Growth in Income from Operations and in the Operating Margin Before Non-Recurring Items — Continuation of Investments for the Future Income from operations before non-recurring items was €19.8 million. Like-for-like, it was up €2.4 million (+14%) relative to 2013. At actual exchange rates, it increased by €2.3 million (+13%). This increase stems from the growth in revenues from new systems sales (€2.6 million), in recurring revenues (€4.1 million), and in gross proﬁt margins (€1.5 million). These positive impacts were partly offset by the natural increase in ﬁxed overhead costs (€1.9 million), and the increase in investments for the future related to the company’s transformation plan (€3.9 million). The impact of exchange rate variations on income from operations before non-recurring items for the year was virtually nil. The operating margin before non-recurring items was 9.4%, up 0.7 percentage points like-for-like and 0.8 percentage points at actual exchange rates. Expenditures corresponding to investments for the future (€13.6 million) had a negative impact of 1.8 percentage points on the operating margin before non-recurring items relative to 2013 and represented 6.4 percentage points relative to 2011, i.e. before the transformation plan’s inception and investments for the future totaling €50 million over the period 2012-2015. Income from operations for 2013 included the €11.1 million non-recurring income reﬂecting receipt of the outstanding amount in the litigation against Induyco, and the €0.7 million goodwill impairment on Lectra Spain. Net income reached €14.4 million, up €1.9 million (+15%) compared with net income before non-recurring items of €12.5 million in 2013. Strong Increase in Free Cash Flow Before Non-Recurring Items Free cash ﬂow amounted to €19 million (€6.5 million in 2013 excluding receipt of the €11.1 million non-recurring income reﬂecting receipt of the outstanding amount in the litigation against Induyco). Excluding non-recurring items, the increase was €12.6 million. Free cash ﬂow was boosted by the receipt of the 2010 (French) research tax credit amounting to €5.7 million.
A Zero-Debt Company, Shareholders’ Equity and Net Cash Position Further Strengthened At December 31, 2014, consolidated shareholders’ equity amounted to €94.1 million (+12%). Cash and cash equivalents totaled €43.5 million (+47%) and the net cash position was positive at €43.1 million (+50%), after payment of the €6.6 million dividend declared in respect of ﬁscal 2013. Financial borrowings have been reduced to €0.4 million. They correspond to interest-free government advances to help ﬁnance R&D programs, the ﬁnal repayment being scheduled for March 31, 2015. Subsidiary Opened in South Korea In April 2014, the company formed a new subsidiary, Lectra Korea, in South Korea, in order to accelerate its development in Asia. After China, South Korea is one of the spearheads of Lectra’s expansion in Asia, especially in the automotive industry and in the fashion and apparel industries, where South Korean ﬁrms increasingly rank among the world’s leaders. Lectra has been operating in the country for more than twenty-ﬁve years, represented until then by an exclusive agent. Acquisitions and Partnerships The company made no acquisitions in 2014 apart from the purchase of the activity of the former agent in South Korea and did not enter into any new strategic partnership agreements.
2. STRATEGIC ROADMAP FOR 2013 2016: