The key indicators emphasise the very satisfactory sales performance below:
- Licenses sales increased by +12.6% to €77.5 million,
- Licensing installed base was up +11.7%,
- Licenses repeat business remained at a very high rate of 86.5%,
- Licenses New Business saw moderate growth of +6.6% to €17.0 million,
- Services sales were up +24.1%, at €31.5 million.
- The gross margin remains strong
The gross margin was 68% of revenue, compared with 70% in 2011/12, partly because of a less favourable product mix (Services accounted for 28.9% of sales in 2012/13) and the increase of external royalties (“third party”). The strong growth of the Services segment is constructive in terms of future opportunity, as the dynamism is associated with methodological evolution and a substantial demand for innovative projects founded on co-creation of new solutions with industrial partners.
- A cost structure impacted by non-recurrent elements and by the slowdown in growth recorded at the end of the 4th quarter
ESI Group maintained its R&D investment policy and investment spending increased by +9.4% to €20.5 million (excluding Research Tax Credit), or 26.4% of Licenses revenue compared with 27.2% the previous year. In IFRS terms, R&D costs were up +5.0% at €15.6 million.
Sales and Marketing costs increased by +23.3% to €35.6 million, or 32.6% of total revenue compared with 30.6% the previous year, in continuation of the first half semester.
General & Administrative costs were up +20.4% at €14.3 million, versus €11.9 million in 2011/12 after integration of exceptional costs.
This substantial increase in the cost structure was due to:
- spending commitments that were aligned with stronger growth expectations of final quarter,
- investments to accelerate the integration of the virtual reality solution,
- marketing investments to continue seeking acquisition targets,
- exceptional one-off costs of around €1.2 million written down at the end of the financial year.
- Profitability
EBITDA was down 16.0% at €8.8 million with a margin of 8.1%, compared with €10.4 million and 11.1% in 2011/12. These figures were impacted by a level of spending that was not matched to the revenue recorded over the final quarter of the financial year, when there was a slowdown that was in stark contrast to the dynamic activity recorded over the previous nine months.
Current operating profit decreased by 15.4% to €8.8 million, giving a core operating margin of 8.1% in 2012/13 compared with 11.0% in 2011/12.
Pre-tax profit was stable at €8.1 million (versus €8.2 million last year) once a neutral financial result is taken into account. The latter includes an interest expense of €0.6 million that was offset by forex hedging gains of €0.6 million.
Attributable net profit totalled €5.0 million, or 4.6% of revenue, versus €6.0 million in 2011/12. Net profitability was impacted by a tax burden of €3.0 million with a particularly high tax rate (37.5%).
- Solid financial structure
The Group had €7.6 million in available cash at the end of the year. The financial structure remains solid with a gearing (long-term financial debt over shareholders equity) of 16% (vs 17% the previous year).
At January 31 2013, ESI Group held 7.25% of its own capital.
Outlook
- Responding to industrial challenges
ESI Group signed a strategic cooperation partnership agreement with Renault in January 2013, further increasing the Group’s substantial visibility amongst major OEMs in manufacturing industries. This echoes the partnership agreement signed with EADS/Astrium in November 2012. These partnerships highlight the necessity of use of virtual prototyping solutions by major OEMs and their suppliers.
- Integrating acquisitions and executing an external growth strategy
