Results
Improvement of the gross margin
ESI Group's gross margin increased by +3.8% to €101.5 million, representing 72.8% of revenues (vs. 72.3% in 2017). This progression is due to an improved gross profit margin for Licensing of 85.2% (vs. 84.7%) and a greater increase in the Licensing business compared to the Services.
Increased investments
The operational optimization associated with the Group’s transformation has differing impacts on two main expense items. In 2018, the Group increased:
- R&D investments, which came to €36.8 million (33.5% of licensing revenue), up €1.9 million, in consequence of integrating technologies and adapting the offer. Taking into account ESI Group’s Research Tax Credit and capitalization of development costs, R&D expenditures recorded in the Profit & Loss Statement were lower, at €31.7 million, an +8.2% growth;
- Sales and Marketing (S&M) expenses, which came to €43.0 million (30.9% of revenues), up €1.1 million as part of a sales structuring focused on developing a key account strategy and targeting strategic initiatives.
Slight decrease in operating profitability
EBITDA amounted to €11.2 million (vs. €12.1m in FY’17), for a margin of 8.0% of total revenues (vs. 9.0%), before considering the depreciation and amortization associated with major amortization of investments, which bring the Group's operating income to €7.0 million (5.0% of revenues) compared to €8.1 million in FY’17 (6.0% of revenues).
Cash situation
The Group’s cash position was €18.1 million (vs. FY’17 €15.8 million).
Financial debt amounts to €45.1 million at January 31, 2019 (vs. €47.6 million at January 31, 2018). The Group's net debt stood at €27.0 million (vs. €31.8m in January 2018, and €37.3m in January 2017).
Gearing (net debt to equity) improved and is now 25.5% (vs. 31.4% in 2017 and 37.6% in 2016).
As part of its financing policy, the Group secured a €40 million syndicated credit line from a consortium of leading European banks, replacing the 2015 agreement.
As at January 31, 2019, ESI Group held 6.5% of its share capital in treasury shares.
