2001 Annual Results
Analyst & Investor Presentation
Paris and Lyon, March 13 and 14, 2002
Jean-Michel Bérard (Chief Executive Officer)
Emmanuel Olivier (V.P. Finance and Investor
Relation)
Agenda

Esker at a glance

Esker’s markets

2001 Financial statements

Strategy

Esker’s strengths to succeed

Conclusion
2

Esker at a glance

Esker’s markets

2001 Financial statements

Strategy

Esker’s strenghts to succeed

Conclusion
3
Esker at a glance
 Independent Software Vendor
 Founded in 1985
 Listed on the Nouveau Marché (Euronext Paris)
since 1997
 Our mission:
• Esker develops software products that immediately integrate new
and existing technologies to streamline the exchange of vital
business information.
 Our principles:
• Focus on software development
• Diversify our product portfolio in complementary markets to
feed company's growth
4
Esker at a glance
A world-wide leader
 3rd largest world-wide fax server
software vendor
 6th largest world-wide Host Access
solutions vendor
5
Esker at a glance
An international success story
35,00
 16 years of sustained
growth
30,00
25,00
20,00
15,00
10,00
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1990
-
1991
5,00
Annual sales from 1990 to 2001
France
11%
Germany
6%
 89% of sales outside
France
Benelux
4%
UK
11%
USA
60%
Sales by country
in 2001
Italy
2%
Australia
4%
Spain
2%
6
Esker at a glance
An international success story
300 employees world-wide
 Subsidiaries in 7 countries :
- USA : 3 offices: Madison (WI), Stillwater (OK),
Lake Forest (CA)
- Europe : France, UK, Germany, Italy, Spain
- Asia Pacific : Australia
Production
France
29%
USA
55%
3%
Marketing
13%
UK
7%
Germany
3%
Italy
1%
Sales and
Spain
Tech. Support
2%
Australia
38%
3%
Management &
Admin.
19%
R&D
27%
7
Esker at a glance
Products
 Host Access : provide access
via a PC to core business
information residing on most
legacy systems and hosts
 IID (Intelligent Information
Delivery) : multi-channel
electronic delivery of core
business information from
any enterprise application
(ERP, CRM, Legacy, …)
8
Esker at a glance
Strategic goal
 Become the world-wide leader in electronic
delivery of business documents …
 … and to consolidate existing complimentary
markets to accelerate our development:
• Print management
• Forms Processing
• Archiving
• EDI-XML
• Fax servers…
9

