‘We have always been a tech-led business’, says Gary Carter, chief executive of Flomerics, ‘but our focus now is very much on selling’. His comments accompanied decent interims to June from the supplier of simulation software to the engineering and electronics industries listed on AIM since 1995.

Encouraging performances from product lines in the US and Asia Pacific lifted sales 8% to £5.7 million. Pre-tax profits (before goodwill and share based payments) eased to £238,000 (£380,000) after spending on an expanded sales force, still a good result given the group’s traditional second half profits weighting. Half-time cash stood at a robust £4m.

Carter was particularly cheered by 29% sales growth in the US, ‘the big growth opportunity’ going forward, as well as a 16% revenue spike in Asia Pacific. However the key strategic move since the half-year has been the acquisition of Frankfurt-headquartered NIKA for an initial £8m. In a good signal, the vendors took £7m worth of Flomerics shares as well as £1m cash for NIKA, which looks a transformational deal expanding the business geographically, and bringing in new products and customers.

NIKA looks highly complimentary, with 88% of its business emanating from outside the electronics sector, versus the 90% of Flomerics that comes from within. Set to break-even this year, NIKA, whose customers include Thales and Siemens, has strong European presence but has yet to be pushed in the UK and USA.

Flomerics’ second half profits will include a full contribution from NIKA. And for calendar 2006, Oriel Securities’ Nick Hyslop suggests profits could flow north to £1.6m (£1.1m) from sales of £14.1m, giving earnings of 6.8p and a forward multiple of 13.6, falling to only 7.3 times the following year. After a difficult few years, we think the shares now look decent speculative value.