“Our key financial ratios have been strengthened once more and will go on improving thanks to the strength and the relevance of our business model.”
Jérôme Viala Chief Financial Officer Member of the Executive Committee —
Are you satisfied with the financial results for 2014? JÉRÔME VIALA: Even more satisfactory than the revenue growth was the sharp growth in income from operations and net income. Our gross profit increased by €10 million relative to 2013 and is €0.8 million higher than the growth in revenues. That was an outstanding performance, thanks to higher margins on each of our product lines and to the larger weighting of software as well as training and consulting in our total revenues. Income from operations and operating margin before non-recurring items grew by €2.4 million and 0.7 percentage points respectively, despite the natural increase in fixed overhead costs and the increase in investments for the future, which have all been expensed in the year. Is the balance sheet still getting stronger? JÉRÔME VIALA: Our already excellent balance sheet ended 2014 even stronger. Free cash flow rose sharply to €19 million, exceeding net income by €5.6 million. Cash and cash equivalents have grown once again, and we have practically no financial debt.
Also, we have a €22.9 million negative working capital requirement, after restating for our €23 million receivable for tax credits on the French tax administration: a unique achievement. As a result, our key financial ratios have thus been strengthened once more, and they will go on improving thanks to the strength and the relevance of our business model. Are you confident in your capacity to reach your objectives? JÉRÔME VIALA: We began 2015 with even stronger fundamentals than in earlier years, an order backlog up €6.4 million relative to January 1, 2014, and with margins and recurring revenues ahead of our plan. We will reach our 2015 objectives provided we deliver the planned level of revenues from new systems sales.
Recurring revenues hit a new record level. At actual exchange rates, they exceeded their pre-crisis level by €21.1 million (+21%) and accounted for 58% of 2014 revenues, versus 47% in 2007.
The security ratio—the percentage of annual fixed overhead costs covered by gross profit on recurring revenues—was particularly strong and 4 percentage points ahead of the set minimum goal.
Increase in net cash
Cash and cash equivalents reached a total of €43.5 million and financial debts were reduced to €0.4 million.