FY19 Results
As a reminder, full year sales increased +7.8% to €146.2 million (+5.6% cer), driven by an 8.4% growth in software license activity yielding stronger business recurrence. This topline growth has a positive impact on financial performance as the Group maintained control of the costs.
Gross margin improvement
Gross margin rose to €107.4 million (up 10,1% improving by +1.5 points to 73.4% vs. 71.9%). This increase was driven by the rise in Licensing gross margin to 86.2% (vs. 84.5% in proforma 2018) and the increasing proportion of License sales in the revenue mix.
Lower growth in other operational costs
The Group maintained its efforts to control other operational expenses (+5.6%, +€5.2m) to support overall revenue increase and long-term development. Note that €1.5m of the €5.2m cost increase is linked to exchange rate (4.0% cer).
These operational expenses break down as follows:
- Sales & Marketing: remains nearly stable as a ratio of total sales, 30.3% (vs 31.0%).
- R&D costs: remains stable in absolute terms, reaching €31.7 million (vs. €31.3 million) after considering the Research Tax Credit (CIR) and capitalization of development costs. These expenses now represent 27.4% of Licensing revenue (vs. 29.2%).
- General & Administration: increased by €2.6m €23.2m vs. €20.6m, partly due to some exceptional expenses.
Improved profitability
EBITDA (before IFRS 16) increased to €12.3 million (vs. €8.1 million), now 8.4% of total sales (vs. 6.0%). EBIT (before IFRS 16) rose to €8.3 million (vs. €3.6 million), now 5.7% of total sales.
Cash position
The Group's available cash position rose to €20.2 million at December 31, 2019 (vs. €12.4m end of December 2018).
Financial debt reached €49.6 million (vs. €51.6 million) and Net debt decreased to €29.4 million (vs. €39.2 million). Gearing (net debt to equity) was 34.4% (vs. 57.7%).
At 31 December 2019, ESI Group held 6.3% of its capital in "treasury" shares.
