More robust growth and recurring sales

• Sharp increase in quarterly sales: +17.7%
• Strong growth in New Business
• Significant contribution from Asia

Alain de Rouvray, Chairman and Chief Executive Officer of ESI Group, comments: "The first half of the year witnessed a more robust growth, based on a solid performance from the Licences business and a gradual recovery in the Services business. The Licences business delivered a particularly strong performance in the second quarter, with high recurring sales from our installed base and an increased growth in New Business. These trends bring confidence in a positive evolution of our performance for the current year both in sales and results."

Reminder: The seasonal nature of ESI Group's Licences sales usually reflects into a larger proportion of full-year revenues to be recognised in the second half of the year.

·         Sales growth and strong performance for Licences

Second-quarter sales came to €17.4 million, an increase of +17.7% or +8.9% by volume.

First-half sales totalled €33.3 million, up +6.8% (+2.2% by volume).

The product mix benefited from the improved performance of the Licences business, representing 69% of first-half sales compared with 66% in the first half of 2009.

·         Solid growth in Licences and larger installed base

It is worth noting the sharp increase in Licences sales in the second quarter of 2010, up +23.3% (+13.1% by volume), as well as growth of +20.9% (+8.8% by volume) in the recurring installed base.

The Licences business generated sales of €22.9 million in the first half of the year, up +10.5% compared with the first half of 2009 (+5.1% by volume). The high rate of recurring Licences sales reaches 86% compared with 81% in the first half of 2009, with a further +4.6% increase of the installed base. In addition, New Business delivered a further improved and robust growth in the first half of the year with sales up +32.7% (+27.1% by volume).

·         Growth in Services in the second quarter

The Services business generated sales of €10.4 million in the first half of the year, down -0.4% in real terms or -3.5% in terms of volume compared with the first half of 2009. This half-year sales performance should be put into context with the real growth of +7.1% in the second quarter, i.e. with stable sales in terms of volume.

·         Significant contribution to first-half sales from Asia 

By region, Asia saw the strongest growth both in real terms and in volume terms, contributing 44% of first-half sales compared with 40% in the first half of 2009. The Americas and Europe represented 21% and 35% of first-half sales respectively.

·         Outlook

The Group's good performance for the first half of the year is amplified by a positive exchange rate impact, in particular in Asia, with a counter effect on the costs. Again the inherent highly seasonal nature of the Licences business means that expected profit margins are much higher in the second half of the year.

Note that ESI Group is due to report its first-half earnings on 29 September 2010 after market closing.

About ESI

ESI is a pioneer and world-leading provider in virtual prototyping that take into account the physics of materials. ESI 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 to evaluate the environment’s impact on performance. ESI’s solutions fit into a single collaborative and open environment for End-to-End Virtual Prototyping, thus eliminating the need for physical prototypes during product development. The company employs over 750 high-level specialists worldwide covering more than 30 countries. ESI Group is listed in compartment C of NYSE Euronext Paris. For further information, visit http://www.esi-group.com/.