The financial statements were approved by the Board of Directors on April 14, 2014. The audit procedures were performed on the consolidated financial statements and the certification report is being issued.

* Excluding acquisition costs, amortization of goodwill and before the impacts of R&D's adopting IFRS.

Solid licensing activity and refocusing of Services

As announced on March 12, 2015, annual sales for 2014 came to €111.0 million, up slightly by 1.6% on the previous year in actual terms. There was a negative currency effect of €1.0 million over the period, mainly due to the fall in value of the Japanese Yen. Sales would have been €112.1 million, up 2.5% at constant currency. Adoption of ESI Group's solutions by industry leaders and their subcontractors reflects the success of the immersive virtual reality offering and builds on the evident value proposition of Virtual Prototyping to address societal priorities such as air quality and renewable energies. This solid business dynamics, less evident in the first three quarters, was apparent again with the performance of the 4^th quarter, during which sales grew by 7.8% in actual terms, confirming the more pronounced seasonal nature of the business in 2014.

Licensing activity was solid, representing 75.0% of 2014 sales, compared with 73.3% in 2013. It grew 3.3% over the period, buoyed by 4.8% growth in the installed base and a repeat business rate which remained at the high level of 84.7%. New Business accounted for 20.1% of Licensing sales. The growth of Licensing and New Business was affected by the difficult political and economic context in the BRIC countries, notably Russia and China.

The Services activity amounted to €27.8 million (down 3.3% in actual terms) following the former strategic decision to focus on projects with higher added value. After a reduction in activity in the first nine months of the year there was a significant 10.7% rise observed in the 4^th quarter.

Improvement in gross margin

The Gross Margin was 71.3% of sales compared with 68.6% in 2013. This improvement is due to the favorable development of the product mix. The licensing margin was sustained at a high level and there was significant improvement in the Services margin consequent to the strategic refocusing of the business.

Sustained R&D investment policy and impact of the policy to control operational costs

The ESI Group retained an active investment policy; manifest by 12.4% growth in its R&D expenses in actual terms. These expenses amounted to €23.9 million (excluding the French research tax credit), and represent 28.8% of Licensing sales; a slight increase compared to 2013, when they were at 26.2%. These investment expenses include development activity by the recent external growth operations, such as virtual reality (IC.IDO), fluid dynamics (OpenCFD) and systems (CyDesign technology). The total R&D expenses recorded in the income statement in IFRS format are €20.0 million in actual terms, up 16.9% on the previous year.

Sales & Marketing and G&A costs remained largely stable (€35.0 million and €15.2 million respectively) thanks to the Group's efforts to control costs.

Improvement in profitability

In actual terms, EBITDA grew 5.8% to €10.1 million, i.e. a margin of 9.1% compared with 8.7% in 2013. This growth improves to 13.6% when reported at constant rates (for an equivalent of €10.8 million, i.e. 9.7% margin).

Current Operating Profit (ROC) rose 14.0% to €9 million, showing a margin of 8.1% up 0.9 point compared with last year. At constant rates, it would be €9.7 million, up 23.3%, with a margin of 8.7%.

EBIT rose 35.6% to €8.4 million, corresponding to a margin of 7.5% and up 1.9 points compared with 2013. At constant rates, the EBIT would be reported as €9.1 million, up 47.6%, i.e. €2.9 million.

The increasing difference in growth between the EBITDA and the ROC on the one hand and the EBIT on the other hand is mainly due to the exceptional items recorded in 2013; including provisions for risks and acquisition costs.

Net Financial Income was €0.7 million vs. a loss of €0.9 million in 2013. This €1.7 million change is due mainly to the impact of the exchange rates evolution, particularly of the US dollar right at the end of the year.

The attributable Net Profit was €5.5 million, i.e. 5.0% of net margin, compared with €2.4 million in 2013, an increase of 127.2% in actual terms. The €3.6 million tax expense remained high at an average rate of 39.5%, to be compared to 52.1% in 2013. This improvement is mainly due to the recording of provision for tax risk carried out in 2013.

A sound financial structure

Available cash at year-end was €11.9 million. Net debt was €10.7 million at January 31, 2015, compared with €14.0 million at January 31, 2014. Gearing (net debt in relation to equity) remained at 12.3% and continues to improve, confirming the soundness and low debt of our financial structure.