As announced on 11 March 2008, full-year revenues for the 2007-08 financial year totalled €68.9 million, up +4.3% year-on-year or +8.5% at constant exchange rates. This organic revenue growth comprises moderate growth in the Licences business of +1.4% in real terms and +5.8% in volume, and very sound growth for the Services business of +16.3% in real terms and +20.0% in volume.

81% of revenues were generated outside France.

Improvement in operating margin at constant exchange rates

Operating profit came to €5.7 million or €6.6 million in volume, stable in real terms compared to 2006-07 but up +18% at constant exchange rates. Operating margin was therefore 9.3% at constant exchange rates and 8.2% in real terms. This more or less stable margin was a result of:

• a significant impact of the unfavourable development of exchange rates which cut down the Group's revenues by €2.8 million;
• a product mix effect on gross margin despite significant improvement in gross margin on Services activities;
• continuing control of Research and Development costs, which represented 29% of Licences revenues compared with 30% in 2006-07, as well as general operating expenses (down 1.7%);
• growth of 8.2% in sales and marketing expenses, in particular as a result of increased commercial investment in order to build up local teams.

Significant improvement in cash and operating cash flow

After interest expenses of €0.76 million, currency losses relating to the unfavourable development of exchange rates (in particular the US dollar and the Korean won) of €1.67 million and a tax charge of €0.88 million, attributable net profit was €2.3 million.

In parallel, ESI Group generated €3.4 million of cash, mainly as a result of improved management of its working capital requirement. Operating cash flow therefore increased significantly to €6.2 million. Available cash at 31 January 2008 stood at €13.1 million.

The Group's financial position remained solid, with an indebtedness ratio (long-term financial debt over shareholders equity) of 8.4%.

Synthesis

2007-08 was characterised by the continuing transition phase in the Licences business, while the Services business saw a strong growth. In addition, operational margin remained stable relative to last year but grew up by 18% in volume. The Group’s fundamentals remain solid. We have strengthened our financial position thanks to cash generation of €3.4 million and our strategy keeps being confirmed by the continuing roll-out of our solutions at major clients.

Outlook

Despite the prevailing uncertain economic conditions, we are confident about improving our performance over the current fiscal year. Indeed, we expect to see the positive effects of commercial investments carried out in 2007-08, as well as continuing strong growth in the Services business. Net margin should also benefit from a more effective currency hedging. Therefore, operating margin is expected to reach 10% of 2008-09 total revenues.