2008/09 annual sales: €70.2 million

10 March 2009
Paris, France
Strong resistance of the recurrent installed base, Operating margin impacted by the fall in new business

ESI Group (ISIN FR0004110310), a pioneer and world-leading solution provider in virtual prototyping and manufacturing processes, announced today its consolidated sales for its fourth quarter and full year to 31st January 2009.

Consolidated annual sales

 

Consolidated annual sales

FY to 31st January

Quarterly sales

 

Quarterly sales

FY to 31st January

Quarterly sales

Sales for the fourth quarter of the Group’s 2008/09 fiscal year totalled €27.5 million, down -2.9% in actual terms and down -6.9% by volume (positive evolution of exchange rates). Excluding the new acquisitions of the Vdot team and of Mindware, consolidated since 15th October 2008 and 16th December 2008 respectively, sales would have been down -4.6% in actual terms and -8.7% by volume compared to the same period of the previous year.

For Licences, the drop in activity over the fourth quarter was essentially a result of the substantial fall of -35% in new business associated with the brutal slowdown in investments within the context of the economic crisis. However, the installed base remained stable, and lays witness to the solidity of ESI Group’s business model, which is based on annual rentals and leads to substantial repeat Licence revenue.

For Services, as in previous quarters, organic growth remained buoyant, at +9%. Once external growth is taken into account, Services activity for the 4th quarter of 2008/09 came to €5.3 million, the highest level of quarterly activity ever recorded by the Group.

Annual sales

ESI Group’s 2008/09 annual sales totalled 70.2 million euros, up +1.9% in actual terms and +1.8% on a constant exchange rate basis. Given the evolution of the various currencies, the exchange rate situation had a globally neutral effect on the fiscal year as a whole. Excluding external growth, annual sales would have been up +1.2%.

Licence sales totalled 52.6 million euros, down -2.4% and down -2.6% excluding external growth. The +2.3% increase in the installed base resulted in an increase in the rate of repeat business, which remained high at 77% versus 76% the previous year.

Services activity recorded another year of buoyant growth, with sales growth of +17.4%, +14.8% purely organically. Subsequently, the breakdown in activity continued to evolve towards high value- added Services, which now represent 25% of sales.

The breakdown by geographical region was almost unchanged, with 49% of sales recorded in Europe, 35% in Asia and 16% in America. 82% of sales were recorded outside of France.

By business sector, 40% of booked orders came from the automotive sector, 24% from heavy industry, 8% from aeronautics and 6% from defence. This stable split by sector highlights the necessity and advantages of using ESI Group solutions for major car manufacturers and their subcontractors, despite the economic context that is hitting them hard.

Alain de Rouvray, ESI Group’s Chairman and CEO, concludes: “Over the fourth quarter, we noted a sudden fall in activity after a positive first 9 months of the year that saw growth of +8% by volume. The brutal downturn in the economic situation over the fourth quarter resulted in a slowdown in new investments, specifically in Asia, which led to sales below expectations. Given our cost structure, which is virtually unchanged, this slowdown in activity will directly impact our operating profit and will result in an operating margin below our 10% target. However, and compared to the previous year, net profit will benefit from the effectiveness of foreign exchange hedging that we have implemented.

Beyond the figures themselves, the positive renegotiation of contracts for the annual rental of licences, notably regarding our fourth and most important quarter, highlights the solidity of our business model. Our recurrent installed base at 31st January 2009 was thus slightly up, reflecting the clear advantages our solutions provide to our historic clients, and notably to car manufacturers, whether it be in terms of improving performance or in terms of contributing to innovation.

Lastly, ESI Group also stands out through the solidity of its balance sheet situation, with low debt and again generating significant positive cash at the end of the 2008/09 fiscal year.”

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