 70.0 2008-2015 
G C Carter 100,000 – – 100,000 87.5 2008-2015 
G C Carter – 100,000 – 100,000 86.0 2010-2017 
C J R Ogle* 100,000 – – 100,000 54.5 2002-2009 
C J R Ogle* 8,750 – – 8,750 84.0 2005-2012 
C J R Ogle* 12,500 – – 12,500 51.0 2006-2013 
C J R Ogle* 45,000 – – 45,000 61.5 2007-2014 
C J R Ogle* 35,000 – – 35,000 70.0 2008-2015 
C J R Ogle* 50,000 – – 50,000 98.5 2009-2016 
* Resigned 31 December 2007. 
** Resigned 27 January 2007. 
  DIRECTORS’ REPORT 
Flomerics Group PLC Annual Report 2007 21 
The Directors present their annual report on the affairs of the Group, together with the financial statements and auditors’ report,  
for the year ended 31 December 2007. 
Results and dividends 
The consolidated income statement is set out on page 25 and shows the profit for the year. 
The Directors recommend the payment of a dividend of 1.6p (2006: 1.4p) per ordinary share. 
The consolidated loss for the year amounted to £1,896,000 (2006: profit £804,000). 
Principal activities, trading review and future developments 
The principal activities of the Group are the provision of virtual prototyping software. A review of the development of the business 
during the year, that fulfils the requirements of the ‘Enhanced Business Review’, is given in the Chairman’s Statement on page 3 in 
paragraphs headed ‘Results’ and ‘Regional performance’ and the KPIs are outlined in the Business Review on page 14. The 
Chairman’s Statement also includes reference to the Group’s future prospects. An indication of the Group’s activities in research and 
development is given in the Chief Executive’s review on pages 4 and 5. 
Areas of operation 
The Group’s headquarters and primary centre for research and development is in the United Kingdom. The Group also has research 
and development centres in India and Russia. The Group also has sales and support offices in the United States of America, France, 
Germany, Italy, China, Singapore, Sweden, Japan and India. 
Financial instruments 
The Group’s policy in respect of financial instruments is set out in note 31. 
Political and charitable contributions 
During 2007, the Group contributed a total of £50 (2006 – £1,864) to support local charities. The Group made no political donations.  
Directors and their interests 
The Directors of the Company during the year were 
D W Mann Non-Executive Chairman 
G C Carter Chief Executive 
C J R Ogle Finance Director (resigned 31 December 2007) 
T R Rowbotham Non-Executive Deputy Chairman 
T R T Morris Non-Executive Director (resigned 24 January 2007) 
W Biedermann Non-Executive Director (resigned 15 April 2008) 
P R Teague Audit Committee Chairman (appointed 24 January 2007) 
Subsequent to the year end Keith Butcher was appointed to the Board as Finance Director. 
Details of Directors’ remuneration and Directors’ share options are given in the Report on Remuneration on page 20. 
The Directors who held office at the end of the financial year had the following interests in the ordinary shares of the Company  
as recorded in the register of Directors’ share and debenture interests: 
 
At 31 
December 
2007 
Ordinary 
shares  
No. 
At 1 
January 
2007 
Ordinary 
shares  
No. 
D W Mann 167,195 167,195 
D W Mann – non-beneficial 45,000 45,000 
G C Carter 30,000 30,000 
C J R Ogle* 22,500 22,500 
T R Rowbotham 361,236 361,326 
W Biedermann** – – 
P R Teague – – 
* Chris Ogle resigned as a Director on 31 December 2007. 
** W Biedermann (resigned 15 April 2008), was a principal of Pricap Venture Partners AG until 30 June 2007. Pricap Venture Partners AG had  
a significant shareholding in the Company throughout 2007. On 14 March 2008 they sold their entire shareholding. 
Keith Butcher was appointed as a Director on 2 January 2008 and as at 28 April 2008 holds 100,000 shares. 
There were no other changes in the Directors’ shareholdings between 31 December 2007 and 28 April 2008.  DIRECTORS’ REPORT 
22 Flomerics Group PLC Annual Report 2007 
Directors’ share options 
Details of Directors’ share options are provided in the Directors’ remuneration report on page 20. 
Directors’ indemnities 
The Company has made qualifying third party indemnity provisions for the benefit of its Directors which were made during the year 
and remain in force at the date of this report. 
Supplier payment policy 
The Company’s policy, which is also applied by the Group, is to settle terms of payment with suppliers when agreeing the terms  
of each transaction, ensures that suppliers are made aware of the terms of payment and abide by the terms of payment. Trade 
creditors of the Group at 31 December 2007 were equivalent to 27 (2006 – 39) days’ purchases, based on the average daily amount 
invoiced by suppliers during the year. 
Significant shareholdings 
As at 28 April 2008, notification had been received that the following were interested in more than 3% of the Company’s ordinary 
share capital: 
 
Number of 
ordinary 
shares 
Percentage 
of issued 
ordinary 
share 
capital 
Mentor Graphics Corporation 6,541,175  28.77 
Kozo Keikaku Engineering 1,099,597  5.11 
D G Tatchell 1,332,800  5.86 
Disabled employees 
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant 
concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the 
Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and 
promotion of disabled persons should, as far as possible, be identical to that of other employees. 
Employee consultation 
The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters 
affecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal  
and informal meetings, the Company magazine and a special edition for employees of the annual financial statements. Employee 
representatives are consulted regularly on a wide range of matters affecting their current and future interests.  
Post balance sheet events 
On 20 December 2007 the Board announced the disposal of the EM Business to CST GmbH for a consideration of £1.6m. The sale  
was completed on 31 January 2008 and the gain on disposal will be recognised in 2008. Final payment was received in April 2008. 
As part of the completion terms relating to the acquisition of NIKA GmbH in 2006 1,100,724 shares were issued in March 2008  
to the vendors of NIKA GmbH. 
Independent auditors 
Each of the persons who is a Director at the date of approval of this annual report confirms that: 
• so far as the Director is aware, there is no relevant audit information of which the company’s auditors are unaware; and 
• the Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any  
relevant audit information and to establish that the Company’s auditors are aware of that information. 
This confirmation is given and should be interpreted in accordance with the provisions of s234ZA of the Companies Act 1985.  
BDO Stoy Hayward LLP have expressed their willingness to continue in office as auditors and a resolution to reappoint them  
will be proposed at the forthcoming Annual General Meeting. 
By order of the Board 
Keith Butcher 
Secretary 
28 April 2008 
  STATEMENT OF DIRECTORS’ RESPONSIBILITIES 
Flomerics Group PLC Annual Report 2007 23 
Directors’ responsibilities 
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the 
financial position of the Group, for safeguarding the assets of the Company, for taking reasonable steps for the prevention and 
detection of fraud and other irregularities and for the preparation of a Directors’ Report which complies with the requirements  
of the Companies Act 1985. 
The Directors are responsible for preparing the annual report and the financial statements in accordance with the Companies Act 
1985. The Directors are also required to prepare financial statements for the Group in accordance with International Financial 
Reporting Standards as adopted by the European Union (IFRSs) and the rules of the London Stock Exchange for companies trading 
securities on the Alternative Investment Market. The Directors have chosen to prepare financial statements for the Company in 
accordance with UK Generally Accepted Accounting Practice. 
Group financial statements 
International Accounting Standard 1 requires that financial statements present fairly for each financial year the Group’s financial 
position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events 
and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the 
International Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually  
all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. A fair presentation also requires the 
Directors to: 
• consistently select and apply appropriate accounting policies; 
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable 
information; and 
• provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to 
understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial 
performance.  
Parent company financial statements 
Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the 
state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements,  
the Directors are required to: 
• select suitable accounting policies and then apply them consistently; 
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will  
continue in business.  
• make judgements and estimates that are reasonable and prudent; and 
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and  
explained in the financial statements. 
Financial statements are published on the Group’s website in accordance with legislation in the United Kingdom governing the 
preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance  
and integrity of the Group’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing 
integrity of the financial statements contained therein. 
The maintenance and integrity of Flomerics Group PLC’s website is the responsibility of the Directors. The work carried out by the 
auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that 
may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom 
governing the preparation and dissemination of the financial statements may differ in other jurisdictions.   INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF FLOMERICS GROUP PLC 
24 Flomerics Group PLC Annual Report 2007 
We have audited the Group and parent Company financial statements (the “financial statements”) of Flomerics Group PLC for the 
year ended 31 December 2007 which comprise the consolidated income statement, the consolidated statement of changes in equity, 
the consolidated balance sheet, the consolidated cash flow statement, the related notes 1 to 34 and the Company balance sheet and 
related notes A to K. These Group financial statements have been prepared under the accounting policies set out therein. 
Respective responsibilities of Directors and auditors 
The Directors’ responsibilities for preparing the annual report and Group financial statements in accordance with applicable law  
and International Financial Reporting Standards (IFRSs) as adopted by the European Union and for preparing the parent Company 
financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally 
Accepted Accounting Practice) are set out in the statement of Directors’ responsibilities.  
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and 
International Standards on Auditing (UK and Ireland). 
We report to you our opinion as to whether the financial statements give a true and fair view and have been properly prepared  
in accordance with the Companies Act 1985 and whether the information given in the Directors’ report is consistent with those 
financial statements. We also report to you if, in our opinion, the Company has not kept proper accounting records, if we have  
not received all the information and explanations we require for our audit, or if information specified by law regarding Directors’ 
remuneration and other transactions is not disclosed. 
We read other information contained in the annual report, and consider whether it is consistent with the audited financial 
statements. This other information comprises only the Chairman’s statement, the Chief Executive’s Review, the business review  
and the Directors’ report. We consider the implications for our report if we become aware of any apparent misstatements or 
material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. 
Our report has been prepared pursuant to the requirements of the Companies Act 1985 and for no other purpose. No person is 
entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of 
the Companies Act 1985 or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept 
responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability. 
Basis of audit opinion 
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices 
Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements.  
It also includes an assessment of the significant estimates and judgments made by the Directors in the preparation of the financial 
statements, and of whether the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently 
applied and adequately disclosed. 
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order 
to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, 
whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the 
presentation of information in the financial statements. 
Opinion 
In our opinion: 
• the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the 
state of the Group’s affairs as at 31 December 2007 and of its loss for the year then ended; 
• the parent Company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted 
Accounting Practice, of the state of the parent Company’s affairs as at 31 December 2007; 
• the financial statements have been properly prepared in accordance with the Companies Act 1985; and 
• the information given in the Directors’ Report is consistent with the Group financial statements. 
BDO Stoy Hayward LLP 
Chartered Accountants and Registered Auditors 
London, United Kingdom 
28 April 2008  CONSOLIDATED INCOME STATEMENT 
Year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 25 
 
 
 Note 
Continuing 
operations  
2007  
£’000 
Dis-
continued 
operations  
2007  
£’000 
Year 
ended  
2007  
£’000 
Continuing 
operations  
2006  
£’000 
Dis-
continued 
operations  
2006  
£’000 
Year 
ended  
2006  
£’000 
 Revenue  14,647 1,623 16,270 12,433 1,788 14,221 
 Cost of sales  (699) (31) (730) (519) (31) (550) 
 Gross profit  13,948 1,592 15,540 11,914 1,757 13,671 
 Other operating income  61 – 61 61 – 61 
 Impairment of goodwill  (2,223) – (2,223) – – – 
 Other administrative expenses  (13,845) (1,336) (15,181) (11,314) (1,279) (12,593) 
 Exceptional expenses  – – – (222) – (222) 
 Total administrative expenses  (16,068) (1,336) (17,404) (11,536) (1,279) (12,815) 
 Operating (loss)/profit 5 (2,059) 256 (1,803) 439 478 917 
 Finance income 7 66 – 66 101 – 101 
 Finance costs 8 (25) – (25) (164) – (164) 
 (Loss)/profit before tax  (2,018) 256 (1,762) 376 478 854 
 Tax 9 (57) (77) (134) 93 (143) (50) 
 (Loss)/profit for the year  (2,075) 179 (1,896) 469 335 804 
 
