Alain de Rouvray, ESI Group’s Chairman and CEO, comments: "The solid performance in the first half-year shows the widening adoption of ESI Group's Virtual Prototyping solutions and reflects the transformation of leading industrial firms to the smart digital factory. This structural trend drives strong growth of Licenses, particularly in the installed base, and is indicative of the strength of ESI's industry standard solutions and the Group's robust business model. The restructured Services division, although held back by some cyclical effects, posted healthy growth in high value added engineering studies which eventually lead on to recurrent License sales. The cost control policy also delivered further substantial improvements to profitability without reducing the R&D investment which is core to the Group's development strategy. Notably, ESI Group continues to differentiate itself clearly from its competition by technological innovation and adoption of disruptive technologies, including those represented in recently acquired activities. The unique positioning of ESI's solutions in the future markets for Virtual Engineering, coupled with high-performing strategic international partnerships, amplifies the solidity of the Group's activity and enables us to look ahead with confidence over the short and medium term."
Revenues for the 1st half of 2015 amounted to €48.4 million, a healthy 13.6% growth in actual terms (+6.0% at constant exchange rates). This strong performance reflects the dynamism of the Licensing activity and was helped by currency movements over the period, mainly in the US dollar, Japanese yen and Korean won. Recent acquisitions mainly concerned technologies requiring further development and their revenue impact was therefore limited at this stage to €0.1 million. The product mix shifted toward Licensing activity, which accounted for 71.7% of revenues compared to 69.6% in the 1st half of 2014.
Licenses revenue recorded annual sales of €34.7 million, a strong increase of 17% at actual rates (+8.8% at constant exchange rates) driven by the remarkable 26.9% increase in repeat business in the installed base (+17.1% at constant exchange rates). The rate of repeat business was a massive 94.7% at actual rates (87.4% at constant exchange rates compared to 76% in the 1st half of 2014). New Business fell back by -8.1% at actual rates (-12.9% at constant exchange rates) hampered by cyclical effects, including the still difficult environment in Russia. The excellent performance of IC.IDO has to be highlighted as it has been adopted not only in traditional areas such as Ground Transportation and Aerospace but also in Heavy Industry such as Kubota for its loaders.
Services revenue was €13.7 million, up by +5.6% at actual exchange rates (-0.6% at constant exchange rates). The success of engineering studies, the core of ESI Group's business, where revenues rose by +19.4% (+11.9% at constant rates), reflected the continued refocus on high expertise, high value added projects, particularly in Japan, France, Germany and the US. This structural trend was, however, masked by declines in sales of other services evident in the 2nd quarter.
Over the period the geographical distribution of revenues in actual currency shifted toward Asia (41.1% vs. 40.2%) and the Americas (20.4% vs. 17.1%), and away from Europe (38.5% vs. 42.7%) where sales were held back by Russia. These trends, albeit amplified by the fall in the euro against the US dollar and Asian currencies, reflect very strong License sales at constant exchange rates; up by an impressive 24% in the USA and 26% in China.
At actual exchange rates, activity in BRIC countries contributed 12.2% of revenues compared to 13.3% in the prior year period as growth in China and India was offset by the still difficult environment in Russia.
