2012-2013 Annual Results : for the first time, online business now exceed offline sales

A new CEO for a new ambition   Board of Directors of Avanquest Software met on September 25, 2013, to approve the financial statements for the 2012-2013 financial year.  

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*Of which, €60M in goodwill depreciation                    unaudited accounts   Sales stable with more than 45% now made through online activities Avanquest Software achieved annual sales of 100.3 million euros for the 2012-2013 financial year, which was marked by an accelerated shift toward online sales. This figure is virtually unchanged from the previous year (-1.0% and -5.3% at constant scope and exchange rates).   The year’s activity was characterized by strong growth in Web-to-print, hosting and downloads (+24%), which almost compensated for the drop in retail sales (-25%). Overall, the Group is now doing 45.5% of its business online. Offline sales now represent only 34% of gross income. This is the first time these two proportions have been reversed, marking a significant stage in the Group’s transition. BtoB activities also showed growth (+3% to 15.8 million euros, or 20.5% of the group’s sales).   The growth in online activities was especially pronounced in the United States, which now accounts for 44% of sales, ahead of the United Kingdom (22%) and France (17%).         Annual results reflecting efforts associated with the shift in business model         With sales virtually stable, the gross margin is down slightly from the previous year, at €56.9M.  This virtual stability can also be seen in the operating income (OI), slightly negative (€ -1M), compared with a slightly positive result (€ 0.8M) in 2011/12. The gap in income compared with the previous year can be explained by the contribution of offline activities and an increase in marketing investments (+1,6M€) in order to promote the growth in online activities, especially Web-to-print (remote photo printing in various formats) and download sales. Conversely, the group’s personnel expenses declined by 5%. In the first half of the year, goodwill was depreciated for €60M. This depreciation came in the wake of an in-depth review by management of prospects associated with the change in markets in which the Group operates: most of it refers to the acquisitions made between 2002 and 2007 in the area of B2C software, sold in the traditional channels. This operation enables the Group to present an accounting position that is consistent with the transformation of its business.  This depreciation did not lead to any cash outflow and has no impact on the Group’s solvency. After taking into account this exceptional depreciation and the reorganization costs associated with the business shift (€4.2M), and the financial result (€ -1.5M), the net result for the 2012-2013 financial year is € -65.7M. During the year the Avanquest Group strengthened its financial structure by securing its long-term financing with an agreement signed in March with its banks calling for an extension of the maturity dates on existing loans until June 2018.  At June 30, 2013, the Group’s equity capital amounted to €37.0M, and Avanquest Software had €4.8M in cash and cash equivalents for financial debts of €29M (of which only €2.7M is short-term).   A new direction to finalize a new strategy The 2012-2013 financial year was also marked by the arrival of Pierre Cesarini as CEO last May 15. After the period of transition to offline, which made it possible to maintain sales above €100M, this change in governance was necessary in order to move on to a new, strategic stage and enter into a new cycle of value creation. The new management headed by Pierre Cesarini has set itself the goal of getting back on a sustainable-performance track by relying on the company’s internal advantages and the Group’s strengths (international scale, control of all distribution channels, capacity for growth, etc.). “Since I was named CEO of the Avanquest Group, I’ve seen how strong our teams’ expertise is in this constantly evolving digital marketplace, where in just a few years technological revolutions can change the rules of the game, and where yesterday’s champions can disappear as quickly as new leaders emerge. That is also why the opportunities are so huge. Based on the Group’s competencies worldwide, my role today is to reinvent Avanquest by anticipating new trends in this digital marketplace, by putting innovation and products at the core of our considerations in order to develop unique solutions in growth markets where we can stand out from the others and take a dominant position. This new strategy is under development and will be introduced by the end of this year,” according to Pierre Cesarini, CEO.

Avanquest - Press release - 2012-2013 Annual resultsPDF