(Loss)/earnings per share Note 
2007  
Pence 
2006  
Pence 
From continuing operations:    
Basic 12 (9.65) 2.59 
Diluted 12 (9.65) 2.04 
From continuing and discontinued operations:    
Basic 12 (8.81) 4.45 
Diluted 12 (8.81) 3.50 
The notes on pages 29 to 63 form part of these financial statements  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
for the year ended 31 December 2007 
26 Flomerics Group PLC Annual Report 2007 
 
  Note 
Year 
ended  
2007  
£’000 
Year 
ended  
2006  
£’000 
 Balance at start of year  14,843 6,853 
 (Loss)/profit for the year  (1,896) 804 
 Currency translation movement  1,018 (302) 
 Deferred tax on currency translation movement 21 (112) 16 
 Net income/(expense) recognised directly in equity  906 (286) 
 Total recognised income and expense for the year  (990) 518 
 Dividends paid 11 (299) (195) 
 Share based payment 27 116 97 
 Issue of new shares 23, 24 43 7,603 
 Movements in merger reserve  24 145 – 
 Movements in share to be issued reserve 24 – (33) 
 Balance at end of year  13,858 14,843  CONSOLIDATED BALANCE SHEET 
31 December 2007 
Flomerics Group PLC Annual Report 2007 27 
 
 Note 
2007  
£’000 
2006  
£’000 
Non-current assets    
Property, plant and equipment 15 542 520 
Investment property 16 – 1,189 
Goodwill 13 5,706 7,554 
Intangible assets 14 3,902 4,141 
Deferred tax asset 21 253 423 
Total non-current assets  10,403 13,827 
Current assets    
Inventories 18 110 33 
Trade and other receivables 19 6,149 5,467 
Cash and cash equivalents 19 2,971 2,339 
Non current assets held for sale 31 1,492 – 
Total current assets  10,722 7,839 
Total assets  21,125 21,666 
Current liabilities    
Bank overdrafts and loans  20 (76) (71) 
Trade and other payables 22 (5,847) (5,217) 
Current tax liabilities  (23) (14) 
Total current liabilities  (5,946) (5,302) 
Non-current liabilities    
Bank loans 20 (229) (305) 
Deferred tax liabilities 21 (1,092) (1,216) 
Total non current liabilities  (1,321) (1,521) 
Total liabilities  (7,267) (6,823) 
Total net assets  13,858 14,843 
Equity    
Share capital 23 216 213 
Share premium account 24 1,775 1,735 
Shares to be issued 24 1,112 1,112 
Merger reserve 24 7,330 7,185 
Translation reserves 24 716 (302) 
Retained earnings 24 2,709 4,900 
Total equity  13,858 14,843 
The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2008. 
They were signed on its behalf by: 
G C Carter  K Butcher 
Director   Director  CONSOLIDATED CASH FLOW STATEMENT 
for the year ended 31 December 2007 
28 Flomerics Group PLC Annual Report 2007 
 
 
Year 
ended  
2007  
£’000 
Year 
ended  
2006  
£’000 
Profit for the year (1,896) 804 
Adjustments for:   
Finance income (66) (101) 
Finance costs 25 164 
Income tax expense/(income) 134 50 
Depreciation of property, plant and equipment 291 240 
Depreciation of investment property 14 14 
Amortisation of intangible assets 901 577 
Impairment of goodwill 2,223 – 
Share-based payment expense 901 97 
Loss on disposal of property, plant and equipment – 2 
Operating cash flows before movements in working capital 1,742 1,847 
(Increase)/decrease in inventories (77) 30 
(Increase) in receivables (682) (1,081) 
Increase in payables 921 89 
Cash generated by operations 1,904 885 
Income taxes paid (191) (176) 
Interest paid (25) (164) 
Net cash from operating activities 1,688 545 
Cash flows from investing activities:   
Interest received 66 101 
Proceeds on disposal of property, plant and equipment 24 5 
Purchases of property, plant and equipment (333) 306 
Purchase of intangibles (313) (312) 
Acquisition of subsidiary (net of cash acquired) – (1,418) 
Deferred consideration on acquisition of subsidiary (259) – 
Net cash used in investing activities (815) (1,930) 
Cash flows from financing activities:   
Proceeds from issue of shares 38 – 
Dividends paid (299) (195) 
Repayment of loans (71) (68) 
Net cash used in financing activities (332) (263) 
Net increase/(decrease) in cash and cash equivalents  541 (1,648) 
Cash and cash equivalents at the start of the year 2,339 4,081 
Effect of foreign exchange rate changes 91 (94) 
Cash and cash equivalents at end of year 2,971 2,339 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 29 
1 General information 
Flomerics Group PLC is a Company incorporated in the United Kingdom under the Companies Act 1985. The address of the 
registered office is 81 Bridge Road, Hampton Court, Surrey, KT8 9HH. The nature of the Group’s operations and its principal activities 
are set out in note 4 and in the Business review on pages 14 to 15. 
The Directors have chosen to present these financial statements in the functional currency of the primary economic environment in 
which the Group operates which is Pounds Sterling. Foreign operations are included in accordance with the policies set out in note 2. 
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied 
in these financial statements were in issue but not yet effective: 
IAS 1  Presentation of financial statements (revised) 
IAS 23 Borrowing costs (revised) 
IAS 27  Consolidated and separate Financial Statements (revised) 
IFRS 3  Business Combinations (revised) 
IFRS 8 Operating segments 
IFRIC 12 Service concession arrangements 
IFRIC 13 Customer loyalty programmes 
IFRIC 14 IAS 19 – The limit on a Defined Benefit Asset, Minimum Funding Requirements and their interaction. 
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on 
the financial statements of the Group except for any additional disclosures that may be required arising when IFRS 8 comes into 
effect for periods commencing on or after 1 January 2009. 
2 Significant accounting policies 
Basis of accounting 
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial 
statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial 
statements comply with Article 4 of the EU IAS Regulation. 
The principal accounting policies adopted are set out below. 
First time adoption 
The Group has adopted IFRS from 1 January 2006 (‘the date of transition’); please refer to note 34 for details of the transition. 
Basis of consolidation 
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company 
(its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial 
and operating policies of an investee entity so as to obtain benefits from its activities. The Group income statement includes the 
results of subsidiaries acquired or disposed of during the year from the effective date of acquisition or up to the effective date of 
disposal, as appropriate. 
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line 
with those used by the Group. 
All intra-group transactions, balances, income and expenses are eliminated on consolidation. 
Business combinations  
The acquisition of subsidiaries or trade and assets, is accounted for using the purchase method. The cost of the acquisition is 
measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity 
instruments issued or to be issued, by the Group in exchange for control of the acquiree, plus any costs directly attributable to the 
business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition 
under IFRS 3 are recognised at their fair value at the acquisition date. 
Goodwill arising on acquisition is recognised as an asset and initially measured at cost and is accounted for according to the  
policy below. 
The Group has taken the exemption conferred in IFRS 1, “First-time Adoption of International Financial Reporting Standards”, not  
to restate business combinations prior to the transition date of 1 January 2006 under IFRS 3. 
Property, plant and equipment 
Property, plant and equipment is stated at cost or deemed cost less accumulated depreciation and any impairment in value.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
30 Flomerics Group PLC Annual Report 2007 
2 Significant accounting policies continued 
Depreciation 
Depreciation is provided on all property, plant and equipment, other than freehold land, at rates calculated to write off the cost, 
less estimated residual value based on prices prevailing at the date of acquisition, of each asset evenly over its expected useful life, 
as follows: 
– Computer hardware 20 – 33% per annum 
– Fixtures and fittings 20 – 33% per annum 
The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate the 
carrying value may not be recoverable. 
The asset’s residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial year end. 
Investment property 
Investment property, which is properly held to earn rentals is stated at its historic cost as the Group elected, under the transitional 
arrangements available under IFRS 1, to use the previous carrying value under UK GAAP as deemed cost in transition. The investment 
property is depreciated on a straightline basis of 2% per annum, however the land on which it is situated is not depreciated. 
This property has been reclassified in the year to assets held for sale and is currently held on the books at market value less costs to sell. 
Goodwill 
Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, 
intangible fixed assets and liabilities of a subsidiary, or acquired sole trade business at the date of acquisition. Goodwill is initially 
recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is 
recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the Group income 
statement and is not subsequently reversed. 
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from 
the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, 
or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit 
is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill 
allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. 
An impairment loss recognised for goodwill is not reversed in a subsequent period. 
On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject  
to being tested for impairment at that date and subsequently as required by the provisions of IAS 36 “impairment of assets”. 
Intangible assets 
Intangible assets with a finite useful life are carried at cost less amortisation and any impairment losses. Intangible assets represent 
items which have been separately identified under IFRS 3 arising in business combinations, or meet the recognition criteria of  
IAS 38, “Intangible Assets”. These assets comprise of customer relationships, contract based asset, completed technology and  
non competition agreements. 
Impairment of tangible and intangible assets excluding goodwill 
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether 
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount  
of the asset is estimated in order to determine the extent of the impairment loss (if any).  
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash 
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value 
of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. 
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount 
of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the income statement  
as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as 
a revaluation decrease. 
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised 
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would 
have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an 
impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the 
reversal of the impairment loss is treated as a revaluation increase.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 31 
2 Significant accounting policies continued 
Amortisation of intangible assets acquired in a business combination is calculated over the following periods on a straight line basis: 
Customer relationships – 10% per annum 
Contract based assets – 50% per annum 
Completed technology – over a useful life of 7 years 
Non-competition agreement – 25% per annum 
Amortisation of other intangible assets (computer software) is calculated using the straight-line method to allocate the cost of the 
asset less its assessed realisable value over its estimated useful life, which equates to 33% to 50% per annum. 
Impairment of financial assets  
Determining whether a provision is required against trade receivables requires management to make a judgment of the likely 
proportion of receivables that will not be recovered. In order to establish a reasonable provisioning level, therefore, the Directors 
use historical trends in order to predict likely irrecoverable receivables at any point in time. When an event occurs which makes it 
more likely than not that a debt will not be recovered, provision is made accordingly. For further discussion on trade and other 
receivables refer to note 19 to the accounts. 
Internally-generated intangible assets – research and development expenditure 
Expenditure on research activities is recognised as an expense in the period in which it is incurred.  
Any internally-generated intangible asset arising from the Group’s development projects are recognised only if all of the following 
conditions are met: 
• The technical feasibility of completing the intangible asset so that it will be available for use or sale. 
• The intention to complete the intangible asset and use or sell it. 
• The ability to use or sell the intangible asset. 
• How the intangible asset will generate probable future economic benefits. Among other things, the Group can demonstrate  
the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally,  
the usefulness of the intangible asset. 
• The availability of adequate technical, financial and other resources to complete the development and to use or sell the 
intangible asset. 
• Its ability to measure reliably the expenditure attributable to the intangible asset during its development. 
Internally-generated intangible assets are amortised on a straight-line basis over their useful lives of three years. Where no 
internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in 
which it is incurred. 
Financial instruments 
Financial assets and financial liabilities are recognised on the Group’s balance sheet at fair value when the Group becomes a party  
to the contractual provisions of the instrument. 
Trade receivables 
Trade receivables represent amounts due from customers in the normal course of business. All amounts are initially stated at their 
fair value and are subsequently carried at amortised costs, less provision for impairment. 
Cash and cash equivalents 
Cash and cash equivalents include cash at hand and deposits held at call with banks with original maturities of three months or less. 
Financial liabilities and equity instruments 
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. 
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. 
Bank Borrowings 
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges are 
accounted for on an accruals basis in the income statement using the effective interest rate method and are added to the carrying 
amount of the instrument to the extent that they are not settled in the period in which they arise. 
Trade payables 
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest 
rate method. 
Equity instruments 
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 
Derivative financial instruments 
The Group’s activities expose it primarily to the financial risks of changes in foreign exchange rates. The Group occasionally  
uses forward exchange contracts to hedge these exposures. The Group does not use derivative financial instruments for  
speculative purposes. 
The Group has elected not to adopt the hedge accounting provisions of IAS 39. Derivative financial instruments are initially 
measured at fair value on the date that the contract is entered into and subsequently re-measured to fair value at each reporting 
date. The gains and losses on re-measurement are taken to the income statement and reported in administrative expenses.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
32 Flomerics Group PLC Annual Report 2007 
2 Significant accounting policies continued 
Dividends 
Final equity dividends are recognised when they are approved at a general meeting of the Company. No Interim dividends are paid.  
Inventories 
Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling price less all 
estimated costs of completion and costs to be incurred in marketing, selling and distribution. 
Where necessary an allowance is made for obsolete, slow moving and damaged inventories. 
Employee share incentive plans 
The Group issues equity-settled share-based payments to certain employees (including Directors). These payments are measured at 
fair value at the date of grant by use of the Black-Scholes pricing model. This fair value cost of equity-settled awards is recognised on 
a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the 
effect of any non market-based vesting conditions. The expected life used in the model has been adjusted, based on management’s 
best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. A corresponding credit is 
recorded in equity in the share option account. 
Leases 
Leases taken by the Group are assessed individually as to whether they are finance leases or operating leases. Leases are classified as 
finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other 
leases are classified as operating leases. 
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. 
Operating lease rental payments are recognised as an expense in the income statement on a straight-line basis over the lease term. 
The benefit of lease incentives is spread over the term of the lease. 
The Group currently has no material finance leases. 
Taxation 
The tax expense represents the sum of the current tax and deferred tax charges. 
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income 
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items 
that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or 
substantively enacted by the balance sheet date.  
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in 
the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the 
balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets 
are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences 
can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of 
goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that 
affects neither the tax profit nor the accounting profit. 
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer 
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. 
Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in 
which case the deferred tax is also dealt with in equity. 
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax 
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax 
assets and liabilities on a net basis. 
Share capital and share premium 
There is one class of shares. When new shares are issued, they are recorded in share capital at their par value. The excess of the issue 
price over the par value is recorded in the share premium reserve. 
Incremental external costs directly attributable to the issue of new shares (other than in connection with a business combination) are 
recorded in equity as a deduction, net of tax, to the share premium reserve.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 33 
2 Significant accounting policies continued 
Revenue recognition 
Revenue represents the amounts receivable, net of sales taxes, on the provision of the Group’s software, maintenance, consultancy, 
and other services such as training and hardware. When a sale is made to a customer of the Group’s software, the price normally 
includes the provision of maintenance (for a perpetual licence this is only for the first year). The maintenance element is deferred 
and is recognised over the period that the maintenance is provided. Appropriate amounts attributable to maintenance are deferred 
for each type of licence. 
The licence element of the sale is recognised as income when the following conditions have been satisfied: 
1) The software has been provided to the customer in a form that enables the customer to utilise it; 
2) There is a contractual relationship between the customer and the Group; 
3) The ongoing obligations of the Group to the customer, aside from the maintenance, are minimal; and 
4) The amount payable by the customer is determinable and there is a reasonable expectation of payment. 
Revenue on the sale of hardware products is recognised when the risks and rewards of ownership have passed to the customer and 
the Group’s work is substantially complete, which is usually upon delivery to the customer or his agent. 
Retirement benefit costs 
The Group operates defined contribution pension schemes. The amount charged to the income statement in respect of pension costs 
and other post-retirement benefits is the contributions payable in the year.  
Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments 
in the balance sheet. 
Operating profit 
Operating profit is stated before finance income and finance costs. 
Foreign exchange 
The individual financial statements of each Group Company are presented in the currency of the primary economic environment in 
which it operates (its functional currency). For the purpose of the consolidated financial statements, the result and the financial 
position of each Group Company are expressed in pounds sterling, which is the functional currency of the Company, and the 
presentation currency for the consolidated financial statements. 
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit 
or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in 
profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and 
losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised 
directly in equity. 
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are 
transitioned at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange 
relates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date 
of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation 
reserve. Such translation differences are recognised as income or an expenses in the period in which the operations is disposed of. 
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign 
entity and translated at the closing rate. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions 
before the date of transition to IFRS as sterling denominated assets and liabilities. 
Non-current assets held for sale 
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less 
costs to sell. 
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale 
transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the 
asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which 
should be expected to qualify for recognition as a completed sale within one year from the date of classification.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
34 Flomerics Group PLC Annual Report 2007 
3 Critical accounting judgements and key sources of estimation uncertainty 
Critical judgments in applying the Group’s accounting policies 
In the application of the Group’s accounting policies, which are described in note 2, the Directors are required to make judgments, 
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The 
estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual 
results may differ from these estimates. 
The estimates and underlying assumptions are reviewed on an ongoing basis.  
Key sources of estimation uncertainty 
The following are the critical judgments that that the Directors have made in the process of applying the Group’s accounting policies 
that have the most significant effect on the amounts recognized in the financial statements. 
Capitalisation of internal research and development costs 
In order to comply with the Group’s accounting policy relating to internally generated intangible assets (research and development 
expenditure), the Directors are required to assess the fair value of the costs incurred on the Group’s development projects that are 
allowed to be capitalized. The vast majority of these costs are salary related, representing the costs of the employees conducting the 
research and development. In order to measure the costs that should be capitalized, the Directors conduct an exercise whereby they 
estimate the proportion of each employee’s working hours that have been spent on qualifying research and development projects. 
The Directors are then able to determine that this proportion of each employee’s salary is capital in nature, and is therefore accounted 
for accordingly. The Directors are of the opinion that as a number of people are working on such projects at any time, and that they 
can reliably assess the amount of time that is being spent by each individual on qualifying capital research, that this is a reasonably 
accurate estimation technique. The total value of internal costs capitalized as intangible assets related to research and development 
at the balance sheet date was £336,000 (2006 – £103,000). 
Impairment of goodwill 
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which  
goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise  
from the cash-generating units and a suitable discount rate in order to calculate present value. Actual events may vary materially from 
management expectation.  
Following the impairment review the carrying value of goodwill for NIKA GmbH was impaired in the year by £2,223,000. The 
Directors consider the impairment to be appropriate to reflect the slower than initially anticipated sales growth of the products 
purchased with NIKA GmbH. 
Deferred revenue policy 
In establishing the Group’s deferred revenue policy the Directors have used their judgement to determine what proportion of  
a licence sale relates to the licence and what proportion relates to the ongoing maintenance of that licence. The Directors have 
based their judgement on the proportion of the list price of a licence with maintenance compared to the list price of the 
maintenance only.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 35 
4 Business and geographical segments 
Business segments 
For management purposes, the Group is currently organised into one operating division and it is on this basis that the Group reports 
its primary segment information. 
The principal activities of the Group’s operating division is the provision of virtual prototyping software and other related services. 
The Group was also previously involved in electromagnetic virtual prototyping. This operation was discontinued during the period,  
in accordance with IFRS 5. Please refer to note 10 for further details. 
Segment information about these businesses is presented below: 
2007 
Software  
sales  
2007  
£’000 
Discontinued 
operations  
2007  
£’000 
Consolidated  
2007  
£’000 
Revenue    
External sales 14,647 1,623 16,270 
Total revenue 14,647 1,623 16,270 
Result    
Segment result (2,059) 256  
Operating loss   (1,803) 
Finance income   66 
Finance costs   (25) 
Loss before tax   (1,762) 
Tax   (134) 
Loss after tax    (1,896) 
 
2006 
Software  
sales  
2006  
£’000 
Discontinued 
operations  
2006  
£’000 
Consolidated  
2006  
£’000 
Revenue    
External sales 12,433 1,788 14,221 
Total revenue 12,433 1,788 14,221 
Result    
Segment result 439 478  
Operating profit   917 
Finance income   101 
Finance costs   (164) 
Profit before tax   854 
Tax   (50) 
Profit after tax    804 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
36 Flomerics Group PLC Annual Report 2007 
4 Business and geographical segments continued 
Geographical segments 
The Group’s operations are located in the United States of America, Europe and the Far East.  
The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods/services: 
 
Sales revenue by 
geographical market 
 
2007  
£’000 
2006  
£’000 
United States of America 5,150 5,563 
Europe 7,450 5,946 
Far East 3,670 2,712 
 16,270 14,221 
Revenue from the Group’s discontinued operations was derived as follows: United States of America (2007: £586,000, 2006: £832,000), 
Europe (2007: £602,000, 2006: £477,000) and the Far East (2007: £435,000, 2006: £478,000). 
The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment and 
intangible assets, analysed by the geographical area in which the assets are located: 
 
 Carrying amount of 
segment assets 
Additions to property, 
plant and equipment  
and intangible assets 
 
2007  
£’000 
2006  
£’000 
2007  
£’000 
2006  
£’000 
United States of America 2,781 2,677 13 68 
Europe 17,201 17,843 594 529 
Far East 1,143 1,008 39 21 
 21,125 21,528 646 618 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 37 
5 Operating profit  
 
2007  
£’000 
2006  
£’000 
Operating profit for the year has been arrived at after charging/(crediting):   
Research and development costs 3,071 2,878 
Depreciation of property, plant and equipment 291 240 
Depreciation of investment property 12 12 
Amortisation of intangible assets, other than development costs 874 471 
Amortisation of internally-generated intangible assets included in other operating expenses 27 106 
Staff costs (see note 6) 9,541 7,645 
Exceptional costs in the prior year related to £112,000 exceptional staff costs and £110,000 exceptional restructuring costs. 
The analysis of auditors’ remuneration is as follows: 
 
2007  
£’000 
2006  
£’000 
Fees payable to the Company’s auditors for the audit of the Company’s annual accounts 25 25 
Fees payable to the Company’s auditors and their associates for other services to the Group   
– The audit of the Company’s subsidiaries pursuant to legislation 160 70 
Total audit fees 185 95 
 Other services pursuant to legislation   
– Tax services 43 26 
– Acquisition of NIKA – 10 
– IFRS 10 6 
– Other services – 3 
Total non-audit fees  53 45 
Fees payable to BDO Stoy Hayward LLP and their associates for non-audit services to the Company are not required to be disclosed 
because the consolidated financial statements are required to disclose such fees on a consolidated basis. 
6 Staff costs 
The average monthly number of employees (including Executive Directors) was: 
 
2007  
Number 
2006  
Number 
   
Sales and marketing 63 52 
Technical staff 146 109 
Administration 33 30 
 242 191 
 
 £’000 £’000 
Their aggregate remuneration comprised:   
Wages and salaries 8,030 6,447 
Social security costs 1,014 842 
Other pension costs  497 356 
 9,541 7,645 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
38 Flomerics Group PLC Annual Report 2007 
7 Finance income 
 
2007  
£’000 
2006  
£’000 
Interest on bank deposits 50 101 
Foreign exchange gains 16 – 
 66 101 
8 Finance costs 
 
2007  
£’000 
2006  
£’000 
Interest on bank overdrafts and loans 25 26 
Foreign exchange losses – 138 
 25 164 
9 Tax 
 
2007  
£’000 
2006  
£’000 
Current income tax:   
Current year 183 175 
Adjustment to prior period 17 (15) 
Total current income tax 200 160 
Deferred tax (note 21):   
Original and reversal of temporary differences (73) (110) 
Effect of change in tax rate 7 – 
Total deferred tax (66) (110) 
Total tax charge in the income statement 134 50 
UK Corporation tax is calculated at 30% (2006:30%) of the estimated assessable profit for the year. 
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. 
Reconciliation of continuing and discontinued operations: 
 
2007  
£’000 
2006  
£’000 
Continuing operations:   
Current tax 123 17 
Deferred tax (66) (110) 
 57 (93) 
Discontinued operations:   
Current tax 77 143 
Total 134 50 
 
 
2007  
£’000 
2006  
£’000 
Tax relating to items (credited)/charged to equity:   
Deferred tax on currency translation movements 112 (16) 
 112 (16) 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 39 
9 Tax continued 
The charge for the year can be reconciled to the profit per the income statement as follows: 
 