Esker at a glance

Esker’s markets

2001 Financial statements

Strategy

Esker’s strenghts to succeed

Conclusion
10
Esker’s markets
Host Access
 Size: $1 billion a year
 Market drivers
• Compliance with evolving operating systems (Windows
2000, Windows XP)
• Migration to newer architectures (from PC-to6host to
Web-to-Host)
 Market forecast
• Esker believes the Host Access market will decline by
5 to 10% a year by 2005
11
Esker’s markets - Host Access
World-wide monthly sales from 1/1/99 to
12/31/01
Stabilization
1/1/2000
12
Esker’s markets
Definition
–
I.I.D
I.I.D. : Intelligent Information Delivery
Distribution of electronic business
documents originating from an
enterprise application
13
Eskers’ markets
–
I.I.D
Enterprises yesterday…
Physical Mail
Enterprise
Information
System
(ERP, SCM, HR, ...)
Paper
Manual Tasks
Printing
Fax
• Invoices
• Reminders
• Claims
• Purchase Orders
• Delivery notes
• Quotes/proposal
Telephone
• Notifications
• Reminders
• Exception management
Archiving
• All legal document
Internal copies
• Payroll
• Reporting
14
Eskers’ markets
Today with IID…
–
I.I.D
XML
(RossetaNet)
Hybrid
Mail
Enterprise
Information
System
(ERP, SCM, HR, ...)
Pulse
• Invoices
• Purchase Orders
• Payment
• Invoices
• Claims
• Reminders
Automated
Fax
• Purchase Order
• Delivery notes
• Proposal/quotes
SMS,
Automated
voice
• Notifications
• Reminders
• Exception management
Archiving
System
Web or E-Mail
(Secure)
Printing
• All legal document
• Reporting
• Account statements
• Quotes, Delivery notes
• Purchase Orders
• Other paper
documents
15
Esker’s markets
–
I.I.D
Guaranteed R.O.I for the enterprise
Productivity gains
— Eliminate numerous manual activities (printing, waiting, walking,
stuffing, dialing, phoning, archiving, stamping,…)
Cost Reduction
— Eliminate primary materials such as paper, ink, printers,
envelopes and office space
— Use less expensive media than Post or Fax to carry Business
Documents
Accelerate Business Cycles
— Reduce cash collection cycles
— Reduce level of inventory
— Reduce % of problematic incoming orders
Customer/Supplier relationship improvement
—
—
—
—
Real-time communication via customer preferred channel
Personalized information can be sent more often to the customer
Senders can be sure that information reaches right destination
Customers can deal more easily with digital information
16
Eskers’ markets
–
I.I.D
Real life business case
A €100 million company produces per month:
•17,000 invoices
•5,000 delivery notes
•150 collection notices
•8 500 collection reminder letters
•1 700 purchase orders
Savings are:
•Productivity gains
•Reduction in material consumption
•Total direct gains
•Improvement of interest expense
Return on Investment
54 000 €
11 500 €
65 500 €
120 000 €
< 5 months
17
Esker’s markets – I.I.D
A market with high growth potential
 90% of paper-based documents originate as electronic
documents (Aberdeen)
 The e-billing and e-presentment market will reach $3.3 billion by
2005 (Killen & Associates)
 75% of American companies use no electronic media to handle
their business transactions (National Association of Manufacturers – Ernst &
Young)
 Per Gartner Group:
 By 2004 DOM servers will become as pervasive as networked print
servers (0.7 probability)
 DOM is approximately a US$560 million market that is growing at 35 %
CAGR.
The IID market should reach $2 billion by
2005
18
Esker’s markets – I.I.D
Competitive analysis
• Accelio (Nasdaq: ACLO), formerly
•
•
•
•
•
•
Jetform
Dazel – Hewlett Packard
Formscape
Macro 4 (LSE)
Streamserve
IBM
…
In red: public companies
19

