Paris, April 6th, 2006: ESI Group (ISIN FR0004110310), a pioneer and world leading solution provider in virtual prototyping and manufacturing processes, today announced the signing of a strategic partnership that aims to take over the Chinese-based company ATE Technology International’s activities.

This partnership, which should result in the acquisition of these activities, will allow ESI Group to strengthen its presence in China, notably via the integration of a team of 32 high level and experienced engineers.

Through this operation, ESI Group is looking for both market diversification and a strengthening of its geographical presence. Indeed, ATE Technology International has a presence in aeronautics, astronautics, energy, ship building and electronics, whilst the current ESI Group’s clients in China are essentially in the automotive and manufacturing sectors. Moreover, ESI Group’s current subsidiary Zhong Guo ESI has sites in the southern cities of GuangZhou and Shanghai, whilst ATE Technology International is in Beijing, the Chinese capital in the north.

Already a distributor of ESI Group’s Fluid Mechanics (CFD) products, as the third-largest player on the Chinese Mechanical Computer Aided Engineering (MCAE) market and with know-how resulting from 12 years of experience, ATE Technology is in a strong position to reinforce ESI Group’s development across this vast territory. ATE Technology, taking into account all of ESI Group’s know-how, will offer high value-added integrated solutions and thus will have access to major industrial projects. For FY 2005, ATE Technology recorded a turnover close to US$ 3.9 million for all its activities.

Su ZHANG, President of ATE Technology, states: “As a distributor of CFD products, the collaboration between ATE Technology and ESI Group has been well-received on the Chinese market, and I am very happy that this collaboration will now be strengthened by the intended take over. Furthermore, ESI Group’s Open-VTOS strategy, with its all encompassing Visual simulation platform, should meet the strong demand from Chinese clients for specific system integration projects. This operation will allow us to reach critical size to gain access to such strategic industrial projects.”

Financial details of the operation

The partnership agreement was finalized on 16th March 2006 in the form of a transfer of activity incorporating the clientele, workforce, know-how, sales contracts and intellectual property rights.

Within the framework of this agreement, a new company will be created, ESI-ATE Holding Ltd, and its activity will be integrated starting 1st June, 2006. ESI Group will initially hold 51% of this new entity’s capital. Moreover, ESI Group will benefit from a commitment to sell relating to the new entity’s remaining capital.

The operation should be accretive from the moment it is integrated within ESI Group’s scope.

Alain de ROUVRAY, ESI Group’s Chairman and CEO, concludes: “This operation shows ESI Group’s active desire to strengthen its presence in fast growing industrial countries. The presence in China of our excellent engineers combining efforts between ATE Technology and  Zhong Guo ESI teams, will significantly contribute to extend our product installed base and facilitate access to strategic industrial projects for the best benefits of our Chinese customers.”  

About ATE Technologies

About ESI Group

ESI Group is a world-leading supplier, and a pioneer of digital simulation software for prototyping and manufacturing processes that take into account the physics of materials. ESI Group has developed an extensive suite of coherent, industry oriented applications to realistically simulate a product’s behavior during testing, to fine-tune manufacturing processes in accordance with desired product performance, and evaluate the environment’s impact on product performance. ESI Group’s products, which have a proven track record in manufacturing and have been combined in multi-trade value chains, represent a unique collaborative and open virtual engineering solution known as the Virtual Try-Out Space (VTOS), enabling virtual prototypes to be improved in a continuous and collaborative manner. This integrated protocol allows all the company’s solutions to work with each other and with applications developed by independent software vendors. By significantly reducing costs and development lead times and enabling product/process synergies, VTOS solutions offer major competitive advantage by progressively eliminating the need for physical prototypes during product development. The company generated sales of €62.2m in 2005, employs over 500 high-level specialists worldwide covering more than 30 countries. ESI Group is listed in Eurolist compartment C of Euronext Paris. For further information, visit www.esi-group.com.

ESI GROUP has been qualified as “an innovative company” since January 20 2000 by the ANVAR and is eligible for inclusion in “FCPI” (venture capital trusts dedicated to innovation).

Listed on compartment C of the Eurolist by Euronext Paris

ISIN FR 0004110310 - FTSE 977- Bloomberg ESI FP - Reuters ESIG.LN

2005 annual results will be published on May 3rd, 2006 (after market closing)

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