2007  
£’000 
2007  
% 
2006  
£’000 
2006  
% 
Profit before tax:     
Continuing operations  (2,018)  376  
Discontinued operation 256  478  
 (1,762)  854  
Tax at the UK corporation tax rate of 30% (2006 30%) (529) 30 257 30 
Tax effect of expenses that are not deductible in determining taxable profit 53 (3) 48 5 
Tax effect of impairment of goodwill 667 (38) 50 6 
Tax effect of unrelieved current year losses 161 (9) – – 
Effect of different tax rates of subsidiaries operating in other jurisdictions (29) 2 (34) (4) 
Tax effect of non-taxable income – – (15) (1) 
Tax effect of utilisation of tax losses not previously recognised – – (76) (8) 
Effect of change in UK tax rate as deferred tax 7 – – – 
Over/(under) provision of tax in prior years 17 1 (14) (2) 
Tax effect of enhanced deduction for UK research and development cost (199) 11 (194) (23) 
Utilisation of bought forward credit in respect of overseas taxation (14) – – – 
Tax effect of unrelieved overseas tax – – 28 3 
Tax expense and effective tax rate for the year 134 (8) 50 6 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
40 Flomerics Group PLC Annual Report 2007 
10 Discontinued operations 
On 20 December 2007, the Group entered into a sale agreement to dispose of the electromagnetics division, which carried out all of 
the Group’s electromagnetic virtual prototyping operations. The disposal completed on 31 January 2008, on which date control of 
the division passed to the acquirer. 
The results of the discontinued operations, which have been included in the consolidated income statement, were as follows: 
 
2007  
£’000 
2006  
£’000 
Revenue 1,623 1,787 
Expenses other than finance costs (1,367) (1,309) 
Profit before taxation 256 478 
Tax expense (77) (143) 
Profit/(loss) for the year 179 335 
During the year, the electromagnetics division contributed £179,000 (2006: £335,000) to the Group’s net operating cash flows, and 
made no payments in respect of investing activities or financing activities (2006: £nil). 
The effect of discontinued operations on segment results is disclosed in note 4. 
The major classes of assets and liabilities of the electromagnetics division are as follows: 
 
2007  
£’000 
Goodwill and other intangible assets 296 
Property, plant and equipment 19 
Total assets of division being net assets of disposal group 315 
Please refer to note 31 for further details in this respect. 
In addition to the disposal of the electromagnetics division referred to above, during 2007 the management were actively marketing 
the Group’s investment property. As such at the balance sheet date the property has been reclassified from investment property to 
assets held for sale, as can be seen in note 16 to the financial statements. 
The assets and liabilities comprising the operations as classified as held for sale in respect of the investment property are as follows: 
 
2007  
£’000 
Investment property 1,177 
Total assets classified as held for sale 1,177 
Mortgage on freehold property 305 
Total liabilities associated with assets classified as held for sale 305 
Net assets of disposal group 872 
Please refer to note 31 for further details in this respect. 
11 Dividends 
 
Year 
ended  
2007  
£’000 
Year 
ended  
2006  
£’000 
Amounts recognised as distributions to equity holders in the period:   
Dividends paid of 1.4p (2006: 1.3p) per share. 299 195 
Proposed final dividend for the year ended 31 December 2007 of 1.6p (2006: 1.4p) per share 364 299 
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as  
a liability in these financial statements.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 41 
12 Earnings per share 
From continuing and discontinued operations: 
Year 
ended  
2007  
pence 
Year 
ended  
2006 
pence 
(Loss)/earnings per share:   
Basic (8.81) 4.45 
Diluted (8.81) 3.50 
We have excluded 1,328,000 shares (2006 – 4,905,000) from the diluted earnings per share on the basis that they are anti-dilutive. 
The calculation of the basic and diluted earnings per share is based on the following data: 
Earnings £’000 £’000 
(Loss)/earnings for the purposes of basic earnings per share being net profit  
attributable to equity holders of the parent (1,896) 804 
 
Number of shares 
No.  
‘000 
No.  
‘000 
Weighted average number of ordinary shares for the purposes of basic earnings per share 21,511 18,063 
Effect of dilutive potential ordinary shares:   
Share options 1,328 4,905 
Weighted average number of ordinary shares for the purposes of diluted earnings per share 22,839 22,968 
 
From continuing operations  
Year 
ended  
2007  
£’000 
Year 
ended  
2006  
£’000 
Net profit attributable to equity holders of the parent (1,896) 804 
Adjustments to exclude profit for the period from discontinued operations (179) (335) 
(Loss)/earnings from continuing operations for the purpose of basic and diluted  
earnings per share excluding discontinued operations (2,075) 469 
The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing and 
discontinued operations. 
From continuing operations 
Year  
ended  
2007  
pence 
Year  
ended  
2006  
pence 
(Loss)/earnings per share:   
Basic (9.65) 2.59 
Diluted (9.65) 2.04 
 
From discontinued operations  
Year 
ended  
2007  
pence 
Year 
ended  
2006  
pence 
Earnings per share:   
Basic 0.83 1.85 
Diluted 0.78 1.46 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
42 Flomerics Group PLC Annual Report 2007 
13 Goodwill 
 £’000  
Cost  
At 1 January 2006 1,353 
Exchange differences (99) 
Recognised on acquisition of a subsidiary 6,370 
Other changes (70) 
At 1 January 2007 7,554 
Exchange differences 554 
Reclassified as held for sale (294) 
Other changes 115 
At 31 December 2007 7,929 
Accumulated impairment losses  
At 1 January 2006 and 1 January 2007 – 
Impairment charge in the year 2,223 
At 31 December 2007 2,223 
Carrying amount  
At 31 December 2007 5,706 
At 31 December 2006 7,554 
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to 
benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill had been 
allocated as follows: 
 
2007  
£’000 
2006  
£’000 
NIKA GmbH 4,602 6,271 
Microelectronics Research and Development Limited (“MicReD”) 1,104 989 
Kimberly Communications Consultants Limited – 294 
 5,706 7,554 
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. 
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use 
calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the 
period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money 
and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs 
are based on past practices and expectations of future changes in the market. 
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next  
five years and extrapolates cash flows for the following five years based on an estimated growth rate of zero%. This rate does  
not exceed the average long-term growth rate for the relevant markets. 
The rate used to discount the forecast pre-tax cash flows is 22.86%. 
Goodwill for NIKA GmbH has been retranslated at year end as the underlying goodwill is in Euros. 
Following the impairment review the carrying value of goodwill for NIKA GmbH was impaired by £2,223,000. The Directors  
consider the impairment to be appropriate to reflect the slower than initially anticipated sales growth of the products  
purchased with NIKA GmbH.  
Goodwill for Microelectronics Research and Development Limited has increased from the previous year as a result of the year 2 earn 
out consideration being in excess of amounts accrued for at the last reporting date. The directors have carried out an impairment 
review of the carrying value of goodwill for Microelectronics Research and Development Ltd and do not consider any impairment to 
be appropriate. 
Goodwill for Kimberly Communications Consultants Limited has been reclassified in the year as detailed in note 31.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 43 
14 Other intangible assets 
 
Customer 
relationship  
£’000 
Contract 
leased 
intangible 
£’000 
Completed 
technology 
£’000 
Non-
competition 
agreement 
£’000 
Development 
cost 
£’000 
Software 
£’000 
Total 
£’000 
Cost        
At 1 January 2006 – – – – 132 344 476 
Additions – – – – 77 235 312 
Disposals – – – – – (4) (4) 
Acquired on acquisition  
of a subsidiary 230 236 3,647 92 – – 4,205 
Foreign exchange adjustment (4) (4) (59) (1) – (12) (80) 
At 1 January 2007 226 232 3,588 91 209 563 4,909 
Additions – – – – 260 53 313 
Disposals – – – – – (6) (6) 
Reclassified as held for sale – – – – – (4) (4) 
Foreign exchange adjustment 22 21 336 8 – 2 389 
At 31 December 2007 248 253 3,924 99 469 608 5,601 
Amortisation        
At 1 January 2006 – – – – – 209 209 
Charge for the year 11 58 256 11 106 135 577 
Disposals – – – – – (4) (4) 
Foreign exchange adjustment – – (3) – – (11) (14) 
At 1 January 2007 11 58 253 11 106 329 768 
Charge for the year 25 127 561 25 27 136 901 
Disposals – – – – – (6) (6) 
Reclassified as held for sale – – – – – (2) (2) 
Foreign exchange adjustment 2 5 27 1 – 3 38 
At 31 December 2007 38 190 841 37 133 460 1,699 
Carrying amount         
At 31 December 2007 210 63 3,083 62 336 148 3,902 
At 31 December 2006 215 174 3,335 80 103 234 4,141 
The amortisation period for development costs incurred on the Group’s development is 3 years.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
44 Flomerics Group PLC Annual Report 2007 
15 Property, plant and equipment 
 
Computer 
hardware  
£’000 
Fixtures 
and 
fittings  
£’000 
Total  
£’000 
Cost     
At 1 January 2006 806 370 1,176 
Additions 256 50 306 
Acquisition of subsidiary 31 56 87 
Exchange differences (44) (32) (76) 
Disposals (45) (37) (82) 
At 1 January 2007 1,004 407 1,411 
Additions 257 76 333 
Exchange differences 20 23 43 
Disposals (57) (1) (58) 
Reclassified as held for sale (64) – (64) 
At 31 December 2007 1,160 505 1,665 
Accumulated depreciation and impairment    
At 1 January 2006 521 265 786 
Charge for the year 185 55 240 
Exchange differences (34) (26) (60) 
Eliminated on disposals (38) (37) (75) 
At 1 January 2007 634 257 891 
Charge for the year 225 66 291 
Exchange differences 8 12 20 
Eliminated on disposals (33) (1) (34) 
On assets reclassified as held for sale (45) – (45) 
At 31 December 2007 789 334 1,123 
Carrying amount    
At 31 December 2007 371 171 542 
At 31 December 2006 370 150 520 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 45 
16 Investment property 
 
Investment 
property  
£’000 
Cost  
At 1 January 2006 and 1 January 2007 1,232 
Transfer to assets held for sale (1,232) 
At 31 December 2007 – 
Accumulated depreciation and impairment  
At 1 January 2006  31 
Charge for the year 12 
At 1 January 2007 43 
Charge for the year 12 
Transfer to assets held for sale (55) 
At 31 December 2007 – 
Carrying amount  
At 31 December 2007 – 
At 31 December 2006 1,189 
17 Subsidiaries 
A list of the significant investments in subsidiaries, including the name, country of incorporation, proportion of ownership interest is 
given in note C to the Company’s separate financial statements. 
18 Inventories 
 
2007  
£’000 
2006  
£’000 
Finished goods 110 33 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
46 Flomerics Group PLC Annual Report 2007 
19 Other financial assets 
Trade and other receivables  
2007  
£’000 
2006  
£’000 
Amount receivable for the sale of goods  5,361 4,812 
Allowance for doubtful debts (72) (24) 
 5,289 4,788 
Other debtors 240 292 
Prepayments 620 387 
 6,149 5,467 
 
Trade receivables 
2007  
£’000 
2006  
£’000 
Net of allowances are held in the following currencies:   
Sterling  1,180 1,045 
Euro 2,193 1,589 
US dollar 1,207 1,416 
Other 709 738 
 5,289 4,788 
Before accepting any new customer, the Group uses a credit approval process to assess the potential customer’s credit quality and 
defines credit limits by customer. 
Included in the Group’s trade receivable balance are debtors with a carrying amount of £764,000 (2006: £1,044,000) which are  
past due at the reporting date. The Group does not hold any collateral over these balances. The average age of these receivables  
is 74 days (2006: 72 days). 
Ageing of past due but not impaired receivables. 
 
2007  
£’000 
2006  
£’000 
30-60 days 174 421 
60-90 days  233 284 
90-120 days 357 339 
Total 764 1,044 
Movement in the allowance for doubtful debts. 
 
2007  
£’000 
2006  
£’000 
Balance at the beginning of the period 24 62 
Increase/(decrease) in provision  48 (38) 
Balance at the end of the period 72 24 
In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable 
from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer 
base being large and unrelated. On the basis that the customers of the Group consist of blue chip companies, large electronics 
manufacturers and educational institutions the credit quality of the trade receivables are considered to be good.   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 47 
19 Other financial assets continued 
Ageing of impaired trade receivables 
 
2007  
£’000 
2006  
£’000 
120+ days 72 24 
Total 72 24 
The Directors consider that the carrying amount of trade and other receivables approximates their fair value. 
Cash and cash equivalents 
 
2007  
£’000 
2006  
£’000 
Cash and cash equivalents 2,971 2,339 
Cash and cash equivalents are held in the following currencies; 
 
2007  
£’000 
2006  
£’000 
Sterling  656 167 
US dollar 1,418 1,376 
Euro 481 446 
Other 416 350 
Total 2,971 2,339 
Cash and cash equivalents comprise cash held by the Group and short–term bank deposits with an original maturity of three months 
or less. The carrying amount of these assets approximates their fair value.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
48 Flomerics Group PLC Annual Report 2007 
20 Bank overdrafts and loans 
 
2007  
£’000 
2006  
£’000 
Bank loans 305 376 
 305 376 
The borrowings are repayable as follows:   
On demand or within one year 76 71 
In the second year 81 76 
In the third to fifth years inclusive 148 229 
 305 376 
Less: Amount due for settlement within 12 months (shown under current liabilities) 76 71 
Amount due for settlement after 12 months 229 305 
The above loan is denominated in sterling and is secured against the property that is included in the assets held for sale, (note 34). 
 