Esker at a glance

Esker’s markets

2001 Financial statements

Strategy

Esker’s strenghths to
succeed

Conclusion
20
2001 financial statements
Esker’s financial rationale for growth
 Eskers’ strategy is well balanced between its two product lines:
• Host Access :
Mature product
Low investments
Capitalize on existing channels and gain market share
High profitability
• IID :
New product with high growth potential
Demands high investment in R&D, sales and marketing
 Growth financed through optimization of existing commercial
world-wide infrastructure
21
2001 financial statements
2001 : back to growth
 Back to growth
• + 3.4% at comparable structure
• + 18% accounting annual growth
 Accelerated growth on IID products
• + 25% in 2001
• + 47.3% for Q4
 Stabilisation of Host Access sales
• - 7.8% in 2001
 Excellent commercial results in the US
• Growth exceeds 10% in 2001
2001 sales reached: 32.3 M€
22
2001 financial statements
2001 sales by country
40,00%
Australia
30,00%
20,00%
USA
Benelux
10,00%
2001 Growth by
country
Esker
0,00%
Europe
France
-10,00%
-20,00%
UK
Italy
Spain
Germany
-30,00%
Performance is heavily influenced by quality of implementation
of the IID strategy:
Australia: growth 36% with 60% of sales in IID
Germany: decrease of 29% with 5% of sales in IID
23
2001 Financial statements
Over 100 Pulse servers sold world-wide
2001 revenu : M€1.5
Valéo, Cofinoga, Imerys, C&S Wholesale Grocers Union Bank of
California, Reliant Energy, Pacific Century Cyberworks,
Schneider national, Tab limited, Toronto Mutual Life, South
carolina State Ports Authority, Rexel, Experian, …
24
2001 Financial statements
IID growth accelerates…
50%
Lauch of
Pulse
40%
30%
20%
10%
0%
-10%
Q1 00
Q2 00
Q3 00
Q4 00
Q1 01
Q2 01
Q3 01
Q4 01
25
2001 Financial statements
2001 sales by product line
Million euros
2001
2000
IID
Host Access
13,35
18,96
10,67
20,57
Total
32,31
31,24
Var.
-
%
2,68
1,61
25,1%
-7,8%
1,07
3,4%
At comparable structure
2001 shows Esker’s ability to further grow its
businesses with two main achievements :
 High growth on IID products :
+ 25%
 Stabilization of Host Access range
- 7,8%
26
2001 Financial statements
2001 sales by quarter
9 000 000
8 000 000
7 000 000
6 000 000
5 000 000
4 000 000
3 000 000
2 000 000
1 000 000
0
Europe
US
Esker
Q1
Q2
Q3
Q4
27
2001 Financial statements
2001 income statement
12/31/2001
'000 euros
Sales
32 533
Cost of goods sold
R&D expenses
Selling expenses
Marketing expenses
General & administration expenses
Total operating expenses
%
100%
12/31/2000
27 477
%
Change
100%
18,4%
(2 919)
(6 797)
(11 795)
(6 577)
(5 704)
(33 792)
(0.9%)
(2.1%)
(3.6%)
(2.0%)
(1.8%)
(10.4%)
(2 524)
(6 370)
(11 013)
(5 711)
(5 590)
(31 208)
(0.9%)
(2.3%)
(4.0%)
(2.1%)
(2.0%)
(11.4%)
(1.6%)
(0.7%)
(0.7%)
(1.5%)
(0.2%)
(0.8%)
Loss before Interest & Taxes
Interest income (net)
Operating income
Exceptional items
Amortization of goodwill
Income taxes
(1 259)
292
(967)
(772)
(273)
(182)
(0.4%)
0.1%
(0.3%)
(0.2%)
(0.1%)
(0.1%)
(3 731)
289
(3 442)
(1 065)
(246)
(400)
(1.4%)
0.1%
(1.3%)
(0.4%)
(0.1%)
(0.1%)
6.6%
0.1%
7.2%
2.8%
(1.1%)
5.5%
Net loss
(2 194)
(0.7%)
(5 153)
(1.9%)
5.7%
 Esker continued to heavily invest in R&D,
