Magic Software and FMIS, Backed by Israeli and UK Goverments, to Develop Innovative Technology for Deploying Internet Solutions

IRVINE, Calif. - Magic Software Enterprises (Nasdaq: MGIC - news), a leading provider of state-of-the-art application development technology and business solutions, Thursday announced that it has established a joint venture with U.K. software specialist and Magic Solutions Partner, FMIS Limited, to develop an innovative technology for deploying Internet solutions.

Named eNABLER^TM, the technology will allow non-technical business specialists to quickly build and deploy Internet applications.

Fifty percent of the initial project costs will be provided by BRITECH, a joint British and Israeli government-supported fund established to support commercial and technical collaboration between U.K. and Israeli companies. The remainder is being funded jointly by Magic and FMIS. Magic will own 40% of the joint venture, which will be called eNABLER Technology Limited.

In announcing BRITECH's role in the joint venture, Lord Sainsbury of Turville, the United Kingdom's Minister of Science and Technology, stated, "I am truly excited about this new venture, which is being supported by BRITECH. It teams up an innovative British company (FMIS) with a leading edge Israeli company widely recognized for its state-of-the-art Web technology (Magic) to bring to market a new technology that promises to revolutionize the way in which businesses develop their e-market capabilities."

The eNABLER Technology
eNABLER will make it possible for non-technical business specialists to create Web applications by describing business logic using a set of rules written in everyday language. It also will enable businesses to take existing legacy systems and deploy them as intelligent Web-based solutions without any re-programming. Given today's shortage of developers, this represents a major breakthrough in companies' ability to quickly adopt the latest cutting-edge technologies.

The eNABLER engine will incorporate built-in intelligence to handle the technical issues of presenting and interfacing with existing devices, applications and databases. The need to code complex logic will be replaced with a simple set of rule-based wizards that will guide the user through the stages of developing an application template. Any changes to the rule base will be automatically redeployed for a Web-browser, television or telephone user request.

The concepts behind eNABLER already have been proved historically on the AS/400 and client/server platforms, and are especially appropriate for the new business imperatives of the Web. The new venture will extend these concepts for Web-based applications.

eNABLER will be developed using Magic's application development technology, which has been proven in international competition to be the most productive and robust technology available for Internet development. And eNABLER will serve as a nice complement to Magic's existing e-business applications and suite of customer relationship management (CRM) solutions. Magic's long-range plans are to use eNABLER to develop a series of business cartridges that deliver Internet-based applications for specific markets.

"We are very pleased to be involved in this venture and to have the financial backing of both the Israeli and British governments to push the limits on Internet technology and present companies with a realistic and workable response to the growing resource shortage issue," said Israel Teiblum, president of Magic.

Martin Hakes, Managing Director of FMIS, concluded, "We have worked very successfully with Magic for a number of years and see this new initiative as an exciting development in our ongoing partnership."

About BRITECH

Established in December 1998, BRITECH is a $25 million joint Israeli-British technology investment fund. The fund aims to expedite joint ventures and strategic partnerships between cutting-edge Israeli and British companies, particularly in the areas of telecommunications, biotechnology, software development, and electronics. The fund, which intends to exploit the comparative advantages of both countries, particularly Israeli R&D and British international marketing prowess, will operate for an initial five years. Israel is Britain's 28th largest export market and 3rd largest trading partner in the Middle East.

About FMIS Limited

FMIS Limited, a U.K. registered company, was established in 1986 as a software house offering AS/400 asset management products with a financial bias. In the late 1990s, the company rewrote its solutions to use Magic as its development and deployment technology. During the initial years of the company, product designers created an application template tool to allow users to adapt and change an application via a rule base.

FMIS supports a client base of some 200 blue-chip companies, including Glaxo Welcome Pharmaceuticals, HSBC Bank, ICI, Heinz, Pfizer and The Gap. The Company's U.K. headquarters are located at Abbey House, East Street, Faversham, Kent, ME138AS, telephone +44 1795 531 532, fax +44 1795 534 858, http://www.fmis.co.uk.

About Magic Software Enterprises

Magic Software Enterprises, a member of the Formula Group (Nasdaq: FORTY - news), develops, markets and supports software development and deployment technology that enables enterprises to accelerate the process of building and deploying applications that can be rapidly customized and integrated with existing systems. Magic technology, applications and professional services are available through a global network of subsidiaries, distributors and Magic solutions partners in approximately 50 countries. The Company's North American subsidiary is located at 1642 Kaiser Avenue, Irvine, Calif., 92614, telephone 949/250-1718, fax 949/250-7404, http://www.magic-sw.com.

The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and producing computer-based solutions.

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both here and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.

Contact:
Magic Software Enterprises, Ltd.
Katharine Hanley, 949/250-1718 ext. 220
khanley@magic-sw.com
or
Israel Teiblum, +972-3-538-9311 or 9489
iteiblum@magic-sw.com