Acquisitions during the period: CIVITEC's company entered the scope of consolidation as of March 27, 2015 and the assets of Ciespace were consolidated as of April 10, 2015. The assets of PicViz were consolidated as of March 30, 2015, and PRESTO software entered the scope of consolidation as of May 6, 2015. ITI GmbH's company was consolidated as of January 6, 2016. These acquisitions represent revenue of €0.7 million over the full year and €0.5 million in the fourth 2015 fiscal quarter. Mineset, acquired on February 5, 2016, will be consolidated in the 2016 financial year.
Substantial growth in Licensing activity and engineering studies
As announced on March 14, 2016, 2015 annual sales totaled €124.7 million, up +12.3% on the previous year at actual rates. Acquisition-related revenue remained limited at €0.7 million, split equally between Licensing and Services. There was a positive currency effect of €6.1 million, arising mainly from the positive trend of the US dollar and, to a lesser extent, the Japanese yen and South Korean won.
The product mix shifted towards Licensing activity, which now accounts for 77.8% of total sales compared with 76.1% in 2014.
Sales generated by Licensing activity strongly increased by +14.8% at actual rates compared with the previous year. That solid growth reflects ESI Group's success in developing its installed base, which generates the high repeat business rate of 90% at constant exchange rates. Services activity recorded a moderate growth of +4.5%, driven by a solid +14.8% increase in engineering studies, the core of ESI Group's Consulting activity (Services excluding Other Services, such as supply of equipment).
In 2015, the geographical split in sales reflected the dynamism of activity in Asia, while the proportion of activity recorded in BRIC countries remained stable.
Improvement in the gross margin
The gross margin was 72.5% of sales, compared with 71.3% in 2014. This improvement was a result of the shift in the product mix towards Licenses and also an improvement in margin in both Licensing and Consulting activities.
Operating costs under control, further investment efforts
In 2015, Sales and Marketing (S&M) and General and Administrative (G&A) costs represented 31.0% and 13.8% of global sales respectively. Altogether, these costs increased by +11.2% in 2015, compared with a +12.3% increase in sales. This result, which fully includes S&M and G&A expenses of the Group’s acquisitions, highlights ESI’s good piloting of its operating costs over the year.
In alignment with our strategy based on technological innovation, R&D investments increased by +21.6% at actual rates. R&D costs thus totaled €29.1 million (excluding the French Research Tax Credit ‘CIR’) and now represent 30.0% of Licensing sales. This increased investment concerns existing technologies and also technologies associated with recent external growth operations. Once CIR and R&D capitalization costs are taken into account, the total R&D costs recorded in the P&L statement amounted to €22.8 million at actual rates, an increase of +14.0%.
Strong growth in EBITDA and Current Operating Profit
The EBITDA increased sharply (+32.2%) to €14.3 million, giving an EBITDA margin of 11.4% in 2015 compared with 9.7% in 2014. The annexed reconciliation table documents the effect of the standardization in the definition of EBITDA and confirms the Group’s good performance in terms of increase in profitability both prior to and after the integration of its acquisitions.
Current Operating Profit strongly grew by +31.8% to €11.8 million, showing a current operating margin of 9.5%, or 1.4 percentage point on the previous year.
EBIT increased by +12.0 % to €9.4 million, giving a margin of 7.5%, stable on the previous year. This increase was smaller than the increase in EBITDA and current operating profit mainly because of exceptional costs, classified in non-recurring costs, associated with the last six technological acquisitions carried out in 2015.
The Financial Result was -€0.9 million versus +€0.7 million in 2014. In 2015, financial costs, notably associated with interest charges, were not totally offset by revenue from currency gains and losses, which in 2014 exceptionally totaled €1.6 million following the strengthening of the US dollar at the end of the year.
Attributable Net Profit totaled €5.3 million in 2015, to yield a net margin of 4.3%. This takes into account a tax burden of €3.2 million.
Solid financial structure
Available cash at the end of 2015 was €10.3 million euros. Net debt was €36.4 million at January 31, 2016 compared with €10.7 million at January 31, 2015. The gearing (debt-to-equity ratio) was 39.4% following the acquisitions carried out during the year.
At January 31, 2016, ESI Group held 7.2% of its capital in treasury stocks.
Further adoption by major customers
