Paris, 26^th September 2007: ESI Group (ISIN FR0004110310), a pioneer and world-leading solution provider in virtual prototyping and manufacturing processes, today announces its consolidated half-year results to 31^st July 2007.

Consolidated data

      The Group’s FY runs to 31^st January

Reminder: Figures for this first half were recorded on a constant business perimeter, and therefore reflect purely organic growth. The strong seasonality inherent to ESI Group’s activity means that a substantial portion of annual revenues are recorded over the second half of its financial year.

As announced on 11^th September 2007, first-half revenues totalled 27.6 million euros, up +10.0% at constant exchange rates. Revenues were particularly dynamic for Services (+17.2% at constant exchange rates).

• Restoration of the Services gross margin and controlled increase in investments

The upturn in Services activity led to a restoration of the gross margin for this activity. Given Licences activity’s substantial seasonal effect and the product-mix effect, growth in the overall gross margin was limited to +4.3%.

The Group is pursuing tight control of its cost structure whilst increasing investments, notably in emerging countries. The substantial increase in the workforce in China due to the integration of ATE and the structuring of local sales and support teams in India enabled the average cost of teams to be further reduced over the period. R&D and G&A costs and staff numbers remained constant.

The operating loss was stable compared to the first half of last year, at -2.6 million euros.

However, at constant exchange rates, as a result of structural improvements, operating profit would have recorded an improvement resulting in a gain of 2.5 margin points.

Within a context of increasingly adverse exchange rate effects, ESI Group recorded limited foreign exchange losses that were essentially associated with balance sheet positions. Once we take into account these exchange rate losses and interest charges, which were up because of higher interest rates and one-off short-term bank borrowings, the financial loss was -1.0 million euros.

The net loss was -2.7 million euros, close to the -2.6 million euros for the first half of 2006-2007.

• Improvement in operating cash flow

Available cash at 31^st July 2007 totalled 11.0 million euros, versus 10.5 million euros at 31^st July 2006. This evolution is the result of a significant improvement in free cash flow, and notably working capital movement, as well as controlled capital investments. The Group’s financial situation remains sound, with shareholders equity of 52.9 million euros and low indebtedness ratio (long-term financial debt over shareholders equity) of 11.2%.

Alain de Rouvray, ESI Group’s Chairman and CEO, says: “Given our Licensing activity’s substantial seasonal effect, this half-year performance notably reflects the very positive contribution from Services to the improvement in profitability. Moreover, the structuring of our teams and the reduction in their average cost are in line with our policy of optimising our operating costs.”

Key points for the first half of 2007

• Licences: favourable general adoption context

○ Consolidation of mature products: our PAM-STAMP 2G and PAM-CRASH 2G integrated solutions and the 3G Simulation Process Data Management (SPDM) environment named VisualDSS are in their qualification phase with major OEMs. These products specifically meet the requirements of the Automotive and Aeronautical industries, and will enable users to evolve within an integrated 2G/3G environment for most significant benefits.

○ Deployment of emerging products: these products are continuing to efficiently play their role as growth relays. In particular, the integrated Vibro-Acoustics solution VA One © for multi-frequency noise simulation and acoustic comfort, a unique product on this market and a result of our acquisition synergies, is recording substantial growth.

○ In the wake of mature products and emerging products, innovative products are also contributing to the growth of Licences activity.

• Services: restoration of activity growth

○ Engineering studies: the buoyant growth in Services is essentially due to the amplification of new high value-added engineering studies. This acceleration in innovative industrial projects notably reflects increasing industry concerns facing ever-stronger productivity and flexibility demands within the context of a global economy. In order to efficiently respond to the dynamic development of global ‘multi-shore’ projects, the organisation of our Services activity has been strengthened for sales and production at the corporate level.

○ Field Services: in order to meet industry’s request to enable their changeover to Simulation Based Design (SBD), ESI Group has developed a specific offer with a high level of world class expertise. Contributing to the development of international and local know-how, this offer is recording increasing success.

• Sales strategy: accelerate adoption of realistic simulation

With an analysis of our first-half performance confirming increasing market appeal for realistic simulation solutions, ESI Group is pursuing its sales strategy that aims to give momentum to this global trend. This strategy is based on targeted actions for each product category, a strengthening of the sectorial and geographical diversification of activity and the consolidation of strategic partnerships.

Prospects

• Strengthening of the Board

-          Appointment of Francis Bernard as independent director

Co-founder of Dassault Systèmes, a group he spent over 25 years with and within which he was notably leading the much successful CATIA development and the implementation of the commercial partnership with IBM, Francis Bernard is a recognised expert in aeronautics.

He is currently CEO of ParallelGraphics, a start-up that is already benefiting from substantial renown in the aeronautical industry thanks to its 3D web centric solutions for product maintenance support.

-          Appointment of Othman Laraki as independent director

Graduated in 2000 from Stanford University and 2004 from the MIT (Massachusetts Institute of Technology), where he obtained an MBA in engineering, Othman Laraki began his career in the Information and Communication Technologies universe before joining Google as Projects Director. He notably actively contributed to the development of numerous innovative products such as Google Gears and Google Toolbar. He is a resident of the United States, and continues to enjoy close ties with both the MIT and Stanford.

Alain de Rouvray states: “We are very pleased to welcome Francis Bernard and Othman Laraki into ESI Group as new independent directors. The fact that these two prestigious figureheads of the simulation and IT worlds are joining our Board backs the opinion that our business vision is the right one and that the quality of our teams is highly commendable. Furthermore, these appointments reflect our commitment to strengthen our Corporate Governance best practices.”

These appointments, validated by the Board meeting of 21^st September 2007, will be put to the next shareholders meeting.

Alain de Rouvray concludes: “The significant upturn in our Services activity over the first half year is a very positive factor that reflects increasing market appeal for our solutions. As a consequence, we expect the first-half trend to continue over the second half of the year, with a further surge in Services activity and a strengthening of mature products growth, a trend that should furthermore be bolstered by the launch of our VisualDSS. Whilst controlling and improving our cost structure remains a top priority, we are continuing the globalisation of our teams in order to limit the effect of exchange rate fluctuations and to improve operating profitability with lower average costs. In the medium term, we are fully confident in the generalized adoption of realistic simulation by industry which fosters the relevance of ESI Group’s multi-product positioning that uniquely allows manufacturing and product performance synergies.”

About ESI Group

A virtual test software package publisher, ESI Group is the 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 behaviour 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 communication protocol will enable 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 revenues of €66m in 2006, employs over 600 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^th 2000 (last renewal on July 30^th, 2007) by the OSEO-Anvar and is eligible for inclusion in “FCPI” (venture capital trusts dedicated to innovation).

Listed in Eurolist compartment C of Euronext Paris

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

Third-quarter revenues will be published on 11th December 2007 (after market)

Virtual Try-Out Space® and VTOS® are registered trademarks of ESI Group. All other products, names or companies are the brands or registered trademarks of their respective owners.

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