ESI GROUP (EPA:ESI) ESI GROUP: 2008/09 FY SALES

Transparency directive : regulatory news

10/03/2009 17:50

ESI Group               NewCap
Corinne Romefort-Régnier      Emmanuel Huynh/Axelle Vuillermet
Shareholder relations       Tel.: +33 (0)1 44 71 94 94
Tel.: +33 (0)1 53 65 14 14    esi@newcap.fr
investors@esi-group.com

2008/09 annual sales: EUR70.2 million

Strong resistance of the recurrent installed base
Operating margin impacted by the fall in new business

Paris, 10th March 2009: ESI Group (ISIN FR00041 10310), 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
In EUR millions      2008/09   2007/08    Var. %    Var. %
                                         (actual)  (volume)
Licences              52.6      53.9       -2.4%    -2.6%
Services & other      17.6      15.0      +17.4%   +17.5%
activities
Total                 70.2      68.9       +1.9%    +1.8%
FY to 31st January

                          Quarterly sales
                         2008/09                2007/08
In EUR millions     Q1   Q2    Q3  Q4      Q1   Q2   Q3  Q4
Licences           10.8 10.5  9.1 22.2    10.4 10.4 9.2 23.8
Services & other    3.9  4.1  4.3  5.3     3.1  3.7 3.7  4.5
activities
Total              14.7 14.6 13.4 27.5    13.5 14.1 12.9 28.3
FY to 31st January

Quarterly sales
Sales for the fourth quarter of the Group's 2008/09 fiscal year totalled EUR27.5
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 EUR5.3 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."

About ESI Group

A virtual test software package publisher, ESI Group is the world-leading
supplier, and a pioneer of digital simulation software for prototyping and
manufacturing processes that take into account the physics of materials. ESI
Group has developed an extensive suite of coherent, industry oriented
applications to realistically simulate a product's behaviour during testing, to
fine-tune manufacturing processes in accordance with desired product
performance, and evaluate the environment's impact on product performance. This
offer represents a unique collaborative and open virtual engineering solution
known as the Virtual Try-Out Space (VTOS), enabling virtual prototypes to be
improved in a continuous and collaborative manner with the gradual elimination
of physical prototyping during the product's development phase. ESI Group
employs over 700 high-level specialists worldwide covering more than 30
countries. ESI Group is listed in Eurolist compartment C of Euronext Paris. For
further information, visit www.esi-group.com.

Listed in Eurolist compartment C of Euronext Paris
ISIN FR 0004110310 - FTSE 977- Bloomberg ESI FP - Reuters ESIG.LN

ESI GROUP has been qualified as "an innovative company" since January 20th 2000
by the OSEO-Anvar and is eligible for inclusion in "FCPI" (venture capital
trusts dedicated to innovation).

2008/09 annual results will be published on:
29th April 2009
(after market)

G.PC.09.205

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