2007  
% 
2006  
% 
The weighted average interest rates paid were as follows:   
Bank loans 7.04 6.09 
The Directors estimate the fair value of the Group’s borrowings as follows: 
 
2007  
£’000 
2006  
£’000 
Bank loans 305 376 
The Group has principal bank loan of £305,000 (2006: £376,000). The loan was taken out on 14 September 2001. Repayments 
commenced on 01 October 2001 and will continue until 01 September 2011. The loan is secured by a charge over certain of the 
Group’s properties dated 14 September 2011. The loan carries interest rate at 1.25% above LIBOR. 
At 31 December 2007 and 31 December 2006, the Group had no undrawn committed borrowing facilities.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 49 
21 Deferred tax 
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current 
and prior reporting period. 
 
Accelerated 
tax 
depreciation  
£’000 
Deferred 
development 
costs  
£’000 
NIKA 
intangibles  
£’000 
Share based 
payment  
£’000 
Temporary 
differences 
£’000 
Total 
£’000 
At 1 January 2006 428 (40) – 14 18 420 
Credit/(charge) to income (4) 9 107 (7) 5 110 
Recognised on acquisition – – (1,339) – – (1,339) 
Exchange differences – – 16 – – 16 
At 1 January 2007 424 (31) (1,216) 7 23 (793) 
Credit/(charge) to income (82) (65) 236 (7) (9) 73 
Exchange differences – – (112) – – (112) 
Effect of change in tax rate  –     
– income statement (8) 2 – – (1) (7) 
As 31 December 2007 334 (94) (1,092) – 13 (839) 
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) 
for financial reporting purposes: 
 
 2007  
£’000 
2006  
£’000 
Deferred tax liabilities  (1,092) (1,216) 
Deferred tax assets  253 423 
  (839) (793) 
At the balance sheet date, the Group has unused tax losses of £6.5m (2006: £5.5m) available for offset against future profits. No 
deferred tax asset has been recognised in respect of these losses due to the unpredictability of future profit streams. The losses may 
be carried forward indefinitely, subject to certain conditions. 
22 Other financial liabilities 
Trade and other payables  
 
2007  
£’000 
2006  
£’000 
Trade creditors and accruals  5,847 5,217 
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit 
period taken for trade purchases is 27 days. 
The Directors consider that the carrying amount of trade payables approximates to their fair value. 
23 Share capital 
 
2007  
£’000 
2006  
£’000 
Authorised:   
40,000,000 ordinary shares of 1p each 400 400 
Issued and fully paid:   
21,631,516 ordinary shares of 1p each (2006 – 21,331,370 ordinary shares of 1p each) 216 213 
The Company has one class of ordinary shares which carry no right to fixed income.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
50 Flomerics Group PLC Annual Report 2007 
24 Reserves 
 Note 
Share 
premium 
reserve 
£’000 
Shares to 
be issued 
£’000 
Merger 
reserve 
£’000 
Translation 
reserves 
£’000 
Retained 
earnings 
£’000 
Total 
equity 
2007 
£’000 
Balance at 1 January 2007  1,735 1,112 7,185 (302) 4,900 14,630 
Profit for the year  – – – – (1,896) (1,896) 
Dividends paid  – – – – (299) (299) 
Currency translation movements  – – – 1,018 – 1,018 
Deferred tax on currency translation movements  – – – – (112) (112) 
Share based payment  – – – – 116 116 
Issue of new shares  40 – 145 – – 185 
Balance at 31 December 2007  1,775 1,112 7,330 716 2,709 13,642 
 
 Note 
Share 
premium 
reserve 
£’000 
Shares to 
be issued 
£’000 
Merger 
reserve 
£’000 
Translation 
reserves 
£’000 
Retained 
earnings 
£’000 
Total 
equity 
2006 
£’000 
Balance at 1 January 2006  1,602 33 892 – 4,178 6,705 
Profit for the year  – – – – 804 804 
Dividends paid  – – – – (195) (195) 
Currency translation movements  – – – (302) – (302) 
Deferred tax on currency translation movements  – – – – 16 16 
Share based payment  – – – – 97 97 
Issue of new shares  133 1,112 6,293 – – 7,538 
Acquisition of MicReD – shares to be  
issued adjustment  – (33) – – – (33) 
Balance at 31 December 2006  1,735 1,112 7,185 (302) 4,900 14,630 
Share premium reserve can be defined as amount subscribed for share capital in excess of nominal value. 
Merger reserve can be defined as amounts recognised as a result of claiming merger relief following the issue of shares of the Group 
as consideration for an acquisition. 
Translation reserves can be defined as the gains and losses on retranslating the net assets of overseas operations into sterling. 
Retained earnings can be defined as the cumulative net gains and losses recognised in the consolidated income statement. 
25 Contingent liabilities 
During the reporting period, an employee of the Group instigated proceedings against it for alleged breaches in employment 
arrangements.  
The Group’s lawyers have advised that they do not consider that the suit has merit and they have recommended that it be contested. 
No provision has been made in these financial statements as the Group’s management do not consider that there is any probable loss.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 51 
26 Operating lease arrangements 
The Group as lessee 
 
2007  
£’000 
2006  
£’000 
Minimum lease payments under operating leases recognised as an expense in the year 591 435 
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable 
operating leases, which fall due as follows: 
 
2007 
£’000 
2006 
£’000 
Within one year 111 91 
In the second to fifth years inclusive 447 328 
After five years 154 154 
 712 573 
Operating lease payments represent rentals payable by the Group for certain of its office properties. Leases are negotiated for an 
average term of 5 years and rentals are fixed for an average of 5 years. 
The Group as lessor 
Property rental income earned during the year was £61,000 (2006: £61,000). The property is expected to generate rental yields of  
5% on an ongoing basis. The property has a committed tenant for next 3 years. 
At the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments: 
 
2007 
£’000 
2006 
£’000 
Within one year – 61 
In the second to fifth years inclusive 75 – 
After five years – – 
 75 61 
The property on which the above income relates is currently held for sale, and if sold, the Company will not receive future  
lease payments.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
52 Flomerics Group PLC Annual Report 2007 
27 Share based payments  
Equity settled share option scheme 
In the past the Company has granted share options to employees and Directors through an Executive Share Option Scheme (‘ESOS’) 
and an Enterprise Management Incentive (EMI) Scheme. Under these schemes options are granted at an exercise price equal to the 
mid-market price as at the end of the day immediately preceding the grant and as shown in the Financial Times newspaper. The 
exercise of options for all options granted during the period under review and for most options granted historically is subject to  
a performance criterion being satisfied. The vesting period is three years. If the options remain unexercised after a period of ten 
years from the date of grant the options expire. The options are forfeited if the employee leaves the Group before the options vest. 
In 2006 the shareholders gave permission for the ESOS to be replaced by a new scheme, the main difference being that under the 
new scheme options may be granted at nominal or nil cost. For the period under review options were granted under the new plan. 
IFRS2 (Share based payment) 
In accordance with IFRS2 the Group has elected not to apply IFRS2 to options granted on or before 7 November 2002 or to options 
which had vested by 1 January 2006. 
Details of the share options outstanding during the year for options issued since 7 November 2002 are as follows: 
 2007 2006 
 
Number of 
shares 
options 
Weighted 
average 
exercise 
price (in £) 
Number of 
share 
options 
Weighted 
average 
exercise 
price (in £) 
Outstanding at beginning of period 1,386,495 0.73 1,186,049 0.68 
Granted during the period 346,900 0.86 240,000 0.98 
Forfeited during the period (55,431) 0.73 (37,734) 0.61 
Exercised during the period (37,861) 0.61 (1,820) 0.455 
Outstanding at the end of the period 1,640,103 0.76 1,386,495 0.73 
Exercisable at the end of the period 486,203 0.61 158,690 0.59 
The weighted average share price at the date of exercise for share options granted during the period was 91p (2006: 86p). The 
options outstanding at the 31 December 2007 had a weighted average remaining contractual life of 7.58 years (2006: 8.10 years). 
In 2007 share options were granted on 3 May. The estimated fair value of the options granted on that date is £65,000 (2006: £65,000).  
For the period ending 31 December 2007 the Group has recognised a total expense of £116,000 (2006: £97,000) related to equity-
settled share-based payment transactions. 
The estimated fair values for determining this charge were calculated using the Black-Scholes option pricing model. This produces  
a fair value for each grant of options made and the fair value is then charged over the vesting period, which is three years. For this 
reason the charge for 2007 is determined by any grants made in our case since 12 March 2004. The inputs into the model at each 
grant date since then were as follows: 
Date of Grant 
12 March 
2004 
11 June 
2004 
30 July 
2004 
3 May 
2005 
28 July 
2005 
25 
November 
2005 
 7 March 
2006 
3 May 
2007 
Share price on date of grant 0.81 0.62 0.60 0.68 0.75 0.85 0.99 0.86 
Exercise Price 0.80 0.62 0.60 0.70 0.76 0.88 0.99 0.86 
Expected volatility 66.3% 66.2% 66.2% 65.5% 64.7% 63.5% 61.9% 54.1% 
Expected life (years) 6 6 6 6 6 6 6 6 
Risk-free Rate 4.5% 5.2% 5.1% 4.5% 4.2% 4.2% 4.3% 5.4% 
Expected dividend yield 1.2% 1.6% 1.7% 1.6% 1.5% 1.3% 1.3% 1.6% 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 53 
27 Share based payments continued 
Assumptions in calculating fair value 
The expected volatility was determined by calculating the historical volatility of the Company’s share price over the six years 
preceding the grant of the option. Six years was selected as this is the expected term of the options. 
The risk free rate is the rate of interest obtainable from government securities (i.e. Gilts in the UK) over the expected life of  
the option. 
The expect dividend yield is based on the historic dividend yield – i.e. dividends paid in the twelve months prior to grant calculated 
as a percentage of the share price on the date of grant. 
The exercise of the share options granted are subject to performance criteria being met. In some cases this is a fixed three year 
period, in others it has been any three year period from the date of grant until maturity. 
In addition the number of share options has been adjusted by the expected rate of staff turnover where the share option would  
be forfeited in the event an employee left before the vesting date. A staff turn-over rate of 9% per year has been assumed for 
employees and 3.3% for Directors. 
Share options granted prior to 7 November 2002 
The movements during the year are as follows: 
Period of options 
As at  
1 January 
2007 
Exercised 
during the 
year 
Lapsed 
during the 
year 
As at 31 
December 
2007 
Option 
Price £ 
13 April 1999 to 12 April 2009 50,000 50,000 – – 0.40 
4 October 1999 to 3 October 2009 100,000 – – 100,000 0.54 
24 April 2002 to 23 April 2012 35,000 – – 35,000 0.84 
1 August 2002 to 31 July 2012 74,000 2,500 8,500 63,000 0.53 
11 September 2002 to 10 September 2012 15,481 785 1,915 12,781 0.475 
28 Retirement benefit schemes 
Defined contribution schemes 
The Group operates defined contribution pension schemes. The pension charge for the year represents contributions payable to the 
Group to the schemes and amounted to £497,000 (2006: £356,000). 
At 31 December 2007, contributions amounting to £147,000 (2006: £58,000) were payable and included in trade and other payables. 
29 Financial instruments 
Capital risk management 
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the 
return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, 
which includes the borrowings disclosed in note 20, cash and cash equivalents and equity attributable to equity holders of the 
parent, comprising issued capital, reserves and retained earnings as disclosed in note 24.  
Gearing ratio 
The Group does not regularly review its gearing ratio as its debt, being defined as long and short term borrowings, is limited to  
a mortgage against its investment property. This asset is classified as held for resale at the balance sheet date and, once disposed of, 
the Group will no longer have any debt. 
Externally imposed capital requirement 
The Group is not subject to externally imposed capital requirements. 
Significant accounting policies 
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement 
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity 
instrument are disclosed in note 2 to the financial statements. Further details on critical accounting judgments and estimation 
uncertainty are detailed in note 3.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
54 Flomerics Group PLC Annual Report 2007 
29 Financial instruments continued 
Categories of financial instruments 
 Carrying value 
 