sales and marketing
28
2001 Financial statements
Pro forma income statement
Millions d’euros
2001
2000
Var.
Sales
32.5
31.3
4%
E.B.I.T
Interest income
Operating loss
Exceptional items
Income taxes
Amortization of goodwill
-1.3
0.3
-1.0
-0.8
-0.2
-0.3
-4.8
0.3
-4.5
-1.1
0.1
-0.2
73%
1%
78%
27%
-300%
11%
Net loss
-2.2
-5.6
61%
Pro forma data include VSI revenues and cost from 1/1/2000
 Taking into account VSI’s activities in 2000,
improvement is even better.
 VSI’s acquisition allowed Esker to
implement economies of scale and
improve profitability
29
2001 Financial statements
Analysis of operating costs
In % of sales
Cost of goods sold
R&D expenses
Selling expenses
Marketing expenses
General & administration expenses
Total operating expenses
2001
S2 2000
Change
9.0%
21.0%
36.5%
20.4%
17.7%
105.6%
9.4%
22.1%
34.2%
15.8%
17.7%
99.2%
-0.4%
-1.1%
2.3%
4.6%
0.0%
6.4%
Esker invests to build the future of
its products
30
2001 Financial statements
Exceptional items
 As of 12/31/2001 (in ‘000 of euros)
• Write down of treasury stock
• Write down of goodwill
• Restructuring costs
276
153
343
772
 As of 12/31/2000 (in ‘000 of euros)
• Write down of treasury stock
• Restructuring costs
• Other
311
610
144
1 065
31
2001 financial statements
Cash flow statement
2001
In '000 euros
Financing capacity
Change in working capital
-
Net cash provided by operating activities
Net cash used by investing activities
Net cash provided by financing activities
594
1 865
-
2 578
534
1 271
-
2 044
666
-
Net increase in cash
Cash at beginning of year
Net increase in cash
Change in treasury stock
Currency translation adjustment
Cash at end of year
2000
-
457
63
-
1 741
542
-
4 242
-
11 606
4 242
548
7 912
542
297
49
8 206
7 912
2001 showed positive cash flow
€ 1.3 million from operating activities
€ 0.5 million net increase in cash
32
2001 financial statements
Balance sheet
12/31/2001 12/31/2000
EUROS
EUROS
12/31/2001 12/31/2000
EUROS
EUROS
Intangible assets
Tangible fixed assets
Financial fixed assets
FIXED ASSETS
Inventories
Trade accounts receivable
Other receivable
Deferred taxes
Treasury shares
Cash and cash equivalents
CURRENT ASSETS
Prepaid expenses
2 456 633
1 152 406
59 717
3 668 756
307 639
6 669 226
1 191 979
308 607
250 782
7 962 909
16 691 142
495 511
2 983 570
1 368 530
70 739
4 422 839
279 502
6 727 232
1 740 484
647 487
548 428
7 567 728
17 510 861
694 192
SHAREHOLDERS EQUITY
TOTAL
20 855 409
22 627 892
TOTAL
Reserves for risks
Financial debt
Trade accounts payable
& other payable
Deferred revenue
13 327 671
15 729 803
176 692
174 809
7 602
203 976
4 351 053
4 144 888
2 992 391
2 374 416
20 855 409
22 627 892
33
2001 financial statements
Balance sheet analysis
Fixed assets
Shareholders’ equity
Current assets
Current liabilities
Net cash on hand
Deferred income
Active
Passive
 A very healthy financial position…
 … resulting from years of careful management.
34
2001 Financial statements
Esker’s market capitalization
Total value
in M€
 Market capitalization
Value per share
in Euros
14.0
4.1
 Cash
8.0
2.3
 Value excluding cash
6.0
1.76
Esker is valued at (not including cash):
 19% of 2001 sales
 1,75 times its cash
35