2007 
£’000 
2006 
£’000 
Financial assets   
Loans and receivables:   
– Trade receivables 5,289 4,788 
– Other assets 240 292 
– Cash and cash equivalents 2,971 2,339 
 8,500 7,419 
Financial liabilities   
Financial liabilities at amortised cost:   
– Trade payables 5,847 5,217 
– Borrowings due within one year 76 71 
– Borrowings due after one year 229 305 
 6,152 5,593 
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously 
monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. As part of this 
monitoring the Group ensures that the financial liabilities due to be paid can be met by existing cash and cash equivalents. 
Financial risk management objectives 
The Group monitors and manages the financial risks relating to the financial instruments held. The principal risks include currency 
risk (on financial assets and trade payables), credit risk (on financial assets) and interest rate risk (on financial assets and borrowings). 
These risks are discussed in further detail below. 
By virtue of the nature of the Group’s operations, it is generally not exposed to price risk and, for reasons documented in ‘Gearing 
ratio’ above, it is also not exposed greatly to liquidity risk. 
It is not Group policy to trade in financial instruments. 
Market risk 
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The 
Group does, at times, use forward foreign exchange contracts to hedge exchange rate risk, however their use is considered on a case 
by case basis. 
The Group does not prepare a value-at-risk (VaR) analysis of the market risk exposures faced by the Group. Therefore, in accordance 
with IFRS 7, sensitivity analysis of each type of market risk is presented below. 
Foreign currency risk management 
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. 
Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts. 
The carrying amounts of the Group’s material foreign currency denominated monetary assets and monetary liabilities at the 
reporting date are as follows: 
  Liabilities  Assets 
 
2007 
£’000 
2006 
£’000 
2007 
£’000 
2006 
£’000 
Euro (399) (465) 2,674 2,035 
US Dollar (388) (407) 2,625 2,792 
Swedish Krona * * 412 291 
Indian Rupee * * 206 219 
Japanese Yen * * 217 172 
Singapore Dollar * * 141 87 
Hungarian Florin * * 110 321 
Chinese Yuan – – 51 – 
* Liabilities in these currencies are deemed immaterial hence no analysis has been presented  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 55 
29 Financial instruments continued 
Foreign currency sensitivity analysis 
The following table details the Group’s sensitivity to a 10% increase and decrease in Sterling against the relevant foreign currencies. The 
sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period 
end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and other equity where Sterling 
strengthens 10% against the relevant currency. For a 10% weakening of Sterling against the relevant currency, there would be an equal 
and opposite impact on the profit and other equity, and the balances below would be negative. The sensitivities below are based on the 
exchange rates at the balance sheet used to convert the asset or liability to sterling. The Group seeks to match its foreign currency assets 
and cash flows to hedge exposures. Therefore, the rate of exchange at the balance sheet date represents the best method of evaluating 
foreign currency exchange rates and losses arising on the Group’s financial assets and liabilities. 
 Profit and loss impact 
 
2007 
£’000 
2006 
£’000 
Euro 207 143 
US Dollar 203 217 
Swedish Krona 10 29 
Indian Rupee 19 20 
Japanese Yen 20 16 
Singapore Dollar 37 26 
Hungarian Florin 13 8 
Chinese Yuan 5 – 
There are no material foreign exchange differences arising on the retranslation of financial costs and liabilities accordingly, no 
analysis of the sensitivities is presented. The fluctuations from 2006 are as a result of changes in the Group’s working capital at  
the respective balance sheet dates. 
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure 
is higher than in the year. This is due to the high sales volume that takes place in the months leading up to the year end and as a 
result the year end debtors held in foreign currency are higher than during the year. 
Interest rate risk management 
The Group is exposed to interest rate risk as the Group has a mortgage linked to LIBOR, and earns interest on cash deposited at 
banks on a variable rate of interest. Given the relatively low amounts of interest paid and received by the Group, neither interest 
rate swaps contracts nor forward interest rate contracts are used to hedge any risks arising. 
No sensitivity analyses have been presented on the basis that modest changes in interest rates (deemed to be a 0.5% increase or 
decrease) do not have a material impact on the Group. 
Credit risk management 
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.  
The Group faces exposure to credit risk on its trade receivables and cash equivalents. 
The risk of financial loss arising from defaults on trade receivables is mitigated by the Group using a credit approval process to assess 
the potential customers’ credit quality and also establishes credit limits by customer. The limits and credit scores attributed to 
customers is reviewed bi-annually however, the sales ledger is reviewed at least monthly to ensure all receivables are recoverable. 
Please refer to note 19 for further details on trade receivables, including analyses of bad debts, ageing and profile by currency. 
In terms of trade receivables, the Group does not have any significant credit risk exposure to any single counterparty or any group of 
counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are connected 
entities. Concentration of credit did not exceed 5% of gross monetary assets at any time during the year.   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
56 Flomerics Group PLC Annual Report 2007 
29 Financial instruments continued 
The Group believes the credit risk on liquid funds, being cash and cash equivalents, to be limited because the counterparties  
are banks with high-credit ratings assigned by international credit-rating agencies. However, the concentration of credit risk by 
counterparty does exceed 10% of the overall cash and cash equivalents balance (being £298,000 for 2007 and £234,000 for 2006)  
in some cases. Given the recent “credit crunch” the table below shows the balance of counterparties at the balance sheet date in 
excess of 10% of the overall balance, together with the Standard and Poor’s credit rating symbols. 
   2007 2006 
Counterparty Location Rating 
% of 
overall 
cash and 
cash 
equivalents 
£’000 
Carrying 
amount 
£’000 
% of 
overall 
cash and 
cash 
equivalents 
£’000 
Carrying 
amount 
£’000 
Barclays Bank plc UK AA 30.8% 915 23% 539 
Anglo Irish Bank plc UK A – – 19.7% 461 
Bank of America US AA 25.7% 764 24.1% 564 
Naspa Bank  GM A 9.5% 282 – – 
Liquidity risk management 
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk 
management framework for the management of the Group’s short, medium and long-term funding and liquidity management 
requirements. At the balance sheet date, liquidity risk is considered to be low given the fact borrowings are limited to a mortgage 
secured against the Group’s investment property and cash and cash equivalents are thought to be at acceptable levels. 
30 Related party transactions 
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are 
not disclosed in this note.  
Wolfgang Biedermann, Non-Executive Director, was the principal of Pricap Venture Partners AG (“Pricap”) until 30 June 2007 when 
he resigned to join another company. He retains a 20% shareholding in Pricap but holds no executive position. On 15 April 2008 he 
resigned as a Director of Flomerics Group PLC. 
Pricap was the largest shareholder in Flomerics in 2007. On 14 March 2008 Pricap sold their entire shareholding to Mentor  
Graphics Corporation. 
In 2006 an indemnity was made by the Group to Gary Carter which related to certain legal expenses and a settlement in respect  
of certain agreements with his former employer. The total value during the year was £72,000. 
Remuneration of key management personnel 
The Group considers its Directors to be the key management personnel of the Group, as defined in IAS 24. Please refer to the 
Directors’ Remuneration Report on page 20.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 57 
31 Assets held for sale 
 
Electro-
magnetics 
division 
£’000 
Investment 
property 
£’000 
Total 
£’000 
At 1 January 2006 and 1 January 2007 – – – 
Goodwill  294 – 294 
Other intangible assets 2 – 2 
Property, plant and equipment (at fair value) 19 1,177 1,196 
At 31 December 2007 315 1,177 1,492 
 
 
Investment 
property 
£’000 
Total 
£’000 
Cost   
At 1 January 2006 and 1 January 2007 – – 
Transfer from Investment property 1,232 1,232 
At 31 December 2007 1,232 1,232 
Accumulated depreciation   
At 1 January 2006 and 1 January 2007 – – 
Transfer from Investment property 55 55 
At 31 December 2007 55 55 
Carrying amount   
At 31 December 2007 1,177 1,177 
At 31 December 2006 – – 
The fair value of the property held for resale at 31 December 2007 of £1,177,000 (2006: £nil) has been arrived at based on the price 
the property has been marketed at by Main Allen, (Surveyors), less cost to sell.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
58 Flomerics Group PLC Annual Report 2007 
32 Acquisition in prior period  
On 6 July 2006, the Group acquired the entire share capital of NIKA GmbH for initial consideration of £8.8m settled thorough  
a combination of shares and cash as shown below. No further consideration will become payable.  
Fair value of assets acquired 
Fair value 
of assets 
£’000 £’000 
Software and Intangibles 9  
Tangible fixed assets 87  
Stock 4  
Debtors and prepayments 437  
Cash 56  
Creditors and accruals (1,052)  
  (459) 
Consideration paid   
Shares issued 6,356  
Shares to be issued but held in escrow 1,112  
Cash 1,011  
Acquisition costs 298  
  8,777 
Identifiable intangible assets (note 14)  (4,205) 
Deferred tax liability (note 21)  1,339 
Currency movements   (99) 
Goodwill (note 14)  6,271 
NIKA GbmH and its subsidiaries made a loss of £315,000 for the period from 1 January to 5 July 2006 (‘NIKA Pre-acquisition’). 
33 Post balance sheet events 
On 20 December 2007 the Board announced the disposal of its electromagnetics business to CST GmbH for a consideration of £1.6m.  
The sale was completed on 31 January 2008 and the gain on disposal will be recognised in 2008. Final payment was received in  
April 2008. 
As part of the completion terms relating to the acquisition of NIKA GmbH in 2006 1,100,724 shares were issued on in March 2008  
to the Vendors of NIKA GmbH. 
34 Transition to IFRS  
The following pages set out reconciliations of the UK GAAP balance sheet at 1 January 2006 and 31 December 2006 and the income 
statements for the period 31 December 2006. 
The principal accounting policy changes from UK GAAP that have had an impact on the balance sheet or income statement are set 
out as follows: 
IFRS1 First time adoption of IFRS 
IFRS 1 permits a number of first adoption exemptions and the Group has elected to take those relating to business combinations, fair 
value or revaluation as deemed cost and cumulative translation differences. 
These are explained in more detail below: 
Business combinations: The Group has elected not to apply IFRS3, Business Combinations, retrospectively to combinations that take 
place prior to the transition date. Accordingly, the carrying value of goodwill recorded under UK GAAP has been fixed at the date  
of transition as deemed cost and will no longer be amortised. 
Fair value or revaluations as deemed cost: described in the IFRS accounting policies, the Group has elected to adopt the cost model 
available under IAS 40, Investment Property. Accordingly, the net book value of the property at the date of transition will be 
deemed as cost under IFRS. 
Cumulative translation differences: Under IAS 21, some translation differences are required to be initially recognised as a separate 
component of equity that is only recognised in the income statement on the disposal of that foreign operation. The Group has 
elected not to comply with this requirement for cumulative translation differences that existed at the date of transition and 
accordingly, the cumulative translation differences for all foreign operations are deemed to be zero at the date of transition.  
The Group has also elected to treat goodwill and fair value adjustments arising on acquisitions prior to 1 January 2006 as sterling 
denominated assets and liabilities.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 59 
34 Transition to IFRS continued 
IAS 12 Income Taxes  
General 
IAS 12 takes a balance sheet approach to deferred tax whereby deferred tax is recognised in the balance sheet by applying the 
appropriate tax rate to the temporary differences arising between the carrying value of the assets and liabilities and their tax base. 
This contrasts with UK GAAP (FRS 19) which considered timing differences arising in the profit and loss account. 
Where the IFRS adjustments discussed in this document create a difference between the carrying amount of an asset or liability and 
the related tax base, and there are no initial recognition exemptions available under IAS 12, the Group has recorded a deferred tax 
liability or asset as required. The following table demonstrates how the asset and liabilities have arisen: 
 
Deferred 
tax asset/ 
(liability)  
£’000 
At date of transition:  
IAS 38 – capitalisation of research and development (40) 
Asset arising on fixed asset temporary differences 428 
Asset arising on short term temporary differences 18 
Asset arising on share based payment 14 
Net deferred tax asset 420 
At 31 December 2006:  
IAS 38 – capitalisation of research and development (31) 
Asset arising on fixed asset temporary differences 424 
Asset arising on short term temporary differences 23 
Asset arising on share based payment 7 
 423 
Liability arising on NIKA intangibles at the date of acquisition (1,339) 
Deferred tax on business combinations 
IAS 12 requires that deferred tax is provided in full on differences between the carrying value of assets and liabilities acquired in  
a business combination and the related tax base, regardless of whether the business combination is accounted for under IFRS 3.  
In the specific case of business combinations, the initial recognition exemption available under IAS 12 not to recognise deferred  
tax on transactions which at the time of the transaction do not affect accounting profit or taxable profit is not available. 
The Group acquired NIKA GmbH (NIKA), in July 2006 in a transaction which was a business combination as defined by IFRS 3, 
“Business combinations”. NIKA had at that date certain assets which did not qualify for tax deduction (non qualifying assets). Under 
UK GAAP these non qualifying assets do not result in a timing difference on which deferred tax is provided. Additionally, under IAS 
12, in the normal course of events, the initial recognition exemption referred to above is available on these non qualifying assets.  
Accordingly, the Group has provided for deferred tax on the full difference between the carrying amount of the NIKA intangibles 
assets acquired by the Group in July 2006 and their tax base of £nil. The impact of this change for the Group has been an increase to 
goodwill in the period to 31 December 2006 of £1,339,000 and a corresponding deferred tax provision of £1,339,000. There was no 
impact on the income statement as a result of this change. 
IAS 19 Employee Benefits  
Holiday pay accrual 
IAS 19 requires an accrual to be made for earned but unpaid holiday pay. The Group’s holiday year runs from January to December 
and holiday carryover is permitted. Accordingly, the requirement to record a holiday pay accrual has impacted negatively, the 
opening balance sheet as at 1 January 2006 by £79,000 and the 31 December 2006 balance sheet by £97,000, with the income 
statements for each period incurring a charge by the corresponding movement.  
Furthermore, an additional fair value adjustment of £68,000 in respect of holiday pay accruals was made as part of the NIKA 
acquisition and this has increased goodwill by an equal amount. 
IAS 21 The effect of changes in foreign exchange 
Under IAS 21, it is necessary to present foreign exchange differences arising from the retranslation of overseas subsidiaries into the 
presentation currency of the Group from the transition date as a separate reserve in equity. Accordingly, such movements have been 
reclassified for the year ended 31 December. 
Also, goodwill and fair value adjustments arising on acquisitions of a foreign entity are treated as assets and liabilities of that foreign 
entity and translated at the closing rate. As a result of this change, net assets at 31 December 2006 have been reduced by £162,000.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
60 Flomerics Group PLC Annual Report 2007 
34 Transition to IFRS continued 
IAS 38 Intangible Assets 
Capitalised software 
Under UK GAAP, all capitalised software development costs are included within tangible fixed assets. IAS 38 requires that where 
such costs are not an integral part of the associated hardware, they should be classified as intangible assets. Accordingly, certain 
items of property, plant and equipment have been reclassified to intangible assets at each reference date where they are items  
of software that meet the recognition criteria of IAS 38. 
There is no net impact on the income statement as a result of this reclassification, however, there has been a reclassification of the 
amounts recorded as depreciation on these assets to amortisation charges. The impact on the balance sheets at 1 January 2006 has 
been an increase in Intangible Assets and a matching decrease in property, plant and equipment of £135,000. Software had already 
been reclassified as an intangible asset in the 31 December 2006 financial statements and hence no adjustment has arisen. 
Intangible assets amortisation 
The Group has recognised additional intangible assets under IFRS 3 “Business Combinations”, as discussed below. IAS 38 requires 
that amortisation is provided where an intangible asset has a finite life. The adjustment arising from this is discussed below in IFRS 3 
“Business Combinations”. 
Research and development expenditure 
Under UK GAAP, the Group took the option available under SSAP 13 to write off all expenditure as incurred. Under IAS 38 it is 
obligatory to capitalise when all of the criteria specified by the standard are met. Following a review of the research and development 
projects being conducted by the Group, the capitalisation of the qualifying expenditure has resulted in an increase in intangible 
assets at 1 January 2006 of £132,000 and £103,000 at 31 December 2006 with a corresponding reduction of administrative expenses 
in the income statement. 
Internally generated intangible assets are amortised on a straight line basis over their useful lives of three years. 
IAS 39 Financial Instruments: Recognition and Measurement  
Forward exchange contract fair value 
IAS 39 requires all derivatives, including forward exchange contracts, to be initially recognised and subsequently re-measured at  
fair value. The Group had open forward foreign exchange contracts in place at 1 January 2006. The Group had not adopted the 
hedging provisions of IAS 39 at this time and accordingly, changes in fair value are taken to the income statement in the period  
in which they arise. 
The impact of this change for the Group has been a reduction in net assets of £29,000 in the opening balance sheet at 1 January 2006. 
IAS 40 Investment Property 
On reviewing the Group’s UK GAAP accounting policies against IFRS, it was noted that the characteristics of a building owned by  
the Group meant it would more appropriately be classified as an investment property. The Group have chosen to adopt the cost 
measurement accounting policy as allowed by IAS 40 as a result. This new policy has had no impact in the income statement but 
does cause a reclassification in the balance sheet of £1,201,000 within non-current assets; the amounts for subsequent periods is 
reduced by the depreciation charge for that period. 
IFRS 3 Business Combinations 
Business combinations: Reversal of goodwill amortisation 
Under UK GAAP, the Company recognised goodwill as the difference between the fair value of assets and liabilities acquired and  
the fair value of consideration paid on all acquisitions of trade and assets and subsidiary companies. Goodwill was amortised over  
its useful economic life, generally being 20 years. 
IFRS 3 prohibits the amortisation of goodwill. The standard requires goodwill to be carried at cost with impairment reviews both 
annually and when there are indications that the carrying value may not be recoverable.  
Accordingly, amortisation charged in the financial year ended 31 December 2006 has been reversed, increasing operating profit by 
£644,000 for the year to 31 December 2006. Additionally, the accumulated amortisation at the transition date has been eliminated 
against the cost of goodwill. Further adjustments have been made to the goodwill balance resulting from the application of IFRS 3 
to business combinations after the transition date as detailed below. 
Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in 
the Group income statement and is not subsequently reversed. In accordance with IFRS 1 and IAS 36, an impairment review on all 
assets was duly carried out at the transition date and subsequently in December 2006 and no impairment loss was identified. 
Business combinations: Intangible assets 
As accorded by the transitional arrangements of IFRS 1, the Group has chosen to apply IFRS 3 prospectively from the date of 
transition (1 January 2006) and not to restate previous business combinations. 
For qualifying business combinations, goodwill under IFRS 3 represents the excess of consideration over the fair values of acquired 
assets (including any separately identifiable and measurable intangible assets), liabilities and contingent liabilities. As noted above, 
the Group has not applied IFRS 3 to business combinations prior to the transition date of 1 January 2006. In the period subsequent 
to 1 January 2006, the Group acquired NIKA in July 2006. The Group has assessed this business combination under IFRS 3 and 
identified intangible assets relating to recurring customer relationships, a non-competition agreement, a contract based asset and 
completed technology which have been reclassified from goodwill to intangible assets.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 61 
34 Transition to IFRS continued 
Business combinations: Intangible assets continued 
As required under IAS 38, these intangible assets are amortised over their finite lives (considered to be between 4 and 10 years) and 
subject to impairment reviews annually and before the end of the accounting period in which they were acquired. 
The impact of this change for the Group has been a reduction to goodwill of £4,451,000 and a corresponding increase in other 
intangible assets in the year to December 2006. The resulting amortisation charge arising on this reclassification is £338,000 with  
a corresponding reduction in intangible assets. 
The balance sheet reconciliations at 1 January 2006 (date of transition to IFRS) and at 31 December 2006 (date of last UK GAAP 
financial statements) and the reconciliation of profit for 2006, as required by IFRS 1 are shown below: 
1. Balance sheet reconciliation at 1 January 2006 
 
UK GAAP 
(IFRS 
format) 
£’000 
IAS 12 
Income 
taxes 
£’000 
IAS 19 
Holiday 
pay accrual 
£’000 
IAS 38 
Reclassifi-
cation of 
software 
£’000 
IAS 38 
Capitalis-
ation of 
develop-
ment costs 
£’000 
IAS 39  
Loss on 
forward 
exchange 
contract 
£’000 
IAS40 
Reclassifi-
cation of 
investment 
properties 
£’000 
IFRS 
£’000 
Non-current assets         
Goodwill 1,353 – – – – – – 1,353 
Other intangible assets – – – 135 132 – – 267 
Property, plant and equipment 1,726 – – (135) – – (1,201) 390 
Investment property – – – – – – 1,201 1,201 
Deferred tax asset – 420 – – – – – 420 
 3,079 420 – – 132 – – 3,631 
Current assets         
Inventories 59 – – – – – – 59 
Trade and other receivables 3,953 – – – – – – 3,953 
Cash and cash equivalents 4,081 – – – – – – 4,081 
 8,093 – – – – – – 8,093 
Total assets 11,172 420 – – 132 – – 11,724 
Current liabilities         
Trade and other payables (4,289) – (79) – – – – (4,368) 
Current tax liability (30) – – – – – – (30) 
Bank overdraft and loan (67) – – – – – – (67) 
Derivative financial liability – – – – – (29) – (29) 
 (4,386) – (79) – – (29) – (4,494) 
Non-current liabilities         
Bank loans (377) – – – – – – (377) 
Total liabilities (4,763) – (79) – – (29) – (4,871) 
Net assets 6,409 420 (79) – 132 (29) – 6,853 
Equity         
Share capital 148 – – – – – – 148 
Shares to be issued 33 – – – – – – 33 
Share premium reserve 1,602 – – – – – – 1,602 
Merger reserve 892 – – – – – – 892 
Retained earnings 3,734 420 (79) – 132 (29) – 4,178 
Currency translation – – – – – – – – 
 6,409 420 (79) – 132 (29) – 6,853  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
62 Flomerics Group PLC Annual Report 2007 
34 Transition to IFRS continued 
2. Balance sheet reconciliation at 31 December 2006 
 
UK GAAP 
(IFRS 
format) 
£’000 
IAS 12 
Income 
taxes 
£’000 
IAS 19 
Holiday 
pay accrual 
£’000 
IAS 21 
Currency 
translation 
difference 
£’000 
IAS 38 
Capitalis-
ation of 
develop-
ment costs, 
net of 
amortis-
ation 
£’000 
IAS 38 
Amortis-
ation of 
other 
intangibles 
identified 
in NIKA 
acquisition 
£’000 
IAS 40 
Reclassifi-
cation of 
investment 
property 
£’000 
IFRS3 
Reclassifi-
cation of 
intangibles 
identified 
in NIKA 
acquisition 
£’000 
IFRS3  
Add  
back of 
goodwill 
amortis-
ation 
£’000 
IFRS  
£’000 
Non-current assets           
Goodwill 9,807 1,339 68 (99) – – – (4,205) 644 7,554 
Other intangible 
assets 234 – – (63) 103 (338) – 4,205 – 4,141 
Property, plant 
and equipment 1,709 – – – – – (1,189) – – 520 
Investment 
property – – – – – – 1,189 – – 1,189 
Deferred tax asset – 423 – – – – – – – 423 
 11,750 1,762 68 (162) 103 (338) – – 644 13,827 
Current assets           
Inventories 33 –   – – – – – 33 
Trade and other 
receivables 5,467 – – – – – – – – 5,467 
Cash and cash 
equivalents 2,339 – – – – – – – – 2,339 
  7,839 – – – – – – – – 7,839 
Total assets 19,589 1,762 68 (162) 103 (338) – – 644 21,666 
Current liabilities           
Trade and other 
payables (5,120) – (97) – – – – – – (5,217) 
Current tax 
liability (14) – – – – – – – – (14) 
Bank overdraft 
and loan (71) – – – – – – – – (71) 
 (5,205) – (97) – – – – – – (5,302) 
Non-current 
liabilities     –      
Bank loans (305) – – – – – – – – (305) 
Deferred tax 
liability – (1,216) – – – – – – – (1,216) 
 (305) (1.216) – – – – – – – (1,521) 
Total liabilities (5,510) (1,216) (97) – – – – – – (6,823) 
Net assets 14,079 546 (29) (162) 103 (338) – – 644 14,843  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 63 
34 Transition to IFRS continued 
2. Balance sheet reconciliation at 31 December 2006 continued 
 