Esker at a glance

Esker’s markets

2001 Financial statements

Strategy

Esker’s strenghts to succeed

Conclusion
36
Srategy – I.I.D
Sales strategy
Installed base
Banking, Insurance, retail,...
Direct sales to large accounts
Headpin strategy
Channel sales / partnerships
ERP, Output management, Archiving, Postal
services,...
37
Strategy – I.I.D
The headpin approach
Seg 3
App 1
Seg 2
App 2
Seg 2
App 1
Headpin
Seg 1
App 3
Seg 1
App 2
Seg 1
App 1
The goal is to dominate the market within the headpin,
providing a starting point for the rest of the bowling pin.
38
* From Inside the Tornado
Strategy – I.I.D
Supply Chain Communications
Information
Suppliers
Capacity, promotion, plans, delivery schedules
Material
Raw materials, intermediate products, finished goods
Finance
Credits, consignment, payment terms, invoice
Manufacturers
Distributors
Retailers
Sales, orders, inventory, quality, promotion plans
Customers
Information
Returns, repairs, servicing, recycling, disposal
Material
Payments, consignment
Finance
39
Strategy – I.I.D
A new sales approach
Historical Esker
Approach.





Facsimile
Print
Secure e-mail
Web
Wireless








Technology
Purchase Orders
Invoices
Order Confirmations
Collection Notices
Documents
Distributor communication
Supplier communication
Customer communication
Partner communication
Business
Solution Selling
Approach
40
Strategy – I.I.D
An remarkable example
IID quarterly sales in Australia
450 000
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
00 00 00 00 01 01 01 01
 2002 growth: + 167%
41
Strategy
–
I.I.D
Strategic alliances with key partners
Cincom Systems
France Télécom
Mobius Management Systems
La Poste
Zixit Corporation
Complemented by active
recruitment of local partners:
Novaxel, Lasercom, Creatis, …
42

Esker at a glance

Esker’s markets

2001 Financial statements

Strategy

Esker’s strenghts to succeed

Conclusion
43
Esker’s strengths to succeed
Prestigious references
Germany
Opel, Mercedes Benz, Lufthansa Service, Commerzbank, Hansestadt Hamburg,
Siemens, Frei Universität Berlin…
Spain
Mapfre, Cadena Sol, Diputación de la Coruña, Porcelanosa, Pirelli, AEG Fabrica
de Motores, Feria Muestrario de Valencia…
France
Kodak, Casino, Ministère de la Défense, Ministère du Travail et des Affaires
Sociales, France Télécom, ELF Antar, Sagem, Gec Alsthom, BMW, Pierre &
Vacances, EDF, Société Générale, Crédit Agricole, Seita, Siemens, Continent,
Infogrames, Mercedes Benz, Ikea, Cadbury, Usinor, Cofinoga, Lafarge…
UK
Durham County Council, London Ambulance, Houses of Commons, Ocean
Infogram, Rolls Royce, University of Humberside, Nacanco, BBC…
Italy
Lloyd Adriatico, Teuco Guzzini, Università di Napoli, Banca Passadore…
Australia AT&T, Healthcare USA, Nieman Marcus, Phillips Petroleum, Danone Company.
USA &
Canada
Peel Board of Education, American Express, First USA, The Vanguard Group,
Staples,Target Stores, Ohio State University, UCLA University of California,
University of Oklahoma Library, General motors, Motorola, Inc., Mobil Oil
Corporation, Pennsylvania Power & Lighting Co, United States Air Force,
Federal Reserve Bank of NY, First National Bank & Trust…
44
Esker’s strengths to succeed
Public accountability
 Well-balanced ownership
structure between founders
and investors
 Independent Supervisory
Board
 A commitment to transparence
and good corporate
Public
governance evidenced by the 59%
Euronext NextEconomy label
J.Michel
Bérard
9%
Thomas Russell
Wolfe Teubner
8%
7%
Benoît
Borrits
3%
David
Droman
6%
Capital
risque
2%
Autres
nominatifs
3%
Esker S.A.
4%
 Open communication with all
shareholders
Info Plus newsletter
Multi channel e-mailing list powered
by Pulse
45
Esker’s strengths to succeed
An international managing team
Jean-Michel Bérard
CEO
Co-Founder of Esker
Dan Speer
CEO Esker US
Emmanuel
Olivier
VP Finance and
Investor
Relations
Jean-Jacques
Bérard
VP Research &
Development
Lynn Weatherby
VP Corporate
Marketing
Mitch Baxter
VP Business
Development
46
Esker’s strengths to succeed
Esker’s vision
Archiving
Workflow
EDI
Information Delivery
Printing
Fax Servers
Forms
Processing
47

Esker at a glance

Esker’s markets

2001 Financial statements

Strategy

Esker’s strenghts to succeed

Conclusion
48
Conclusion
 Esker starts a new growth area
• With a highly promising project targeting a growing market
• With very positive initial results
 Esker will benefit from its experience
• Mature products will generate positive cash flows to accelerate the
success of the IID product line
• Installed bases speed up market presence for new products
• International infrastructure (people & subsidiaries) will help Esker
become a world-wide leader in IID markets
Esker has all the necessary resources to succeed and stay
independent
49
2001 Annual Results
Analyst & Investor Presentation
Paris and Lyon, March 13 and 14, 2002
Jean-Michel Bérard (Chief Executive Officer)
Emmanuel Olivier (V.P. Finance and Investor
Relation)