UK GAAP 
(IFRS 
format) 
£’000 
IAS 12 
Income 
taxes 
£’000 
IAS 19 
Holiday 
pay accrual 
£’000 
IAS 21 
Currency 
translation 
difference 
£’000 
IAS 38 
Capitalis-
ation of 
develop-
ment costs, 
net of 
amortis-
ation 
£’000 
IAS 38 
Amortis-
ation of 
other 
intangibles 
identified 
in NIKA 
acquisition 
£’000 
IAS 40 
Reclassifi-
cation of 
investment 
property 
£’000 
IFRS3 
Reclassifi-
cation of 
intangibles 
identified 
in NIKA 
acquisition 
£’000 
IFRS3  
Add  
back of 
goodwill 
amortis-
ation 
£’000 
IFRS  
£’000 
Equity           
Share capital 213 – – – – – – – – 213 
Shares to be issued 1,112 – – – – – – – – 1,112 
Share premium 
reserve 1,735 – – – – – – – – 1,735 
Merger reserve 7,185 – – – – – – – – 7,185 
Retained earnings 3,834 546 (29) 140 103 (338) – – 644 4,900 
Currency 
translation – – – (302) – – – – – (302) 
 14,079 546 (29) (162)  103 (338) – – 644 14,843 
3. Income statement reconciliation for the year to 31 December 2006 
 
UK GAAP 
£’000 
IAS 12 
Income 
taxes 
£’000 
IAS 19 
Holiday 
pay accrual 
£’000 
IFRS 38 
Capitalis-
ation of 
develop-
ment 
expendi-
ture net of 
amortis-
ation 
£’000 
IAS 38 
Amortis-
ation of 
intangible 
fixed 
assets 
£’000 
IAS 39  
Add back 
of loss on 
exchange 
contract 
£’000 
IFRS 3 
Write  
back of 
goodwill 
amortis-
ation 
£’000 
IFRS 
£’000 
Continuing operations         
Revenue 14,221 – – – – – – 14,221 
Cost of sales (550) – – – – – – (550) 
Gross profit 13,671 – – – – – – 13,671 
         
Administrative expenses (13,171) – 50 (29) (338) 29 644 (12,815) 
Other operating income 61 – – – – –  61 
Operating profit 561 – 50 (29) (338) 29 644 917 
Investment revenues 101 – – – – – – 101 
Finance costs (164) – – – – – – (164) 
Profit before tax 498 – 50 (29) (338) 29 644 854 
Tax  (160) 110 – – – – – (50) 
Profit for the period 338 110 50 (29) (338) 29 644 804  COMPANY BALANCE SHEET 
Flomerics Group PLC  
31 December 2007 
64 Flomerics Group PLC Annual Report 2007 
 Notes  
2007 
£’000  
2006* 
£’000 
Fixed assets      
Investments C  4,620  4,535 
Current assets      
Debtors  D 2  2  
Cash at bank and in hand  –  1  
  2  3  
Creditors: Amounts falling due within one year E (1,128)  (1,079)  
Net current assets   (1,126)  (1,076) 
Net assets   3,494  3,459 
Capital and reserves      
Called-up share capital F, G  216  213 
Shares to be issued G  1,112  1,112 
Share premium account G  1,643  1,603 
Profit and loss account  G  523  531 
Shareholders’ funds G  3,494  3,459 
* amounts restated see note K. 
The financial statements were approved by the Board of Directors on 28 April 2008 and signed on its behalf by: 
G C Carter  K Butcher 
Director   Director NOTES TO THE COMPANY FINANCIAL STATEMENTS 
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 65 
A Significant accounting policies  
Basis of accounting  
The separate financial statements of the Company are presented as required by the Companies Act 1985. They have been prepared 
under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards and law. 
The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the 
preceding year. 
Investments 
Fixed asset investments in subsidiaries are shown at cost less provision for impairment. 
For investments in subsidiaries acquired for consideration, including the issue of shares, cost is measured by reference to the nominal 
value only of the shares issued. Any premium is ignored. The figure in the prior year did not ignore this premium and as such has 
been restated by £132,000. 
In addition the 2006 opening balance has been restated by £65,000 for the share based payment made in 2005. 
Taxation 
Current taxation is provided at amounts expected to be paid or recovered using tax rates and laws that have been enacted or 
substantively enacted by the balance sheet date. 
Deferred taxation is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax,  
or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing 
differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in 
which they are included in financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely 
than not that they will be recovered. Deferred tax assets and liabilities are not discounted. 
Financial liabilities and equity 
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. 
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.  
Equity instruments issued are recorded at the proceeds received, net of direct issue costs. 
B Loss for the financial year 
As permitted by section 230 of the Companies Act 1985 the Company has elected not to present its own profit and loss account for 
the year. The Company reported a loss after tax for the financial year ended 31 December 2007 of £8,000 (2006: profit £538,000). 
The auditors’ remuneration for audit and other services is disclosed in note 5 to the consolidated financial statements. 
All of the employees of the Company are remunerated through a subsidiary, Flomerics Limited. 
C Fixed asset investments 
 
2007 
£’000 
2006* 
£’000 
Subsidiaries 4,620 4,535 
The Company has investments in the following subsidiaries and associates which principally affected the profits or net assets of  
the Group. 
Name 
Country of incorporation  
or registration 
Flomerics Limited England and Wales 
Flomerics, Inc. USA 
Kimberley Communications Consultants Limited England and Wales 
Flomerics Asia Limited Hong Kong 
Flomerics Nordic AB Sweden 
Flomerics S.E. Asia Pte Limited Singapore 
Flomerics India Private Limited India 
Microelectronics Research & Development Ltd (MicReD) Hungary 
NIKA GmbH Germany 
NIKA Software OOO Russia 
NIKA France SARL  France 
All companies are wholly owned (the holdings in Flomerics, Inc., NIKA Software OOO and NIKA France SARL are indirectly held). 
* amounts restated see note K.  NOTES TO THE COMPANY FINANCIAL STATEMENTS 
for the year ended 31 December 2007 
66 Flomerics Group PLC Annual Report 2007 
C Fixed asset investments continued 
Subsidiaries 
 £’000 
Cost  
At 1 January 2007* 4,535 
Additions – adjustment for Year 2 earnout  114 
Additions – Flomerics Limited – Share option granted to subsidiary employees 116 
Merger relief taken (145) 
At 31 December 2007 4,620 
* amounts restated see note K. 
D Debtors  
 
2007  
£’000 
2006  
£’000 
Amounts owed by subsidiary undertakings – – 
Prepayments and accrued income 2 2 
 2 2 
E Creditors: Amounts falling due within one year  
 
2007  
£’000 
2006  
£’000 
Amounts due to subsidiary undertakings 1,128 787 
Accruals and deferred income – 292 
 1,128 1,079 
F Called-up share capital 
 
2007  
Number 
2007  
£’000 
2006  
Number 
2006  
£’000 
Authorised:     
Ordinary shares of 1p each 40,000,000 400 40,000,000 400 
Allotted, called up and fully paid:     
Ordinary shares of 1p each 21,631,516 216 21,331,370 213 
G Combined reconciliation of movements in shareholders’ funds and statement of movements on reserves 
 
Share 
capital  
£’000 
Shares to 
be issued  
£’000 
Share 
premium 
account  
£’000 
Profit  
and loss 
account  
£’000 
Total  
£’000 
At 1 January 2007* 213 1,112 1,603 531 3,459 
Issue of share capital 3 – 40 – 43 
Profit for the financial year – – – (8) (8) 
At 31 December 2007 216 1,112 1,643 523 3,494 
* amounts restated see note K.  NOTES TO THE COMPANY FINANCIAL STATEMENTS 
for the year ended 31 December 2007 
Flomerics Group PLC Annual Report 2007 67 
H Related party transactions 
The Company has taken advantage of the exemption under FRS 8 ‘Related party disclosures’ not to disclose details of intra-group 
transactions or balances with Group companies which are eliminated on consolidation in the consolidated accounts of Flomerics 
Group PLC. Transactions with Directors are disclosed in the Directors’ Report and note 30 of the consolidated financial statements  
of Flomerics Group PLC.  
I Ultimate controlling party 
Flomerics Group PLC is incorporated and registered in England and Wales and heads the largest group for which consolidated 
financial statements are prepared.  
J Events after the balance sheet date 
On 20 December 2007 the Board announced the disposal of the EM Business to CST GmbH for a consideration of £1.6m. The sale  
was completed on 31 January 2008 and the gain on disposal will be recognised in 2008. Final payment was received in April 2008. 
As part of the completion terms relating to the acquisition of NIKA GmbH in 2006 1,100,724 shares were issued on in March 2008  
to the vendors of NIKA GmbH. 
K Prior year adjustment 
Investments in subsidiaries has been restated for 2006 to reflect to remove the premium that previously report in respect of shares 
issued as part of the consideration of the acquisition of a subsidiary. The impact of this adjustment was to reduce investments by 
£132,000 and reduce the share premium reserve by £132,000. 
In addition the 2006 opening balance has been restated by £65,000 for the share based payment made in 2005. The impact of this 
adjustment was to increase investments by £65,000 and increase the profit and loss reserve by £65,000. 
  INFORMATION FOR SHAREHOLDERS 
68 Flomerics Group PLC Annual Report 2007 
Share Price 
The mid-market share price of the shares at 31 December was as follows: 
 2007 2006 2005 2004 2003 
Ordinary 1p shares 55.0p 89.5p 87.0p 66.5p 60.5p 
Dividends 
Ordinary shareholders have received the following dividends in respect of each financial year: 
 2007 2006 2005 2004 2003 
Final dividend per share (proposed) 1.6p 1.4p 1.3p 1.1p 1.0p 
Dividend 
The 2007 dividend will be paid on 3 June 2008 to shareholders on the register at close of business on 9 May 2008.  
Investor Relations 
Our Corporate Website at www.flomerics.com has a comprehensive Investor Relations Section. It gives the share price updated every 
15 minutes along with graphs, share volumes and other investor information. It is also possible to download the Annual Reports 
from the website going back to 1999. 
The Company is keen to maintain a dialogue with shareholders. In 2001, the Company’s efforts were recognised with the award of 
Best Communications at the prestigious AIM Awards.  
In 2003, the Company was one of four companies nominated for the AIM Award for Best Technology. 
We like to hear from our shareholders and, other than during close periods, both Gary Carter and Keith Butcher are pleased to 
receive calls or respond to emails (Gary.Carter@Flomerics.co.uk and Keith.Butcher@Flomerics.co.uk). 
Website 
www.flomerics.com 
Secretary and registered office 
Keith Butcher,  
81 Bridge Road, Hampton Court,  
Surrey, KT8 9HH. 
Company number 
3109660 
Advisers  
Auditors 
BDO Stoy Hayward LLP, 55 Baker Street,  
London, W1U 3LL. 
Principal bankers 
Barclays Bank Plc, P O Box 729,  
Eagle Point, 1 Capability Green,  
Luton, LU1 3US. 
Registrars 
Capita IRG Plc, The Registry,  
34 Beckenham Road, Beckenham,  
Kent, BR3 4TU. 
Nominated Adviser and Broker 
Oriel Securities Limited, 125 Wood Street,  
London, EC2V 7AN.  design by www.luminous.co.uk
print by www.corporateink.co.uk Flomerics Group PLC
81 Bridge Road
Hampton Court
Surrey KT8 9HH
United Kingdom
Tel +44 (20) 8487 3000
Fax +44 (20) 8487 3001